10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

þ	ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended March 31, 2008
o	TRANSITION REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-12475

Terremark Worldwide, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	84-0873124
(State or Other Jurisdiction of	(IRS Employer
Incorporation or Organization)	Identification No.)

2 South Biscayne Blvd. Suite 2900 Miami, Florida 33131
(Address of Principal Executive Offices, Including Zip Code)

Registrant’s telephone number, including area code:

(305) 856-3200

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, par value $0.001 per share	NASDAQ Stock Market LLC
(Title of Class)	(Name of Exchange on Which Registered)

Securities registered pursuant to Section 12(g) of the Act:

NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o     No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Act.  Yes o     No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (17 CFR 229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller Reporting company o

Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No þ

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant on September 30, 2007 was approximately $419,307,644, based on the closing market price of the registrant’s common stock as reported on the Nasdaq Global Market. For purposes of the foregoing computation, all executive officers, directors and five percent beneficial owners of the registrant are deemed to be affiliates. Such determination should not be deemed to be an admission that such executive officers, directors or five percent beneficial owners are, in fact, affiliates of the registrant.

The number of shares outstanding of the registrant’s common stock, par value $0.001 per share, as of May 31, 2008 was 59,172,422.

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III (Items 10, 11, 12, 13 and 14) is incorporated by reference from the registrant’s definitive proxy statement for its 2008 Annual Meeting of Shareholders (to be filed pursuant to Regulation 14A).

TABLE OF CONTENTS

			Page
Part I				2
	Item 1.	Business		2
	Item 1A.	Risk Factors		11
	Item 1B.	Unresolved Staff Comments		18
	Item 2.	Properties		19
	Item 3.	Legal Proceedings		19
	Item 4.	Submission of Matters to a Vote of Security Holders		20
Part II				21
	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		21
	Item 6.	Selected Financial Data		24
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
	Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		41
	Item 8.	Financial Statements and Supplementary Data		42
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		42
	Item 9A.	Controls and Procedures		42
	Item 9B.	Other Information		43
Part III				43
	Item 10.	Directors, Executive Officers and Corporate Governance		43
	Item 11.	Executive Compensation		43
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		43
	Item 13.	Certain Relationships and Related Transactions, and Director Independence		44
	Item 14.	Principal Accountant Fees and Services		44
Part IV				45
	Item 15.	Exhibits and Financial Statement Schedules		45
Signatures				49
EX-10.39 Form of Indemnification Agreement
EX-10.40 Form of Restricted Stock Agreement
EX-10.41 Employment Agreement with Adam T. Smith
EX-10.42 Employment Agreement with Jose A. Segrera
EX-10.43 Employment Agreement with Marvin Wheeler
EX-21.1 Subsidiaries of the Company
EX-23.2 Consent of KPMG LLP
EX-31.1 Section 302 Certification of CEO
EX-31.2 Section 302 Certification of CFO
EX-32.1 Section 906 Certification of CEO
EX-32.2 Section 906 Certification of CFO

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PART I

ITEM 1.   BUSINESS.

The words “Terremark”, “we”, “our”, “ours”, and “us” refer to Terremark Worldwide, Inc. All statements in this discussion that are not historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding Terremark’s “expectations”, “beliefs”, “hopes”, “intentions”, “strategies” or the like. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Terremark cautions investors that actual results or business condition may differ materially from those projected or suggested in such forward-looking statements as a result of various factors, including, but not limited to, the risk factors discussed in this Annual Report on Form 10-K. Terremark expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Terremark’s expectations with regard thereto or any change in events, conditions, or circumstances on which any such statements are based.

Our Business

We are a global provider of managed IT infrastructure services leveraging data centers throughout the United States, Europe and Latin America and access to massive carrier-neutral network connectivity. Utilizing top-tier, purpose-built data center infrastructure, Terremark delivers a comprehensive suite of managed solutions including managed hosting, colocation, connectivity, disaster recovery, security and cloud computing services. The combination of our carrier-neutral global infrastructure with our complete suite of managed services, including our Infinistructure^TM utility computing platform, enables companies to reduce the capital and operational expenses associated with running their IT operations, while at the same time improving application performance, availability and security. We differentiate ourselves through our world-class, carrier-neutral data centers combined with our continued investment in proprietary service delivery and platform technologies, including our Infinistructure utility computing platform and digitalOps^® service platform, and our premium managed services portfolio supported by a team of highly experienced infrastructure experts.

Our business model is driven primarily by recurring revenue. As a carrier-neutral provider, we do not own or operate our own network, and, as a result, our interconnection services enable our customers to exchange network traffic through direct connection with each other or through peering connections with multiple parties. As a result of having more than 160 carriers in our facilities, our customers have “zero mile” access to robust connectivity and are able to realize significant cost savings, flexibility, and can scale to match their growth while still delivering the performance they demand. The immediate proximity of our facilities to major fiber routes with access to North America, Latin America and Europe has attracted the major global telecommunications carriers, to colocate their equipment with us in order to better service their customers. This network density, which allows our customers to reduce their connectivity costs, combined with the security of our facilities, has attracted enterprise and government sector customers.

Our principal executive office is located at 2 South Biscayne Boulevard, Suite 2900, Miami, Florida 33131. Our telephone number is (305) 856-3200.

Products and Services

Managed Services

Our managed services are designed to support complex, transaction-intensive mission-critical line-of-business and Internet facing applications. Outsourcing in general, and in particular our full suite of managed services, represents a proven way for companies and organizations to reduce their total cost of ownership (TCO), while increasing IT capability through access to significant technical expertise and capability as well as world-class data center, network and computing infrastructure. From our managed services, we generate monthly recurring revenues by providing managed hosting services including technology and operations support. We provide managed hosting services on dedicated servers located within our facilities or virtualized servers through our Infinistructure and

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Enterprise Cloud platforms. Additionally, we provide managed storage and tape backup services, both as part of our managed hosting offerings or discrete solutions.

Terremark has been leveraging the advantages of virtualization technologies. Server virtualization technologies allow a single server to take on the function of what was previously performed by many individual servers as well as allow delivery of services through remote means. These technologies have been rapidly gaining momentum in the industry. Uses of such technology reduce both the energy and labor needed to maintain computing resources while increasing reliability and stability.

Our Infinistructure and Enterprise Cloud platforms leverage virtualization technology that presents a number of opportunities to drive both capital and operating efficiency. By decoupling the entire software environment from its underlying hardware infrastructure, virtualization enables the aggregation of multiple servers, storage infrastructure and networks into shared pools of resources that can be delivered dynamically, securely and reliably to applications as needed. This approach enables organizations to build a computing infrastructure with high levels of utilization, availability, automation and flexibility using building blocks of servers. Although virtualization represents the core enabling technology, the benefits associated with this general purpose computing infrastructure cannot be fully realized without virtual infrastructure automation and management solutions, such as our Infinistructure utility computing platform.

Services include some or all of the following: device management; operating system and application platform management; patch management; monitoring services; problem and incident management; data storage; backup and restoration; security services including managed firewalls, intrusion detection, anti-virus services and DDos protection and mitigation; database administration; application performance tuning; software installation and configuration; application testing and deployment services

Colocation

Utilizing our world-class data centers, our colocation services offer a highly secure and reliable carrier-neutral environment to deploy computing, network, storage and IT infrastructure. We have more than 385,000 square-feet of total data center space across North America, Latin America and Europe. We provide 100% Service Level Agreements (SLAs) for power and environmental systems through a number of redundant subsystems, including power and fiber trunks from multiple sources. Our scalable colocation solutions allow companies to upgrade space, connectivity and services as their requirements evolve. Power is becoming an increasingly more important part of customers’ decisions to outsource their infrastructure. By utilizing our colocation facilities, our customers realize significant benefits of scale to help reduce the costs of power and cooling their infrastructure. Additionally, with their IT infrastructure in a safe, secure highly connected facility, customers enjoy less latency, which enables them to focus on their core business. Customers also have the benefit of our wide range of physical security features, including biometric scanners, man traps, smoke detection, fire suppression systems, motion sensors, secured access, video camera surveillance and security breach alarms. Customers are billed on a monthly recurring basis on a per square foot basis or by cabinet for space and by the circuit (based on the number of amps) for power.

Network and Connectivity Services

Our Exchange Point Services platform is designed to allow our customers to connect their networks and equipment with that of others in a flexible and cost-effective manner. Doing so allows them to reduce costs while enhancing the reliability and performance associated with the exchange of Internet and telecommunications traffic. Our massive connectivity offers our customers a key strategic advantage by providing direct, high-speed connections to peers, partners and the most important sources of IP data, content and distribution in the world.

Our Peering Services provide a highly secure and reliable means to exchange data, deliver IP-based services, and provide content between networks in a carrier-neutral environment. We provide a cost-effective alternative to conventional transport, significantly reducing the costs, delays and performance issues often associated with using a complex patchwork of local loops and long-haul transport.

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Our Cross-Connect Service enables customers to conveniently share data with any other client connected to our sophisticated Exchange Point Platform. This “zero-mile” distance between the customer and the partners helps avoid many of the costs and performance issues often associated with a complex patchwork of local-loops and long-haul circuits. Our carrier-neutral facilities provide the optimal environment for this flexible connectivity option. With direct connections to some of the largest backbone providers in the world, this service offers immediately recognizable cost and performance benefits.

Our Primary Facilities

NAP of the Americas

Terremark’s flagship facility, the NAP of the Americas^®, located in Miami, Florida is one of the most significant telecommunications projects in the world. The Tier-IV, 750,000 square-foot facility was the first purpose-built, carrier-neutral Network Access Point and is the only facility of its kind specifically designed to link the United States with the rest of the world.

Miami has been ranked as one of the most interconnected cities in the world, ahead of San Francisco, Chicago and Washington, D.C. Terremark’s NAP of the Americas is located in downtown Miami, an area that has numerous telecommunications carrier facilities, fiber loops, international cable landings and multiple power grids. The convergence of telecommunications infrastructure is why global carriers, ISPs and other Internet-related businesses, educational institutions, and enterprises have chosen to become Terremark clients.

Our Network Operations Center, or NOC, service provides continuous 24-hour support, monitoring and management of all elements in a customer’s computing infrastructure. The service allows our customers to benefit from our investment in hardware, software tools and expertise, thereby allowing our customers to be supported by a NOC without requiring them to make significant investments in equipment and dedicated staff. The NAP of the Americas is equipped with two fully staffed NOCs, one serving our commercial sector customers and the other serving our federal government sector customers.

NAP of the Capital Region

Strategically located in Culpeper, Virginia, outside of the 50-mile blast zone surrounding downtown Washington, D.C., the NAP of the Capital Region (“NCR”), opening in June 2008, will be one of the most secure and technologically sophisticated datacenters on the Eastern seaboard.

The 30-acre, multi-datacenter campus is the ideal location for government, enterprise and Web 2.0 clients requiring colocation solutions engineered to meet the needs of today’s power, space and bandwidth-intensive mission-critical applications or hot/warm sites for disaster recovery/COOP environments.

The NCR campus will consist of up to five, 50,000 square-foot independent datacenter structures and one, 72,000-square-foot secure office building. Each structure is a secure bunker, designed to provide clients who require colocation space that meets standards for sensitive compartmented information facilities (SCIFs). Inside each datacenter, a professional security staff maintains and operates sophisticated surveillance systems, biometric scanners and secured areas for processing of staff, customers and visitors.

A complete suite of services from colocation and connectivity to managed hosting and comprehensive disaster recovery solutions is offered, including solutions utilizing Terremark’s Infinistructure utility computing platform. NCR is designed to accommodate today’s power requirements for high density computing environments. Terremark offers 100% service level agreements on power and environmentals for NCR.

NAP West

Located in Santa Clara, CA in Silicon Valley, NAP West strategically positions us to service the Asian/Pacific Rim markets and is a key component of our international reach. The facility is engineered to exceed industry standards for power and cooling and is on the critical grid for Silicon Valley Power. Additionally, NAP West’s

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access to major carriers provides a competitive marketplace that lowers bandwidth costs while allowing customers to select the connectivity best suited to their business.

NAP do Brasil

Located in Sao Paulo, NAP do Brasil is the largest NAP in Latin America with total exchange traffic of 5.2 Gbps. Our clients include all major carriers operating in Brazil. Terremark operates the Academic Network of the State of São Paulo, under outsourcing contract with the Foundation for Research Support of the State of São Paulo or FAPESP from this facility which uses the same world class practices used by NAP of the Americas in Miami.

Our Strategy

Our objective is to become the leading provider of infrastructure and managed services for enterprise and government customers. Key components of our strategy include the following:

•  Maximize our expansion opportunities. Our expansion plans are strategic to our continued growth and enable us to broaden our geographic footprint, leverage our global technology relationships and provide COOP and disaster recovery services for our customers. We expect to complete the first phase of our NCR project in June 2008 and we are targeting the second half of Fiscal 2009 to break ground on our Silicon Valley expansion. Our NCR facility will consist of five, 50,000 square-foot independent datacenter structures with each additional pod being built on a success basis. Our Silicon Valley facility will consist of one 50,000 square foot data center facility. The added square-feet from the new facilities will enable us to sell additional colocation, managed services and disaster recovery solutions.

•  Continue our focus on the Federal Government. We continue to broaden our reach with customers in federal government sector, resulting in further penetration of the civilian agencies and solidifying our relationships with the large federal integrators. We have focused on ramping up our collaboration with key federal government IT integrators, which has helped increase demand from both the federal and commercial sectors.

•  Continue to upsell to our existing customers, including selling managed services to our colocation customers. For the year end March 31, 2008 approximately 70% of our bookings were from existing customers. By upselling our existing colocation customers to our managed service platform we expect to increase the amount of revenue per customer.

•  Maximize revenue per square foot. Our ability to successfully deliver colocation and managed services enables us to maximize the revenue per square foot that we generate in our data centers. Maximizing revenue per square foot enables us to increase cash flow per square foot from the data center, thus increasing our return on investment.

•  Continued investment in service delivery technology and products such as our digitalOps Enterprise Service Delivery Platform, our Infinistructure utility-computing platform and our Enterprise Cloud. Our service delivery platform enables us to speed response times, reduce human error, and increase systems availability through increased accuracy, comprehensive change control and rapid fault resolution. These automated processes allow us to leverage our technology to help drive efficiencies and lower our operating costs. Our consistent investment in the Infinistructure utility-computing platform and the development of the Enterprise Cloud have resulted in industry-leading platforms that provide reliable, cost-effective, and flexible solutions to our customers and a technological advantage over competitors.

Market Forces

Market demand for infrastructure services continues to expand. Gartner forecasts that the North American infrastructure services market will grow from $7.0 billion in 2007 to $13.1 billion in 2011. This growth is being driving by escalating broadband penetration, abundance of broadband intensive applications, growing need for advanced networking technology provided through reliable and secure infrastructure and rising power and cooling requirements. These conditions have created an environment of increasing demand for our services including managed hosting, colocation, and interconnection services.

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Adding to the growth in the market place is a trend among companies of all sizes to reduce their IT capital expenditures while increasing their computing capacity, leading many companies to outsource their IT infrastructure needs. According to Gartner, up to 40% of IT infrastructure will be purchased as a service by 2011.

Customers

Our customers include enterprise, government, interactive entertainment, internet infrastructure and carriers. As of March 31, 2008, we had 983 customers worldwide. Agencies of the federal government accounted for approximately 16% of our revenues for the year ended March 31, 2008.

Sales and Marketing

Sales

We use a national direct sales force to market our services to enterprise, government, interactive entertainment, Internet infrastructure, carrier and channel customers. This sales force is supported by a team of trained support engineers who work with our sales executives and their customers to respond to customer questions and design a package of services and technical infrastructure that best meets the customer’s needs. A sales engagement team is responsible for managing inbound demand from marketing campaigns and website visitors as well as conducting targeted sales outreach. Our channels & strategic alliances group is responsible for the acquisition, education and retention of channel partners and reseller agents.

Marketing

Our marketing organization is responsible for brand management, demand generation, market segmentation and market-facing communications. Our marketing team supports our strategic priorities through the following primary imperatives:

•  Brand management and positioning — this includes brand identity and positioning at the corporate and product levels, the development of marketing assets and sales tools, brand awareness programs and industry analyst relations.

•  Lead Generation — Utilizing online marketing, targeted advertising, direct marketing, event marketing, and public relations programs and strategies.

•  Internal coordination and strategic alignment, including: Sales, Channels & Alliances, Product Line Management, and Corporate Communications.

Competition

Our current and potential competition includes:

•  Internet data centers operated by established communications carriers such as at&t, Level 3, Qwest, Savvis, and Verizon Business. Unlike the major network providers, who constructed data centers primarily to help sell bandwidth, we have aggregated multiple networks in one location, providing superior diversity, pricing and performance. Telecommunications companies’ data centers generally only provide one choice of carrier and also prefer customers with high managed services needs as part of their pricing structures. Locating in our data centers provides access to top tier networks and allows customers to negotiate the best prices with a number of carriers resulting in better economics and redundancy. In 2003 and 2004, two major carriers who had built and operated their own data centers exited the U.S. colocation market. The disposition of these assets has been completed with various owners assuming the assets, including Savvis. Because these operators are not network neutral, we believe we have an advantage in gaining the business of those customers displaced by these carriers because access to their networks is also available in our data centers.

•  Network access points (NAPs) and/or network-neutral colocation providers such as Equinix, Global Switch, Interxion and Switch and Data. NAPs, generally operated by carriers, are typically older facilities and lack the incentive to upgrade the infrastructure in order to scale with traffic growth. In contrast, we provide state-

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of-the-art, secure centers and geographic diversity with 24-hour support and a full range of network and content provider offerings along with certain other network-neutral colocation providers.

•  Website hosting, colocation and information technology service providers such as IBM, Rackspace and Sunguard. Most managed service providers require that customers purchase their entire network and managed services directly from them. We are a network and service provider aggregator and allow customers the ability to contract directly with the networks and webhosting partner best for their business.

•  Real Estate Investment Trusts (REITs) such as Digital Realty Trust and Dupont Fabros. Some REITs have leased or begun building data centers focused on meeting the outsourced data center needs of wholesale, or very large, customer deployments. These centers primarily provide space and power without additional services. These customers are not typically suited to the Terremark model as we focus on a large number of diverse customers on a per data center basis thereby creating a network effect for customers and maximizing the financial returns on a per site basis.

Employees

As of March 31, 2008, we had 604 full-time employees in the United States, 69 full-time employees in Europe and 25 full-time employees in Latin America. Of these employees, 466 were in data center operations, 83 were in sales and marketing and 149 were in management, finance and administration.

Our executive officers and directors and their ages as of March 31, 2008, are as follows:

Name	Age		Principal Position
Manuel D. Medina		55	Chairman of the Board, President and Chief Executive Officer
Joseph R. Wright, Jr		69	Vice Chairman of the Board
Guillermo Amore		69	Director
Timothy Elwes		72	Director
Antonio S. Fernandez		68	Director
Arthur L. Money		68	Director
Marvin S. Rosen		66	Director
Miguel J. Rosenfeld		58	Director
Rodolfo A. Ruiz		59	Director
Jamie Dos Santos		46	Chief Executive Officer Terremark Federal Group
Jose A. Segrera		37	Chief Financial Officer
Marvin Wheeler		54	Chief Operations Officer
Adam T. Smith		36	Chief Legal Officer

Manuel D. Medina has served as our Chairman of the Board, President and Chief Executive Officer since April 28, 2000, the date that we merged with AmTec, and as that of Terremark since its founding in 1982. In addition, Mr. Medina is a managing partner of Communication Investors Group, one of our investors. Mr. Medina has been a director of Fusion Telecommunications International since December 14, 1998. Before founding Terremark, an independent financial and real estate consulting company, Mr. Medina, a certified public accountant, worked with PricewaterhouseCoopers LLP. Mr. Medina earned a Bachelor of Science degree in Accounting from Florida Atlantic University in 1974.

Joseph R. Wright, Jr. has served as our Vice Chairman of the Board since April 2000. He recently joined Scientific Games as their CEO effective January 1, 2009. He is currently serving as Vice Chairman of the Board for Scientific Games and has been a member of the board since 2004. He was previously Chairman of Intelsat, the world’s leading provider of satellite/fiber services with a global fleet of 53 satellites servicing over 200 countries and before that CEO of PanAmSat, a publicly-listed satellite based services business, which was acquired by Intelsat in 2006. Before PanAmSat, he was Chairman of GRC International Inc., a public company providing advanced IT, internet, and software technologies to government and commercial customers, which was sold to

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AT&T, was Co-Chairman of Baker & Taylor Holdings, Inc., an international book/video/software distribution and e-commerce company, owned by The Carlyle Group and was EVP, Vice Chairman, and Director of W. R. Grace & Company, Chairman of Grace Energy Company, and President of Grace Environmental Company.

Mr. Wright also serves on the Board of Directors/Advisors of Federal Signal, the Defense Business Board, the Defense Science Board task force on interoperability, OMB’s Performance Measurement Advisory Council, the FCC’s Network Reliability and Interoperability Council, the FCC’s Media Security and Reliability Council, the Council on Foreign Relations, the Committee for the Responsible Federal Budget and the New York Economic Club. See “Certain Relationships and Related Transactions.”

Guillermo Amore has served as a member of our board of directors since February 2001. From August 2000 to February 2001, Mr. Amore served as the President and Chief Operating Officer of our wholly-owned subsidiary, Terremark Latin America, Inc., prior to which, he served as Chairman and Chief Executive Officer of Spectrum Telecommunications Corporation until its acquisition. Mr. Amore has nearly 35 years of telecommunications experience, much of it focused on the developing markets of Latin America and the Caribbean. During his tenure at GTE Corporation he built an extensive network of contacts in the region. These contacts served him well in business development and regulatory affairs during his stewardship of Grupo Isacell S.A. of Mexico and of Spectrum Telecommunications. Mr. Amore holds an MBA from Harvard University and a Bachelors degree in Science in Electrical Engineering from Pontificia Universidad Javeriana, Colombia. See “Certain Relationships and Related Transactions.”

Timothy Elwes has served as a member of our board of directors since April 2000. Mr. Elwes also served as a member of the board of directors of Timothy Elwes & Partners Ltd., a financial services company, between May 1978 and October 1994, the business of which was merged into Fidux Trust Co. Ltd. in December 1995. Since December 2000 he has served as a director of Timothy Elwes & Partners Ltd., a financial services company.

Antonio S. Fernandez was elected to our Board Directors in September 2003. In 1970, Mr. Fernandez was a Systems Engineering Manager at Electronic Data Systems (EDS). In 1971, Mr. Fernandez joined duPont Glore Forgan as a Vice-President in Operations. In 1974, he joined Thomson McKinnon as Director of Operations and Treasurer. In 1979, he was Director of Operations and Treasurer at Oppenheimer & Co. Inc., where he also served as Chief Financial Officer from 1987 until 1994 and a member of the Board of Directors from 1991 until 1998. In 1991, Mr. Fernandez founded and headed the International Investment Banking Department at Oppenheimer & Co. and served in that capacity until 1999. Mr. Fernandez served on the Board of Banco Latinoamericano de Exportaciones from 1992 until 1999. He also served as Trustee of Mulhenberg College, PA from 1995 until 1998. Since June 2004 Mr. Fernandez has been a director of Spanish Broadcasting Systems, an operator of radio stations in the U.S. He graduated from Pace University, NY in 1968 with a B.B.A.

Arthur L. Money has served as a member of our board of directors since May 2003. Since September 2002, Mr. Money has been a member of the board of directors of SafeNet, a provider of Information Technology security solutions. From 1999 to 2001, Mr. Money was the Assistant Secretary of Defense (C3I) and Department of Defense CIO. Prior to this, Mr. Money served as the Assistant Secretary of the Air Force for Research, Development, and Acquisition, and was Vice President and Deputy General Manager of TRW. From 1989 to 1995, Mr. Money was President of ESL, Inc. He has received distinguished public service awards from the U.S. Department of Defense (Bronze Palm), the U.S. Air Force, and the U.S. Navy. He is currently President of ALM Consulting, specializing in command control and communications, intelligence, signal processing, and information processing. Mr. Money received his Master of Science Degree in Mechanical Engineering from the University of Santa Clara and his Bachelor of Science Degree in Mechanical Engineering from San Jose State University. See “Certain Relationships and Related Transactions.”

Marvin S. Rosen has served as a member of our board of directors since April 2000. Mr. Rosen is a co-founder and Chairman of the Board of Directors of Fusion Telecommunications International and served as its Vice Chairman from December 1998 to April 2000 and has served as its Chief Executive Officer since April 2000. Mr. Rosen is also of counsel to Greenberg Traurig, P.A., our corporate counsel. From September 1995 through January 1997, Mr. Rosen served as the Finance Chairman of the Democratic National Committee. Mr. Rosen has served on the Board of Directors of the Robert F. Kennedy Memorial since 1995 and Fusion Telecommunications International, Inc., since 1997, where he has also been Vice-Chairman since December 1998. Mr. Rosen received

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his Bachelor of Science degree in Commerce from the University of Virginia, his LL.B. from Dickinson School of Law and his LL.M. in Corporations from New York University Law School. See “Certain Relationships and Related Transactions.”

Miguel J. Rosenfeld has served as a member of our board of directors since April 2000. Since November 1991, he has served as a Senior Vice President of Delia Feallo Productions, Inc., where he has been responsible for the development of soap opera productions in Latin America. From January 1995 until May 1998, he was the Director of Affiliates and Cable for Latin America for Protele, a division of Televisa International LLC. From December 1984 until September 1998, he was a sales manager for Capitalvision International Corporation. Mr. Rosenfeld holds a Bachelor of Arts degree in Administration from the University of Buenos Aires which he earned in 1975.

Rodolfo A. Ruiz has served as a member of our Board of Directors since July 2003. Since 2004, Mr. Ruiz has served as Executive Vice President — Spirits for Southern Wine and Spirits of America, Inc. From 1999 to 2003, Mr. Ruiz has held a series of senior management positions within the Bacardi organization since 1979, inclusive of having served as President and CEO of Bacardi Global Brands, President and CEO of Bacardi Asia/Pacific Region, and several senior executive sales, marketing, financial and operations positions within Bacardi USA. Prior to joining Bacardi, from 1966 to 1979, Mr. Ruiz, in his capacity as a certified public accountant, served as a Senior Auditor, Senior Internal Auditor, and Audit Manager with Price Waterhouse & Co. for a wide variety of public and private clients and projects in the United States and Mexico, as well as throughout Latin America, interspersed by a term, from 1973 to 1975, with International Basic Economy Corp, otherwise known as IBEC/Rockefeller Group. Mr. Ruiz holds a Bachelor of Business degree from the University of Puerto Rico.

Jamie Dos Santos has served as our CEO of Terremark Federal Group since July 2005. From March 2003 to July 2005, Ms. Dos Santos served as our Chief Marketing Officer. From April 2001 to March 2003, Ms. Dos Santos served as our Senior Vice President Global Sales. From 1981 to April 2001, Ms. Dos Santos worked with the Bell System. Ms. Dos Santos held various positions during her tenure with Telcordia/ Bell Systems including Director of Professional Services Latin America and Regional Account Director. She started her career as a Business Service Representative. Ms. Dos Santos attended the University of Florida and Bellcore’s elite Technical training curriculum receiving various degrees in telecommunications.

Jose A. Segrera has served as our Chief Financial Officer since September 2001. From September 2000 to June 2001, Mr. Segrera served as our Vice President — Finance. From January 2000 to September 2000, Mr. Segrera served as the interim Chief Financial Officer of FirstCom Corporation. From June 1996 to November 1997, Mr. Segrera was a manager in the assurance practice at KPMG Peat Marwick LLP. Mr. Segrera received his Bachelor in Business Administration and his Masters in Professional Accounting from the University of Miami.

Marvin Wheeler has served as our Chief Operations Officer since November 2003. Previously, he served as our Senior Vice President, Worldwide Operations since March 2003. From March 2001 to March 2003, Mr. Wheeler served as Senior Vice President of Operations and General Manager of the NAP of the Americas. From June 1978 to March 2000, Mr. Wheeler managed the Data Center and WAN/LAN Operations for BellSouth, Mr. Wheeler graduated from the University of Florida, where he earned a degree in Business Administration with a concentration in marketing.

Adam T. Smith has served as our Chief Legal Officer since November 2006. From May 2005 to November 2006, Mr. Smith served as our SVP Deputy General Counsel, and from February 2004 to April 2005 as our VP Assistant General Counsel. From April 2000 to January 2004, Mr. Smith led the Electronic Commerce & Technology law practice for a Miami based international law firm, as well as focused on domestic and international corporate transactions, venture capital, and corporate securities. Prior to April 2000, Mr. Smith worked in Washington, D.C., where he was responsible for the review of the legal issues surrounding the Internet aspects of the proposed Sprint/Worldcom merger, and gained federal government experience as an honors intern in the Office of the Secretary of Defense, as well as the Department of State (U.S. Embassy/Santiago, Chile), Office of the Deputy Attorney General, and U.S. House of Representatives International Relations Committee. Mr. Smith received his Juris Doctor from the University of Miami School of Law and his Bachelor of Arts from Tufts University. Mr. Smith is a member of the bar of the State of Florida and the United States District Court for the Southern District of Florida.

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Where You Can Find Additional Information

We file annual, quarterly, annual and special reports, proxy statements and other information with the SEC. You may read and copy any documents that we have filed with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our Securities and Exchange Commission filings are also available to the public at the Securities and Exchange Commission’s website at http://www.sec.gov. In addition, we make available free of charge on or through our Internet website, http://www.terremark.com under “Investor Relations”, all of the annual, quarterly and special reports, proxy statements, Section 16 insider reports on Form 3, Form 4 and Form 5 and amendments to these reports and other information we file with the SEC. Additionally, our board committee charters and code of ethics are available on our website and in print to any shareholder who requests them. We do not intend for information contained in our website to be part of this Annual Report on Form 10-K.

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ITEM 1A.   RISK FACTORS.

You should carefully consider the following risks and all other information contained in this report. If any of the following risks actually occur, our business along with the consolidated financial conditions and results of operations could be materially and adversely affected. The risks and uncertainties described below are those that we currently believe may materially affect our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business operations.

We have incurred substantial losses in the past and may continue to incur additional losses in the future.

We incurred net losses of $42.2 million, $15.0 million and $37.1 million for the years ended March 31, 2008, 2007 and 2006, respectively. The net loss for the year ended March 31, 2008 included a $26.9 million non-cash loss on the early extinguishment of debt. The net loss for the quarters ended March 31, 2008 and December 31, 2007 was $2.7 million and $3.7 million, respectively. Although we believe we are approaching a position of producing net income in the foreseeable future, we are also currently investing heavily in our expansion plans in Virginia and California. As a result, we will incur higher depreciation and other operating expenses that will negatively impact our ability to achieve and sustain profitability unless and until these new facilities generate enough revenue to exceed their operating costs and cover additional overhead needed to scale our business to this anticipated growth. Although our goal is to achieve profitability, there can be no guarantee that we will become profitable, and we may continue to incur additional losses. Even if we achieve profitability, given the competitive nature of the industry in which we operate, we may not be able to sustain or increase profitability on a quarterly or annual basis.

We may not be able to compete successfully against current and future competitors.

Our products and services must be able to differentiate themselves from existing providers of space and services for telecommunications companies, web hosting companies, virtualized IT solutions and other colocation providers. In addition to competing with neutral colocation providers, we must compete with traditional colocation providers, including local phone companies, long distance phone companies, Internet service providers and web hosting facilities. Likewise, with respect to our other products and services, including managed services, bandwidth services and security services, we must compete with more established providers of similar services. Most of these companies have longer operating histories and significantly greater financial, technical, marketing and other resources than we do.

Because of their greater financial resources, some of our competitors have the ability to adopt aggressive pricing policies. As a result, in the future, we may suffer from pricing pressure that would adversely affect our ability to generate revenues and adversely affect our operating results. In addition, these competitors could offer colocation on neutral terms, and may start doing so in the same metropolitan areas where we have NAP centers. Some of these competitors may also provide our target customers with additional benefits, including bundled communication services, and may do so in a manner that is more attractive to our potential customers than obtaining space in our data centers. If our competitors were able to adopt aggressive pricing policies together with offering colocation space, our ability to generate revenues would be materially adversely affected. We may also face competition from persons seeking to replicate our Internet Exchanges concept by building new centers or converting existing centers that some of our competitors are in the process of divesting. We may experience competition from our landlords in this regard. Rather than licensing our available space to large single tenants, they may decide to convert the space instead to smaller square foot units designed for multi-tenant colocation use. Landlords may enjoy a cost effective advantage in providing similar services as our data centers, and this could also reduce the amount of space available to us for expansion in the future. Competitors may operate more successfully or form alliances to acquire significant market share. Furthermore, enterprises that have already invested substantial resources in outsourcing arrangements may be reluctant or slow to adopt our approach that may replace, limit or compete with their existing systems. In addition, other companies may be able to attract the same potential customers that we are targeting. Once customers are located in competitors’ facilities, it may be extremely difficult to convince them to relocate to our data centers.

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We anticipate that a significant portion of our revenues will be from contracts with agencies of the United States government, and uncertainties in government contracts could adversely affect our business.

During the year ended March 31, 2008, revenues under contracts with agencies of the U.S. federal government constituted approximately 16% of our revenues. Generally, U.S. government contracts are subject to oversight audits by government representatives, to profit and cost controls and limitations, and to provisions permitting modification or termination, in whole or in part, without prior notice, at the government’s convenience. In some cases, government contracts are subject to the uncertainties surrounding congressional appropriations or agency funding. Government contracts are also subject to specific procurement regulations. Failure to comply with these regulations and requirements could lead to suspension or debarment from future government contracting for a period of time, which could limit our growth prospects and adversely affect our business, results of operations and financial condition. Government contracts typically have an initial term of one year. Renewal periods are exercisable at the discretion of the U.S. government. We may not be successful in winning contract awards or renewals in the future. Our failure to renew or replace U.S. government contracts when they expire could have a material adverse effect on our business, financial condition, or results of operations.

We derive a significant portion of our revenues from a few clients; accordingly, a reduction in our clients’ demand for our services or the loss of clients could impair our financial performance.

During the years ended March 31, 2008 and 2007, we derived approximately 16% and 20%, respectively, of our revenues from agencies of the federal government. Because we derive a large percentage of our revenues from a few major customers, our revenues could significantly decline if we lose one or more of these customers or if the amount of business we obtain from them is reduced. See “Business — Customers.”

A failure to meet customer specifications or expectations could result in lost revenues, increased expenses, negative publicity, claims for damages and harm to our reputation and cause demand for our services to decline.

Our agreements with customers require us to meet specified service levels for the services we provide. In addition, our customers may have additional expectations about our services. Any failure to meet customers’ specifications or expectations could result in:

•  delayed or lost revenue;

•  requirements to provide additional services to a customer at reduced charges or no charge;

•  negative publicity about us, which could adversely affect our ability to attract or retain customers; and

•  claims by customers for substantial damages against us, regardless of our responsibility for the failure, which may not be covered by insurance policies and which may not be limited by contractual terms of our engagement.

Our ability to successfully market our services could be substantially impaired if we are unable to deploy new infrastructure systems and applications or if new infrastructure systems and applications deployed by us prove to be unreliable, defective or incompatible.

We may experience difficulties that could delay or prevent the successful development, introduction or marketing of hosting and application management services in the future. If any newly introduced infrastructure systems and applications suffer from reliability, quality or compatibility problems, market acceptance of our services could be greatly hindered and our ability to attract new customers could be significantly reduced. We cannot assure you that new applications deployed by us will be free from any reliability, quality or compatibility problems. If we incur increased costs or are unable, for technical or other reasons, to host and manage new infrastructure systems and applications or enhancements of existing applications, our ability to successfully market our services could be substantially limited.

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Any interruptions in, or degradation of, our private transit Internet connections could result in the loss of customers or hinder our ability to attract new customers.

Our customers rely on our ability to move their digital content as efficiently as possible to the people accessing their websites and infrastructure systems and applications. We utilize our direct private transit Internet connections to major network providers, such as AT&T and Global Crossing as a means of avoiding congestion and resulting performance degradation at public Internet exchange points. We rely on these telecommunications network suppliers to maintain the operational integrity of their networks so that our private transit Internet connections operate effectively. If our private transit Internet connections are interrupted or degraded, we may face claims by, or lose, customers, and our reputation in the industry may be harmed, which may cause demand for our services to decline.

Our network and computing infrastructure could fail, which would impair our ability to provide guaranteed levels of service and could result in significant operating losses.

To provide our customers with guaranteed levels of service, we must operate our network and computing infrastructure 24 hours a day, seven days a week, without interruption. We must, therefore, protect our infrastructure, equipment and customer files against damage from human error, natural disasters, unexpected equipment failure, power loss or telecommunications failures, terrorism, sabotage or other intentional acts of vandalism. Even if we take precautions, the occurrence of a natural disaster, equipment failure or other unanticipated problem at one or more of our data centers could result in interruptions in the services we provide to our customers. We cannot assure you that our disaster recovery plan will address all, or even most, of the problems we may encounter in the event of a disaster or other unanticipated problem. We have experienced service interruptions in the past, and any future service interruptions could:

•  require us to spend substantial amounts of money to replace equipment or facilities;

•  entitle customers to claim service credits or seek damages for losses under our service level guarantees;

•  cause customers to seek alternate providers; or

•  impede our ability to attract new customers, retain current customers or enter into additional strategic relationships.

Our dependence on third parties increases the risk that we will not be able to meet our customers’ needs for software, systems and services on a timely or cost-effective basis, which could result in the loss of customers.

Our services and infrastructure rely on products and services of third-party providers. We purchase key components of our infrastructure from a limited number of suppliers, such as IBM, Cisco Systems, Inc., Microsoft and Oracle. We may experience operational problems attributable to the installation, implementation, integration, performance, features or functionality of third-party software, systems and services. We may not have the necessary hardware or parts on hand or that our suppliers will be able to provide them in a timely manner in the event of equipment failure. Our inability to timely obtain and continue to maintain the necessary hardware or parts could result in sustained equipment failure and a loss of revenue due to customer loss or claims for service credits under our service level guarantees.

We could be subject to increased operating costs, as well as claims, litigation or other potential liability, in connection with risks associated with Internet security and the security of our systems.

A significant barrier to the growth of e-commerce and communications over the Internet has been the need for secure transmission of confidential information. Several of our infrastructure systems and application services use encryption and authentication technology licensed from third parties to provide the protections necessary to ensure secure transmission of confidential information. We also rely on security systems designed by third parties and the personnel in our network operations centers to secure those data centers. Any unauthorized access, computer viruses, accidental or intentional actions and other disruptions could result in increased operating costs.

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For example, we may incur additional significant costs to protect against these interruptions and the threat of security breaches or to alleviate problems caused by these interruptions or breaches. If a third party were able to misappropriate a consumer’s personal or proprietary information, including credit card information, during the use of an application solution provided by us, we could be subject to claims, litigation or other potential liability as well as loss of reputation.

We may be subject to legal claims in connection with the information disseminated through our network, which could divert management’s attention and require us to expend significant financial resources.

We may face liability for claims of defamation, negligence, copyright, patent or trademark infringement and other claims based on the nature of the materials disseminated through our network. For example, lawsuits may be brought against us claiming that content distributed by some of our customers may be regulated or banned. In these and other instances, we may be required to engage in protracted and expensive litigation that could have the effect of diverting management’s attention from our business and require us to expend significant financial resources. Our general liability insurance may not cover any of these claims or may not be adequate to protect us against all liability that may be imposed. In addition, on a limited number of occasions in the past, businesses, organizations and individuals have sent unsolicited commercial e-mails from servers hosted at our facilities to a number of people, typically to advertise products or services. This practice, known as “spamming,” can lead to statutory liability as well as complaints against service providers that enable these activities, particularly where recipients view the materials received as offensive. We have in the past received, and may in the future receive, letters from recipients of information transmitted by our customers objecting to the transmission. Although we prohibit our customers by contract from spamming, we cannot assure you that our customers will not engage in this practice, which could subject us to claims for damages.

We may become subject to burdensome government regulation and legal uncertainties that could substantially harm our business or expose us to unanticipated liabilities.

It is likely that laws and regulations directly applicable to the Internet or to hosting and managed application service providers may be adopted. These laws may cover a variety of issues, including user privacy and the pricing, characteristics and quality of products and services. The adoption or modification of laws or regulations relating to commerce over the Internet could substantially impair the growth of our business or expose us to unanticipated liabilities. Moreover, the applicability of existing laws to the Internet and hosting and managed application service providers is uncertain. These existing laws could expose us to substantial liability if they are found to be applicable to our business. For example, we provide services over the Internet in many states in the United States and elsewhere and facilitate the activities of our customers in these jurisdictions. As a result, we may be required to qualify to do business, be subject to taxation or be subject to other laws and regulations in these jurisdictions, even if we do not have a physical presence, employees or property in those states.

Difficulties presented by international economic, political, legal, accounting and business conditions could harm our business in international markets.

For the year ended March 31, 2008, 13% of our total revenue was generated in countries outside of the United States. Some risks inherent in conducting business internationally include:

•  unexpected changes in regulatory, tax and political environments;

•  longer payment cycles and problems collecting accounts receivable;

•  fluctuations in currency exchange rates;

•  our ability to secure and maintain the necessary physical and telecommunications infrastructure;

•  challenges in staffing and managing foreign operations; and

•  laws and regulations on content distributed over the Internet that are more restrictive than those currently in place in the United States.

Any one or more of these factors could materially and adversely affect our business.

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We have significant debt service obligations which will require the use of a substantial portion of our available cash.

We are a highly leveraged company. For a description of our outstanding debt, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.” Should we need additional capital or financing, our ability to arrange financing and the cost of this financing will depend upon many factors, including:

•  general economic and capital markets conditions, and in particular the non-investment grade debt market;

•  conditions in the Internet infrastructure market;

•  credit availability from banks or other lenders;

•  investor confidence in the telecommunications industry generally and our company specifically; and

•  the success of our facilities

We may be unable to find additional sources of liquidity on terms acceptable to us, if at all, which could adversely affect our business, results of operations and financial condition. Also, a default could result in acceleration of our indebtedness. If this occurs, our business and financial condition would be adversely affected.

Our Credit Facilities, Senior Convertible Notes, and Series B Notes contain numerous restrictive covenants.

Our Credit Facilities, our Senior Convertible Notes and our Series B Notes, contain numerous covenants imposing restrictions on our ability to, among other things:

•  incur more debt;

•  pay dividends, redeem or repurchase our stock or make other distributions;

•  make acquisitions or investments;

•  enter into certain transactions with affiliates;

•  merge or consolidate with others;

•  dispose of assets or use asset sale proceeds;

•  create liens on our assets

•  capital expenditures; and

•  extend credit.

Our failure to comply with the obligations in our Credit Agreements, Senior Convertible Notes, and Series B Notes could result in an event of default under the credit facilities and such notes which, if not cured or waived, could permit acceleration of the indebtedness or our other indebtedness, or result in the same consequences as a default in payment. If the acceleration of the maturity of our debt occurs, we may not be able to repay our debt or borrow sufficient funds to refinance it on terms that are acceptable to us, which could adversely impact our business, results of operations and financial condition. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

Our substantial leverage and indebtedness could adversely affect our financial condition, limit our growth and prevent us from fulfilling our debt obligations.

Our substantial indebtedness could have important consequences to us and may, among other things:

•  limit our ability to obtain additional financing to fund our growth strategy, working capital, capital expenditures, debt service requirements or other purposes;

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•  limit our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to make principal payments and fund debt service requirements;

•  cause us to be unable to satisfy our obligations under our existing or new debt agreements;

•  make us more vulnerable to adverse general economic and industry conditions;

•  limit our ability to compete with others who are not as highly leveraged as we are; and

•  limit our flexibility in planning for, or reacting to, changes in our business, industry and market conditions.

In addition, subject to restrictions in our existing debt instruments, we may incur additional indebtedness. If new debt is added to our current debt levels, the related risks that we now face would all likely intensify. Our growth plans and our ability to make payments of principal or interest on, or to refinance, our indebtedness, will depend on our future operating performance and our ability to enter into additional debt and/or equity financings. If we are unable to generate sufficient cash flows in the future to service our debt, we may be required to refinance all or a portion of our existing debt, to sell assets or to obtain additional financing. We may not be able to do any of the foregoing on terms acceptable to us, if at all.

If our financial condition deteriorates, we may be delisted by the NASDAQ and our stockholders could find it difficult to sell our common stock.

As of May 14, 2007 our common stock began trading on the NASDAQ Global Market. The NASDAQ requires companies to fulfill specific requirements in order for their shares to continue to be listed. Our securities may be considered for delisting if:

•  our financial condition and operating results appear to be unsatisfactory;

•  we have sustained losses that are so substantial in relation to our overall operations or our existing financial condition has become so impaired that it appears questionable whether we will be able to continue operations and/or meet our obligations as they mature.

If our shares are delisted from the NASDAQ, our stockholders could find it difficult to sell our stock. To date, we have had no communication from the NASDAQ regarding delisting. If our common stock is delisted from the NASDAQ, we may apply to have our shares quoted on NASDAQ’s Bulletin Board or in the “pink sheets” maintained by the National Quotation Bureau, Inc. The Bulletin Board and the “pink sheets” are generally considered to be less efficient markets than the NASDAQ. In addition, if our shares are no longer listed on the NASDAQ or another national securities exchange in the United States, our shares may be subject to the “penny stock” regulations. If our common stock were to become subject to the penny stock regulations it is likely that the price of our common stock would decline and that our stockholders would find it more difficult to sell their shares on a liquid and efficient market.

Our business could be harmed by prolonged electrical power outages or shortages, or increased costs of energy.

A significant amount of our business is dependent upon the continued operation of the NAP of the Americas building. The NAP of the Americas building and our other NAP facilities are susceptible to regional costs of power, electrical power shortages and planned or unplanned power outages caused by these shortages. A power shortage at an internet exchange facility may result in an increase of the cost of energy, which we may not be able to pass on to our customers. We attempt to limit exposure to system downtime by using backup generators and power supplies. Power outages that last beyond our backup and alternative power arrangements could harm our customers and have a material adverse effect on our business.

We are dependent on key personnel and the loss of these key personnel could have a material adverse effect on our success.

We are highly dependent on the skills, experience and services of key personnel. The loss of key personnel could have a material adverse effect on our business, operating results or financial condition. We do not maintain

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keyman life insurance with respect to these key individuals. Our recent and potential growth and expansion are expected to place increased demands on our management skills and resources. Therefore, our success also depends upon our ability to recruit, hire, train and retain additional skilled and experienced management personnel. Employment and retention of qualified personnel is important due to the competitive nature of our industry. Our inability to hire new personnel with the requisite skills could impair our ability to manage and operate our business effectively.

We may encounter difficulties implementing our expansion plan.

We expect that we may encounter challenges and difficulties in implementing our expansion plan to establish new Internet exchange facilities in domestic locations in which we believe there is significant demand for our services. These challenges and difficulties relate to our ability to:

•  identify and obtain the use of locations in which we believe there is sufficient demand for our services;

•  generate sufficient cash flow from operations or through additional debt or equity financings to support these expansion plans;

•  hire, train and retain sufficient additional financial reporting management, operational and technical employees; and

•  install and implement new financial and other systems, procedures and controls to support this expansion plan with minimal delays.

If we encounter greater than anticipated difficulties in implementing our expansion plan, it may be necessary to take additional actions, which could divert management’s attention and strain our operational and financial resources. We may not successfully address any or all of these challenges, and our failure to do so would adversely affect our business plan and results of operations, our ability to raise additional capital and our ability to achieve enhanced profitability.

Risk Factors Related to Our Common Stock

Our stock price may be volatile, and you could lose all or part of your investment.

The market for our equity securities has been extremely volatile (ranging from $4.64 per share to $8.79 per share during the 52-week trading period ending March 31, 2008). Our stock price could suffer in the future as a result of any failure to meet the expectations of public market analysts and investors about our results of operations from quarter to quarter. The factors that could cause the price of our common stock in the public market to fluctuate significantly include the following:

•  actual or anticipated variations in our quarterly and annual results of operations;

•  changes in market valuations of companies in our industry;

•  changes in expectations of future financial performance or changes in estimates of securities analysts;

•  fluctuations in stock market prices and volumes;

•  future issuances of common stock or other securities;

•  the addition or departure of key personnel; and

•  announcements by us or our competitors of acquisitions, investments or strategic alliances.

We expect that the price of our common stock will be significantly affected by the availability of shares for sale in the market.

The sale or availability for sale of substantial amounts of our common stock could adversely impact its price. Our certificate of incorporation authorizes us to issue 100,000,000 shares of common stock. On March 31, 2008, there were approximately 59.2 million shares of our common stock outstanding and approximately 14.1 million shares of our common stock reserved for issuance pursuant to our 9% Senior Convertible Notes, 6.625% Senior

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Convertible Notes, Series B Notes, Series I convertible preferred stock, options, nonvested stock and warrants to purchase our common stock, which consist of:

•  2,324,800 shares of our common stock reserved for issuance upon conversion of our 9% Senior Convertible Notes;

•  4,575,200 shares of our common stock reserved for issuance upon conversion of our 6.625% Senior Convertible Notes;

•  492,000 shares of our common stock reserved for issuance upon conversion of our Series B Notes;

•  1,041,333 shares of our common stock reserved for issuance upon conversion of our Series I convertible preferred stock;

•  2,303,138 shares of our common stock issuable upon exercise of options;

•  976,245 shares of our nonvested stock; and

•  2,364,187 shares of our common stock issuable upon exercise of warrants.

Accordingly, a substantial number of additional shares of our common stock are likely to become available for sale in the foreseeable future, which may have an adverse impact on our stock price.

Our common shares are thinly traded and, therefore, relatively illiquid.

As of March 31, 2008, we had 59,172,022 common shares outstanding. While our common shares trade on the NASDAQ, our stock is thinly traded (approximately 0.4%, or 261,002 shares, of our stock traded on an average daily basis during the year ended March 31, 2008) and you may have difficulty in selling your shares quickly. The low trading volume of our common stock is outside of our control, and may not increase in the near future or, even if it does increase in the future, may not be maintained.

Existing stockholders’ interest in us may be diluted by additional issuances of equity securities.

We expect to issue additional equity securities to fund the acquisition of additional businesses and pursuant to employee benefit plans. We may also issue additional equity for other purposes. These securities may have the same rights as our common stock or, alternatively, may have dividend, liquidation, or other preferences to our common stock. The issuance of additional equity securities will dilute the holdings of existing stockholders and may reduce the share price of our common stock.

We do not expect to pay dividends on our common stock, and investors will be able to receive cash in respect of the shares of common stock only upon the sale of the shares.

We have no intention in the foreseeable future to pay any cash dividends on our common stock in accordance with the terms of our new credit facilities. Furthermore, we may not pay cash or stock dividends without the written consent of the lenders. In addition, in accordance with the terms of the purchase agreement under which we sold the Series B Notes to Credit Suisse, International, our ability to pay dividends is similarly restricted. Further, the terms of our Series I convertible preferred stock provide that, in the event we pay any dividends on our common stock, an additional dividend must be paid with respect to all of our outstanding Series I convertible preferred stock in an amount equal to the aggregate amount of dividends that would be owed for all shares of commons stock into which the shares of Series I convertible preferred stock could be converted at such time. Therefore, an investor in our common stock will obtain an economic benefit from the common stock only after an increase in its trading price and only by selling the common stock.

ITEM 1B.   UNRESOLVED STAFF COMMENTS.

None.

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ITEM 2.   PROPERTIES.

We lease or own properties on which we operate internet exchange facilities from which we may provide our colocation, interconnection and managed services to the government and commercial sectors. The following table shows information on these properties and facilities as of March 31, 2008:

		Lease Expires	Gross
		(reflecting	Area
		all Options)	(Square		Annual
Description	Location	(M/Yr)	Feet)		Rent
Data Center	Miami, Florida	Owned		750,000	N/A
Data Center	Sao Paulo, Brazil	Oct-21		5,300	$652,780(1)
Data Center	Santa Clara, California	Sep-20		40,000	$1,668,012(2)
Data Center	Madrid, Spain	Dec-15		10,550	$1,521,592(3)
Data Center	Frankfurt, Germany	Jun-08		80	$19,851
Data Center	Amsterdam,	Dec-09 to Dec-10		2,493	$436,728
	The Netherlands
Data Centers	Brussels, Belgium	Sep-08 to Feb-13		1,594	$374,668
Data Center	Hong Kong, China	Jul-08		1 rack	$11,568
Data Center	Singapore	Jul-08		39	$12,168
Data Center	Hilversum,	Nov-08		18 racks	$178,560
	The Netherlands
Data Center	Brussels, Belgium	Apr-10		1 rack	$15,810
Data Center	Pleasanton, California	Oct-11		29,784	$495,683
Data Center	Irving, Texas	Dec-09		4,603	$33,660
Data Center	Dallas, Texas	Aug-09		5,376	$1,548,288
Data Center	London, England	Aug-09		775	$225,892
Principal executive offices	Miami, Florida	Dec-18		36,457	$1,248,835
Office and Data Center	Herndon, Virginia	Mar-18		34,207	$833,622(1)
Office	Irving, Texas	Jul-09		66,340	$1,067,000
Office	SantoDomingo,	Jul-08		948	$29,424
	Dominican Republic
Office	Culpepper, Virginia	Aug-08		1,152	$27,516
Office	Sao Paulo, Brazil	Aug-08		1,500	$67,276

(1)	We are also responsible for our share of common area maintenance expenses and real estate taxes.
(2)	We are also responsible for real estate taxes and property and casualty insurance expenses aggregating approximately $46,000 annually.
(3)	Annual rent is exclusive of value added taxes.

ITEM 3.   LEGAL PROCEEDINGS.

On May 14, 2007, we filed an action for declaratory relief against Strategic Growth International, Inc., (“SGI”), an investor relations firm formerly engaged by us, in the Circuit Court of the 11th Judicial Circuit in

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Miami-Dade County Florida. The declaratory action requested that the Court determine whether SGI properly exercised certain warrants issued to it in 2002, and if so, in what quantity and what price. Our position was that SGI failed to properly exercise the warrants, and that such failure cannot be cured because the warrants have since expired, and even if SGI did exercise the warrants, SGI was not entitled to the number of shares claimed upon exercise. On May 17, 2007, SGI filed an action in the Supreme Court of the State of New York in connection with the purported warrant exercise and our position with respect to this exercise. In the lawsuit, SGI alleged (i) violations under Rule 10b-5 of the Securities Exchange Act of 1934, as amended, against certain of our senior executive officers; (ii) breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment against us; and (iii) negligence, negligent misrepresentation, intentional concealment, and negligent nondisclosure against us and certain senior executive officers. SGI also sought a declaratory judgment that it properly exercised the warrants. On January 24, 2008, we paid SGI $540,000 in settlement of all such claims and all claims filed by us and SGI were dismissed with prejudice and all parties party to such claims executed mutual releases to each other regarding same.

In the ordinary course of conducting our business, we become involved in various other legal actions and other claims. Litigation is subject to many uncertainties and we may be unable to accurately predict the outcome of individual litigated matters. Some of these matters possibly may be decided unfavorably to us. Currently, we have some collection related litigation ongoing in the ordinary course of business. Management believes that the ultimate liability, if any, with respect to these matters will not be material.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

We held our 2007 Annual Meeting of Stockholders on September 28, 2007. The holders of 58,686,669 shares of our common stock and the holders of 323 share of our Series I convertible preferred stock, representing 1,077,667 common shares, were entitled to vote at the meeting.

At our 2007 Annual Meeting of Stockholders, our stockholders met to consider and vote upon proposals to elect the directors of our Company to hold office for a one year term or until their successors are elected and qualified. Our stockholders also met to approve an increase of 3,000,000 shares of our common stock reserved for issuance under our 2005 Executive Compensation Plan.

Proposal 1:  The following nine individuals were elected as Directors of our company to hold office until their successors are elected and qualified.

	For		Withheld
Manuel D. Medina		31,889,775		4,763,312
Joseph R. Wright, Jr.		28,955,270		7,697,817
Guillermo Amore		31,771,457		4,881,630
Timothy Elwes		35,678,005		975,082
Antonio S. Fernandez		35,681,857		971,230
Arthur L. Money		28,770,021		7,883,066
Marvin S. Rosen		28,770,021		7,883,066
Miguel J. Rosenfeld		35,572,842		1,080,245
Rodolfo A. Ruiz		29,216,811		7,436,276

Proposal 2:  Our stockholders approved an increase of 3,000,000 shares of our common stock reserved for issuance under the 2005 Plan.

	For		Against		Abstain
Shares voted		17,916,886		2,182,351		2,860

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PART II

ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Common Stock and Preferred Stock Information

On May 14, 2007, our common stock, par value $0.001 per share, began trading under the symbol “TMRK” on the Nasdaq Global Market and ceased trading on the American Stock Exchange under the symbol “TWW”.

As of March 31, 2008, under our amended and restated certificate of incorporation, we had the authority to issue:

•  100,000,000 shares of common stock, par value $0.001 per share; and

•  10,000,000 shares of preferred stock, par value $0.001 per share, which are issuable in series on terms to be determined by our board of directors, of which 600 shares are designated as series I convertible preferred stock.

As of March 31, 2008:

•  59,172,022 shares of our common stock were outstanding;

•  312 shares of our series I convertible preferred stock were outstanding. Each share of series I convertible preferred stock may be converted into 3,333 shares of our common stock. In September, 2007, 11 shares of our series I convertible preferred stock was converted to 6,667 shares of our common stock.

•  In April 2007, we sold 608,500 shares in a public offering, at an offering price of $8.00 per share, pursuant to the underwriters’ exercise of their over-allotment option of the 11,000,000 shares sold in the March 2007 public offering.

•  In May 2007, we issued 1,925,546 shares, valued at $15.0 million, based on the closing price of our common stock on May 11, 2007 of $7.79 per share, in connection with the acquisition of all of the outstanding common stock of a Data Return, LLC.

•  In October 2007, the Company issued 61,237 shares, valued at $0.5 million, of its common stock to certain employees of the Company as settlement of share-based awards earned during fiscal year 2007.

•  In January 2008, we issued 390,000 shares, valued at $2.1 million, based on the closing price of our common stock on January 24, 2008 of $5.26 per share, in connection with the acquisition of all of the outstanding common stock of Accris Corporation

As of May 31, 2008, there were 453 holders of record and we believe at least 6,589 beneficial owners of our common stock.

The following table sets forth, for the fiscal quarters indicated, the high and low sales prices for our common stock on the Nasdaq Global Market. Quotations are based on actual transactions and not bid prices:

	Prices
Fiscal Year 2008 Quarter Ended	High		Low
June 30, 2007	$	8.79	$	6.34
September 30, 2007		7.61		5.15
December 31, 2007		8.14		5.14
March 31, 2008		6.69		4.64
Through June 11, 2008		7.30		5.37

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	Prices
Fiscal Year 2007 Quarter Ended	High		Low
June 30, 2006	$	8.68	$	3.26
September 30, 2006		6.10		3.60
December 31, 2006		7.20		4.76
March 31, 2007		9.15		6.41

Performance Graph

The following graph presents our total return to our stockholders for the period from March 31, 2003 to March 31, 2008. Our common stock is compared to the Russell 2000 Index and a peer group. Our peer group of companies comprised the Goldman Sachs Internet Index (GSI) over the same period. The information contained in this graph is not necessarily indicative of our future performance.

The stock performance graph assumes for comparison that the value of the Company’s common stock was $100 on March 31, 2003 and that all dividends were reinvested.

Dividend Policy

Holders of our common stock are entitled to receive dividends or other distributions when and if declared by our board of directors. In addition, our 9% Senior Convertible Notes and our 6.625% Senior Convertible Notes contain contingent interest provisions which allow the holders of these notes to participate in any dividends declared on our common stock. Further, our Series I preferred stock contain participation rights which entitle the holders to received dividends in the events we declare dividends on our common stock. The right of our board of directors to declare dividends, however, is subject to any rights of the holders of other classes of our capital stock and the availability of sufficient funds under Delaware law to pay dividends. Our credit facilities limit our ability to pay dividends. We do not anticipate paying cash dividends on our common stock in the foreseeable future.

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Recent Sales of Unregistered Securities

On May 24, 2007, in connection with our acquisition of 100% of the outstanding membership interests of Data Return, we issued to the former owners of Data Return $15.0 million of our common stock, or 1,925,546 shares based on the closing price of our common stock on Friday, May 11, 2007 of $7.79 per share.

On January 24, 2008, connection with our acquisition of 100% of the outstanding common stock of Accris Corporation, we issued to the former owners of Accris Corporation $2.1 million of our common stock, or 390,000 shares based on the closing price of our common stock on January 24, 2008 of $5.26 per share.

The offer and sale of our securities was exempt from the registration requirements of the Securities Act, as the securities were sold to accredited investors pursuant to Regulation D and to non-United States persons in offshore transactions pursuant to Regulation S.

Equity Compensation Plan Information

This table summarizes share and exercise price information about our equity compensation plans as of March 31, 2008.

	Number of Securities		Weighted Average
	to be Issued Upon		Exercise Price of		Number of Securities
	Exercise of Outstanding		Outstanding Options,		Available for Future
	Options, Nonvested Stock,		Nonvested Stock,		Issuance Under Equity
Plan Category	Warrants and Rights		Warrants and Rights		Compensation Plans
Equity compensation plans approved by security holders		5,643,570	$	8.64		2,342,778
Equity compensation plans not approved by security holders		—	$	—		—

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ITEM 6.   SELECTED FINANCIAL DATA.

The following selected consolidated annual financial statement data has been derived from our audited Consolidated Financial Statements. The data set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and the related notes included elsewhere herein.

	Twelve Months Ended March 31,
	2008			2007			2006			2005			2004
	(Dollars in thousands except per share data)
Results of Operations:
Revenues	$	187,414		$	100,948		$	62,529		$	46,818		$	17,034
Real estate services		—			—			—			1,330			1,179
Total revenues		187,414			100,948			62,529			48,148			18,213
Cost of revenues		100,886			56,902			38,824			36,310			16,413
Construction contract expenses		—			—			—			809			918
Other expenses		128,756			58,998			60,854			20,888			23,373
Total expenses		229,642			115,900			99,678			58,007			40,704
Net loss		(42,228	)		(14,952	)		(37,149	)		(9,859	)		(22,491	)
Non-cash preferred dividend		(794	)		(676	)		(727	)		(915	)		(1,158	)
Net loss attributable to common stockholders	$	(43,022	)	$	(15,628	)	$	(37,876	)	$	(10,774	)	$	(23,649	)
Net loss per common share — basic	$	(0.74	)	$	(0.35	)	$	(0.88	)	$	(0.31	)	$	(0.78	)
Net loss per common share — diluted	$	(0.74	)	$	(0.36	)	$	(0.88	)	$	(0.40	)	$	(0.78	)

	As of March 31,
	2008		2007		2006		2005		2004
	(Dollars in thousands)
Financial condition:(1)
Property and equipment, net	$	231,674	$	137,937	$	129,893	$	123,406	$	53,898
Total assets		503,860		309,646		204,716		208,906		77,433
Long term obligations(2)(3)		352,391		184,510		163,967		149,734		78,525
Stockholders’ equity (deficit)		90,522		89,499		13,836		40,176		(22,720	)

(1)	See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”
(2)	Long term obligations as of March 31, 2004 through 2007 include mortgage payable less current portion, convertible debt, estimated fair value of derivatives embedded within convertible debt, deferred rent, deferred revenue, unearned interest under capital lease obligations, capital lease obligations less current portion and notes payable less current portion. At March 31, 2008, the notes payable were paid off and there were no significant derivatives embedded within convertible debt.
(3)	Long term obligations as of March 31, 2005 and 2004 include approximately $600 in redeemable convertible preferred stock plus accrued dividends.

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The quarterly selected financial statement data set forth below has been derived from our unaudited condensed consolidated financial statements. The data set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and the related notes included elsewhere herein.

	Three Months Ended
	March 31,			December 31,			September 30,			June 30,
	2008			2007			2007			2007
	(Dollars in thousands except per share data)
Revenues	$	56,841		$	49,964		$	45,368		$	35,241
Cost of revenues		30,276			26,358			25,304			18,948
Other expenses		29,031			27,096			35,584			37,045
Total expenses		59,307			53,454			60,888			55,993
Net loss		(2,466	)		(3,490	)		(15,520	)		(20,752	)
Non-cash preferred dividend		(195	)		(196	)		(201	)		(202	)
Earnings allocation to participating stockholders		—			—			—			—
Net loss attributable to common stockholders	$	(2,661	)	$	(3,686	)	$	(15,721	)	$	(20,954	)
Net loss per common share — basic	$	(0.04	)	$	(0.06	)	$	(0.27	)	$	(0.37	)
Net loss per common share — diluted	$	(0.04	)	$	(0.06	)	$	(0.27	)	$	(0.37	)

	Three Months Ended
	March 31,			December 31,			September 30,			June 30,
	2007			2006			2006			2006
	(Dollars in thousands except per share data)
Revenues	$	30,692		$	24,669		$	24,184		$	21,403
Cost of revenues		17,470			12,973			14,774			11,612
Other expenses		17,484			22,472			18,853			263
Total expenses		34,954			35,445			33,627			11,875
Net (loss) income		(4,262	)		(10,776	)		(9,443	)		9,528
Non-cash preferred dividend		(189	)		(162	)		(162	)		(164	)
Earnings allocation to participating stockholders		—			—			—			(1,458	)
Net (loss) income attributable to common stockholders	$	(4,451	)	$	(10,938	)	$	(9,605	)	$	7,906
Net (loss) income per common share — basic	$	(0.10	)	$	(0.25	)	$	(0.22	)	$	0.18
Net loss per common share — diluted	$	(0.10	)	$	(0.25	)	$	(0.22	)	$	(0.05	)

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ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 based on our current expectations, assumptions, and estimates about us and our industry. These forward-looking statements involve risks and uncertainties. Words such as “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “will,” “may, ” and other similar expressions identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. All statements other than statements of historical facts, including, among others, statements regarding our future financial position, business strategy, projected levels of growth, projected costs and projected financing needs, are forward-looking statements. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of several important factors including, without limitation, a history of losses, competitive factors, uncertainties inherent in government contracting, concentration of business with a small number of clients, the ability to service debt, substantial leverage, material weaknesses in our internal controls and our disclosure controls, energy costs, the interest rate environment, one-time events and other factors more fully described in “Risk Factors” and elsewhere in this report. The forward-looking statements made in this report relate only to events as of the date on which the statements are made. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely upon forward-looking statements as predictions of future events. Except as required by applicable law, including the securities laws of the United States, and the rules and regulations of the Securities and Exchange Commission, we do not plan and assume no obligation to publicly update or revise any forward-looking statements contained herein after the date of this report, whether as a result of any new information, future events or otherwise.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Management believes the following significant accounting policies, among others, affect its judgments and estimates used in the preparation of its consolidated financial statements:

•  revenue recognition and allowance for bad debt;

•  derivatives;

•  accounting for income taxes;

•  impairment of long-lived assets;

•  share-based compensation; and

•  goodwill.

Revenue Recognition and Allowance for Bad Debts

Revenues principally consist of monthly recurring fees for colocation, exchange point, managed and professional services fees. Colocation revenues also include monthly rental income for unconditioned space in the NAP of the Americas. Revenues from colocation, exchange point services, and managed web hosting as well as rental income for unconditioned space, are recognized ratably over the term of the contract. Installation fees and related direct costs are deferred and recognized ratably over the expected life of the customer installation which is

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estimated to be 36 to 48 months. Managed and professional services fees are recognized in the period in which the services are provided. Revenues also include equipment resales which are recognized in the period in which the equipment is delivered and installed. Revenue from contract settlements is generally recognized when collectibility is reasonably assured and no remaining performance obligation exists. Taxes collected from customers and remitted to the government are excluded from revenues.

In accordance with Emerging Issues Task Force (EITF) Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables”, when more than one element such as equipment, installation and colocation or managed web hosting services are contained in a single arrangement, the Company allocates revenue between the elements based on acceptable fair value allocation methodologies, provided that each element meets the criteria for treatment as a separate unit of accounting. An item is considered a separate unit of accounting if it has value to the customer on a stand alone basis and there is objective and reliable evidence of the fair value of the undelivered items. The fair value of the undelivered elements is determined by the price charged when the element is sold separately, or in cases when the item is not sold separately, by using other acceptable objective evidence. We apply judgment to ensure appropriate application of EITF 00-21, including the determination of fair value for multiple deliverables, determination of whether undelivered elements are essential to the functionality of delivered elements, and timing of revenue recognition, among others. For those arrangements where the deliverables do not qualify as a separate unit of accounting, revenue from all deliverables are treated as one accounting unit and recognized ratably over the term of the arrangement.

Revenue is recognized when there is persuasive evidence of an arrangement, the fee is fixed or determinable and collection of the receivable is reasonably assured. We assess collection based on a number of factors, including past transaction history with the customer and the creditworthiness of the customer. We do not request collateral from customers. If we determine that collection is not reasonably assured, we defer the fee and recognize revenue at the time collection becomes reasonably assured, which is generally upon receipt of cash. As of March 31, 2008 and 2007, accounts receivable amounted to $44.0 million and $23.6 million, respectively. These amounts are net of allowance for doubtful accounts of approximately $1.0 million and $1.2 million, respectively.

We sell certain third-party service contracts and software assurance or subscription products and evaluates whether the subsequent sales of such services should be recorded as gross revenues or net revenues in accordance with the revenues recognition criteria outlined in SAB No. 104, EITF 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent,” and FASB Technical Bulletin 90-1, “Accounting for Separately Priced Extended Warranty and Product Contracts.” We determine whether our role is that of a principal in the transaction and therefore assume the risks and rewards of ownership or if our role is acting as an agent or broker. Under gross revenues recognition, the entire selling price is recorded as revenues and costs to the third-party service provider or vendor is recorded in cost of revenues. Under net revenues recognition, the cost to the third-party service provider or vendor is recorded as a reduction to revenues resulting in net revenues equal to the gross profit on the transaction and there are no cost of revenues.

We analyze current economic news and trends, historical bad debts, customer concentrations, customer credit-worthiness and changes in customer payment terms when evaluating revenue recognition and the adequacy of the allowance for bad debts.

Customer contracts generally require us to meet certain service level commitments. If we do not meet the required service levels, we may be obligated to provide credits, usually a month of free service. Such credits, to date, have been insignificant.

Derivatives

We have, in the past, used financial instruments, including interest cap agreements, to manage exposures to movements in interest rates. The use of these financial instruments is designed to modify our exposure to these risks.

We do not hold or issue derivative instruments for trading purposes. However, our 9% Senior Convertible Notes, due June 15, 2009, (the “9% Senior Convertible Notes”), 6.625% Senior Convertible Notes, due June 15, 2013, (the “6.625% Senior Convertible Notes”) and 0.5% Senior Subordinated Convertible Notes, due June 30, 2009, (the “Series B Notes”) (collectively, the “Notes”) contain embedded derivatives that require separate

27

valuation from the Notes. We recognize these derivatives as assets or liabilities in its balance sheet, measures them at their estimated fair value, and recognizes changes in their estimated fair value in earnings in the period of change.

We estimate the fair value of our embedded derivatives using available market information and appropriate valuation methodologies. These embedded derivatives derive their value primarily based on changes in the price and volatility of our common stock, interest rates and credit rating.

On February 8, 2008, we entered into two interest rate hedge agreements, in accordance with the provisions of the Senior Secured Credit Facilities. One of the interest rate hedge agreements was effective March 31, 2008 for a notional amount of $148.0 million and a fixed interest rate of 2.999%. Interest payments on this hedge are due on the last day of each March, June, September and December commencing on June 30, 2008 and ending on December 31, 2010. The second interest rate hedge agreement is effective on July 31, 2008 for a notional amount of $102.0 million and a fixed interest rate of 3.067%. Interest payments on this hedge are due on the last day of each January, April, July and October commencing on October 31, 2008 and ending on January 31, 2011. The interest rate swap agreements serve as an economic hedge against increases in interest rates and have not been designated as hedges for accounting purposes. Accordingly, we account for these interest rate hedge agreements on a fair value basis and adjusts these instruments to fair value and the resulting changes in fair value are charged to earnings.

Considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that we may eventually pay to settle these embedded derivatives.

Accounting for Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce tax assets to the amounts expected to be realized. In assessing the likelihood of realization, we consider estimates of future taxable income.

Effective April 1, 2007, we adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48 (As amended) — “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109” (“FIN 48”). This interpretation clarifies the accounting for uncertainty in income taxes recognized in financial statements in accordance with FASB No. 109 and prescribes a recognition threshold and measurement attribute for the financial recognition and measurement of a tax position taken or expected to be taken on a tax return. FIN 48 requires that we determine whether the benefits of our tax positions will more likely than not be sustained upon audit based on the technical merits of the tax position. The provisions of FIN 48 also provide guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. In connection with the adoption of FIN No. 48, we analyzed the filing positions in all of the federal, state and foreign jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. We did not have any unrecognized tax benefits and there was no effect on the financial condition or results of operations for the year ended March 31, 2008 as a result of implementing FIN 48. In accordance with FIN 48, we continued our policy of recognizing penalties and interest related to unrecognized tax positions, if any, in general and administrative expenses.

We currently have provided for a full valuation allowance against our net deferred tax assets. Based on the available objective evidence, management does not believe it is more likely than not that the net deferred tax assets will be realizable in the future. An adjustment to the valuation allowance would benefit net income in the period in which such determination is made if we determine that we would be able to realize our deferred tax assets in the foreseeable future.

We have not been audited by the Internal Revenue Service or applicable tax authorities for the following open tax periods: the year ended December 31, 2004, the quarter ended March 31, 2005, and the years ended March 31,

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2006, March 31, 2007 and 2008. Net operating loss carryovers incurred in years prior to 2004 are subject to audit in the event they are utilized in subsequent years.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events and circumstances include, but are not limited to, prolonged industry downturns, significant decline in our market value and significant reductions in our projected cash flows. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to estimated undiscounted future net cash flows expected to be generated by the asset. Significant judgments and assumptions are required in the forecast of future operating results used in the preparation of the estimated future cash flows, including long-term forecasts of the number of additional customer contracts, profit margins, terminal growth rates and discounted rates. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset.

As of March 31, 2008 and 2007, our long-lived assets, including property and equipment, net and identifiable intangible assets, totaled approximately $333.0 million and $157.6 million, respectively.

Goodwill

Goodwill and intangible assets that have indefinite lives are not amortized, but rather, are tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable. The goodwill impairment test involves a two-step approach. The first step involves a comparison of the fair value of each of our reporting units with its respective carrying amount. If a reporting unit’s carrying amount exceeds its fair value, the second step is performed. The second step involves a comparison of the implied fair value to the carrying value of that reporting unit’s goodwill. To the extent that a reporting unit’s carrying amount exceeds the implied fair value of its goodwill, an impairment loss is recognized. Identifiable intangible assets not subject to amortization are assessed for impairment by comparing the fair value of the intangible asset to its carrying amount. An impairment loss is recognized for the amount by which the carrying value exceeds fair value. Intangible assets that have finite useful lives are amortized over their useful lives.

As of March 31, 2008 and 2007, our goodwill totaled approximately $85.9 million and $16.8 million, respectively. Goodwill represents the carrying amount of the excess purchase price over the fair value of identifiable net assets acquired in conjunction with (i) the 2000 acquisition of a corporation holding rights to develop and manage facilities catering to the telecommunications industry (ii) the 2005 acquisition of a managed web hosting service provider in Europe (iii) the 2007 acquisition of a managed web hosting services provider in the United States and (iv) the 2008 acquisition of a disaster recovery and business continuity provider in the United States. We performed the annual test for impairment for the goodwill acquired in 2000, 2007 and 2008 in the fourth quarter of the fiscal year and concluded there were no impairments. We performed the annual test for impairment for the goodwill acquired in 2005, in the second quarter of the fiscal year and concluded there were no impairments.

Share-Based Compensation

On April 1, 2006, we adopted the fair value provisions of SFAS No. 123R, “Share-Based Payment.” We recognize compensation expense for all share-based payments by estimating the fair value of options at grant date using the Black-Scholes-Merton option pricing model and the fair market value of our common stock on the date of grant. Calculating the fair value of option awards requires the input of subjective assumptions, including the expected term, risk-free interest rates, expected dividends and stock price volatility. Management bases expected term in accordance with SAB 107 and expected volatility on historical volatility trends and our peer group’s common stock over the period commensurate with the expected term. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and we use different assumptions, our share-based compensation expense could be materially different in the future. In addition, we are required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. If our

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actual forfeiture rate is materially different from our estimate, the share-based compensation expense could be significantly different from what we have recorded in the current period and could result in subsequent increases or decreases in compensation expense. See Note 16, “Share-Based Compensation,” in the accompanying Consolidated Financial Statements for a further discussion on share-based compensation.

On March 23, 2006, the Compensation Committee of our Board of Directors approved the vesting, effective as of March 31, 2006, of all unvested stock options previously granted under our stock option and executive incentive compensation plans. The options affected by this accelerated vesting had exercise prices ranging from $2.79 to $16.50. As a result of the accelerated vesting, options to purchase approximately 460,000 shares became immediately exercisable. All other terms of these options remain unchanged.

Recent Accounting Pronouncements

See Note 2, “Summary of Significant Accounting Policies,” in the accompanying Consolidated Financial Statements for a discussion of Recent Accounting Pronouncements.

Recent Events

We have continued to execute our multi-pronged strategy of pursuing growth opportunities to address the significant demand that we anticipate from existing and potential customers. In order to address the demands and requirements of our customers, we plan to continue to expand our existing portfolio of services infrastructure and data center operations in existing markets and deploy infrastructure in additional strategic markets. Below are the significant transactions we recently completed as we executed our business strategy.

•  On May 2, 2007, we completed a private exchange offer with a limited number of holders for $57.2 million aggregate principal amount of its outstanding 9% Senior Convertible Notes due 2009 (the “Outstanding Notes”) in exchange for an equal aggregate principal amount of the Company’s newly issued 6.625% Senior Convertible Notes due 2013 (the “New Notes”). After completion of the private exchange offer, $29.1 million aggregate principal amount of the Outstanding Notes remain outstanding. We also announced our intention to complete a public exchange offer to the remaining holders of our Outstanding Notes to exchange any and all of their Outstanding Notes for an equal aggregate principal amount of New Notes.

•  On May 14, 2007, we began trading on the NASDAQ Global market under the symbol “TMRK.”

•  On May 24, 2007, we acquired privately-held Data Return, LLC (“Data Return”), a leading provider of enterprise-class technology hosting solutions, from Saratoga Partners, for an aggregate purchase price of $85.0 million, which is comprised of $70.0 million in cash and $15.0 million of our common stock. The acquisition of Data Return’s technology, customers and team of employees complements our existing team and service delivery platforms, and, we believe, better positions us to capture the robust market demand we expect for virtualized IT solutions. The addition of Data Return’s innovative virtualized hosting and service delivery platforms are a strategic fit with our network rich colocation and managed service business and should allow us to realize significant synergies. Some of the strategic value points are:

•  Accelerates growth of the managed web hosting business in the U.S. market by adding significant enterprise-class hosting capabilities to our existing service offerings

•  In Gartner’s 2007 North American Web Hosting Industry report, Data Return was positioned in the Leader’s Quadrant

•  Complements our successful acquisition of Dedigate, N.V., in 2005

•  Over 280 dedicated team members focused on delivering enterprise class hosting services

•  Utility computing platform Infinistructure is highly scalable and can be easily deployed in new locations

•  Proprietary service delivery platform digitalOps^® can be leveraged across all of Terremark’s managed services

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•  Robust utility computing and disaster recovery capabilities

•  Highly knowledgeable and experienced solution oriented sales force with a national footprint

•  On July 31, 2007, we completed a debt financing agreement with Credit Suisse and Tennenbaum Capital Partners for a total of $250.0 million. The first term loan, due July 2012, is a $150.0 million loan secured by a first priority lien on substantially all of our assets and bears annual cash interest at Eurodollar rate plus 3.75%. The second term loan, due January 2013, is a $100.0 million loan secured by a second priority lien on substantially all of our assets and bears annual cash interest at Eurodollar rate plus 7.75%, including a “payable-in-kind” portion of 4.5% annually to be added to the principal. A portion of the proceeds was used to repay all of our outstanding secured debt and the remainder was used to fund capital expenditures to support our expansion plan and for working capital.

•  On September 4, 2007, we acquired two parcels of real property, including two buildings, in Santa Clara, California that are adjacent to the Company’s current facilities. We began construction of a data center on these two properties.

•  On January 24, 2008, we entered into a stock purchase agreement to purchase the stock of Accris Corporation (“Accris”), a Florida corporation, for an aggregate price of $0.8 million in cash and 390,000 shares of Terremark common stock with a fair value of $2.1 million for a total purchase price of $2.9 million, including closing costs. Based in Boca Raton, Florida for over 7 years, Accris is widely recognized as leader in the area of IT disaster recovery, business continuity, virtualization and data storage systems.

Results of Operations

Results of Operations for the Year Ended March 31, 2008 as Compared to the Year Ended March 31, 2007.

Revenue.  The following charts provide certain information with respect to our revenues:

	For the Year
	Ended
	March 31,
	2008			2007
U.S. Operations		87	%		84	%
Outside U.S.		13	%		16	%
		100	%		100	%

Revenues consist of:

	For the Year Ended March 31,
	2008				2007
Colocation	$	61,228,544	33	%	$	41,865,161	42	%
Managed and professional services		110,933,378	59	%		43,793,652	43	%
Exchange point services		12,691,169	7	%		9,031,100	9	%
Equipment resales		2,560,708	1	%		6,258,268	6	%
	$	187,413,799	100	%	$	100,948,181	100	%

The increase in revenues is mainly due to both an increase in our deployed customer base and an expansion of services to existing customers. Our deployed customer base increased from 604 customers as of March 31, 2007 to 983 customers as of March 31, 2008. Revenues consist of:

•  colocation services, such as licensing of space and provision of power;

•  exchange point services, such as peering and cross connects;

•  procurement and installation of equipment; and

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•  managed and professional services, such as network management, managed web hosting, outsourced network operating center services, network monitoring, procurement of connectivity, managed router services, secure information services, technical support and consulting.

Our utilization of total net colocation space increased to 23.3% as of March 31, 2008 from 18.6% as of March 31, 2007. Our utilization of total net colocation space represents the percentage of space billed versus total space available for customers.

The increase in managed and professional services is mainly due to an increase of approximately $53.4 million in managed web hosting services, including $48.0 million generated by a web hosting services provider acquired in May 2007. The remainder of the increase is primarily the result of an increase in orders from both existing and new customers as reflected by the growth in our customer base and utilization of space, as discussed above.

The increase in exchange point services is mainly due to an increase in cross-connects billed to customers. Cross-connects billed to customers increased to 6,830 as of March 31, 2008 from 5,594 as of March 31, 2007.

Equipment resales may fluctuate year over year based on customer demand.

We anticipate an increase in revenue from colocation, exchange point and managed services as we add more customers to our network of NAPs, sell additional services to existing customers and introduce new products and services. We anticipate that the percentage of revenue derived from public sector customers will fluctuate depending on the timing of exercise of expansion options under existing contracts and the rate at which we sell services to the public sector. We anticipate that public sector revenues will continue to represent a significant portion of our revenues for the foreseeable future.

Cost of Revenues.  Costs of revenues, excluding depreciation and amortization, increased $44.0 million to $100.9 million for the twelve months ended March 31, 2008 from $56.9 million for the twelve months ended March 31, 2007. Cost of revenues, excluding depreciation and amortization, consist mainly of operations personnel, fees to third party service providers, procurement of connectivity and equipment, technical and colocation space rental costs, electricity, chilled water, insurance, property taxes, and security services. The increase is mainly due to increases of $20.8 million in personnel costs and $7.3 million in managed services costs. We also had increases of $8.5 million in certain variable costs such as electricity, chilled water costs and maintenance as a result of an increase in orders from both existing and new customers as reflected by the growth in our customer base and utilization of space, as discussed above.

The $7.3 million increase in managed service costs is consistent with the increase in related revenues and includes a $4.0 million increase in third party service providers and a $3.7 million increase in fees for connectivity procurement costs. The $20.8 million increase in personnel costs is mainly due to operations and engineering staffing levels increasing from 205 employees as of March 31, 2007 to 466 employees as of March 31, 2008. This increase is mainly attributed to the acquisition of a web hosting services provider in May 2007 and the expansion of operations in Virginia and California.

General and Administrative Expenses.  General and administrative expenses increased $14.7 million to $32.3 million for the year ended March 31, 2008 from $17.6 million for the year ended March 31, 2007. General and administrative expenses consist primarily of administrative personnel, professional service fees, travel, rent, and other general corporate expenses. The $14.7 million increase in general and administrative expenses is mainly due to a $9.2 million increase in administrative personnel costs and $1.7 million in professional fees. Personnel costs include payroll and share-based compensation, including share-settled liabilities. The $9.2 million increase in administrative personnel is the result of an increase in headcount from 95 employees as of March 31, 2007 to 149 employees as of March 31, 2008. The additional headcount is mainly due to the acquisition of a web hosting services provider in May 2007, expansion of operations in Virginia and California and the expansion of corporate infrastructure, including planning and information systems resources to manage the existing customer base and plan anticipated business growth. The $1.7 million increase in professional fees includes accounting, consulting and legal services and was mostly attributable to the integration of Data Return. Other general corporate expenses such as travel, telecommunications, software, hardware and facility rent also increased as a result of the increase in headcount.

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Sales and Marketing Expenses.  Sales and marketing expenses increased $9.5 million to $20.9 million for the year ended March 31, 2008 from $11.4 million for the year ended March 31, 2007. The $9.5 million increase in sales and marketing expenses is mainly due to a $6.8 million increase in payroll and sales commissions resulting from an increase in headcount from 56 employees as of March 31, 2007 to 83 employees as of March 31, 2008 coupled with an increase in sales bookings.

Depreciation and Amortization Expenses.  Depreciation and amortization expense increased $7.7 million to $18.7 million for the year ended March 31, 2008 from $11.0 million for the year ended March 31, 2007. The increase is the result of necessary capital expenditures to support our business growth and the acquisition of Data Return in May 2007.

Change in Fair Value of Derivatives.  For the year ended March 31, 2008, we recognized an expense of $1.1 million mainly due to the changes in the fair value of our embedded derivatives and the fair value of our two interest rate hedge agreements.

Our 9% Senior Convertible Notes and our Series B Notes contain embedded derivatives that require separate valuation. We recognize these embedded derivatives as assets or liabilities in our balance sheet, measure them at their estimated fair value and recognize changes in the estimated fair value of the derivative instruments in earnings. The embedded derivatives derive their value primarily based on changes in price and volatility of our common stock. The estimated fair value of these embedded derivatives increase as the price of our common stock increases and decreases as the price of our common stock decreases. The Company has estimated that the embedded derivatives related to the equity participation rights and the takeover make whole premium do not have significant value. The early conversion incentive expired on June 14, 2007. As a result, the Company reclassified $4.3 million of these embedded derivatives, classified as liabilities, to additional paid in capital. This amount represented the fair value of such embedded derivatives at the time of the expiration of the early conversion incentive. We recognized income of $1.5 million from the change in estimated fair value of the embedded derivatives prior to the expiration of the early conversion incentive and we recognized $0.3 million expense for the year ended March 31,2008 related to the fair valuation of the Series B embedded derivative which is our only remaining embedded derivative at March 31, 2008. We do not expect the changes in fair value of the embedded derivative associated with our Series B Notes to have a significant effect on the results of our operations.

On February 8, 2008, we entered into two interest rate hedge agreements, in accordance with the provisions of the Senior Secured Credit Facilities. One of the interest rate hedge agreements was effective March 31, 2008 for a notional amount of $148.0 million and a fixed interest rate of 2.999%. Interest payments on this hedge are due on the last day of each March, June, September and December commencing on June 30, 2008 and ending on December 31, 2010. The second interest rate hedge agreement entered into is effective on July 31, 2008 for a notional amount of $102.0 million and a fixed interest rate of 3.067%. Interest payments on this hedge are due on the last day of each January, April, July and October commencing on October 31, 2008 and ending on January 31, 2011. The interest rate swap agreements serve as an economic hedge against increases in interest rates and have not been designated as hedges for accounting purposes. Accordingly, we are accounting for these interest rate hedge agreements on a fair value basis and as a result these instruments are adjusted to fair value and the resulting changes in fair value are charged to earnings. Included in the $1.1 million change in fair value of derivative expense, for the year ended March 31, 2008, is a $2.5 million charge related to the fair value of the two interest rate hedge agreements we entered into in connection with our Senior Secured Credit Facilities.

For the year ended March 31, 2007, we recognized income of $8.3 million from the change in estimated fair value of derivatives.

Interest Expense.  Interest expense increased $3.9 million to $32.1 million for the year ended March 31, 2008 from $28.2 million for the year ended March 31, 2007. This increase is primarily due to an increase in the outstanding debt balance. On July 31, 2007, we entered into new term loan financing arrangements in the aggregate principal amount of $250.0 million. A portion of the proceeds were used to pay off approximately $96.3 million of old debt.

Interest Income.  Interest income increased $4.0 million to $5.2 million for the year ended March 31, 2008 from approximately $1.2 million for the year ended March 31, 2007. On July 31, 2007, we entered into new term

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loan financing arrangements in the aggregate principal amount of $250.0 million. A portion of the proceeds were used to pay off approximately $96.3 million of old debt. Net proceeds increased our average cash and cash equivalent balances for the period.

Other financing charges.  During the year ended March 31, 2008, we expensed $1.2 million of financing charges consisting of title and legal fees. These charges were expensed after determining that our new term loan of $250.0 million was not a substantial modification of our existing Credit Suisse debt instruments.

Early Extinguishment of Debt and Net Loss.  Net loss increased $27.2 million to $42.2 million for the year ended March 31, 2008 from $15.0 million for the year ended March 31, 2007. This increase is primarily due to a non-cash loss on the early extinguishment of debt of $26.9 million for the year ended March 31, 2008.

Results of Operations for the Year Ended March 31, 2007 as Compared to the Year Ended March 31, 2006.

Revenue.  The following charts provide certain information with respect to our revenues:

	For the Year
	Ended
	March 31,
	2007			2006
U.S. Operations		84	%		88	%
Outside U.S.		16	%		12	%
		100	%		100	%

Revenues consist of:

	For the Year Ended March 31,
	2007				2006
Colocation	$	41,865,161	42	%	$	28,126,193	45	%
Managed and professional services		43,793,652	43	%		25,958,032	42	%
Exchange point services		9,031,100	9	%		6,308,708	10	%
Equipment resales		6,258,268	6	%		2,136,349	3	%
	$	100,948,181	100	%	$	62,529,282	100	%

The increase in revenues is mainly due to both an increase in our deployed customer base and an expansion of services to existing customers. Our deployed customer base increased from 461 customers as of March 31, 2006 to 604 customers as of March 31, 2007. Revenues consist of:

•  colocation services, such as licensing of space and provision of power;

•  exchange point services, such as peering and cross connects;

•  procurement and installation of equipment; and

•  managed and professional services, such as network management, managed web hosting, outsourced network operating center services, network monitoring, procurement of connectivity, managed router services, secure information services, technical support and consulting.

Our utilization of total net colocation space increased to 18.6% as of March 31, 2007 from 12.1% as of March 31, 2006. Our utilization of total net colocation space represents the percentage of space billed versus total space available for customers.

The increase in managed and professional services is mainly due to increases of approximately $4.1 million in managed services provided under government contracts, $6.6 million in managed services generated by our managed web hosting services provider in Europe, $1.9 million in managed router services and $0.3 million for professional services related to the design and development of NAPs in the Canary Islands and the Dominican

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Republic. The remainder of the increase is primarily the result of an increase in orders from both existing and new customers as reflected by the growth in our customer base and utilization of space, as discussed above.

The increase in exchange point services is mainly due to an increase in cross-connects billed to customers. Cross-connects billed to customers increased to 5,594 as of March 31, 2007 from 4,007 as of March 31, 2006.

Equipment resales may fluctuate year over year based on customer demand.

We anticipate an increase in revenue from colocation, exchange point and managed services as we add more customers to our network of NAPs, sell additional services to existing customers and introduce new products and services. We anticipate that the percentage of revenue derived from public sector customers will fluctuate depending on the timing of exercise of expansion options under existing contracts and the rate at which we sell services to the public sector. We anticipate that public sector revenues will continue to represent a significant portion of our revenues for the foreseeable future.

Cost of Revenues.  Costs of revenues increased $18.1 million to $56.9 million for the year ended March 31, 2007 from $38.8 million for the year ended March 31, 2006. Cost of revenues consist mainly of operations personnel, procurement of connectivity and equipment, technical and colocation space rental costs, electricity, chilled water, insurance, property taxes, and security services. The increase is mainly due to increases of $10.0 million in managed services costs, $3.1 million in personnel costs, $2.6 million in electricity and chilled water costs and $1.0 million in technical and colocation space rental costs. The remainder of the increase is primarily the result of an increase in orders from both existing and new customers as reflected by the growth in our customer base and utilization of space, as discussed above.

The $10.0 million increase in managed service costs includes a $1.5 million increase in NAP development costs and a $1.8 million increase in bandwidth costs, which is consistent with increases in related revenue streams. The remainder of the increase is primarily the result of an increase in orders from both existing and new customers as reflected by the growth in our customer base and utilization of space, as discussed above. Personnel costs include payroll and share-based compensation, including share-settled liabilities. The $3.3 million increase in personnel costs is mainly due to operations and engineering staffing levels increasing from 179 employees as of March 31, 2006 to 204 employees as of March 31, 2007. This increase is mainly attributed to the hiring of additional personnel necessary under existing and anticipated customer contracts and the expansion of operations in Herndon, Virginia and Santa Clara, California. The $2.7 million increase in electricity and chilled water costs is mainly due an increase in power utilization and chilled water consumption resulting from our customer and colocation space growth, as well as an increase in the cost of power.

General and Administrative Expenses.  General and administrative expenses increased $2.0 million to $17.6 million for the year ended March 31, 2007 from $15.6 million for the year ended March 31, 2006. General and administrative expenses consist primarily of administrative personnel, professional service fees, travel, rent, and other general corporate expenses. The increase in general and administrative expenses is mainly due to an increase in administrative personnel costs of $2.0 million. Personnel costs include payroll and share-based compensation, including share-settled liabilities. The $2.0 million increase in administrative personnel is the result of an increase in headcount from 57 employees as of March 31, 2006 to 95 employees as of March 31, 2007. The additional headcount is mainly due to a required expansion of corporate infrastructure, including planning and information systems resources. This increased headcount allows us to manage the existing customer base, plan anticipated business growth and maintain a more efficient and effective Sarbanes-Oxley compliance program.

Sales and Marketing Expenses.  Sales and marketing expenses increased $2.9 million to $11.4 million for the year ended March 31, 2007 from $8.5 million for the year ended March 31, 2006. The most significant components of sales and marketing expenses are payroll, sales commissions and promotional activities. Payroll and sales commissions increased by $1.7 million resulting from an increase in sales bookings, $0.2 million in consulting fees and $1.1 million in bad debt expense.

Depreciation and Amortization Expenses.  Depreciation and amortization expense increased $2.3 million to $11.0 million for the year ended March 31, 2007 from $8.7 million for the year ended March 31, 2006. The increase is the result of necessary capital expenditures to support our business growth. These capital expenditures primarily

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related to the build-out of additional space in our Miami facility. Additions to depreciable assets amounted to $14.3 million for the year ended March 31, 2007.

Change in Fair Value of Derivatives Embedded within Convertible Debt.  Our Senior Convertible Notes and our Series B Notes contain embedded derivatives that require separate valuation. We recognize these embedded derivatives as assets or liabilities in our balance sheet, measure them at their estimated fair value and recognize changes in the estimated fair value of the derivative instruments in earnings. We estimated that the embedded derivatives associated with our Senior Convertible Notes, classified as liabilities, had a March 31, 2007 estimated fair value of $16.8 million and a March 31, 2006 estimated fair value of $25.0 million. The embedded derivatives derive their value primarily based on changes in the price and volatility of our common stock. The estimated fair value of these embedded derivatives increase as the price of our common stock increases and decreases as the price of our common stock decreases. The closing price of our common stock decreased to $8.06 on March 31, 2007 from $8.50 on March 31, 2006. We estimated that the embedded derivative associated with our Series B Notes, classified as an asset, had an estimated fair value at issuance of $0.3 million and a March 31, 2007 estimated fair value of $0.5 million. As a result, during the year ended March 31, 2007, we recognized income of $8.3 million from the change in estimated fair value of the embedded derivatives. For the year ended March 31, 2006, we recognized expense of $4.8 million due to the change in value of our embedded derivatives.

Over the life of the Senior Convertible Notes, given the historical volatility of our common stock, changes in the estimated fair value of the embedded derivatives are expected to have a material effect on our results of operations. See “Quantitative and Qualitative Disclosures about Market Risk.” Furthermore, we have estimated the fair value of these embedded derivatives using a theoretical model based on the historical volatility of our common stock of (76% as of March 31, 2007) over the past twelve months. If a market develops for our senior convertible notes or we are able to find comparable market data, we may be able to use future market data to adjust our historical volatility by other factors such as trading volume. As a result, the estimated fair value of these embedded derivatives could be significantly different. Any such adjustment would be made prospectively.

Interest Expense.  Interest expense increased $3.2 million to $28.2 million for the year ended March 31, 2007 from $25.0 million for the year ended March 31, 2006. This increase is due to the amortization of the discount on our Senior Convertible Notes. We record amortization using the effective interest method and accordingly the interest expense associated with the Senior Convertible Notes will increase as the carrying value increases.

Interest Income.  Interest income decreased $0.1 million to $1.2 million for the year ended March 31, 2007 from approximately $1.3 million for the year ended March 31, 2006.

Liquidity and Capital Resources

For the year ended March 31, 2008, we generated income from operations of $14.7 million and our net loss amounted to $42.2 million. For the year ended March 31, 2007, we generated income from operations of $4.0 million and our net loss amounted to $15.0 million. Prior to the fiscal year ended March 31, 2007, we incurred losses from operations in each quarter and annual period dating back to our merger with AmTec, Inc. Cash used in operations for the year ended March 31, 2008 was $1.9 million compared to cash used in operations of $2.5 million for the year ended March 31, 2007. Our working capital decreased from $101.6 million at March 31, 2007 to $91.2 million at March 31, 2008.

Sources and Uses of Cash

Cash used in operations for the year ended March 31, 2008 was $1.9 million as compared to cash used in operations of $2.5 million for the year ended March 31, 2007. We used cash to primarily fund our operations, including cash interest payments on our debt. The decrease in cash used in operations of $0.6 million is mainly due to a year over year increase in income from operations of $10.7 million, offset by a year over year increase in cash paid for interest of $5.0 million. The remainder of the increase is mainly due to the timing of vendor payments.

Cash used in investing activities for the year ended March 31, 2008 was $149.2 million compared to cash used in investing activities of $16.2 million for the year ended March 31, 2007, an increase of $133.0 million. This increase is primarily due to the acquisition of a web hosting services provider in May 2007 and the capital

36

expenditures related to the build-out of additional space in our Miami facility and our expansion in Virginia and California.

Cash provided by financing activities for the year ended March 31, 2008 was $143.0 million compared to cash provided by financing activities of $103.3 million for the year ended March 31, 2007, an increase of $39.7 million. The increase in cash provided by financing activities is primarily due to the proceeds from our $250.0 million term loan financing arrangement entered into on July 31, 2007, offset by $100.5 million in repayments of old notes and mortgage payables and $8.8 million in debt issuance costs. In addition, we issued of 608,500 shares of our common stock in April 2007, pursuant to the underwriter’s exercise of their over-allotment option of the 11,000,000 shares we sold in our March 2007 offering.

Liquidity

Over the past twelve months, we have executed a three step financing plan. The first step was completed in March and April 2007 when we raised approximately $87.2 million in net proceeds of equity offerings. The second step was completed in May 2007 when we effected a private exchange in which a majority of our 9% Senior Convertible Notes were exchanged for 6.625% Senior Convertible Notes with an extended maturity date of June 2013. The notes retained the conversion price of $12.50 per share. The third step was the July 31, 2007 refinancing of our existing mortgage debt and senior secured notes. Our NAP of the Americas facility in Miami was recently appraised at a value of approximately $250.0 million. On July 31, 2007, we entered into two term loan financing arrangements in the aggregate principal amount of $250.0 million. All of the mortgage notes and senior secured notes were paid off and the remainder of the proceeds will be used to fund capital expenditures to support our data center expansion plans and to provide working capital.

We believe we have sufficient cash, coupled with anticipated cash generated from operating activities to meet our operating requirements for at least the next twelve months. Capital expenditures through March 31, 2008 amounted to $80.0 million, with approximately $70.0 million related to our data center expansion plans. Capital expenditures for the year ended March 31, 2009 are expected to range from $70.0 million to $80.0 million, with the majority related to the completion of the first phase of our data center campus in Virginia and to the start up of our expansion in Silicon Valley. The remaining capital expenditures will be used to support our infrastructure in Miami and improve our technology and service delivery platforms.

Indebtedness

As of March 31, 2008, our total liabilities were approximately $413.3 million of which $60.9 million is due within one year.

New Senior Secured Credit Facilities

On July 31, 2007, we entered into term loan financing arrangements in the aggregate principal amount of $250.0 million. The financing is composed of two term loan facilities, including a $150.0 million first lien credit agreement among Terremark Worldwide, Inc. as borrower, Credit Suisse, as administrative agent and collateral agent, Societe Generale, as syndication agent and the lenders from time to time party thereto, and a $100.0 million second lien credit agreement among Terremark Worldwide, Inc., as borrower and Credit Suisse as administrative agent and collateral agent. Credit Suisse Securities (USA) LLC acted as sole bookrunner and sole lead arranger for each credit agreement. The loan proceeds were used to satisfy and pay all of our outstanding secured indebtedness, including (i) the $30 million of our senior secured notes held by Falcon Mezzanine Partners, LP and affiliates of AlpInvest, N.V., (ii) the $10 million of “Series A” senior subordinated secured notes held by Credit Suisse, (iii) the $13,250,000 capital lease facility provided to us by Credit Suisse, of which $4.6 million was drawn at July 31, 2007 and (iv) the $49 million senior mortgage loan initially extended to us by Citigroup Global Markets Realty Corp and subsequently assigned to Wachovia Bank, N.A.. We paid prepayment premiums in amounts equal to $1,641,021 and $1,122,251 to the Falcon investors and Wachovia, respectively, in connection with these financing transactions. We anticipate using the remainder of the proceeds to fund capital expenditures to support our data center expansion plans and to provide us working capital.

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Interest on the loans is determined based on an adjusted Eurodollar rate plus 375 basis points, in the case of the First Lien Agreement, and 775 basis points, in the case of the Second Lien Agreement, or at a rate based on the federal funds rate plus 275 basis points, in the case of the First Lien Agreement, or 675 basis points, in the case of the Second Lien Agreement, at our election. With respect to the loans extended under the Second Lien Agreement, within the first two years following the closing date of the financing, we may elect to capitalize and add to the principal of such loans interest to the extent of 450 basis points of the Eurodollar rate loans or 350 basis points of the federal funds rate loans. On February 8, 2008, we entered into two interest rate hedge agreements, in accordance with the provisions of the Senior Secured Credit Facilities. One of the interest rate hedge agreements was effective March 31, 2008 for a notional amount of $148.0 million and a fixed interest rate of 2.999%. Interest payments on this hedge are due on the last day of each March, June, September and December commencing on June 30, 2008 and ending on December 31, 2010. The second interest rate hedge agreement entered into is effective on July 31, 2008 for a notional amount of $102.0 million and a fixed interest rate of 3.067%. Interest payments on this hedge are due on the last day of each January, April, July and October commencing on October 31, 2008 and ending on January 31, 2011. The interest rate swap agreements serve as an economic hedge against increases in interest rates and have not been designated as hedges for accounting purposes.

The loans under the First Lien Agreement will become due on August 1, 2012 and the loans under the Second Lien Agreements will become due on February 1, 2013. Under certain circumstances the principal amount of the loans extended under the Second Lien Agreement may be increased by $75.0 million, or $100.0 million depending on our financial condition at the time we request such increase, the proceeds from which increase must be used by us to fund certain acquisitions that have been approved by Credit Suisse.

Our obligations to repay the loans under the credit agreements have been guaranteed by those subsidiaries of ours that are party to a Subsidiary Guaranty, dated July 31, 2007. Our obligations and the obligations of these subsidiary guarantors under the First Lien Agreement and Second Lien Agreement and related loan documents are secured on a first priority and second priority basis, respectively, by substantially all of our assets and substantially all of the assets of these subsidiary guarantors, including the equity interests in each of the subsidiary guarantors.

The loans extended under the First Lien Agreement may be prepaid at any time without penalty. The loans extended under the Second Lien Agreement may not be prepaid on or prior to the first anniversary of the closing date. After such first anniversary, the loans extended under the Second Lien Agreement may be prepaid if accompanied by a premium in an amount equal to 2% of the aggregate outstanding principal if prepaid between the first and second anniversaries of the closing date, 1% of the aggregate outstanding principal if prepaid between the second and third anniversaries of the closing date and no premium if prepaid after the third anniversary of the closing date.

Repayments on the loans outstanding under the First Lien Agreement are due at the end of each calendar quarter, while the loans under the Second Lien Agreement are scheduled for repayment on the maturity date. In addition, we are obligated to make mandatory prepayments annually using our excess free cash flow and the proceeds associated with certain asset sales and incurrence of additional indebtedness. Upon an event of default, a majority of the lenders under each of the credit agreements may request the agent under these credit agreements to declare the loans immediately payable. Under certain circumstances involving insolvency, the loans will automatically become immediately due and payable.

The credit agreements are subject to the terms of an Intercreditor Agreement dated as of July 31, 2007, among us and Credit Suisse, as collateral agent under both credit agreements.

As of March 31, 2008, our principal source of liquidity was our $97.0 million in unrestricted cash and cash equivalents and our $44.0 million in accounts receivable. The terms of the First and Second Lien Agreement prohibit us from having cash and cash equivalents less than $10.0 million at any time. We anticipate that the remaining cash coupled with additional debt to fund our planned expansion and our anticipated cash flows generated from operations, will be sufficient to meet our capital expenditures, working capital, debt service and corporate overhead requirements in connection with our currently identified business objectives. Our projected revenues and cash flows depend on several factors, some of which are beyond our control, including the rate at which we provide services, the timing of exercise of expansion options by customers under existing contracts, the rate at which new services are sold to the government sector and the commercial sector, the ability to retain the

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customer base, the willingness and timing of potential customers in outsourcing the housing and management of their technology infrastructure to us, the reliability and cost-effectiveness of our services and our ability to market our services.

Senior Convertible Notes

In June 2004, we privately placed $86.25 million in aggregate principal amount of 9% senior convertible notes due June 15, 2009 to qualified institutional buyers. The notes bear interest at a rate of 9% per annum, payable semi-annually, on each December 15 and June 15 and are convertible at the option of the holders at $12.50 per share. We utilized net proceeds of $81.0 million to pay approximately $46.3 million of outstanding loans and convertible debt. The balance of the proceeds was used for acquisitions and for general corporate purposes, including working capital and capital expenditures. The notes rank pari passu with all existing and future unsecured and unsubordinated indebtedness, senior in right of payment to all existing and future subordinated indebtedness, and rank junior to any future secured indebtedness.

If there is a change in control, the holders of the 9% senior convertible notes have the right to require us to repurchase their notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest. If a change of control occurs and at least 50% of the consideration for our common stock consists of cash, the holders of the 9% senior convertible notes may elect to receive the greater of the repurchase price described above or the total redemption amount. The total redemption amount will be equal to the product of (x) the average closing prices of our common stock for the five trading days prior to the announcement of the change of control and (y) the quotient of $1,000 divided by the applicable conversion price of the 9% senior convertible notes, plus a make-whole premium of $45 per $1,000 of principal if the change of control takes place before December 15, 2008. If we issue a cash dividend on our common stock, we will pay contingent interest to the holders equal to the product of the per share cash dividend and the number of shares of common stock issuable upon conversion of each holder’s note.

We may redeem some or all of the 9% senior convertible notes for cash at any time if the closing price of our common shares has exceeded 200% of the applicable conversion price for at least 20 trading days within a period of 30 consecutive trading days ending on the trading day before the date we mail the redemption notice. If we redeem the 9% senior convertible notes, the redemption price equals 102.25%, respectively, of their principal amount, plus accrued and unpaid interest, if any, to the redemption date, plus an amount equal to 50% of all remaining scheduled interest payments on the 9% senior convertible notes from, and including, the redemption date through the maturity date.

On May 2, 2007, we completed a private exchange offer with a limited number of holders for $57.2 million aggregate principal amount of our outstanding 9% senior convertible notes in exchange for an equal aggregate principal amount of the Company’s newly issued 6.625% Senior Convertible Notes due 2013. See “6.625% Senior Convertible Notes” below.

Series B Notes

On January 5, 2007, we entered into a Purchase Agreement with Credit Suisse, International (the “Purchaser”), for the sale of $4 million in aggregate principal amount of our 0.5% Senior Subordinated Convertible Notes due June 30, 2009 to Credit Suisse, International (the “Series B Notes”) issued pursuant to an Indenture between us and The Bank of New York Trust Company, N.A., as trustee (the “Indenture”). We are subject to certain covenants and restrictions specified in the Purchase Agreement, including covenants that restrict our ability to pay dividends, make certain distributions or investments and incur certain indebtedness. We issued the Series B Notes to partially fund our previously announced expansion plans.

The Series B Notes bear interest at 0.5% per annum for the first 24 months increasing thereafter to 1.50% until maturity. All interest under the Series B Notes is “payable in kind” and is added to the principal amount of the Series B Notes semi-annually. The Series B Notes are convertible into shares of our common stock, $0.001 par value per share at the option of the holders, at $8.14 per share subject to certain adjustments set forth in the Indenture, including customary anti-dilution provisions.

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The Series B Notes have a change in control provision that provides to the holders the right to require us to repurchase their notes in cash at a repurchase price equal to 100% of the principal amount, plus accrued and unpaid interest.

We may redeem, at our option, all of the Series B Notes on any interest payment date at a redemption price equal to (i) certain amounts set forth in the Indenture (expressed as percentages of the principal amount outstanding on the date of redemption), plus (ii) the amount (if any) by which the fair market value on such date of the Common Stock into which the Series B Notes are then convertible exceeds the principal amount of the Series B Notes on such date, plus (iii) accrued, but unpaid interest if redeemed during certain monthly periods following the closing date.

We also paid an arrangement fee (the “Arrangement Fee”) to Credit Suisse, International as consideration for its services in connection with the Series B Notes, in the amount of 145,985 shares of common stock (the “Fee Shares”), which shares had a value of approximately $1.0 million based on the then quoted market price of our common stock. We also granted Credit Suisse, International certain registration rights pursuant to the Registration Rights Agreement dated January 5, 2007 in connection with the Common Stock underlying the Series B Notes and the Fee Shares, including the right to have such shares registered with the Securities and Exchange Commission. We filed with the Securities and Exchange Commission a registration statement covering shares of our common stock issued to Credit Suisse as an arrangement fee and issuable upon conversion of our senior subordinated convertible notes.

6.625% Senior Convertible Notes

On May 2, 2007, we completed a private exchange offer with a limited number of holders for $57.2 million aggregate principal amount of our outstanding 9% Senior Convertible Notes due 2009 (the “Outstanding Notes”) in exchange for an equal aggregate principal amount of our newly issued 6.625% Senior Convertible Notes due 2013 (the “New Notes”). After completion of the private exchange offer, $29.1 million aggregate principal amount of the Outstanding Notes remain outstanding. We also announced our intention to complete a public exchange offer to the remaining holders of its Outstanding Notes to exchange any and all of their Outstanding Notes for an equal aggregate principal amount of New Notes.

The terms of the New Notes are substantially similar to the terms of the Outstanding Notes except that the New Notes do not have a Company redemption option, the early conversion incentive payment that is applicable to the Outstanding Notes does not apply to the New Notes, and the New Notes provide for a make whole premium payable upon conversions occurring in connection with a change in control in which at least 10% of the consideration is cash, while the Outstanding Notes provide for certain cash make whole payments in connection with a change of control in which at least 50% of the consideration is cash.

Debt Covenants

The provisions of our debt contain a number of covenants that limit or restrict our ability to incur more debt or liens, pay dividends, enter into transactions with affiliates, merge or consolidate with others, dispose of assets or use asset sale proceeds, make acquisitions or investments, enter into hedging activities, make capital expenditures and repurchase stock, subject to financial measures and other conditions. In addition, the new credit facilities include financial covenants based on the most recently ended four fiscal quarters such as such as maintaining a certain; (a) maximum leverage ratios regarding the Company’s consolidated funded indebtedness; (b) maximum leverage ratios with respect to the First Lien indebtedness; (c) minimum interest coverage ratios and; (d) capital expenditures not to exceed specified amounts. The ability to comply with these provisions may be affected by events beyond our control. The breach of any of these covenants could result in a default under our debt and could trigger acceleration of repayment. As of March 31, 2008, we were in compliance with all covenants under the debt agreements, as applicable.

Also, a change in control without the prior consent of the lenders could allow the lenders to demand repayment of the loan. Our ability to comply with these and other provisions of our new credit facilities can be affected by events beyond our control. Our failure to comply with the obligations in our new credit facilities could result in an event of default under these new credit facilities, which, if not cured or waived, could permit acceleration of the indebtedness or other indebtedness which could have a material adverse effect on us.

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Guarantees and Commitments

We lease space for our operations, office equipment and furniture under non-cancelable operating leases. Some equipment is also leased under capital leases, which are included in leasehold improvements, furniture and equipment.

The following table represents the minimum future operating and capital lease payments for these commitments, as well as the combined aggregate maturities (principal and interest) for the following obligations for each of the fiscal years ended:

	Capital Lease		Operating		Convertible		Mortgage
	Obligations		Leases		Debt		Payable		Total
2009	$	1,574,056	$	10,607,068	$	6,404,190	$	18,044,792	$	36,630,106
2010		1,111,712		8,910,257		38,224,806		20,697,283		68,944,058
2011		530,676		7,052,212		3,788,970		23,136,361		34,508,219
2012		155,719		6,576,767		3,788,970		23,063,975		33,585,431
2013		—		6,384,546		3,788,970		267,745,743		277,919,259
Thereafter		—		39,974,212		59,086,486		—		99,060,698
	$	3,372,163	$	79,505,062	$	115,082,392	$	352,688,154	$	550,647,771

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

At March 31, 2008, our exposure to market risk related primarily to changes in interest rates on our investment portfolio. Our marketable investments consist primarily of short-term fixed interest rate securities. We invest only with high credit quality issuers and we do not use derivative financial instruments in our investment portfolio. We do not believe that a significant increase or decrease in interest rates would have a material impact on the fair value of our investment portfolio.

We have not entered into any financial instruments for trading purposes. However, the estimated fair value of the derivatives embedded within our 9% Senior Convertible Notes, 6.625% Senior Convertible Notes, and Series B Notes create a market risk exposure resulting from changes in the price of our common stock, interest rates and our credit rating. We do not expect significant changes in the near term in the two-year historical volatility of our common stock used to calculate the estimated fair value of the embedded derivatives. We do not expect the change in the estimated fair value of the embedded derivative to significantly affect our results of operations and it will not impact our cash flows.

Our 9% Senior Convertible Notes, 6.625% Senior Convertible Notes and our Senior Secured Notes have fixed interest rates and, accordingly, are not exposed to market risk resulting from changes in interest rates. However, the fair market value of our long-term fixed interest rate debt is subject to interest rate risk. Generally, the fair market value of fixed interest rate debt will increase as interest rates fall and decrease as interest rates rise. These interest rate changes may affect the fair market value of the fixed interest rate debt but do not impact our earnings or cash flows. In addition, the interest on the Senior Secured Credit Facilities is determined based on an adjusted Eurodollar rate plus 375 basis points, in the case of the First Lien Agreement, and 775 basis points, in the case of the Second Lien Agreement, or at a rate based on the federal funds rate plus 275 basis points, in the case of the First Lien Agreement, or 675 basis points, in the case of the Second Lien Agreement, at our election. On February 8, 2008, we entered into two interest rate hedge agreements, in accordance with the provisions of the Senior Secured Credit Facilities. One of the interest rate hedge agreements was effective March 31, 2008 for a notional amount of $148.0 million and a fixed interest rate of 2.999%. Interest payments on this hedge are due on the last day of each March, June, September and December commencing on June 30, 2008 and ending on December 31, 2010. The second interest rate hedge agreement entered into is effective on July 31, 2008 for a notional amount of $102.0 million and a fixed interest rate of 3.067%. Interest payments on this hedge are due on the last day of each January, April, July and October commencing on October 31, 2008 and ending on January 31, 2011. The interest rate swap agreements serve as an economic hedge against increases in interest rates and have not been designated as hedges for accounting purposes.

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Our carrying values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses are reasonable approximations of their fair value.

For the year ended March 31, 2008, approximately 87% of our recognized revenue has been denominated in U.S. dollars, generated mostly from customers in the U.S., and our exposure to foreign currency exchange rate fluctuations has been minimal. In the future, a larger portion of our revenues may be derived from operations outside of the U.S. and may be denominated in foreign currency. As a result, future operating results or cash flows could be impacted due to currency fluctuations relative to the U.S. dollar.

Furthermore, to the extent we engage in international sales that are denominated in U.S. dollars, an increase in the value of the U.S. dollar relative to foreign currencies could make our services less competitive in the international markets. Although we will continue to monitor our exposure to currency fluctuations, and when appropriate, may use financial hedging techniques in the future to minimize the effect of these fluctuations, we cannot conclude that exchange rate fluctuations will not adversely affect our financial results in the future.

Some of our operating costs are subject to price fluctuations caused by the volatility of underlying commodity prices. The commodity most likely to have an impact on our results of operations in the event of significant price change is electricity. We are closely monitoring the cost of electricity. To the extent that electricity costs rise, we have the ability to pass these additional power costs onto our customers that utilize this power. We do not employ forward contracts or other financial instruments to hedge commodity price risk.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements required by this Item 8 are attached hereto as Exhibit (a)(1) to Item 15 of this Annual Report on Form 10-K and are incorporated herein by reference.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

There were no disagreements with accountants on accounting or financial disclosures during the last three fiscal years.

ITEM 9A.   CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Disclosure

The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), to allow for timely decisions regarding required disclosure and appropriate SEC filings.

The Company’s Disclosure Committee is responsible for ensuring that there is an adequate and effective process for establishing, maintaining and evaluating disclosure controls and procedures for the Company’s external disclosures.

The Company’s management, with the participation of the Company’s CEO and CFO, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of March 31, 2008 and, based on that evaluation, the CEO and CFO have concluded that at that date the Company’s disclosure controls and procedures were effective.

Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the fiscal quarter ended March 31, 2008 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting

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ITEM 9B.   OTHER INFORMATION.

On June 13, 2008, upon approval by the Compensation Committee of the Company’s Board of Directors, the Company entered into a three-year employment agreement with each of Mr. Jose A. Segrera, Mr. Marvin Wheeler and Mr. Adam T. Smith, who are employed as the Company’s Executive Vice President and Chief Financial Officer, Chief Operations Officer and Chief Legal Officer, respectively. The agreement provides for a three year initial term, which automatically renews for successive one-year terms until either party gives written notice of its intention not to renew. Under the agreement, Messrs. Segrera, Wheeler and Smith will receive an initial annual base salary of $275,000, $275,000 and $250,000, respectively, which is subject to increase. Additionally, upon satisfying certain metrics set forth by the Compensation Committee, these officers will be entitled to receive an annual bonus ranging from 30% to 50% of their base salary. Pursuant to the terms of these agreements, these officers are prohibited from competing with the Company during the one year period immediately following the termination of their employment, unless termination is by us without cause or by such officer for “good reason” as specified in the employment agreements. If the employment of these officers were to be terminated by us without cause or by such officer for good reason, such officer is entitled to receive an amount equal to two times the sum of his annual base salary as in effect immediately prior to the termination date and his target bonus for the bonus period in which termination occurs. Additionally, he would be entitled to payment of the termination year bonus and the continuation of certain other benefits for a period of one year immediately following termination.

The foregoing description of these employment agreements is only a summary and is qualified in its entirety by reference to the full text of the agreements which are filed as Exhibits 10.3, 10.4 and 10.5 to this Annual Report on Form 10-K and is incorporated by reference herein.

PART III

ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information required by Item 10 with respect to executive officers is included within Item 1 in Part I under the caption “Employees” of this Form 10-K Annual Report.

The information required by Item 10 with respect to directors, audit committee, audit committee financial experts and Section 16(a) beneficial ownership reporting compliance is included under the captions “Election of Directors,” “Audit Committee” and “Section 16(a) Beneficial Ownership Reporting Compliance” in our definitive proxy statement, which will be filed with the Commission within 120 days after the close of the fiscal year, and is incorporated herein by reference.

We maintain a Code of Ethics that is applicable to our Chief Executive Officer and Senior Financial Officers. This code of ethics requires continued observance of high ethical standards such as honesty, integrity and compliance with the law in the conduct of our business. Violations under our code of ethics must be reported to our audit committee. A copy of our code of ethics may be requested in print by writing to the Secretary at Terremark Worldwide, Inc., 2 South Biscayne Boulevard, Suite 2900, Miami, Florida 33131. In addition, our code of ethics is available on our website, www.terremark.com under “Investor Relations.” We intend to post on our website amendments to or waivers from our code of ethics.

ITEM 11.   EXECUTIVE COMPENSATION.

The information required by Item 11 is included under the captions “Compensation Discussion and Analysis,” “Executive Compensation,” “Compensation Committee,” “Compensation Committee Report on Executive Compensation” and “Director Compensation” in our definitive proxy statement, which will be filed with the Commission within 120 days after the close of the fiscal year, and is incorporated herein by reference.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The information required by Item 12 with respect to related stockholder matters is included within Item 6 in Part I under the caption “Equity Compensation Plan Information” of this Form 10-K Annual Report.

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ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

We have entered into indemnification agreements with all of our directors and some of our officers, to provide them with the maximum indemnification allowed under our bylaws and applicable law, including indemnification for all judgments and expenses incurred as the result of any lawsuit in which such person is named as a defendant by reason of being one of our directors, officers or employees, to the extent such indemnification is permitted by the laws of Delaware. We believe that the limitation of liability provisions in our Amended and Restated Certificate of Incorporation and the indemnification agreements enhance our ability to continue to attract and retain qualified individuals to serve as directors and officers.

On June 13, 2006, we entered into an employment letter agreement with Arthur J. Money, a member of our board of directors. Under the terms of this letter agreement, Mr. Money agreed to serve as Director — Government, Military and Homeland Security Affairs. The employment letter expires by its terms on January 31, 2007; however, it continues in effect unless terminated by us or him on 48 hours written notice for terminations with cause or on 90 days written notice for terminations without cause. Mr. Money’s compensation under the employment letter consists of $5,000 per month and a grant of 15,000 shares of our common stock issued under the terms of our 2005 Executive Incentive Compensation Plan. Notwithstanding his title, Mr. Money is not considered an officer of Terremark, and the employment letter expressly provides he is not granted the ability to bind Terremark to any agreement with a third party or to incur any obligation or liability on behalf of Terremark.

On May 26, 2005, we issued 111,017 shares of our common stock to Joseph R. Wright, our Vice Chairman, in connection with the exercise of certain of his options at $3.50 per share.

We entered into an agreement with Mr. Wright, commencing September 21, 2001, engaging him as an independent consultant. The agreement is for a term of one year after which it renews automatically for successive one-year periods. Either party may terminate the agreement by providing 90 days notice. The agreement provides for an annual compensation of $100,000, payable monthly.

We have also entered into a consulting agreement with Guillermo Amore, a member of our board of directors, engaging him as an independent consultant. The agreement, effective October 2006, provides for annual compensation of $240,000, payable monthly. In addition, in October 2006, our board of directors approved the issuance of 50,000 shares of nonvested stock to Mr. Amore with a vesting period of one year.

On May 2003, we entered into a subcontractor agreement with Fusion Telecommunications International, Inc. to provide Internet protocol services under our agreement with the Diplomatic Telecommunications Service — Program Office for 16 U.S. embassies and consulates in Asia and the Middle East with another one scheduled to be installed. Fusion’s Chief Executive Officer, Marvin Rosen, is one of our directors. In addition, Fusion’s former Chairman, Joel Schleicher, and Kenneth Starr, one of Fusion’s other directors, formerly served on our board. Manuel D. Medina, our Chairman, President and Chief Executive Officer, and Joseph R. Wright, Jr., another director of ours, formerly served on Fusion’s board of directors. During the year ended March 31, 2007 and 2006, we purchased approximately $0.5 million and $1.3 million in services from Fusion, respectively.

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information required by Item 14 is included under the captions “Independent Accountants” in our definitive proxy statement, which will be filed with the Commission within 120 days after the close of the fiscal year, and is incorporated herein by reference.

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PART IV

ITEM 15.   EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES.

(a) List of documents filed as part of this report:

1. Financial Statements

•  Management’s Report on Internal Control over Financial Reporting.

•  Report of Independent Registered Certified Public Accounting Firm on the Financial Statements — KPMG LLP.

•  Report of Independent Registered Certified Public Accounting Firm on Internal Control Over Financial Reporting — KPMG LLP.

•  Consolidated Balance Sheets as of March 31, 2008 and 2007.

•  Consolidated Statements of Operations for the Years Ended March 31, 2008, 2007 and 2006.

•  Consolidated Statement of Changes in Stockholders’ Equity for the Three Year Period Ended March 31, 2008.

•  Consolidated Statements of Cash Flows for the Years Ended March 31, 2008, 2007 and 2006.

•  Notes to Consolidated Financial Statements.

2. Financial Statement Schedules

All schedules have been omitted because the required information is included in the consolidated financial statements or the notes thereto, or the omitted schedules are not applicable.

3. Exhibits

Exhibit
Number			Exhibit Description
	1	.1	Form of Underwriting Agreement related to the Company’s offering of common stock on March 14, 2005 (previously filed as an exhibit to the Company’s registration statement filed on February 3, 2005).
	1	.2	Underwriting Agreement, dated March 22, 2007, by and among Terremark Worldwide, Inc. and Credit Suisse Securities (USA) LLC, as representative of the several underwriters named in Schedule A thereto (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on March 23, 2007).
	3	.1	Certificate of Merger of Terremark Holdings, Inc. with and into AmTec, Inc. (previously filed as an exhibit to the Company’s Registration Statement on Form S-3 filed on May 15, 2000).
	3	.2	Restated Certificate of Incorporation of the Company (previously filed as an exhibit to the Company’s Registration Statement on Form S-3 filed on May 15, 2000).
	3	.3	Certificate of Amendment to Certificate of Incorporation of the Company (previously filed as an exhibit to the Company’s Registration Statement on Form S-1 filed on December 21, 2004).
	3	.4	Second Amended and Restated Bylaws of the Company (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on February 7, 2008).
	3	.5	Certificate of Designations of Preferences of Series H Convertible Preferred Stock of the Company (previously filed as exhibit 3.5 to the Company’s Annual Report on Form 10-K filed on July 16, 2001).
	3	.6	Certificate of Designations of Preferences of Series I Convertible Preferred Stock of the Company (previously filed as an exhibit to the Company’s Registration Statement on Form S-3/A filed on March 17, 2004).
	3	.8	Certificate of Amendment to Certificate of Incorporation of the Company (previously filed as an exhibit to the Company’s current report on Form 8-K filed on May 18, 2005).
	4	.1	Specimen Stock Certificate (previously filed as exhibit to the Company’s current report on Form 8-K filed on May 18, 2005).
	4	.4	Form of Warrant for the Purchase of Common Stock (previously filed as exhibit 4.1 to the Company’s Current Report on Form 8-K filed on April 15, 2003).

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Exhibit
Number			Exhibit Description
	4	.5	Indenture dated June 14, 2004 including form of 9% Senior Convertible Note due 2009 (previously filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2004).
	4	.6	Indenture dated as of January 5, 2007 by Terremark Worldwide, Inc. and Bank of New York Trust Company, N.A., as trustee (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on January 11, 2007).
	4	.7	Indenture dated as of May 2, 2007 by Terremark Worldwide, Inc. and Bank of New York Trust Company, N.A., as trustee (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on May 4, 2007).
	10	.1	1995 Stock Option Plan (previously filed as part of the Company’s Transition Report on Form 10-KSB for the transition period from October 1, 1994 to March 31, 1995).+
	10	.2	1996 Stock Option Plan (previously filed as part of the Company’s Transition Report on Form 10-KSB for the transition period from October 1, 1994 to March 31, 1995).+
	10	.3	Net Premises Lease by and between Rainbow Property Management, LLC and Coloconnection, Inc. (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on April 15, 2003).
	10	.4	Amended and restated 2000 Stock Option Plan (previously filed as an exhibit to the Company’s Registration Statement on Form S-8 filed on August 19, 2004).+
	10	.5	2000 Directors’ Stock Option Plan (previously filed as an exhibit to the Company’s Registration Statement on Form S-8 filed on August 19, 2002).+
	10	.6	Agreement between Fundacão De Amparo A Pesquisa Do Estado De Sao Paulo — FAPESP and Terremark Latin America (Brazil) Ltda. (previously filed as an exhibit to the Company’s Registration Statement on Form S-3/A filed on December 22, 2003).
	10	.7	Form of Warrant Certificate of Terremark Worldwide, Inc. issued to Citigroup Global Markets Realty Corp. (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on January 6, 2005).
	10	.8	Registration Rights Agreement dated as of December 31, 2004 among Terremark Worldwide, Inc. and Falcon Mezzanine Partners, LP, Stichting Pensioenfonds ABP and Stichting Pensioenfonds Voor De Gezondheid, Geestelijke En Maatschappelijke Belangen (the “Purchasers”) (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on January 6, 2005).
	10	.9	Form of Warrant Certificate of Terremark Worldwide, Inc. issued to the Purchasers (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on January 6, 2005).
	10	.10	Dedigate Stock Purchase Agreement (previously filed as an exhibit to the Company’s Quarter Report on Form 10-Q filed August 9, 2005).
	10	.11	Dedigate Registration Rights Agreement (previously filed as an exhibit to the Company’s Quarter Report on Form 10-Q filed August 9, 2005).
	10	.12	2005 Executive Incentive Compensation Plan (previously filed as an exhibit to the Company’s Definitive Proxy Statement relating to the Company’s 2005 Annual Meeting of Stockholders).+
	10	.13	Amended and Restated Employment Letter Agreement between Terremark Worldwide, Inc. and Arthur J. Money (previously filed as an exhibit to the Company’s Annual Report on Form 10-K filed on June 19, 2006).+#
	10	.14	Consulting Agreement, dated as of November 8, 2006, by and between Terremark Management Services, Inc. and Guillermo Amore (previously filed as an exhibit to the Company’s Quarter Report on Form 10-Q filed on November 9, 2006).+#
	10	.15	Purchase Agreement dated as of January 5, 2007, by and among Terremark Worldwide, Inc., as issuer, the guarantors named therein, the agent named therein, and each of the purchasers named therein (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on January 11, 2007).
	10	.16	Registration Rights Agreement dated as of January 5, 2007 by and among Terremark Worldwide, Inc. and Credit Suisse International (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on January 11, 2007).
	10	.17	Capital Lease Facility Commitment Letter by and between TWW and Credit Suisse Securities (USA) LLC and Credit Suisse, Cayman Islands Branch dated January 5, 2007 (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on January 11, 2007).

46

Exhibit
Number			Exhibit Description
	10	.18	Form of Note of Terremark Worldwide, Inc. issued to Credit Suisse, International (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on January 11, 2007).
	10	.19	Participation Agreement, dated as of February 15, 2007, by and among Culpeper Lessor 2007-1 LLC, as Lessor, NAP of the Capital Region, LLC, as Lessee and Terremark Worldwide, Inc., as Guarantor (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on February 20, 2007).
	10	.20	Lease Agreement, dated as of February 15, 2007, by and between Culpeper Lessor 2007-1 LLC and NAP of the Capital Region, LLC (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on February 20, 2007).
	10	.21	Guaranty, dated as of February 15, 2007 by Terremark Worldwide, Inc. in favor of Culpeper Lessor 2007-1 LLC (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on February 20, 2007).
	10	.22	Lease Supplement, Memorandum of Lease Agreement and Remedies, dated as of February 15, 2007, by and among Culpeper Lessor 2007-I LLC, as Lessor, NAP of the Capital Region, LLC, as Lessee and James W. DeBoer, as Trustee (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on February 20, 2007).
	10	.23	Appendix I to Participation Agreement, Lease Agreement and Other Operative Documents — Definitions and Interpretation (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on February 20, 2007).
	10	.24	Interest Purchase Agreement, dated May 11, 2007, by and among the Company and the Sellers (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on May 16, 2007).
	10	.25	Registration Rights Agreement, dated May 11, 2007, by and among the Company and the Sellers (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on May 16, 2007).
	10	.26	First Lien Senior Secured Credit Agreement, dated as of July 31, 2007, by and among the Company, each lender from time to time party thereto, Credit Suisse, as administrative agent and collateral agent and Societe Generale, as syndication agent (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on August 6, 2007).
	10	.27	Form of First Lien Term Note (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on August 6, 2007).
	10	.28	Second Lien Senior Secured Credit Agreement, dated as of July 31, 2007, by and among the Company, each lender from time to time party thereto and Credit Suisse, as administrative agent and collateral agent (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on August 6, 2007).
	10	.29	Form of Second Lien Term Note (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on August 6, 2007).
	10	.30	First Lien Security Agreement, dated as of July 31, 2007, by and among the Company, the other Persons listed on the signature pages thereto, the Additional Grantors and Credit Suisse, as collateral agent for the Secured Parties (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on August 6, 2007).
	10	.31	Second Lien Security Agreement, dated as of July 31, 2007, by and among the Company, the other Persons listed on the signature pages thereto, the Additional Grantors and Credit Suisse, as collateral agent for the Secured Parties (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on August 6, 2007).
	10	.32	First Lien Subsidiary Guaranty, dated as of July 31, 2007, by and among the Subsidiary Guarantors and the Additional Guarantors in favor of the Secured Parties (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on August 6, 2007).
	10	.33	Second Lien Subsidiary Guaranty, dated as of July 31, 2007, by and among the Subsidiary Guarantors and the Additional Guarantors in favor of the Secured Parties (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on August 6, 2007).
	10	.34	Intercreditor Agreement, dated as of July 31, 2007, by and among the Company, Credit Suisse, Cayman Islands Branch, in its capacity as collateral agent for the First Lien Lenders, including its successors and assigns from time to time, and Credit Suisse, in its capacity as collateral agent for the Second Lien Lenders, including its successors and assigns from time to time (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on August 6, 2007).

47

Exhibit
Number			Exhibit Description
	10	.35	Amendment to Terremark Worldwide, Inc. 2005 Executive Incentive Compensation Plan (previously filed on September 6, 2007 as an exhibit to the Company’s Proxy Statement Mailed to Stockholders in Connection with the Company’s 2007 Annual Meeting of stockholders).
	10	.36	Real Property Purchase Agreement, dated March 9, 2007, by and between DPJV II, LLC, BDP Partners, L.P., EJLJ Mathews Family Partners, L.P. and EGP Partners, L.P. and NAP of the Americas/West, Inc. (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on September 10, 2007).
	10	.37	Lease Termination Agreement, dated July 2, 2007, by and between NAP of the Americas/West, Inc. and Equant, Inc. (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed on September 10, 2007).
	10	.38	Employment Agreement with Manuel D. Medina dated February 7, 2008 (previously filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed on February 8, 2008).
	10	.39	Form of Indemnification Agreement for directors and officers of the Company.*+#
	10	.40	Form of Restricted Stock Agreement.*+#
	10	.41	Employment Agreement with Adam T. Smith dated June 13, 2008.*+#
	10	.42	Employment Agreement with Jose A. Segrera dated June 13, 2008.*+#
	10	.43	Employment Agreement with Marvin Wheeler dated June 13, 2008.*+#
	10	.44	Employment Agreement with Jamie Dos Santos dated November 1, 2002 (previously filed as an exhibit to the Company’s Annual Report on Form 10-K filed June 14, 2004).+#
	21	.1	Subsidiaries of the Company*
	23	.2	Consent of KPMG LLP*
	31	.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a)*
	31	.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a)*
	32	.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
	32	.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

*	Filed herewith
+	Compensation Plan or Arrangement
#	Management Contract

48

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TERREMARK WORLDWIDE, INC.

By:  /s/  MANUEL D. MEDINA

Manuel D. Medina

Chairman of the Board, President and

Chief Executive Officer

(Principal Executive Officer)

Date: June 16, 2008

By:  /s/  JOSE A. SEGRERA

Jose A. Segrera

Executive Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

Date: June 16, 2008

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/  MANUEL D. MEDINA Manuel D. Medina	Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)	June 16, 2008
/s/  GUILLERMO AMORE Guillermo Amore	Director	June 16, 2008
/s/  TIMOTHY ELWES Timothy Elwes	Director	June 16, 2008
/s/  ANTONIO S. FERNANDEZ Antonio S. Fernandez	Director	June 16, 2008
/s/  HON. ARTHUR L. MONEY Hon. Arthur L. Money	Director	June 16, 2008
/s/  MARVIN S. ROSEN Marvin S. Rosen	Director	June 16, 2008
/s/  MIGUEL J. ROSENFELD Miguel J. Rosenfeld	Director	June 16, 2008
/s/  RODOLFO A. RUIZ Rodolfo A. Ruiz	Director	June 16, 2008
/s/  JOSEPH R. WRIGHT, JR. Joseph R. Wright, Jr.	Director	June 16, 2008
/s/  JOSE A. SEGRERA Jose A. Segrera	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	June 16, 2008

49

EXHIBIT SCHEDULE

Exhibit
Number			Description
	10	.39	Form of Indemnification Agreement for directors and officers of the Company.*
	10	.40	Form of Restricted Stock Agreement.*
	10	.41	Employment Agreement with Adam T. Smith dated June 13, 2008.*
	10	.42	Employment Agreement with Jose A. Segrera dated June 13, 2008.*
	10	.43	Employment Agreement with Marvin Wheeler dated June 13, 2008.*
	21	.1	Subsidiaries of the Company*
	23	.2	Consent of KPMG LLP*
	31	.1	Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
	31	.2	Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
	32	.1	Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
	32	.2	Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

* Filed herewith.

50

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Terremark is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Terremark’s internal control system was designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements in accordance with U.S. generally accepted accounting principles. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management maintains a comprehensive system of controls intended to ensure that transactions are executed in accordance with management’s authorization, assets are safeguarded, and financial records are reliable. Management also takes steps to ensure that information and communication flows are effective and to monitor performance, including performance of internal control procedures.

Terremark’s management assessed the effectiveness of the Company’s internal control over financial reporting as of March 31, 2008 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on this assessment, management believes that, as of March 31, 2008, the Company’s internal control over financial reporting is effective.

The effectiveness of the Company’s internal control over financial reporting as of March 31, 2008 has been audited by KPMG LLP, the Company’s independent registered public accounting firm, as stated in their report appearing on page F-3, which expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of March 31, 2008.

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Terremark Worldwide, Inc.:

We have audited the accompanying consolidated balance sheets of Terremark Worldwide, Inc. and subsidiaries as of March 31, 2008 and 2007, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended March 31, 2008. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Terremark Worldwide, Inc. and subsidiaries as of March 31, 2008 and 2007, and the results of their operations and their cash flows for each of the years in the three-year period ended March 31, 2008, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 2 to the consolidated financial statements, effective April 1, 2007 the Company adopted Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an Interpretation of FASB No. 109. Also, as discussed in Note 2 to the consolidated financial statements, on April 1, 2006 the Company changed its method of accounting for share-based compensation.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Terremark Worldwide, Inc.’s internal control over financial reporting as of March 31, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated June 13, 2008 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/  KPMG LLP

Miami, Florida

June 13, 2008

Certified Public Accountants

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Terremark Worldwide, Inc.:

We have audited Terremark Worldwide, Inc.’s internal control over financial reporting as of March 31, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Terremark Worldwide, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Terremark Worldwide, Inc. maintained, in all material respects, effective internal control over financial reporting as of March 31, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Terremark Worldwide, Inc. and subsidiaries as of March 31, 2008 and 2007, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended March 31, 2008, and our report dated June 13, 2008 expressed an unqualified opinion on those consolidated financial statements.

/s/  KPMG LLP

Miami, Florida

June 13, 2008

Certified Public Accountants

F-3

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	March 31,
	2008			2007
ASSETS
Current assets:
Cash and cash equivalents	$	96,989,932		$	105,090,779
Restricted cash		755,386			832,178
Accounts receivable, net		44,048,075			23,586,471
Current portion of capital lease receivable		1,860,745			2,616,175
Prepaid expenses and other current assets		8,493,424			5,085,263
Total current assets		152,147,562			137,210,866
Restricted cash		1,585,234			1,602,963
Property and equipment, net		231,674,274			137,936,954
Debt issuance costs, net		9,869,503			5,898,355
Other assets		6,901,083			5,439,708
Capital lease receivable, net of current portion		345,074			1,885,646
Intangibles, net		15,417,502			2,900,000
Goodwill		85,919,431			16,771,189
Total assets	$	503,859,663		$	309,645,681
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of debt and capital lease obligations	$	2,999,741		$	2,221,677
Accounts payable and other current liabilities		57,947,054			33,415,886
Total current liabilities		60,946,795			35,637,563
Mortgage payable, less current portion		249,222,856			45,531,211
Convertible debt		86,284,017			69,914,065
Derivatives embedded with convertible debt, at estimated fair value		—			16,796,865
Notes payable		—			42,279,711
Deferred rent and other liabilities		9,729,736			5,245,487
Deferred revenue		7,154,424			4,742,258
Total liabilities		413,337,828			220,147,160
Commitments and contingencies		—			—
Stockholders’ equity:
Series I convertible preferred stock: $.001 par value, 312 and 323 shares issued and outstanding (liquidation value of approximately $7.8 million and $8.3 million)		1			1
Common stock: $.001 par value, 100,000,000 shares authorized; 59,172,022 and 55,813,129 shares issued		59,172			55,813
Common stock warrants		11,216,638			12,596,638
Additional paid-in capital		420,550,532			377,138,006
Accumulated deficit		(342,425,836	)		(300,197,561	)
Accumulated other comprehensive income		1,169,241			89,991
Note receivable		(47,913	)		(184,367	)
Total stockholders’ equity		90,521,835			89,498,521
Total liabilities and stockholders’ equity	$	503,859,663		$	309,645,681

The accompanying notes are an integral part of these consolidated financial statements.

F-4

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Year Ended March 31,
	2008			2007			2006
Revenues	$	187,413,799		$	100,948,181		$	62,529,282
Expenses
Cost of revenues, excluding depreciation and amortization		100,886,124			56,902,374			38,823,880
General and administrative		32,266,578			17,613,604			15,624,516
Sales and marketing		20,886,849			11,440,703			8,548,049
Depreciation and amortization		18,685,257			11,010,862			8,678,168
Gain on sale of asset		—			—			(499,388	)
Operating expenses		172,724,808			96,967,543			71,175,225
Income (loss) from operations		14,688,991			3,980,638			(8,645,943	)
Other income (expenses)
Interest expense		(32,105,034	)		(28,214,563	)		(25,048,519	)
Interest income		5,230,434			1,222,028			1,306,288
Loss on early extinguishment of debt		(26,949,577	)		—			—
Change in fair value of derivatives		(1,106,625	)		8,276,712			(4,761,000	)
Other financing charges		(1,173,079	)		—			—
Total other expenses		(56,103,881	)		(18,715,823	)		(28,503,231	)
Loss before income taxes		(41,414,890	)		(14,735,185	)		(37,149,174	)
Income taxes		813,385			216,981			—
Net loss		(42,228,275	)		(14,952,166	)		(37,149,174	)
Preferred dividend		(794,063	)		(676,150	)		(726,889	)
Net loss attributable to common stockholders	$	(43,022,338	)	$	(15,628,316	)	$	(37,876,063	)
Net loss per common share:
Basic	$	(0.74	)	$	(0.35	)	$	(0.88	)
Diluted	$	(0.74	)	$	(0.36	)	$	(0.88	)
Weighted average common shares outstanding — basic		58,134,269			44,151,259			42,973,114
Weighted average common shares outstanding — diluted		58,134,269			44,267,041			42,973,114

The accompanying notes are an integral part of these consolidated financial statements.

F-5

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

																			Accumulated
	Preferred		Common Stock Par				Common			Common			Additional						Other
	Stock		Value $.001				Stock			Stock			Paid-In			Accumulated			Comprehensive			Treasury			Notes
	Series I		Issued Shares		Amount		Warrants			Options			Capital			Deficit			Income (loss)			Stock			Receivable			Total
Balance at March 31, 2005	$	1		42,587,321	$	42,587	$	13,599,704		$	1,538,260		$	279,063,085		$	(246,674,069	)	$	(172,882	)	$	(7,220,637	)		—		$	40,176,049
Components of comprehensive loss:
Net loss		—		—		—		—			—			—			(37,149,174	)		—			—			—			(37,149,174	)
Foreign currency translation adjustment		—		—		—		—			—			—			—			(144,874	)		—			—			(144,874	)
Total comprehensive loss		—		—		—		—			—			—			—			—			—			—			(37,294,048	)
Conversion of preferred stock		—		146,655		147		—			—			(147	)		—			—			—			—			—
Exercise of stock options		—		113,456		113		—			—			185,869			—			—			—			—			185,982
Warrants issued for services		—		—		—		45,226			—			—			—			—			—			—			45,226
Accrued dividends on preferred stock		—		—		—		—			—			(726,889	)		—			—			—			—			(726,889	)
Exercise of warrants		—		15,000		15		(41,070	)		—			94,555			—			—			—			—			53,500
Forfeiture of stock options		—		—		—		—			(956,256	)		956,256			—			—			—			—			—
Warrants expired		—		—		—		(352,200	)		—			352,200			—			—			—			—			—
Share-based compensation		—		—		—		—			—			755,644			—			—			—			—			755,644
Issuance of common stock in lieu of cash-preferred stock dividend		—		27,920		28		—			—			173,355			—			—			—			—			173,383
Common stock issued in acquisition		—		1,600,000		1,600		—			—			10,753,600			—			—			—			—			10,755,200
Loans issued to employees, net of repayments		—		—		—		—			—			—			—			—			—			(287,730	)		(287,730	)
Balance at March 31, 2006		1		44,490,352		44,490		13,251,660			582,004			291,607,528			(283,823,243	)		(317,756	)		(7,220,637	)		(287,730	)		13,836,317

The accompanying notes are an integral part of these consolidated financial statements.

F-6

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(Continued)

																			Accumulated
	Preferred		Common Stock Par				Common			Common			Additional						Other
	Stock		Value $.001				Stock			Stock			Paid-In			Accumulated			Comprehensive			Treasury			Notes
	Series I		Issued Shares		Amount		Warrants			Options			Capital			Deficit			Income (loss)			Stock			Receivable			Total
Balance at March 31, 2006		1		44,490,352		44,490		13,251,660			582,004			291,607,528			(283,823,243	)		(317,756	)		(7,220,637	)		(287,730	)		13,836,317
Components of comprehensive loss:
Net loss		—		—		—		—			—			—			(14,952,166	)		—			—			—			(14,952,166	)
Foreign currency translation adjustment		—		—		—		—			—			—			—			407,747			—			(24,957	)		382,790
Total comprehensive loss		—		—		—		—			—			—			—			—			—			—			(14,569,376	)
Conversion of preferred stock		—		53,637		54		—			—			2,225			—			—			—			—			2,279
Exercise of stock options		—		57,655		58		—			—			292,732			—			—			—			—			292,790
Warrants issued in exchange for services		—		—		—		92,988			—			—			—			—			—			—			92,988
Accrued dividends on preferred stock		—		—		—		—			—			(676,029	)		—			—			—			—			(676,029	)
Expiration of warrants		—		—		—		(748,010	)		—			748,010			—			—			—			—			—
Stock tendered in payment of services		—		211,485		211		—			—			1,313,868			—			—			—			—			1,314,079
Share-based compensation		—		—		—		—			—			491,507			—			—			—			—			491,507
Sale of treasury stock		—		—		—		—			—			—			(1,422,152	)		—			7,220,637			—			5,798,485
Issuance of common stock		—		11,000,000		11,000		—			—			82,776,161			—			—			—			—			82,787,161
Repayments of loans issued to employees		—		—		—		—			—			—			—			—			—			128,320			128,320
Adoption of SFAS No. 123R		—		—		—		—			(582,004	)		582,004			—			—			—			—			—
Balance at March 31, 2007		1		55,813,129		55,813		12,596,638			—			377,138,006			(300,197,561	)		89,991			—			(184,367	)		89,498,521
Components of comprehensive loss:
Net loss		—		—		—		—			—			—			(42,228,275	)		—			—			—			(42,228,275	)
Foreign currency translation adjustment		—		—		—		—			—			—			—			1,079,250			—			(17,633	)		1,061,617
Total comprehensive loss		—		—		—		—			—			—			—			—			—			—			(41,166,658	)
Conversion of preferred stock		—		36,667		36		—			—			(36	)		—			—			—			—			—
Common stock issued in connection with acquisition		—		2,315,544		2,316		—			—			16,743,618			—			—			—			—			16,745,934
Exercise of stock options		—		117,922		118		—			—			613,252			—			—			—			—			613,370
Accrued dividends on preferred stock		—		—		—		—			—			(794,063	)		—			—			—			—			(794,063	)
Expiration of warrants		—		—		—		(1,380,000	)		—			1,380,000			—			—			—			—			—
Issuance of nonvested stock		—		218,023		218		—			—			(218	)		—			—			—			—			—
Share-based compensation		—		—		—		—			—			2,569,871			—			—			—			—			2,569,871
Issuance of common stock		—		670,737		671		—			—			4,864,278			—			—			—			—			4,864,949
Repayments of loans issued to employees		—		—		—		—			—			—			—			—			—			154,087			154,087
Premium on issuance of convertible debt		—		—		—		—			—			13,727,707			—			—			—			—			13,727,707
Expiration of early conversion incentive feature within convertible debt		—		—		—		—			—			4,308,117			—			—			—			—			4,308,117
Balance at March 31, 2008	$	1		59,172,022	$	59,172	$	11,216,638		$	—		$	420,550,532		$	(342,425,836	)	$	1,169,241		$	—		$	(47,913	)	$	90,521,835

The accompanying notes are an integral part of these consolidated financial statements.

F-7

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Year Ended March 31,
	2008			2007			2006
Cash flows from operating activities:
Net loss	$	(42,228,275	)	$	(14,952,166	)	$	(37,149,174	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		18,685,257			11,010,862			8,678,168
Loss on early extinguishment of debt		26,949,577			—			—
Change in fair value of derivatives		1,106,625			(8,276,712	)		4,761,000
Accretion on debt, net		3,972,044			8,327,261			6,769,030
Amortization of debt issue costs		1,518,927			2,042,999			1,814,480
Provision for doubtful accounts		1,555,144			1,068,478			249,425
Interest payment in kind on notes and mortgage payable		4,151,508			1,625,440			823,039
Share-based compensation		3,962,657			766,957			975,644
Disposal of property and equipment		—			—			(324,641	)
Other, net		—			—			(317,549	)
Warrants issued for services		—			92,988			45,226
(Increase) decrease in:
Accounts receivable		(17,298,342	)		(14,099,965	)		(5,835,215	)
Capital lease receivable, net of unearned interest		2,042,201			1,866,867			1,365,713
Restricted cash		94,522			(13,341	)		1,754,981
Prepaid expenses and other assets		(3,147,002	)		(2,467,328	)		(2,879,615	)
Increase (decrease) in:
Accounts payable and other current liabilities		(7,810,510	)		6,160,368			2,776,463
Deferred revenue		4,179,777			3,983,935			3,800,060
Deferred rent and other liabilities		393,053			408,351			770,295
Net cash used in operating activities		(1,872,837	)		(2,455,006	)		(11,922,670	)
Cash flows from investing activities:
Restricted cash		—			2,199,945			1,782,956
Purchase of property and equipment		(80,036,387	)		(18,463,769	)		(8,483,784	)
Proceeds from sale of assets		—			—			762,046
Acquisition of Dedigate, net of cash acquired		—			—			203,308
Acquisition of Data Return, LLC, net of cash acquired		(68,625,297	)		—			—
Acquisition of Accris Corporation, net of cash acquired		(681,808	)		—			—
Issuance of notes receivable		—			—			(344,530	)
Repayments of notes receivable		154,087			103,363			56,800
Net cash used in investing activities		(149,189,405	)		(16,160,461	)		(6,023,204	)
Cash flows from financing activities:
Payment on loans and mortgage payable		(100,545,487	)		(744,630	)		(4,938,566	)
Issuance of convertible debt		—			4,000,000			—
Sale of treasury stock		—			5,798,485			—
Payment of debt issuance costs		(8,835,232	)		(966,412	)		(4,111	)
Proceeds from issuance of common stock		4,404,727			82,787,161			—
Proceeds from issuance of mortgage payable		249,500,000			—			—
Redemption of preferred stock		—			(646,693	)		—
Payments of preferred stock dividends		(598,813	)		(673,533	)		(383,834	)
Issuance of senior subordinated secured notes		—			10,000,000			—
Proceeds from capital lease facility		—			4,403,573
Payments under capital lease obligations		(1,577,171	)		(946,429	)		(566,307	)
Proceeds from exercise of stock options and warrants		613,371			292,790			239,482
Net cash provided by (used in) financing activities		142,961,395			103,304,312			(5,653,336	)
Net (decrease) increase in cash and cash equivalents		(8,100,847	)		84,688,845			(23,599,210	)
Cash and cash equivalents at beginning of period		105,090,779			20,401,934			44,001,144
Cash and cash equivalents at end of period	$	96,989,932		$	105,090,779		$	20,401,934

The accompanying notes are an integral part of these consolidated financial statements.

F-8

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Business and Organization

Terremark Worldwide, Inc. and subsidiaries (the “Company” or “Terremark”) is a leading operator of integrated Tier-1 Internet exchanges and a global provider of managed IT infrastructure solutions for the government and commercial sectors. Terremark delivers its portfolio of services from eight locations in the U.S., Latin America, Europe and Asia. Terremark’s flagship facility, the NAP of the Americas, located in Miami, Florida is its model for carrier-neutral Internet exchanges and is designed and built to disaster-resistant standards with maximum security to house mission-critical systems infrastructure.

2.   Summary of Significant Accounting Policies

The accompanying audited consolidated financial statements include the accounts of Terremark Worldwide, Inc. and all entities in which Terremark Worldwide, Inc. has a controlling voting interest (“subsidiaries”) required to be consolidated in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) (collectively referred to as “Terremark”). All significant intercompany accounts and transactions between consolidated companies have been eliminated in consolidation.

Reclassifications

Certain reclassifications have been made to the prior period’s consolidated financial statements to conform to the current presentation.

Use of estimates

The Company prepares its financial statements in conformity with generally accepted accounting principles in the United States of America. These principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Areas where the nature of the estimate makes it reasonably possible that actual results could materially differ from the amounts estimated include: revenue recognition and allowance for bad debts, derivatives, income taxes, share-based compensation, impairment of long-lived assets, intangibles and goodwill.

Revenue recognition and allowance for bad debts

Revenues principally consist of monthly recurring fees for colocation, exchange point, managed and professional services fees. Colocation revenues also include monthly rental income for unconditioned space in the NAP of the Americas. Revenues from colocation, exchange point services, and managed web hosting as well as rental income for unconditioned space, are recognized ratably over the term of the contract. Installation fees and related direct costs are deferred and recognized ratably over the expected life of the customer installation which is estimated to be 36 to 48 months. Managed and professional services fees are recognized in the period in which the services are provided. Revenues may also include equipment resales which are generally recognized in the period in which the equipment is delivered and installed. Revenue from contract settlements is generally recognized when collectibility is reasonably assured and no remaining performance obligation exists. Taxes collected from customers and remitted to the government are excluded from revenues.

In accordance with Emerging Issues Task Force (EITF) Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables”, when more than one element such as equipment, installation and colocation or managed web hosting services are contained in a single arrangement, the Company allocates revenue between the elements based on acceptable fair value allocation methodologies, provided that each element meets the criteria for treatment as a separate unit of accounting. An item is considered a separate unit of accounting if it has value to the customer on a stand alone basis and there is objective and reliable evidence of the fair value of the undelivered items. The fair

F-9

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

value of the undelivered elements is determined by the price charged when the element is sold separately, or in cases when the item is not sold separately, by using other acceptable objective evidence. Management applies judgment to ensure appropriate application of EITF 00-21, including the determination of fair value for multiple deliverables, determination of whether undelivered elements are essential to the functionality of delivered elements, and timing of revenue recognition, among others. For those colocation or managed web hosting arrangements where the deliverables do not qualify as a separate unit of accounting, revenue from all deliverables are treated as one accounting unit and recognized ratably over the term of the arrangement.

Revenue is recognized when there is persuasive evidence of an arrangement, the fee is fixed or determinable and collection of the receivable is reasonably assured. The Company assesses collectibility based on a number of factors, including past transaction history with the customer and the credit-worthiness of the customer. The Company does not request collateral from the customers. If the Company determines that collectibility is not reasonably assured, the fee is deferred and revenue is recognized at the time collection becomes reasonably assured, which is generally upon receipt of cash.

The Company sells certain third-party service contracts and software assurance or subscription products and evaluates whether the subsequent sales of such services should be recorded as gross revenues or net revenues in accordance with the revenue recognition criteria outlined in SAB No. 104, EITF 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent,” and FASB Technical Bulletin 90-1, “Accounting for Separately Priced Extended Warranty and Product Contracts.” The Company determines whether its role is that of a principal in the transaction and therefore assumes the risks and rewards of ownership or if its role is acting as an agent or broker. Under gross revenues recognition, the entire selling price is recorded as revenues and costs to the third-party service provider or vendor is recorded as cost of revenues, product and services. Under net revenues recognition, the cost to the third-party service provider or vendor is recorded as a reduction to revenues resulting in net revenues equal to the gross profit on the transaction and there are no cost of revenues.

The Company analyzes current economic news and trends, historical bad debts, customer concentrations, customer credit-worthiness and changes in customer payment terms when evaluating revenue recognition and the adequacy of the allowance for bad debts.

The Company’s customer contracts generally require the Company to meet certain service level commitments. If the Company does not meet required service levels, it may be obligated to provide credits, usually a month of free service. Such credits, to date, have been insignificant.

Significant concentrations

Agencies of the federal government accounted for approximately 16% and 20% of revenues for the year ended March 31, 2008 and 2007, respectively. No other customer accounted for more than 10% of revenues for the years ended March 31, 2008 and 2007. The Company’s two largest customers, agencies of the federal government and Blackbird Technologies, accounted for approximately 19% and 14%, respectively, of revenues for the year ended March 31, 2006.

Derivatives

The Company has, in the past, used financial instruments, including swaps and cap agreements, to manage exposures to movements in interest rates. The use of these financial instruments modifies the exposure of these risks with the intent to reduce the risk or cost to the Company.

The Company does not hold or issue derivative instruments for trading purposes. However, the Company’s 9% Senior Convertible Notes, due June 15, 2009, (the “9% Senior Convertible Notes”), 6.625% Senior Convertible Notes, due June 15, 2013, (the “6.625% Senior Convertible Notes”) and 0.5% Senior Subordinated Convertible Notes, due June 30, 2009, (the “Series B Notes”) (collectively, the “Notes”) contain embedded derivatives that require separate valuation from the Notes. The Company recognizes these derivatives as assets or liabilities in its

F-10

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

balance sheet, measures them at their estimated fair value, and recognizes changes in their estimated fair value in earnings in the period of change.

On February 8, 2008, the Company entered into two interest rate swap agreements as required under the provisions of the $250 million mortgage loan entered into on July 31, 2007. One of the interest rate hedge agreements was effective March 31, 2008 for a notional amount of $148.0 million and a fixed interest rate of 2.999%. Interest payments on this instrument are due on the last day of each March, June, September and December commencing on June 30, 2008 and ending on December 31, 2010. The second interest rate swap agreement is effective on July 31, 2008 for a notional amount of $102.0 million and a fixed interest rate of 3.067%. Interest payments on this instrument are due on the last day of each January, April, July and October commencing on October 31, 2008 and ending on January 31, 2011. The interest rate swap agreements serve as an economic hedge against increases in interest rates and have not been designated as hedges for accounting purposes. Accordingly, the Company accounts for these interest rate swap agreements on a fair value basis and adjusts these instruments to fair value and the resulting changes in fair value are charged to earnings. See Note 10.

The Company estimates the fair value of its embedded derivatives using available market information and appropriate valuation methodologies. These embedded derivatives derive their value primarily based on changes in the price and volatility of the Company’s common stock, interest rates and the Company’s credit rating.

Considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company may eventually pay to settle these derivatives.

Share-based compensation

Effective April 1, 2006, the Company adopted the fair value recognition provisions of SFAS No. 123R, “Share-Based Payment” (“SFAS No. 123(R)”). The fair value of the stock option and nonvested stock awards with only service conditions, which are subject to graded vesting, granted after April 1, 2006 is expensed on a straight-line basis over the vesting period of the awards.

Tax benefits resulting from tax deductions in excess of share-based compensation expense recognized under the fair value recognition provisions of SFAS No. 123(R) (windfall tax benefits) are credited to additional paid-in capital in the Company’s consolidated balance sheets. Realized tax shortfalls are first offset against the cumulative balance of windfall tax benefits, if any, and then charged directly to income tax expense.

Prior to the adoption of SFAS 123(R), the Company accounted for share-based awards to employees and directors using the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, as allowed under SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). Under the intrinsic value method, no share-based compensation expense for employee stock options had generally been recognized in the Company’s consolidated statements of operations because the exercise price of its stock options granted to employees and directors since the date of our initial public offering generally equaled the fair market value of the underlying stock at the date of grant.

F-11

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company also provided the disclosures required under SFAS No. 123, as amended by SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosures.” For the year ended March 31, 2006, all employee stock option awards were granted with an exercise price equal to the market value of the underlying common stock on the date of grant. Pro forma information for the year ended March 31, 2006 is as follows:

	2006
Net loss attributable to common stockholders — as reported	$	(37,876,063	)
Employee related share-based compensation expense included in net loss		975,644
Incremental share-based compensation expense if the fair value method had been adopted		(3,691,670	)
Net loss attributable to common stockholders — pro forma	$	(40,592,089	)
Basic loss per common share — as reported	$	(0.88	)
Basic loss per common share — pro forma	$	(0.94	)
Diluted loss per common share — as reported	$	(0.88	)
Diluted loss per common share — pro forma	$	(0.94	)

Stock warrants

The Company uses the fair value method to value warrants granted to non-employees. Some warrants are vested over time and some vest upon issuance. The Company determined the fair value for non-employee warrants using the Black-Scholes-Merton option-pricing model with the same assumption used for employee grants, except for expected life which was estimated to be between 1 and 7 years. When warrants to acquire the Company’s common stock are issued in connection with the sale of debt or other securities, aggregate proceeds from the sale of the warrants and other securities are allocated among all instruments issued based on their relative fair market values. Any resulting discount from the face value of debt is amortized to interest expense using the effective interest method over the term of the debt.

Earnings (loss) per share

The Company’s 9% Senior Convertible Notes and 6.625% Senior Convertible Notes (collectively, the “Senior Convertible Notes”) contain contingent interest provisions which allow the holders of the Senior Convertible Notes to participate in any dividends declared on the Company’s common stock. Further, the Company’s Series I preferred stock contain participation rights which entitle the holders to receive dividends in the event the Company declares dividends on its common stock. Accordingly, the Senior Convertible Notes and the Series I preferred stock are considered participating securities.

Basic EPS is calculated as net income (loss) available to common stockholders divided by the weighted average number of common shares outstanding during the period. If the effect is dilutive, participating securities are included in the computation of basic EPS. The Company’s participating securities do not have a contractual obligation to share in the losses in any given period. As a result, these participating securities will not be allocated any losses in the periods of net losses, but will be allocated income in the periods of net income using the two-class method. The two-class method is an earnings allocation formula that determines earnings for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. Under the two-class method, net income is reduced by the amount of dividends declared in the current period for each class of stock and by the contractual amounts of dividends that must be paid for the current period. The remaining earnings are then allocated to common stock and participating securities to the extent that each security may share in earnings as if all of the earnings for the period had been distributed. Diluted EPS is calculated using the treasury stock and “if converted” methods for potential common stock. For diluted earnings

F-12

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(loss) per share purposes, however, the Company’s preferred stock will continue to be treated as a participating security in periods in which the use of the “if converted” method results in anti-dilution.

Other comprehensive loss

Other comprehensive loss presents a measure of all changes in stockholder’s equity except for changes resulting from transactions with stockholders in their capacity as stockholders. Other comprehensive loss consisting of net loss and foreign currency translation adjustments, is presented in the accompanying consolidated statement of stockholders’ equity.

The Company’s foreign operations generally use the local currency as their functional currency. Assets and liabilities of these operations are translated at the exchange rates in effect on the balance sheet date. If exchangeability between the functional currency and the U.S. dollar is temporarily lacking at the balance sheet date, the first subsequent rate at which exchanges can be made is used to translate assets and liabilities.

Cash and cash equivalents

The Company considers all amounts held in highly liquid instruments with an original purchased maturity of three months or less to be cash equivalents. Cash and cash equivalents include cash balances maintained in the operating and interest-bearing money market accounts at the Company’s banks.

Restricted cash

Restricted cash represents cash required to be deposited with financial institutions in connection with certain loan agreements and operating leases.

Property and equipment

Property and equipment are stated at the Company’s original cost or fair value at the date of acquisition for acquired property and equipment. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets, generally three to five years for non- data center equipment, furniture and fixtures and five to twenty years for data center equipment and building improvements. Building and leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the asset or improvement, which averages fifteen years. The NAP of the Americas building, owned by the Company, is depreciated over the estimated useful life of the building, which is thirty nine years. Costs for improvement and betterments that extend the life of assets are capitalized. Maintenance and repair expenditures are expensed as incurred. Construction in progress is stated at its original cost and includes direct and indirect expenditures for the construction and expansion associated with the NAP of the Capital Region in Virginia. For the years ended March 31, 2008 and 2007, the Company capitalized $1.6 million and $0.2 million of interest related to various construction projects, respectively.

On September 4, 2007, the Company acquired two parcels of real property, including two buildings, in Santa Clara, California that are adjacent to the Company’s current facilities. The Company intends to build a data center on these two properties. The Company has not determined if there is any use for the two existing buildings and as such the entire purchase price has been preliminarily allocated to the land.

Capitalized Software

The Company accounts for internal-use software development costs in accordance with American Institute of Certified Public Accountants (“AICPA”) Statement of Position 98-1, “Accounting for the Cost of Software Developed or Obtained for Internal Use,” (“SOP 98-1”). SOP 98-1 specifies that software costs, including internal payroll costs, incurred in connection with the development or acquisition of software for internal use is charged to technology development expense as incurred until the project enters the application development phase. Costs

F-13

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

incurred in the application development phase are capitalized and will be depreciated using the straight-line method over an estimated useful life of five years, beginning when the software is ready for use. During the year ended March 31, 2008, the Company capitalized software costs totaling $0.5 million. During the years ended March 31, 2007 and 2006 the Company did not capitalize any software costs.

Goodwill and Impairment of long-lived assets and long-lived assets to be disposed of

Goodwill and intangible assets that have indefinite lives are not amortized, but rather, are tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable. The goodwill impairment test involves a two-step approach. The first step involves a comparison of the fair value of each of our reporting units with its carrying amount. If a reporting unit’s carrying amount exceeds its fair value, the second step is performed. The second step involves a comparison of the implied fair value and carrying value of that reporting unit’s goodwill. To the extent that a reporting unit’s carrying amount exceeds the implied fair value of its goodwill, an impairment loss is recognized. Identifiable intangible assets not subject to amortization are assessed for impairment by comparing the fair value of the intangible asset to its carrying amount. An impairment loss is recognized for the amount by which the carrying value exceeds fair value. Intangible assets that have finite useful lives are amortized over their useful lives.

Goodwill represents the carrying amount of the excess purchase price over the fair value of identifiable net assets acquired in conjunction with (i) the April 2000 acquisition of a corporation holding rights to develop and manage facilities catering to the telecommunications industry (ii) the September 2005 acquisition of a managed web hosting service provider in Europe (iii) the May 2007 acquisition of a managed web hosting services provider in the United States and (iv) the January 2008 acquisition of a disaster recovery and business continuity provider in the United States. The Company performed the annual test for impairment for the goodwill acquired in 2000 and 2007 in the fourth quarter of the fiscal year and concluded there were no impairments. The Company performed the annual test for impairment for the goodwill acquired in 2005, in the second quarter of the fiscal year and concluded there were no impairments.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events and circumstances include, but are not limited to, prolonged industry downturns, significant decline in our market value and significant reductions in our projected cash flows. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to estimated undiscounted future net cash flows expected to be generated by the asset. Significant judgments and assumptions are required in the forecast of future operating results used in the preparation of the estimated future cash flows, including long-term forecasts of the number of additional customer contracts, profit margins, terminal values and discounted rates. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Rent expense

Rent expense under operating leases is recorded on the straight-line method based on total contracted amounts. Differences between the amounts contractually due and those amounts reported are included in deferred rent.

Fair value of financial instruments

The Company estimates the fair value of financial instruments through the use of public market prices, quotes from financial institutions, discounted cash flow analyses and other available information. Judgment is required in interpreting data to develop estimates of market value and, accordingly, amounts are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The Company does not hold its financial instruments for trading or speculative purposes.

F-14

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s short-term financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, prepaid expenses and other current assets, accounts payable and other liabilities, consist primarily of instruments without extended maturities, the fair value of which, based on management’s estimates, reasonably approximated their book value. The fair value of capital lease obligations is based on management estimates and reasonably approximated their book value due to obligations with similar interest rates and maturities. The fair value of the Company’s redeemable preferred stock is estimated to be its liquidation value, which includes accumulated but unpaid dividends. The fair value of other financial instruments the Company held for which it is practicable to estimate such value is as follows:

	March 31, 2008				March 31, 2007
	Book Value		Fair Value		Book Value		Fair Value
Mortgage payable, including current portion	$	250,722,856	$	247,811,706	$	46,322,515	$	48,177,123
Notes payable		—		—		42,279,711		50,551,949
Convertible debt		86,284,017		86,717,644		69,914,065		86,771,627

As of March 31, 2008 and 2007 the fair value of the Company’s notes payable and convertible debentures was based on discounted cash flows using a discount rate of approximately 10% and 13%, respectively. The book value for the Company’s mortgage payable and notes payable is net of the unamortized discount to debt principal. See Notes 10 and 13.

Income taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce tax assets to the amounts expected to be realized. In assessing the likelihood of realization, management considers estimates of future taxable income.

Effective April 1, 2007, the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48 (As amended) — “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109” (“FIN 48”). This interpretation clarifies the accounting for uncertainty in income taxes recognized in financial statements in accordance with FASB No. 109 and prescribes a recognition threshold and measurement attribute for the financial recognition and measurement of a tax position taken or expected to be taken on a tax return. FIN 48 requires that we determine whether the benefits of our tax positions will more likely than not be sustained upon audit based on the technical merits of the tax position. The provisions of FIN 48 also provide guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. In connection with the adoption of FIN No. 48, the Company analyzed the filing positions in all of the federal, state and foreign jurisdictions where the Company is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company does not have any unrecognized tax benefits and there was no effect on the financial condition or results of operations for the year ended March 31, 2008 as a result of implementing FIN 48. In accordance with FIN 48, the Company continued its policy of recognizing penalties and interest related to recognized tax positions, if any, in general and administrative expenses.

The Company has not been audited by the Internal Revenue Service or other applicable tax authorities for the following open tax periods: the year ended December 31, 2004, the quarter ended March 31, 2005, and the years ended March 31, 2006, 2007 and 2008. Net operating loss carryovers incurred in years prior to 2004 are subject to audit in the event they are utilized in subsequent years.

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TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Recent Accounting Pronouncements

In February 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 155, “Accounting for Certain Hybrid Instruments,” an amendment of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” and SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities — a replacement of FASB Statement No. 125” (“SFAS No. 155”). SFAS No. 155 improves the financial reporting of certain hybrid financial instruments by requiring more consistent accounting that eliminates exemptions and provides a means to simplify the accounting for such instruments. Specifically, SFAS No. 155 allows financial instruments that have embedded derivatives to be accounted for as a whole (eliminating the need to bifurcate the derivative from its host) if the holder elects to account for the whole instrument on a fair value basis. SFAS No. 155 also (i) clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133; (ii) establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; (iii) clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives and (iv) amends SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. The Company adopted SFAS No. 155 in the quarter ended June 30, 2007 and it did not have any impact on its financial position, results of operations and cash flows.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”). This standard clarifies the principle that fair value should be based on the assumptions that market participants would use when pricing an asset or liability. Additionally, it establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those years for financial assets and liabilities, as well as for any other assets and liabilities, that are carried at fair value on a recurring basis in the financial statements. The FASB has provided a one year deferral for the implementation of SFAS No. 157 for nonfinancial assets and liabilities that are not remeasured at fair value on a recurring basis. The Company is currently in the process of evaluating the impact that the adoption of SFAS No. 157 will have on its financial position, results of operations and cash flows.

In November 2006, the FASB ratified Emerging Issues Task Force (“EITF”) Issue No. 06-7, “Issuer’s Accounting for a Previously Bifurcated Conversion Option in a Convertible Debt Instrument When the Conversion Option No Longer Meets the Bifurcation Criteria in FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities” (“EITF 06-7”). At the time of issuance, an embedded conversion option in a convertible debt instrument may be required to be bifurcated from the debt instrument and accounted for separately by the issuer as a derivative under FASB 133, based on the application of EITF Issue 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock”, (“EITF 00-19”). Subsequent to the issuance of the convertible debt, facts may change and cause the embedded conversion option to no longer meet the conditions for separate accounting as a derivative instrument, such as when the bifurcated instrument meets the conditions of EITF 00-19 to be classified in stockholders’ equity. Under EITF 06-7, when an embedded conversion option previously accounted for as a derivative under FASB 133 no longer meets the bifurcation criteria under that standard, an issuer shall disclose a description of the principal changes causing the embedded conversion option to no longer require bifurcation under FASB 133 and the amount of the liability for the conversion option is reclassified to stockholders’ equity. EITF 06-7 should be applied to all previously bifurcated conversion options in convertible debt instruments that no longer meet the bifurcation criteria in FASB 133 in interim or annual periods beginning after December 15, 2006, regardless of whether the debt instrument was entered into prior or subsequent to the effective date of EITF 06-7. Earlier application of EITF 06-7 is permitted in periods for which financial statements have not yet been issued. The Company’s 9% Senior Convertible Notes contained an embedded early conversion incentive that resulted in the conversion feature

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

meeting the conditions to be bifurcated and was accounted for as a derivative. The early conversion incentive expired on June 14, 2007 and the Company adopted the provisions of EITF 06-7, which resulted in the conversion feature no longer meeting the bifurcation criteria. See Note 12.

In December 2006, the FASB issued a Staff Position on EITF 00-19-2, “Accounting for Registration Payment Arrangements” (“FSP 00-19-2”). This FSP 00-19-2 specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, should be separately recognized and measured in accordance with SFAS No. 5, “Accounting for Contingencies.” If the transfer of consideration under a registration payment arrangement is probable and can be reasonably estimated at inception, the contingent liability under the registration payment arrangement is included in the allocation of proceeds from the related financing transaction (or recorded subsequent to the inception of a prior financing transaction) using the measurement guidance in SFAS No. 5. FSP 00-19-2 is effective immediately for registration payment arrangements and the financial instruments subject to those arrangements that are entered into or modified subsequent to the issuance of the FSP 00-19-2. For prior arrangements, the FSP 00-19-2 is effective for financial statements issued for fiscal years beginning after December 15, 2006 and interim periods within those years. The adoption of this FSP 00-19-2 did not have a material impact on the Company’s financial position, results of operations or cash flows.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115” (SFAS No. 159). Under SFAS No. 159, companies have an opportunity to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact SFAS No. 159 will have on its financial condition and results of operations should the Company elect to adopt SFAS No. 159.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) replaces SFAS No. 141, “Business Combinations,” however, it retains the fundamental requirements of the former Statement that the acquisition method of accounting (previously referred to as the purchase method) be used for all business combinations and for an acquirer to be identified for each business. SFAS No. 141(R) defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. Among other requirements, SFAS No. 141(R) requires the acquiring entity in a business combination to recognize the identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree at their acquisition-date fair values, with limited exceptions; acquisition-related costs generally will be expensed as incurred. SFAS No. 141(R) requires certain financial statement disclosures to enable users to evaluate and understand the nature and financial effects of the business combination. SFAS No. 141(R) must be applied prospectively to business combinations that are consummated beginning in the Company’s fiscal 2010.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51” (“SFAS No. 160”) to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Among other requirements, SFAS No. 160 clarifies that a noncontrolling interest in a subsidiary, which is sometimes referred to as minority interest, is to be reported as a separate component of equity in the consolidated financial statements. SFAS No. 160 also requires consolidated net income to include the amounts attributable to both the parent and the noncontrolling interest and to disclose those amounts on the face of the consolidated statement of income. SFAS No. 160 must be applied prospectively for fiscal years, and interim periods within those fiscal years, beginning in the Company’s fiscal 2010, except for the presentation and disclosure requirements, which will be applied retrospectively for all periods presented.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS No. 161”). SFAS No. 161 amends and expands the disclosure requirement for SFAS Statement No. 133, “Derivative Instruments and Hedging Activities” (“SFAS No. 133”). It requires enhanced disclosure about (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedged

F-17

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

items are accounted for under SFAS No. 133 and its related interpretations, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for the Company as of April 1, 2009. The Company is currently evaluating the impact SFAS No. 161 will have on its financial statement disclosures.

In April 2008, the FASB issued FASB Staff Position (“FSP”) No. FAS 142-3, Determination of the Useful Life of Intangible Assets. FSP No. FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142, Goodwill and Other Intangible Assets. This FSP is effective for fiscal years beginning after December 31, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The Company is currently evaluating the impact that FSP No. FAS 142-3 will have on its will have on its financial position, results of operations and cash flows.

3.   Acquisitions

On January 24, 2008, the Company acquired all of the outstanding common stock of Accris Corporation (“Accris”). Accris is widely recognized as a leader in assisting government and commercial customers architect and implement data storage, data protection and data availability systems. The purchase price of $2.9 million was comprised of $0.8 million in cash and 390,000 shares of the Company’s common stock with a fair value of $2.1 million. The fair value of the Company’s stock was determined using the five-day trading average price of the Company’s common stock for two days before and after the date the transaction was finalized. The costs to acquire Accris were allocated to the tangible assets acquired and liabilities assumed based on their respective fair values and any excess was allocated to goodwill. There were no significant identifiable intangible assets. The following summarizes the allocation of the purchase price as of March 31, 2008:

Cash and cash equivalents	$	109,248
Accounts receivable		2,172,035
Inventory		763,970
Goodwill		2,964,769
Accounts payable and accrued expenses		(3,141,827	)
Net assets acquired	$	2,868,195

On May 24, 2007, the Company acquired all of the outstanding common stock of Data Return, LLC (“Data Return”). Data Return is a leading provider of enterprise-class technology hosting solutions. The acquisition of Data Return’s technology, customers and team of employees complements the Company’s existing team and service delivery platforms better positioning the Company to capture the market demand for virtualized IT solutions. The preliminary purchase price of $85.0 million was comprised of: (i) cash consideration of $70.0 million, (ii) 1,925,546 shares of the Company’s common stock with a fair value of $14.7 million and (iii) direct transaction costs of $0.3 million. The fair value of the Company’s stock was determined using the five-day trading average price of the Company’s common stock for two days before and after the date the transaction was announced. The costs to acquire Data Return were allocated to the tangible and identified intangible assets acquired and liabilities assumed based on their respective fair values and any excess was allocated to goodwill. The purchase agreement also included contingent consideration which was based on the determination of the seller’s net working capital target amount at the acquisition closing date. On October 22, 2007, the valuation of the seller’s net working capital amount was finalized resulting in a $1.7 million reduction to the $85.0 million preliminary purchase price. In addition, as of March 31, 2008, the original purchase price allocation was

F-18

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

adjusted by decreasing accounts receivables and increasing goodwill by $0.5 million. The following summarizes the allocation of the purchase price as of March 31, 2008:

Cash and cash equivalents	$	41,095
Accounts receivable		2,546,372
Property and equipment		9,786,000
Other assets		950,813
Intangible assets, including goodwill		80,825,287
Accounts payable and accrued expenses		(6,894,281	)
Other liabilities		(3,849,216	)
Net assets acquired	$	83,406,070

The allocation of intangible assets acquired as of March 31, 2008 is summarized in the following table:

	Gross Carrying		Amortization		Accumulated
	Amount		Period		Amortization
Intangibles no longer amortized:
Goodwill	$	66,125,287		—	$	—
Trademarks		4,100,000		—		—
Amortizable intangibles:
Customer base		6,500,000		8 years		690,625
Technology		4,000,000		5 years		680,000
Other		100,000		3 years		28,333

The results of Data Return’s operations have been included in the Company’s consolidated financial statements since the acquisition date. The following unaudited pro forma financial information of the Company for the years ended March 31, 2008 and 2007 have been presented as if the acquisition had occurred as of the beginning of each period. This pro forma information does not necessarily reflect the results of operations if the business had been managed by the Company during these periods and is not indicative of results that may be obtained in the future.

	For the Years Ended
	March 31,
	(unaudited)
	2008			2007
Revenues — pro forma	$	197,751,889		$	156,985,181
Net loss — pro forma	$	(42,303,283	)	$	(17,934,166	)
Net loss per common share:
Basic and diluted — pro forma	$	(0.74	)	$	(0.40	)

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TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

4.   Restricted Cash

	March 31,
	2008			2007
Restricted cash consists of:
Security deposits under operating leases	$	2,340,620		$	1,599,710
Escrow deposits under mortgage loan agreement		—			832,178
Capital improvements reserve		—			3,253
		2,340,620			2,435,141
Less: current portion		(755,386	)		(832,178	)
	$	1,585,234		$	1,602,963

5.   Accounts Receivable

	March 31,
	2008			2007
Accounts receivable consists of:
Accounts receivable	$	36,371,552		$	22,752,676
Unbilled revenue		8,667,031			2,034,303
Allowance for doubtful accounts		(990,508	)		(1,200,508	)
	$	44,048,075		$	23,586,471

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Unbilled revenue consists of revenues earned for which the customer has not been billed.

6.   Prepaid Expenses and Other Assets

	March 31,
	2008			2007
Prepaid expenses and other assets consists of:
Prepaid expenses	$	3,090,786		$	1,311,820
Deferred installation costs		5,571,544			4,327,300
Deposits		3,646,384			1,703,757
Deferred rent receivable		1,085,872			832,733
Interest and other receivables		424,355			499,788
Other assets		1,575,566			1,849,573
		15,394,507			10,524,971
Less: current portion		(8,493,424	)		(5,085,263	)
	$	6,901,083		$	5,439,708

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TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

7.   Property and Equipment

	March 31,
	2008			2007
Property and equipment consists of:
Land	$	24,172,193		$	14,575,176
Building		55,335,724			55,335,724
Building and leasehold improvements		68,652,594			50,442,331
Machinery and equipment		52,274,739			38,296,663
Construction in progress		54,677,025			3,682,770
Office equipment, furniture and fixtures		29,793,591			12,125,967
		284,905,866			174,458,631
Less accumulated depreciation and amortization		(53,231,592	)		(36,521,677	)
	$	231,674,274		$	137,936,954

8.   Intangibles

	March 31,
	2008			2007
Intangibles consist of:
Customer base	$	8,300,000		$	1,800,000
Technology		6,400,000			2,400,000
Trademarks		4,100,000			—
Non-compete agreements		100,000			—
		18,900,000			4,200,000
Accumulated amortization		(3,482,498	)		(1,300,000	)
	$	15,417,502		$	2,900,000

The Company expects to record amortization expense associated with these intangible assets as follows:

					Non-Compete
	Customer Base		Technology		Agreements
2009	$	992,500	$	1,400,000	$	33,333
2010		992,500		1,295,714		33,333
2011		992,500		800,000		5,000
2012		992,500		800,000		—
2013		992,500		120,000		—
Thereafter		1,867,622		—		—
	$	6,830,122	$	4,415,714	$	71,666

During the years ended March 31, 2008, 2007 and 2006, amortization of intangibles aggregated $2.2 million, $0.8 million and $0.5 million, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

9.   Accounts Payable and Other Current Liabilities

	March 31,
	2008		2007
Accounts payable and other current liabilities consists of:
Accounts payable	$	29,383,405	$	11,721,406
Accrued expenses		17,246,649		12,994,896
Current portion of deferred revenue		6,320,659		2,766,984
Interest payable		2,884,780		3,663,248
Customer prepayments		2,111,561		2,269,352
	$	57,947,054	$	33,415,886

10.   Mortgage Payable

	March 31,
	2008			2007
Mortgage Payable consists of:
First Lien Credit Agreement, face value of $150 million, due August 15, 2012. Principal of $375,000 is payable quarterly. Interest is payable monthly at Eurodollar rate plus 3.75% at the election of the Company. (Effective interest rate of 7.6)%	$	148,188,463		$	—
Second Lien Credit Agreement, face value of $100 million, due February 2, 2013. Interest is payable at Eurodollar rate plus 7.75% at the election of the Company. (Effective interest rate of 12.1)%		102,534,393			—
Citigroup Global Markets, face value of $49 million, due February 2009. Interest is payable annually at greater of 6.75% or LIBOR plus 4.75%. (Effective interest rate of 10.7)%		—			46,322,516
		250,722,856			46,322,516
Less: current portion		(1,500,000	)		(791,305	)
	$	249,222,856		$	45,531,211

On July 31, 2007, the Company entered into term loan financing arrangements in the aggregate principal amount of $250 million, composed of two term loan facilities, including a $150 million first lien credit agreement (“First Lien Agreement”) and a $100 million second lien credit agreement (“Second Lien Agreement”, the First Lien Agreement and the Second Lien Agreement collectively, the “Credit Agreements”) among the Company, as borrower and Credit Suisse as principal agent in the First Lien Agreement and as administrative agent and collateral agent in the Second Lien Agreement and the lenders from time to time party thereto (initially Credit Suisse and Tennenbaum Capital Partners, LLC). Interest on the First Lien Agreement will be based, at the periodic election of the Company, on an adjusted Eurodollar rate plus 3.75% or at a rate based on the federal funds rate plus 2.75%. Interest on the Second Lien Agreement will be based, at the periodic election of the Company, on an adjusted Eurodollar rate plus 7.75% or at a rate based on the federal funds rate plus 6.75%. With respect to the loans extended under the Second Lien Agreement, within the first two years, the Company may elect to capitalize and add to the principal of such loans interest to the extent of 4.5% of the Eurodollar rate loans or 3.5% of the federal funds rate loans. Principal payments of $375,000 are due quarterly on the First Lien Agreement and the principal for the Second Lien Agreement is due at maturity.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The loans extended under the First Lien Agreement may be prepaid at any time without penalty. The loans extended under the Second Lien Agreement may not be prepaid on or prior to the first anniversary of the closing date. After such first anniversary, the loans extended under the Second Lien Agreement may be prepaid if accompanied by a premium in an amount equal to 2.0% of the aggregate outstanding principal if prepaid between the first and second anniversaries of the closing date, 1.0% of the aggregate outstanding principal if prepaid between the second and third anniversaries of the closing date and no premium if prepaid after the third anniversary of the closing date.

The loan proceeds were used to satisfy and pay all of the Company’s outstanding secured indebtedness, including (i) the senior secured notes, with a face value of $30.0 million, held by Falcon Mezzanine Partners, LP (“Falcon Investors”) and affiliates of AlpInvest, N.V., (ii) the $10 million aggregate principal amount of our Senior Subordinated Secured Notes, due June 30, 2009 (the “Series A Notes”) held by Credit Suisse, Cayman Islands Branch, (iii) the $13.25 million capital lease facility provided to the Company by Credit Suisse (the “Lease Financing Commitment”), of which $4.6 million was drawn at July 31, 2007 and (iv) the senior mortgage loan, with a face value of $49.0 million, initially extended to the Company by Citigroup Global Markets Realty Corp and subsequently assigned to Wachovia, N.A. (“Wachovia”). The Company paid prepayment premiums in amounts equal to $1.7 million and $1.1 million to the Falcon Investors and Wachovia, respectively, in connection with these financing transactions. The Company anticipates using the remainder of the proceeds to fund capital expenditures to support the Company’s data center expansion plans and to provide working capital.

The payoff of the senior secured notes with a face value of $30.0 million and the senior mortgage loan with a face value of $49.0 million was treated as a debt extinguishment. The early extinguishment of these debt instruments resulted in a loss of approximately $8.5 million during the year ended March 31, 2008. The loss included $2.8 million of prepayment penalties, $0.2 million of additional financing charges, $1.3 million of unamortized deferred financing costs and $4.2 million of unamortized discount related to the extinguished debt that were written off.

The payoff of the Series A Notes with a face value of $10.0 million and the $13.25 million capital lease facility, of which $4.6 million was drawn at July 31, 2007, was treated as a modification of debt instruments, in accordance with EITF Issue No. 96-19, “Debtor’s Accounting for a Modification or Exchange of Debt Instruments” (“EITF 96-19”), as Credit Suisse was the creditor on these debt instruments as well as the creditor on the First Lien Agreement. In accordance with EITF 96-19, the modification of the Credit Suisse related debt instruments was not determined to be a substantial modification. As a result, unamortized debt issuance costs and debt discounts related to the modified debt are allocated to the new debt and amortized over the term of the new debt. At July 31, 2007, unamortized debt issuance costs amounting to $0.7 million related to the Series A Notes and the Capital Lease Facility were allocated $0.6 million to the First Lien Agreement and $0.1 million to the Second Lien Agreement. In addition, the Company incurred $8.9 million of additional debt issuance costs which were allocated $4.8 million to the First Lien Agreement and $4.1 million to the Second Lien Agreement. The Company is amortizing the debt issuance costs using the effective interest method over the term of the respective Lien Agreement to which the debt issuance costs were allocated.

At July 31, 2007, the unamortized debt discount amounting to $0.9 million related to the Series A Notes and the Capital Lease Facility was allocated $0.8 million to the First Lien Agreement and $0.1 million to the Second Lien Agreement. The Second Lien Agreement also had a discount of $0.5 million. The Company is amortizing the debt discount using the effective interest method over the term of the respective Lien Agreement to which the debt discount was allocated.

As the modification of the Credit Suisse debt instruments was not determined to be a substantial modification, fees paid to third parties were expensed. The Company expensed $1.2 million of charges consisting primarily of title and legal fees which are included in other financing charges for the year ended March 31, 2008.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The provisions of the Credit Agreements contain a number of covenants that limit or restrict the Company’s ability to incur more debt or liens, pay dividends, enter into transactions with affiliates, merge or consolidate with others, dispose of assets or use asset sale proceeds, make acquisitions or investments, enter into hedging activities, make capital expenditures and repurchase stock, subject to financial measures and other conditions. In addition, the Credit Agreements include financial covenants based on the most recently ended four fiscal quarters such as maintaining certain; (a) maximum leverage ratios regarding the Company’s consolidated funded indebtedness; (b) maximum leverage ratios with respect to the First Lien indebtedness; (c) minimum interest coverage ratios and; (d) incur capital expenditures not to exceed specified amounts. The breach of any of these covenants could result in a default and could trigger acceleration of repayment. As of March 31, 2008, the Company was in compliance with all covenants under the debt agreements, as applicable.

In addition, the Company is required to enter into an interest rate swap prior to the 210th day after July 31, 2007 (the “Closing Date”) of the Credit Agreements (or such later dates as may be specified by the Administrative Agent in its sole discretion). The interest rate instrument should cover a notional amount of not less than 50% of the sum of the principal amount of the Credit Agreements outstanding as of the Closing Date for a period not less than 2 years. On February 8, 2008, the Company entered into two interest rate swap agreements. One of the interest rate swap agreements was effective March 31, 2008 for a notional amount of $148.0 million and a fixed interest rate of 2.999%. Interest payments on this instrument are due on the last day of each March, June, September and December commencing on June 30, 2008 and ending on December 31, 2010. The second interest rate swap agreement entered into is effective on July 31, 2008 for a notional amount of $102.0 million and a fixed interest rate of 3.067%. Interest payments on this instrument are due on the last day of each January, April, July and October commencing on October 31, 2008 and ending on January 31, 2011. The interest rate swap agreements serve as an economic hedge against increases in interest rates and have not been designated as hedges for accounting purposes. Accordingly, the Company accounts for these interest rate swap agreements on a fair value basis and as a result these instruments are adjusted to fair value and the resulting changes in fair value are charged to earnings. At March 31, 2008, the fair value of the interest rate swap agreements was determined to be a $2.5 million charge to earnings and included in change in fair value of derivatives in the accompanying consolidated statements of operations. The resulting liability has been included in deferred rent and other liabilities in the accompanying consolidated balance sheets.

In connection with the December 31, 2004 purchase of the NAP of the Americas building, the Company issued to Citigroup Global Markets Realty Corp., for no additional consideration, warrants to purchase an aggregate of 500,000 shares of the Company’s common stock. Those warrants expire on December 31, 2011 and are divided into four equal tranches that differ only in respect of the applicable exercise prices, which are $6.80, $7.40, $8.10 and $8.70, respectively. The warrants were valued at approximately $2.2 million, which was recorded as a discount to the debt principal. Proceeds from the issuance of the mortgage note payable and the warrants were allocated based on their relative fair values. The costs related to the issuance of the mortgage loan were capitalized and amounted to approximately $1.6 million. At July 31, 2007 there was $0.6 million and $0.9 million of unamortized debt issuance costs and unamortized debt discount, respectively, related to this loan. These amounts were written off in connection with the early extinguishment of this debt.

F-24

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

11.   Convertible Debt

	March 31,
	2008		2007
Convertible debt consists of:
9% Senior Convertible Notes, face value of $29.1 and $86.25 million, due June 15, 2009, and convertible into shares of the Company’s common stock at $12.50 per share. Interest at 9% is payable semi-annually, on December 15 and June 15 (Effective interest rate of 26.5% and 23.4%)	$	24,834,645	$	65,510,191
6.625% Senior Convertible Notes, face value of $57.2 million, due June 15, 2013, and convertible into shares of the Company’s common stock at $12.50 per share. Interest at 6.625% is payable semi-annually, on December 15 and June 15 (Effective interest rate of 6.6%)		57,192,000		—
0.5% Senior Subordinated Convertible Notes, face value of $4.0 million, due June 30, 2009, and convertible into shares of the Company’s common stock at $8.14 per share. Interest at 0.5% is payable semi-annually, on December 1 and July 1 (Effective interest rate of 0.72% and 0.74%)		4,257,372		4,403,874
	$	86,284,017	$	69,914,065

On May 2, 2007, the Company completed a private exchange offer for the issuance of up to $86,250,000 of its 6.625% Senior Convertible Notes with a limited number of holders for $57,190,000 aggregate principal amount of its outstanding 9% Senior Convertible Notes in exchange for an equal aggregate principal amount of the 6.625% Senior Convertible Notes. The Company also announced that it will initiate a public exchange offer to the remaining holders of its 9% Senior Convertible Notes to exchange any and all of their 9% Senior Convertible Notes for an equal aggregate principal amount of 6.625% Senior Convertible Notes. After completion of the private exchange offer, only $29,060,000 aggregate principal amount of the 9% Senior Convertible Notes remain outstanding under the global note and indenture governing the 9% Senior Convertible Notes.

The private exchange offer is an exchange of debt instruments as addressed in EITF Issue No. 96-19, “Debtor’s Accounting for a Modification or Exchange of Debt Instruments” (“EITF 96-19”). In accordance with EITF 96-19, the exchange of $57.2 million of the 9% Senior Convertible Notes were accounted for as an early extinguishment of debt and the 6.625% Senior Convertible Notes were accounted for as new debt instruments and recorded at $57.2 million on the date of the transaction. The exchange of the 9% Senior Convertible Notes with the 6.625% Senior Convertible Notes resulted in a loss on the early extinguishment of debt of $18.5 million included in the twelve months ended March 31, 2008. The loss included $2.2 million of unamortized deferred financing costs, $13.3 million of the unamortized discount on the 9% Senior Convertible Notes and the write off of $10.8 million of the derivative liability associated with the 9% Senior Convertible Notes that was bifurcated and accounted for separately. In addition, the exchange results in a substantial premium of $13.7 million associated with the fair value of the 6.625% Senior Convertible Notes that was recorded as additional paid-in capital, in accordance with Accounting Principles Board Opinion No. 14 “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants.” The Company determined the fair value of the 6.625% Senior Convertible Notes based on an option pricing model. Market data was used in the option pricing model to determine the volatility of the stock price of the Company, the interest rate term structure, the volatility of the interest rate and the correlation between the interest rate and the stock price.

The 6.625% Senior Convertible Notes bear interest at 6.625% per annum and mature on June 15, 2013. Interest is payable semi-annually, in arrears, on June 15 and December 15 of each year. The 6.625% Senior Convertible Notes are convertible into shares of the Company’s common stock, par value $0.001 par value per share at the

F-25

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

option of the holders, at $12.50 per share subject to certain adjustments as set forth in the Indenture. The 6.625% Senior Convertible Notes are initially convertible into 4,575,200 shares of the Company’s common stock.

If there is a change in control, the holders of the 6.625% Senior Convertible Notes have the right to require the Company to repurchase their notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest. If a holder surrenders notes for conversion at any time beginning on the effective notice of a change in control in which 10% of the consideration for the Company’s common stock consists of cash, the Company will increase the number of shares issuable upon such conversion. The number of additional shares is based on the date on which the partial cash buy-out becomes effective and the price paid or deemed to be paid per share of the Company’s common stock in the change of control. If the Company issues a cash dividend on its common stock, it must pay contingent interest to the holders of the 6.625% Senior Convertible Notes equal to the product of the per share cash dividend and the number of shares of common stock issuable upon conversion of such holder’s 6.625% Senior Convertible Notes.

The 9% Senior Convertible Notes are unsecured obligations and rank pari passu with all existing and future unsecured and unsubordinated indebtedness, senior in right of payment to all existing and future subordinated indebtedness, and rank junior to any future secured indebtedness. If there is a change in control of the Company, the holders have the right to require the Company to repurchase their notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest (the “Repurchase Price”). If a change in control occurs and at least 50% of the consideration for the Company’s common stock consists of cash, the holders of the 9% Senior Convertible Notes may elect to receive the greater of the Repurchase Price or the Total Redemption Amount. The Total Redemption Amount will be equal to the product of (x) the average closing prices of the Company’s common stock for the five trading days prior to announcement of the change in control and (y) the quotient of $1,000 divided by the applicable conversion price of the 9% Senior Convertible Notes, plus a make whole premium of $90 per $1,000 of principal if the change in control takes place before June 15, 2008 reducing to $45 per $1,000 of principal if the change in control takes place between June 16, 2008 and December 15, 2008. If the Company issues a cash dividend on its common stock, it will pay contingent interest to the holders of the 9% Senior Convertible Notes equal to the product of the per share cash dividend and the number of shares of common stock issuable upon conversion of each holder’s note.

The Company may redeem some or all of the 9% Senior Convertible Notes for cash at any time if the closing price of the Company’s common shares has exceeded 200% of the applicable conversion price for at least 20 trading days within a period of 30 consecutive trading days ending on the trading day before the date it mails the redemption notice. If the Company redeems the notes during the twelve month period commencing on June 15, 2007 or 2008, the redemption price equals 104.5% or 102.25%, respectively, of their principal amount, plus accrued and unpaid interest, if any, to the redemption date, plus an amount equal to 50% of all remaining scheduled interest payments on the notes from, and including, the redemption date through the maturity date.

The 9% Senior Convertible Notes contained an early conversion incentive for holders to convert their notes into shares of common stock which expired on June 14, 2007. If exercised, the holders would have received the number of common shares to which they are entitled to based on the conversion feature and an early conversion incentive payment in cash or common stock, at the Company’s option, equal to one-half the aggregate amount of interest payable through June 14, 2007. The conversion option, including the early conversion incentive, the equity participation feature and a takeover make whole premium due upon a change in control, embedded in the 9% Senior Convertible Notes were determined to be derivative instruments to be considered separately from the debt and accounted for separately. The early conversion incentive payment related to the 9% Senior Convertible Notes expired on June 14, 2007. See Note 12.

On January 5, 2007, the Company entered into a Purchase Agreement with Credit Suisse, Cayman Islands Branch and Credit Suisse, International (the “Purchasers”), for the sale of (i) our Series A Notes to Credit Suisse, Cayman Islands Branch, (ii) $4 million in aggregate principal amount of our 0.5% Senior Subordinated Convertible Notes, due June 30, 2009 to Credit Suisse, International (the “Series B Notes”) issued pursuant to an Indenture

F-26

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

between the Company and The Bank of New York Trust Company, N.A., as trustee (the “Indenture”), and (iii) the Lease Financing Commitment for certain specified properties. The Company is subject to certain covenants and restrictions specified in the Purchase Agreement, including covenants that restrict their ability to pay dividends, make certain distributions or investments and incur certain indebtedness. On July 31, 2007, the Series A Notes and Lease Financing Commitment were paid off in connection with the Company entering into the Credit Agreements. The Company had previously completed a draw down of $4.4 million on the Lease Financing Commitment in order to acquire the use of real property in Culpeper County, Virginia. See Note 10.

The Series B Notes bear interest at 0.5% per annum for the first 24 months increasing thereafter to 1.50% until maturity. All interest under the Series B Notes is “payable in kind” and will be added to the principal amount of the Series B Notes semi-annually beginning July 1, 2007. The Series B Notes are convertible into shares of the Company’s common stock, $0.001 par value per share, at the option of the holders, at $8.14 per share subject to certain adjustments set forth in the Indenture, including customary anti-dilution provisions.

The Series B Notes have a change in control provision that provides to the holders the right to require the Company to repurchase their notes in cash at a repurchase price equal to 100% of the principal amount, plus accrued and unpaid interest.

The Company, at its option, may redeem all of the Series B Notes on any interest payment date after June 5, 2007 at a redemption price equal to (i) certain amounts set forth in the Indenture (expressed as percentages of the principal amount outstanding on the date of redemption), plus (ii) the amount (if any) by which the fair market value on such date of the common stock into which the Series B Notes are then convertible exceeds the principal amount of the Series B Notes on such date, plus (iii) accrued, but unpaid interest if redeemed during certain monthly periods following the closing date. The call option embedded in the Series B Notes was determined to be a derivative instrument to be considered separately from the debt and accounted for separately. As a result of the bifurcation of the embedded derivative, the carrying value of the Series B Notes at issuance was approximately $4.4 million. At March 31, 2008, the unamortized premium was $0.3 million, and the carrying value of the Series B Notes was approximately $4.3 million.

The Company also paid an arrangement fee (the “Arrangement Fee”) to Credit Suisse, International as consideration for its services in connection with the Series A Notes, Series B Notes and the Lease Financing Commitment in the amount of 145,985 shares of common stock (the “Fee Shares”), which shares had a value of approximately $1.0 million based on then quoted market price of the Company’s common stock. Since the Arrangement Fee was paid with shares of the Company’s common stock, the proceeds including the expected proceeds from the Lease Financing Commitment were allocated to the Series A Notes, the Series B Notes, the Lease Financing Commitment and the Fee Shares based on the relative fair value of each security. The amount allocated to the Series A Notes, the Series B Notes and the Lease Financing Commitment was a discount of $0.2 million, a premium of ($0.1 million) and a discount of $0.9 million, respectively. The relative fair value of the Fee Shares was determined to be approximately $1.0 million. The premiums and discounts are being amortized on a monthly basis over the term of the respective debt instruments using the effective interest rate method. On July 31, 2007 the Series A Notes and the Lease Financing Commitment were paid off. The unamortized debt discount at July 31, 2007 related to the Series A Notes and the Lease Financing Commitment remained capitalized in connection with the modification of these debt instruments. See Notes 10 and 13.

The Company also granted Credit Suisse, International certain registration rights pursuant to the Registration Rights Agreement dated January 5, 2007 in connection with the common stock underlying the Series B Notes and the Fee Shares, including the right to have such shares registered with the Securities and Exchange Commission. The Company filed a registration statement with the Securities and Exchange Commission covering the shares of its common stock issued to Credit Suisse as an arrangement fee and issuable upon conversion of the Company’s Series B Notes.

F-27

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On June 14, 2004, the Company privately placed the initial $86.5 million in aggregate principal amount of the 9% Senior Convertible Notes to qualified institutional buyers. The 9% Senior Convertible Notes bear interest at a rate of 9% per annum, payable semiannually, on each December 15 and June 15, and are convertible at the option of the holders, into shares of the Company’s common stock at a conversion price of $12.50 per share. In conjunction with the offering, the Company incurred $6.6 million in debt issuance costs, including $1.4 million in estimated fair value of warrants issued to the placement agent to purchase 181,579 shares of the Company’s common stock at $9.50 per share.

The following table represents the combined aggregate principal maturities for the following obligations for each of the twelve months ended:

	Convertible			Mortgage
	Debt			Payable			Total
2009	$	—		$	1,500,000		$	1,500,000
2010		33,092,966			1,500,000			34,592,966
2011		—			1,500,000			1,500,000
2012		—			1,500,000			1,500,000
2013		—			245,964,477			245,964,477
Thereafter		57,192,000			—			57,192,000
		90,284,966			251,964,477			342,249,443
Less: Unamortized premiums and discounts		(4,000,949	)		(1,241,621	)		(5,242,570	)
	$	86,284,017		$	250,722,856		$	337,006,873

12.   Derivatives

The Company’s 9% Senior Convertible Notes contained three embedded derivatives that require separate valuation from the 9% Senior Convertible Notes: a conversion option that includes an early conversion incentive, an equity participation right and a takeover make whole premium due upon a change in control. The Company has estimated that the embedded derivatives related to the equity participation rights and the takeover make whole premium do not have significant value. The early conversion incentive expired on June 14, 2007. The Company has applied the provisions of EITF Issue No. 06-7 “Issuer’s Accounting for a Previously Bifurcated Conversion Option in a Convertible Debt Instrument When the Conversion Option No Longer Meets the Bifurcation Criteria in FASB Statement No. 133” and determined that with the expiration of the early conversion incentive on June 14, 2007, the conversion feature no longer meets the conditions that would require separate accounting as a derivative. The remaining two embedded derivatives do not have significant value. As a result, the Company reclassified $4.3 million of these embedded derivatives, classified as liabilities, to additional paid in capital. This amount represented the fair value of such embedded derivatives, at the time of the expiration of the early conversion incentive. The Company estimated that these embedded derivatives, classified as liabilities, had an estimated fair value of $16.8 million on March 31, 2007. The Company recognized income of $1.5 million resulting from the change in the fair value of the conversion option prior to the expiration of the early conversion incentive on June 14, 2007, which is included in change in fair value of derivatives in the accompanying consolidated statements of operations for the year ended March 31, 2008.

The Company’s Series B Notes contain one embedded derivative that requires separate valuation from the Series B Notes: a call option which provides the Company with the option to redeem the Series B Notes at fixed redemption prices plus accrued and unpaid interest and plus any difference in the fair value of the conversion feature. The Company estimated that this embedded derivative, classified as an asset, had an estimated fair value of $0.3 million at inception and at March 31, 2008 the fair value of this asset was $0.1 million and is included in other assets in the accompanying consolidated balance sheets. For the year ended March 31, 2008, the Company recorded

F-28

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

a charge of $0.4 million related to the fair valuation of the Series B embedded derivative. For the year ended March 31, 2007, the Company recorded income of $0.1 million related to the fair valuation of the Series B embedded derivative. The change in the estimated fair value of the embedded derivative was included in change in fair value of derivatives in the accompanying consolidated statements of operations. At March 31, 2008, the only embedded derivative with value that remains is related to the Series B Notes.

The Company’s 6.625% Senior Convertible Notes contain two embedded derivatives that require separate valuation from the 6.625% Senior Convertible Notes: an equity participation right and a contingent put upon change in control. The Company has estimated that these embedded derivatives do not have significant value.

On February 8, 2008, the Company entered into two interest rate swap agreements as required under the provisions of the Credit Agreements discussed in Note 10. One of the interest rate swap agreements was effective March 31, 2008 for a notional amount of $148.0 million and a fixed interest rate of 2.999%. Interest payments on this instrument are due on the last day of each March, June, September and December commencing on June 30, 2008 and ending on December 31, 2010. The second interest rate swap agreement entered into is effective on July 31, 2008 for a notional amount of $102.0 million and a fixed interest rate of 3.067%. Interest payments on this instrument are due on the last day of each January, April, July and October commencing on October 31, 2008 and ending on January 31, 2011. The interest rate swap agreements serve as an economic hedge against increases in interest rates and have not been designated as hedges for accounting purposes. Accordingly, the Company accounts for these interest rate swap agreements on a fair value basis and adjusts these instruments to fair value and the resulting changes in fair value are charged to earnings. At March 31, 2008, the fair value of the interest rate swap agreements was $2.5 million. This charge to earnings was included in change in fair value of derivatives in the accompanying consolidated statements of operations. The resulting $2.5 million liability was included in deferred rent and other liabilities in the accompanying consolidated balance sheets.

13.   Notes Payable

Notes payable consists of:

	March 31,
	2008		2007
Senior Secured Notes, face value of $30.0 million, due March 2009	$	—	$	28,488,987
Series A Notes, face value of $10.0 million, due June 30, 2009		—		10,106,281
Capital Lease Facility, due June 30, 2009		—		3,684,443
	$	—	$	42,279,711

The Series A Notes bore interest at the Eurodollar rate, as calculated under terms of the Series A Notes, plus 8.00%. All interest under the Series A Notes was “payable in kind” and was added to the principal amount of the Series A Notes. On July 31, 2007, the Series A Notes were paid off in connection with the Company entering into the Credit Agreements. See Note 10. At July 31, 2007, there was $0.2 million and $0.2 million of unamortized debt issuance costs and debt discount, respectively. These amounts were capitalized in connection with the modification of these notes.

On February 15, 2007, the Company completed a draw down on the Lease Financing Commitment by establishing a single-purpose entity that is wholly-owned by the Company, NAP of the Capital Region, LLC (the “NAP Lessee”) to enter into a Participation Agreement (the “Participation Agreement”) with a single-purpose entity designated and structured by Credit Suisse, Culpeper Lessor 2007-1 LLC (the “Lessor”) under the terms of which the Lessor acquired for approximately $4.4 million (the “Purchase Price”) 30 acres of real property in Culpeper County, Virginia and leased this property to NAP Lessee under the terms of a triple net lease (the “Lease”) under which NAP Lessee agreed to bear all rights, obligations, and expenses related to the Property. On July 31, 2007, the Lease Financing Commitment was paid off in connection with the Company entering into the Credit Agreements. See

F-29

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 10. At July 31, 2007, there was $0.5 million and $0.7 million of unamortized debt issuance costs and debt discount, respectively. These amounts were capitalized in connection with the modification of this debt.

In connection with the purchase of the NAP of the Americas building on December 31, 2004, the Company issued Senior Secured Notes in an aggregate principal amount equal to $30.0 million and sold 306,044 shares of its common stock valued at $2.0 million to the Falcon Investors. The Senior Secured Notes were collateralized by substantially all of the Company’s assets other than the NAP of the Americas building, bore cash interest at 9.875% per annum and “payment in kind” interest at 3.625% per annum subject to adjustment upon satisfaction of specified financial tests. On July 31, 2007, the Senior Secured Notes were paid off in connection with the Company entering into the Credit Agreements. See Note 10.

The Company contemporaneously issued to the Falcon Investors, for no additional consideration, warrants to purchase an aggregate of 1.5 million shares of the Company’s common stock. Those warrants expire on December 30, 2011 and are divided into four equal tranches that differ only in respect of the applicable exercise prices, which are $6.90, $7.50, $8.20 and $8.80, respectively. The warrants were valued at approximately $6.6 million, which was recorded as a discount to the debt principal. At July 31, 2007, the unamortized balance of the debt discount and debt issuance costs amounted to $3.3 million and $0.8 million, respectively, and was written off in connection with the early extinguishment of this debt.

14.   Deferred Rent and Other Liabilities

	March 31,
	2008		2007
Deferred rent and other liabilities consists of:
Deferred rent	$	3,704,038	$	3,180,435
Interest rate swap, at fair value		2,466,370		—
Deferred tax liability		1,781,159		127,013
Other liabilities		1,778,169		1,938,039
	$	9,729,736	$	5,245,487

15.   Changes in Stockholders’ Equity

Series I convertible preferred stock

In 2004, the Company issued 400 shares of Series I 8% Convertible Preferred Stock for $10.0 million, together with warrants to purchase 280,000 shares of the Company’s common stock, which are exercisable for five years at $9.00 per share. The Series I Preferred Stock is convertible into shares of the Company’s common stock at $7.50 per share. In January 2007, the Series I Preferred Stock dividend rate increased to 10% per year until January 2009, when it increases to 12%. Dividends are payable, at the Company’s discretion, in shares of the Company’s common stock or cash. The Company has the right to redeem the Series I Preferred Stock at $25,000 per share plus accrued dividends at any time. Some of the Series I Preferred Stock shares were committed on dates where the conversion price was less than market. Accordingly, the Company recognized a preferred dividend of approximately $0.8 million, $0.7 million, and $0.7 million for the years ended March 31, 2008, 2007 and 2006, respectively. The Series I Preferred Stock shall vote together with the Company’s common stock based on the then current conversion ratio.

F-30

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Common stock

Issuance of Common Stock

In January 2008, the Company issued 390,000 shares of its common stock, valued at $2.1 million, in connection with the acquisition of all of the outstanding common stock of Accris.

In October 2007, the Company issued to certain of it employees 62,237 shares of its common stock, valued at $0.5 million, as settlement of share-based awards earned during fiscal year 2007.

In May 2007, the Company issued 1,925,544 shares of its common stock, valued at $14.7 million, in connection with the acquisition of all of the outstanding common stock of a managed web hosting services provider.

In April 2007, the Company sold 608,500 shares in a public offering, at an offering price of $8.00 per share, pursuant to the underwriters’ exercise of their over-allotment option of the 11,000,000 shares sold in the March 2007 public offering. After payment of underwriting discounts, commission and other offering costs, the net proceeds to the Company of the over-allotment were approximately $4.4 million.

In March 2007, the Company sold 11,000,000 shares in a public offering, at an offering price of $8.00 per share. After payment of underwriting discounts, commission and other offering costs, the net proceeds to the Company were approximately $82.8 million.

In August 2005, the Company issued 1,600,000 shares, valued at $10.8 million, of its common stock in connection with the acquisition of all of the outstanding common stock of a managed web hosting services provider in Europe.

Exercise of employee stock options

During the year ended March 31, 2008, the Company issued 117,922 shares of its common stock in conjunction with the exercise of employee stock options. The exercise price of the options ranged from $2.50 to $6.74.

During the year ended March 31, 2007, the Company issued 57,655 shares of its common stock in conjunction with the exercise of employee stock options. The exercise price of the options ranged from $2.70 to $7.30.

During the year ended March 31, 2006, the Company issued 206,254 shares of its common stock in conjunction with the exercise of employee stock options, including 200,000 shares issued to a director of the Company. The exercise price of the options ranged from $2.50 to $6.74.

Conversion of preferred stock

During the year ended March 31, 2008, 11 shares of the Company’s Series I preferred stock, with an aggregate fair value of $0.3 million (based on the closing price of the Company’s common stock at conversion date) were converted to 36,667 shares of common stock.

During the year ended March 31, 2007, 16 shares of the Company’s Series I preferred stock, with an aggregate fair value of $0.4 million (based on closing price of the Company’s common stock at conversion date) were converted to 53,637 shares of common stock at the discretion of the Series I holders.

During the year ended March 31, 2006, 44 shares of the Series I preferred stock, with an aggregate fair value of $0.8 million (based on closing price of the Company’s common stock at conversion date) were converted to 146,655 shares of common stock.

F-31

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Issuance of nonvested stock

During the year ended March 31, 2008, the Company issued 218,023 shares of common stock, relating to various employee grants of nonvested stock whose vesting restrictions lapsed.

Expiration of warrants

In June 2007, 181,579 warrants with a value of $1,380,000 expired.

Stocks tendered in payment of services

In January 2007, the Company issued 145,985 shares of common stock to Credit Suisse, International as consideration for its services in connection with the Senior Subordinated Convertible Notes. The shares had an aggregate fair value of approximately $1.0 million.

In October 2006, the Company issued 50,000 share of nonvested stock to a director pursuant to the terms of a consulting agreement.

In June 2006, the Company issued 15,000 shares of nonvested stock to a director pursuant to a prior agreement in connection with the director bringing additional business to the Company.

Loans issued to employees

In connection with the acquisition of Dedigate, the Company extended loans to certain Dedigate employees to exercise their Dedigate stock options. The Dedigate shares received upon exercise of those options were then exchanged for shares of the Company’s common stock under the terms of the acquisition. The loans are evidenced by full recourse promissory notes, bear interest at 2.50% per annum, matured in August 2007 and are collateralized by the shares of stock acquired with the loan proceeds. The outstanding principal balance on such loans, net of repayments, is reflected as a reduction to stockholders’ equity in the accompanying consolidated balance sheets at March 31, 2007 and March 31, 2008. The Company intends to exercise its rights to demand payment on the remaining balance and expects to be paid in full.

F-32

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock warrants

During the period from November 2000 through March 2008, the Company issued warrants to third parties for services and to facilitate certain debt and equity transactions. The following table summarizes information about stock warrants outstanding as of March 31, 2008.

						Estimated
	No. of Shares		Exercise			Fair Value at
Issuance Date	Able to Purchase		Price		Expiration Date	Issuance
April 2006		12,500	$	4.80	April 2011	$	92,988
April 2005		7,200		6.90	April 2011		25,056
December 2004		2,003,378		6.80-8.80	December 2011		8,782,933
April 2004		5,000		7.00	April 2009		32,450
March 2004		248,841		9.00	March 2009		1,672,248
February 2004		8,210		9.00	February 2009		8,652
January 2004		36,808		7.10-9.00	January 2009		33,750
December 2003		10,000		6.20	July 2008		114,400
October 2003		5,000		7.30	October 2008		33,700
June 2001		1,300		17.20	June 2011		22,490
January 2003		950		4.80	June 2011		3,971
November 2000		25,000		27.60	November 2008		394,000
		2,364,187				$	11,216,638

In April 2006, the Company issued 12,500 warrants with an estimated fair value of $0.1 million in connection with consulting services.

Sale of Treasury Shares

In December 2006, the Board of Directors approved the sale, to a third party, of 865,202 shares of the Company’s treasury stock at the market rate of $6.75 per share. Proceeds from the sale of this stock amounted to $5.8 million, net of commissions. As of March 31, 2008, the Company does not have any treasury stock.

16.   Loss Per Share

The following table presents the reconciliation of net loss to attributable to common stockholders to the numerator used for diluted loss per share:

	March 31,
	2008			2007			2006
Net loss attributable to common stockholders	$	(43,022,338	)	$	(15,628,316	)	$	(37,876,063	)
Adjustments:
Interest expense, including amortization of discount and debt issue costs		—			(28,701	)		—
Change in fair value of derivatives embedded within convertible debt		—			(112,827	)		—
Numerator for diluted loss per share:	$	(43,022,338	)	$	(15,769,844	)	$	(37,876,063	)

F-33

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table represents the reconciliation of weighted average shares outstanding to basic and diluted weighted average shares outstanding:

	March 31,
	2008		2007		2006
Basic:
Weighted average common shares outstanding — basic		58,134,269		44,151,259		42,973,114
Diluted:
Weighted average common shares outstanding		58,134,269		44,151,259		42,973,114
Series B Notes		—		115,782		—
Weighted average common shares outstanding — diluted		58,134,269		44,267,041		42,973,114

The following table sets forth potential shares of common stock that are not included in the diluted net loss per share calculation because to do so would be anti-dilutive for the periods indicated:

	March 31,
	2008		2007		2006
9% Senior Convertible Notes		2,724,817		6,900,000		6,900,000
Common stock warrants		2,364,187		2,545,766		2,679,636
Common stock options		2,303,138		2,437,249		2,257,700
Early conversion incentive		191,603		1,540,772		2,677,471
Nonvested stock		798,222		532,800		15,000
Series I convertible preferred stock		1,058,507		1,084,477		1,130,000
6.625% Senior Convertible Notes		4,175,183		—		—
0.5% Senior Subordinated Convertible Notes		491,400		—		—
Series H redeemable preferred stock		—		12,324		29,400

17.   Share-Based Compensation

On August 9, 2005, the Company’s Board of Directors adopted the 2005 Executive Incentive Compensation Plan (the “Plan”), which was approved by the Company’s stockholders on September 23, 2005. This comprehensive plan superseded and replaced all of the Company’s pre-existing stock option plans. The Compensation Committee has the authority, under the Plan, to grant share-based incentive awards to executives, key employees, directors, and consultants. These awards include stock options, stock appreciation rights or SARS, nonvested stock (commonly referred to as restricted stock), deferred stock, other stock-related awards and performance or annual incentive awards that may be settled in cash, stock or other property (collectively, the “Awards”). Awards granted generally vest over three years with one third vesting each year from the date of grant and generally expire ten years from the date of grant. On September 28, 2007, the Company’s shareholders approved a proposal to increase the number of shares available to be granted under the plan from 1,000,000 to 4,000,000. There were 2,342,778 unused shares available to be granted under the Plan as of March 31, 2008.

Prior to the adoption of SFAS No. 123(R), the Compensation Committee approved the immediate vesting, effective March 31, 2006, of all unvested stock options previously granted under the Company’s stock option and executive compensation plans. The options affected by the accelerated vesting had exercise prices ranging from $2.79 to $16.50. As a result of the accelerated vesting, options to purchase approximately 460,000 shares became immediately exercisable. All other terms of these options remain unchanged. The decision of the Compensation Committee to accelerate the vesting of all outstanding options was made primarily to reduce compensation expense

F-34

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

that otherwise would be recorded starting with the three months ending June 30, 2006. The future compensation expense that will be avoided is approximately $0.2 million in the fiscal year ended March 31, 2009.

The Company has adopted the provisions of and accounts for share-based compensation in accordance with SFAS No. 123(R) and related pronouncements. The Company has elected to apply the modified-prospective method, under which prior periods are not revised for comparative purposes. Under the fair value recognition provisions of this statement, share-based compensation cost is measured at the grant date for all share-based awards made to employees and directors based on the fair value of the award using an option-pricing model and is recognized as expense over the requisite service period, which is generally the vesting period. In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) providing supplemental implementation guidance for SFAS 123(R). The Company has applied the provisions of SAB 107 in its adoption of SFAS 123(R).

Option Awards

A summary of the Company’s stock option activity as of March 31, 2008, and changes during the year ended March 31, 2008 is presented below:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Shares			Exercise Price		Contractual Term		Intrinsic Value
Outstanding at April 1, 2007		2,426,249		$	9.82
Granted		50,000			7.39
Exercised		(117,922	)		5.18
Forfeited		(55,189	)		8.25
Outstanding at March 31, 2008		2,303,138			10.05		5.44	$	(10,518,217	)
Exercisable at March 31, 2008		2,019,792		$	10.63		5.00	$	(10,401,716	)

The weighted average grant date fair value of options granted during the years ended March 31, 2008 and 2007 was $7.39 and $4.86, respectively. As of March 31, 2008, the future compensation expense related to unvested options that will be recognized is approximately $1.2 million. The cost is expected to be recognized over a weighted average period of 1.7 years. The Company recognized approximately $0.6 million of share-based compensation expense, associated with options, in the year ended March 31, 2008. The total intrinsic value of stock options exercised during the years ended March 31, 2008, 2007 and 2006 was approximately $0.3 million, $0.1 million and $0.5 million, respectively. The intrinsic value is calculated as the difference between the market value on the date of the exercise and the exercise price of the shares. The following table summarizes information about stock options outstanding and exercisable in various price ranges at March 31, 2008:

			Weighted
			Average		Weighted				Weighted
			Remaining		Average				Average
	Outstanding		Contractual Life		Exercise Price		Options		Exercise Price
Range of Exercise Prices	Options		(Years)		(Outstanding)		Exercisable		(Exercisable)
$2.50-5.00		281,550		6.18	$	4.00		281,550	$	4.00
$5.01-10.00		1,592,630		6.16		6.20		1,309,284		6.26
$10.00-20.00		101,071		2.58		15.45		101,071		15.45
$20.01-30.00		13,260		2.81		24.71		13,260		24.71
$30.01-50.00		314,627		2.14		32.59		314,627		32.59
		2,303,138		5.44	$	10.05		2,019,792	$	10.63

F-35

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair Value Assumptions

The Company uses the Black-Scholes-Merton option-pricing model to determine the fair value of stock options granted under the Company’s stock option plans. The determination of the fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include:

•  the Company’s expected stock price volatility over the term of the awards;

•  actual and projected employee stock option exercise behaviors, which is referred to as expected term;

•  risk-free interest rate and

•  expected dividends

The Company estimates the expected term of options granted by taking the average of the vesting term and the contractual term of the option, as illustrated in SAB 107. Expected volatility is based on the combination of the historical volatility of the Company’s common stock and the Company’s peer group’s common stock over the period commensurate with the expected term of the award. The Company bases the risk-free interest rate that it uses in its option-pricing models on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on its equity awards. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in its option-pricing models. If factors change and the Company employs different assumptions for estimating share-based compensation expense in future periods or if it decides to use a different valuation model in the future, the future periods may differ significantly from what the Company has recorded in the current period and could materially affect its operating results, net income or loss and net income or loss per share.

The assumptions used to value stock options were as follows:

	2008	2007	2006
Risk Free Rate	4.11%	4.54%	3.63% - 4.83%
Volatility	102%	118%	112% - 121%
Expected Term	6 years	6 years	5 years
Expected Dividends	0%	0%	0%
Expected Dividends	0%	0%	0%

Nonvested Awards

In accordance with SFAS No. 123(R), the Company records the intrinsic value of the nonvested stock as additional paid-in capital. Share-based compensation expense is recognized ratably over the applicable vesting period. As of March 31, 2008, the future compensation expense related to nonvested stock that will be recognized is approximately $4.4 million. The cost is expected to be recognized over a weighted average period of 2.2 years. The Company recognized approximately $3.3 million of share-based compensation expense, associated with nonvested

F-36

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

stock, for the year ended March 31, 2008. A summary of the Company’s nonvested stock, as of March 31, 2008 and changes during the year ended March 31, 2008 is presented below:

				Weighted Average
				Grant Date
	Shares			Fair Value
Outstanding at April 1, 2007		470,300		$	5.61
Granted		727,122			6.83
Vested		(281,500	)		5.87
Forfeited		(116,177	)		6.38
Outstanding at March 31, 2008		799,745		$	6.52

18.   Commitments and Contingencies

Leasing activities

The Company leases space for its operations, office equipment and furniture under operating leases. Certain equipment is also leased under capital leases, which are included in improvements, furniture and equipment.

The Company leases space for the colocation facility in Santa Clara, California. The lease commenced in January 2001 and is for 20 years. Annual rent payments are approximately $1.5 million. The Company also leases space for its facilities in Brazil and Virginia, as well as its corporate offices. Annual rent payments for these facilities are approximately $1.0 million per year. The Company leases unconditioned space in the NAP of the Americas to certain customers. The terms of the operating leases range from 10 to 15 years. Annual rent payments paid to the Company are approximately $3.0 million.

During February 2005, the Company entered into a lease agreement for the facility in Madrid, Spain, which houses the NAP of the Americas-Madrid. The annual rent payments under this lease are approximately 800,000 euros ($1.0 million at the March 31, 2005 exchange rate) exclusive of value added tax. Payments of rent under the lease agreement commenced in March 2005, and the initial term of the lease expires on December 25, 2015. As required by the terms of the lease agreement, the Company has obtained a five year bank guarantee in favor of Global Switch in an amount equal to the annual rent payments. In connection with this bank guarantee, the Company has deposited 50% of the guaranteed amount, or approximately 475,000 euros ($0.6 million at the March 31, 2005 exchange rate), with the bank issuing the guarantee.

The Company has entered into capital lease agreements with third parties for equipment related primarily to the NAP of the Americas. Generally, the lease terms are for 48 months and contain $1.00 bargain purchase options. The aggregate gross related assets total approximately $1.6 million during the year ended March 31, 2008.

Operating lease expense, in the aggregate, amounted to approximately $9.7 million, $5.3 million, and $11.7 million, for the years ended March 31, 2008, 2007 and 2006, respectively.

F-37

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At March 31, 2008, future minimum lease/rental payments for each of the following five years and thereafter under non-cancelable operating and capital leases having a remaining term in excess of one year are as follows:

	As Lessee					As Lessor
	Capital			Operating		Sales-Type			Operating
	Leases			Leases		Leases			Leases
2009	$	1,830,766		$	10,607,068	$	1,964,974		$	3,235,430
2010		1,306,526			8,910,257		254,980			2,681,462
2011		589,409			7,052,212		123,229			2,740,771
2012		156,083			6,576,767		—			2,622,633
2013		—			6,384,546		—			2,105,915
Thereafter		—			39,974,212		—			9,695,469
Total minimum lease payments	$	3,882,784		$	79,505,062	$	2,343,183		$	23,081,680
Amount representing interest and maintenance		(836,052	)				(345,464	)
Net minimum lease payments	$	3,046,732				$	1,997,719

Total future sublease rentals of $1.5 million are included within the future minimum rental payments for operating leases as lessor.

Litigation

On May 14, 2007, the Company filed an action for declaratory relief against Strategic Growth International, Inc., (“SGI”), an investor relations firm formerly engaged by the Company, in the Circuit Court of the 11th Judicial Circuit in Miami-Dade County Florida. The declaratory action requested that the Court determine whether SGI properly exercised certain warrants issued to it in 2002, and if so, in what quantity and what price. The Company’s position was that SGI failed to properly exercise the warrants, and that such failure cannot be cured because the warrants have since expired, and even if SGI did exercise the warrants, SGI was not entitled to the number of shares claimed upon exercise. On May 17, 2007, SGI filed an action in the Supreme Court of the State of New York in connection with the purported warrant exercise and the Company’s position with respect to this exercise. In the lawsuit, SGI alleged (i) violations under Rule 10b-5 of the Securities Exchange Act of 1934, as amended, against certain of the Company’s senior executive officers; (ii) breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment against the Company; and (iii) negligence, negligent misrepresentation, intentional concealment, and negligent nondisclosure against the Company and certain senior executive officers. SGI also sought a declaratory judgment that it properly exercised the warrants. On January 24, 2008, the Company paid SGI $540,000 in settlement of all such claims and all claims filed by the Company and SGI were dismissed with prejudice and all parties party to such claims executed mutual releases to each other regarding same.

From time to time, the Company is involved in various other litigations relating to claims arising out of the normal course of business. These claims are generally covered by insurance. The Company is not currently subject to any other litigation which singularly or in the aggregate could reasonably be expected to have a material adverse effect on the Company’s financial position or results of operations.

19.   Related Party Transactions

Due to the nature of the following relationships, the terms of the respective agreements may not be the same as those that would result from transactions among wholly unrelated parties.

F-38

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Following is a summary of transactions for the years ended March 31, 2008, 2007 and 2006 and balances with related parties included in the accompanying balance sheet as of March 31, 2008 and 2007.

	For the Year Ended March 31,
	2008		2007		2006
Services purchased from related party	$	—	$	497,948	$	1,270,504
Services provided to related party		71,335		87,321		23,698
Interest income from shareholder		18,685		25,800		29,728
Services from directors		536,476		712,503		442,500
Other assets		387,658		422,467
Note receivable — related party		52,981		191,525

The Company has entered into consulting agreements with two members of its Board of Directors and into an employment agreement with another board member. One consulting agreement provided for annual compensation of $250,000 and expired in May 2005. This agreement was renewed in November 2006, effective as of October 2006, for annual compensation of $240,000, payable monthly. In addition, in October 2006, the Company’s Board of Directors approved the issuance to this director of 50,000 shares of nonvested stock vesting over a period of one year. The remaining consulting agreement and employment agreement provide for annual compensation aggregating $160,000. In June 2006, the Company agreed to issue 15,000 shares of nonvested stock to the director, with the employment agreement, pursuant to a prior agreement in connection with the director bringing additional business to the Company.

The Company’s Chairman and Chief Executive Officer has a minority interest in Fusion Telecommunications International, Inc. (“Fusion”) and was formerly a member of its board of directors. In addition, the Chairman and Chief Executive Officer of Fusion is a member of the Company’s board of directors. The Company purchased $0.5 million and $1.3 million in services from Fusion for the years ended March 31, 2007 and 2006, respectively. The Company did not purchase any services from Fusion for the year ended March 31, 2008.

20.   Revenues

	For the Year Ended March 31,
	2008		2007		2006
Revenues consist of:
Colocation	$	61,228,544	$	41,865,161	$	28,126,193
Managed and professional services		110,933,378		43,793,652		25,958,032
Exchange point services		12,691,169		9,031,100		6,308,708
Equipment resales		2,560,708		6,258,268		2,136,349
Total revenues	$	187,413,799	$	100,948,181	$	62,529,282

Total arrangement consideration for managed web hosting solutions may include the procurement of equipment. Amounts allocated to equipment sold under these arrangements and included in managed and professional services were $7.1 million, $1.9 million and $1.0 million for the years ended March 31, 2008, 2007 and 2006, respectively.

21.   Income Taxes

The Company recorded a provision for income taxes of $0.8 million and $0.2 million for the years ended March 31, 2008 and March 31, 2007, respectively. No provision for income taxes was recorded for the year ended March 31, 2006 as the Company incurred net operating losses in all tax jurisdictions.

F-39

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net (loss) income before income taxes is attributable to the following geographic locations:

	For the Year Ended March 31,
	2008			2007			2006
United States	$	(42,674,575	)	$	(14,219,056	)	$	(34,201,581	)
International		1,259,685			(516,129	)		(2,947,593	)
	$	(41,414,890	)	$	(14,735,185	)	$	(37,149,174	)

Deferred tax assets (liabilities) consist of the following:

	March 31,
	2008			2007
Deferred tax assets:
Net operating loss carryforwards	$	81,858,671		$	66,747,512
Net operating loss carryforwards retained from discontinued operations		17,280,709			17,280,709
Embedded derivatives		21,960			6,188,256
Allowances and other		11,216,600			8,030,356
Total deferred tax assets		110,377,940			98,246,833
Valuation allowance		(104,776,430	)		(81,868,281	)
Deferred tax liabilities:
Intangibles with indefinite lives		(1,558,000	)		—
Convertible debt		(1,484,228	)		(7,804,425	)
Depreciation and amortization		(4,082,750	)		(8,749,723	)
Other		(257,688	)		(47,561	)
Total deferred tax liability		(7,382,666	)		(16,601,709	)
Net deferred tax liability	$	(1,781,156	)	$	(223,157	)

The Company’s accounting for deferred taxes involves the evaluation of a number of factors concerning the realizability of the Company’s deferred tax assets. A 100% valuation allowance has been provided on the net deferred tax assets of the U.S. companies and operations in Madrid. The remaining net deferred tax liability relates to foreign income taxes of the Company’s managed web hosting services provider in Europe and purchased trademarks with indefinite lives. To support the Company’s conclusion that a 100% valuation allowance was required, the Company primarily considered such factors as the Company’s history of operating losses, the nature of the Company’s deferred tax assets and the absence of taxable income in prior carryback years. Although the Company’s operating plans assume taxable and operating income in future periods, the Company’s evaluation of all the available evidence in assessing the realizability of the deferred tax assets indicates that it is more likely than not that such plans are insufficient to overcome the available negative evidence.

The valuation allowance increased by $22.9 million and $6.0 million for the years ended March 31, 2008 and 2007, respectively. The net change of the valuation allowance for the years ended March 31, 2008 and 2007 was primarily due to the increase in temporary differences related to the increase in operational loss, allowances and intangibles, less a net decrease in convertible debt, derivatives and expiring net operating loss carryforwards.

As of March 31, 2008, we have not made a U.S. tax provision on the unremitted earnings of our foreign subsidiaries. As of March 31, 2008, these earnings are intended to be permanently re-invested in foreign operations.

The Company has federal net operating loss carryforwards of $231 million, expiring through tax year 2028.

F-40

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The reconciliation between the statutory income tax rate and the effective income tax rate on pre-tax loss is as follows:

	For the Year Ended March 31,
	2008			2007			2006
Statutory tax rate		(34.0	)%		(34.0	)%		(34.0	)%
State income taxes, net of federal income tax benefit		(2.9	)		(4.0	)		(4.0	)
Foreign income tax		0.1			(0.9	)		—
Permanent differences		(0.9	)		0.5			0.3
Increase in valuation allowance		39.9			39.9			37.7
Effective tax rate		2.2	%		1.5	%		—	%

The Company has not been audited by the Internal Revenue Service or other applicable tax authorities for the following open tax periods: the year ended December 31, 2004, the quarter ended March 31, 2005, and the years ended March 31, 2006, 2007 and 2008. Net operating loss carryovers incurred in years prior to 2004 are subject to audit in the event they are utilized in subsequent years.

22.   Information About the Geographic Segments

The Company’s geographic statements of operations disclosures are as follows (in thousands):

	March 31,
	2008		2007			2006
Revenues:
United States	$	163,278	$	85,167		$	54,837
International		24,136		15,781			7,692
	$	187,414	$	100,948		$	62,529
Cost of revenues:
United States	$	86,416	$	47,175		$	32,893
International		14,470		9,727			5,931
	$	100,886	$	56,902		$	38,824
Income (loss) from operations:
United States	$	13,676	$	4,831		$	(5,854	)
International		1,013		(850	)		(2,792	)
	$	14,689	$	3,981		$	(8,646	)

The Company’s long-lived assets are located in the following geographic areas (in thousands):

	March 31,
	2008		2007
United States	$	327,048	$	152,623
International		5,963		4,985
	$	333,011	$	157,608

F-41

TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

23.   Supplemental Cash Flow Information

	For the Year Ended March 31,
	2008		2007		2006
Supplemental disclosures of cash flow information:
Cash paid for interest	$	21,385,504	$	16,407,077	$	14,489,566
Non-cash operating, investing and financing activities:
Warrants issued		—		92,988		45,226
Assets acquired under capital leases		1,528,340		1,897,465		889,012
Stock tendered in payment of services		—		1,038,579		—
Establishment of Series B derivative asset		—		342,534		—
Net assets acquired in exchange for common stock		16,745,934		—		10,755,200
Expiration of warrants		1,380,000		748,010		1,308,456
Non-cash preferred dividend		—		—		173,355
Conversion of preferred stock to equity		—		2,279		804,000
Changes in accrued property and equipment		18,258,644		2,445,152		5,238,532
Cash paid for taxes		216,981		—		—

F-42

EX-10.39

Exhibit 10.39

INDEMNIFICATION AGREEMENT

     THIS INDEMNIFICATION AGREEMENT, is made and entered into as of the ___ day of ___, 2008, between Terremark Worldwide, Inc., a Delaware corporation (the “Company”), and __________________ (the “Indemnitee”).

Recitals

A.	The Company and/or its subsidiaries desires to retain the services of the Indemnitee as __________________, [and a Director] of the Company.
B.	As a condition to the Indemnitee’s agreement to serve the Company as such, the Indemnitee requires that he be indemnified from liability to the fullest extent permitted by law.
C.	The Company is willing to indemnify the Indemnitee to the fullest extent permitted by law in order to retain the services of the Indemnitee.

Agreement

     NOW, THEREFORE, for and in consideration of the mutual premises and covenants contained herein, the Company and the Indemnitee agree as follows:

          Section 1. MANDATORY INDEMNIFICATION IN PROCEEDINGS OTHER THAN THOSE BY OR IN THE RIGHT OF THE COMPANY. Subject to Section 4 hereof, the Company shall indemnify and hold harmless the Indemnitee from and against any and all claims, damages, expenses (including attorneys’ fees), judgments, penalties, fines (including excise taxes assessed with respect to an employee benefit plan), amounts paid in settlement and all other liabilities actually and reasonably incurred or paid by him in connection with the investigation, defense, prosecution, settlement or appeal of any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, investigative or otherwise (other than an action by or in the right of the Company) and to which the Indemnitee was or is a party or is threatened to be made a party by reason of the fact that the Indemnitee is or was an officer, director, stockholder, employee or agent of the Company, or is or was serving at the request of the Company as an officer, director, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of anything done or not done by the Indemnitee in any such capacity or capacities, provided that the Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

          Section 2. MANDATORY INDEMNIFICATION IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. Subject to Section 4 hereof, the Company shall indemnify and hold harmless the Indemnitee from and against any and all expenses (including attorneys’ fees) actually and reasonably incurred or paid by him in connection with the investigation, defense, prosecution, settlement or appeal of any threatened, pending or completed action, suit or proceeding by or in the right of the Company to procure a judgment in its favor, whether civil, criminal, administrative, investigative or otherwise, and to which the Indemnitee was or is a party or is threatened to be made a party by reason of the fact that the Indemnitee is or was an officer, director, stockholder, employee or agent of the Company, or is or was serving at the request of the Company as an officer, director, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of anything done or not done by the Indemnitee in any such capacity or capacities, provided that (i) the Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and (ii) no indemnification shall be made under this Section 2 in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged to be liable to the Company for misconduct in the performance of his duty to the Company unless and only to the extent that the court in which such action, suit or proceeding was brought (or any other court of competent jurisdiction) shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.

          Section 3. REIMBURSEMENT OF EXPENSES FOLLOWING ADJUDICATION OF NEGLIGENCE. The Company shall reimburse the Indemnitee for any expenses (including attorneys’ fees) and amounts paid in settlement actually and reasonably incurred or paid by him in connection with the investigation, defense, settlement or appeal of any action or suit described in Section 2 hereof that results in an adjudication that the Indemnitee was liable for negligence, gross negligence or recklessness (but not willful misconduct) in the performance of his duty to the Company; provided, however, that the Indemnitee acted in good faith and in a manner he believed to be in the best interests of the Company.

          Section 4. AUTHORIZATION OF INDEMNIFICATION. Any indemnification under Sections 1 and 2 hereof (unless ordered by a court) and any reimbursement made under Section 3 hereof shall be made by the Company only as authorized in the specific case upon a determination (the “Determination”) that indemnification or reimbursement of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in Section 1, 2 or 3 hereof, as the case may be. Subject to Sections 5.6, 5.7, 5.8 and 8 of this Agreement, the Determination shall be made in the following order of preference:

               (a) first, by the Company’s Board of Directors (the “Board”) by majority vote or consent of directors (“Disinterested Directors”) who are not, at the time of the Determination, named parties to such action, suit or proceeding, even though such Disinterested Directors may be less than a quorum; or

               (b) next, if the majority vote or consent of the Disinterested Directors cannot be obtained, by majority vote or consent of a committee duly designated by such Disinterested Directors consisting solely of two or more Disinterested Directors, even though such Disinterested Directors may be less than a quorum; or

               (c) next, if such a committee cannot be designated, by any independent legal counsel (who may be any outside counsel regularly employed by the Company); or

               (d) next, if such legal counsel determination cannot be obtained, by vote or consent of the holders of a majority of the Company’s Common Stock that are represented in person or by proxy at a meeting called for such purpose.

          4.1 No Presumptions. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Indemnitee did not act in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

          4.2 Benefit Plan Conduct. The Indemnitee’s conduct with respect to an employee benefit plan for a purpose he reasonably believed to be in the interests of the participants in and beneficiaries of the plan shall be deemed to be conduct that the Indemnitee reasonably believed to be not opposed to the best interests of the Company.

          4.3 Reliance as Safe Harbor. For purposes of any Determination hereunder, the Indemnitee shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe his conduct was unlawful, if his action is based on (i) the records or books of account of the Company or another enterprise, including financial statements, (ii)

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information supplied to him by the officers of the Company or another enterprise in the course of their duties, (iii) the advice of legal counsel for the Company or another enterprise, or (iv) information or records given or reports made to the Company or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Company or another enterprise. The term “another enterprise” as used in this Section 4.3 shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which the Indemnitee is or was serving at the request of the Company as an officer, director, partner, trustee, employee or agent. The provisions of this Section 4.3 shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in Sections 1, 2 or 3 hereof, as the case may be.

          4.4 Success on Merits or Otherwise. Notwithstanding any other provision of this Agreement, to the extent that the Indemnitee has been successful on the merits or otherwise in defense of any action, suit or proceeding described in Section 1 or 2 hereof, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the investigation, defense, settlement or appeal thereof. For purposes of this Section 4.4, the term “successful on the merits or otherwise” shall include, but not be limited to, (i) any termination, withdrawal or dismissal (with or without prejudice) of any claim, action, suit or proceeding against the Indemnitee without any express finding of liability or guilt against him, (ii) the expiration of 120 days after the making of any claim or threat of an action, suit or proceeding without the institution of the same and without any promise or payment made to induce a settlement, or (iii) the settlement of any action, suit or proceeding under Section 1, 2 or 3 hereof pursuant to which the Indemnitee pays less than $25,000.

          4.5 Partial Indemnification or Reimbursement. If the Indemnitee is entitled under any provision of this Agreement to indemnification and/or reimbursement by the Company for some or a portion of the claims, damages, expenses (including attorneys’ fees), judgments, fines or amounts paid in settlement by the Indemnitee in connection with the investigation, defense, settlement or appeal of any action specified in Section 1, 2 or 3 hereof, but not, however, for the total amount thereof, the Company shall nevertheless indemnify and/or reimburse the Indemnitee for the portion thereof to which the Indemnitee is entitled. The party or parties making the Determination shall determine the portion (if less than all) of such claims, damages, expenses (including attorneys’ fees), judgments, fines or amounts paid in settlement for which the Indemnitee is entitled to indemnification and/or reimbursement under this Agreement.

          4.6 Limitations on Indemnification. No indemnification pursuant to Section 1 or 2 hereof shall be paid by the Company if a judgment (after exhaustion of all appeals) or other final adjudication determines that the Indemnitee’s actions, or omissions to act, were material to the cause of action so adjudicated and constitute:

               (a) a violation of criminal law, unless the Indemnitee had reasonable cause to believe his conduct was lawful or had no reasonable cause to believe his conduct was unlawful;

               (b) a transaction from which the Indemnitee derived an improper personal benefit within the meaning of the Delaware General Corporation Law;

               (c) in the event that the Indemnitee is a director of the Company, a circumstance under which the liability provisions of Section 174 of the Delaware General Corporation Law are applicable; or

               (d) willful misconduct or conscious disregard for the best interests of the Company in a proceeding by or in the right of the Company to procure a judgment in its favor or in a proceeding by or in the right of a stockholder of the Company.

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          4.7 Costs. All costs of making the Determination required by Section 4 hereof shall be borne solely by the Company, including, but not limited to, the costs of legal counsel, proxy solicitations and judicial determinations. The Company shall also be solely responsible for paying (i) all reasonable expenses incurred by the Indemnitee to enforce this Agreement, including, but not limited to, the costs incurred by the Indemnitee to obtain court-ordered indemnification pursuant to Section 8 hereof, regardless of the outcome of any such application or proceeding, and (ii) all costs of defending any suits or proceedings challenging payments to the Indemnitee under this Agreement.

          Section 5. PROCEDURES FOR DETERMINATION OF WHETHER STANDARDS HAVE BEEN SATISFIED.

          5.1 Timing of the Determination. The Company shall use its best efforts to make the Determination contemplated by Section 4 hereof promptly. In addition, the Company agrees:

               (a) if the Determination is to be made by the Board or a committee thereof, such Determination shall be made not later than 30 days after a written request for a Determination (a “Request”) is delivered to the Company by the Indemnitee;

               (b) if the Determination is to be made by independent legal counsel, such Determination shall be made not later than 45 days after a Request is delivered to the Company by the Indemnitee; and

               (c) if the Determination is to be made by the stockholders of the Company, such Determination shall be made not later than 120 days after a Request is delivered to the Company by the Indemnitee.

The failure to make a Determination within the above-specified time period shall constitute a Determination approving full indemnification or reimbursement of the Indemnitee. Notwithstanding anything herein to the contrary, a Determination may be made in advance of (i) the Indemnitee’s payment (or incurring) of expenses with respect to which indemnification or reimbursement is sought, and/or (ii) final disposition of the action, suit or proceeding with respect to which indemnification or reimbursement is sought.

          5.2 Reasonableness of Expenses. The evaluation and finding as to the reasonableness of expenses incurred by the Indemnitee for purposes of this Agreement shall be made (in the following order of preference) within 30 days after the Indemnitee’s delivery to the Company of a Request that includes a reasonable accounting of expenses incurred:

               (a) first, by the Board by majority vote or consent of the Disinterested Directors, even though such Disinterested Directors may be less than a quorum; or

               (b) next, if such a quorum cannot be obtained, by majority vote or consent of a committee duly designated by the Disinterested Directors, consisting solely of two or more Disinterested Directors, even though such Disinterested Directors may be less than a quorum; or

               (c) next, if such a committee cannot be designated, by any independent legal counsel (who may be any outside counsel regularly employed by the Company);

provided, however, that if a determination as to reasonableness of expenses is not made under any of the foregoing subsections (a), (b) and (c), such determination shall be made, not later than 120 days after the Indemnitee’s delivery of such Request, by vote or consent of the holders of a majority of the Company’s Common Stock that are represented in person or by proxy at a meeting called for such purpose.

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All expenses shall be considered reasonable for purposes of this Agreement if the finding contemplated by this Section 5.3 is not made within the prescribed time. The finding required by this Section 5.3 may be made in advance of the payment (or incurring) of the expenses for which indemnification or reimbursement is sought.

          5.3 Payment of Indemnified Amount. Immediately following a Determination that the Indemnitee has met the applicable standard of conduct set forth in Section 1, 2 or 3 hereof, as the case may be, and the finding of reasonableness of expenses contemplated by Section 5.3 hereof, or the passage of time prescribed for making such determination(s), the Company shall pay to the Indemnitee in cash the amount to which the Indemnitee is entitled to be indemnified and/or reimbursed, as the case may be, without further authorization or action by the Board; provided, however, that the expenses for which indemnification or reimbursement is sought have actually been incurred by the Indemnitee.

          5.4 Stockholder Vote on Determination. Notwithstanding the provisions of Section 145 of the Delaware General Corporation Law, the Indemnitee and any other stockholder who is a party to the proceeding for which indemnification or reimbursement is sought shall be entitled to vote on any Determination to be made by the Company’s stockholders, including a Determination made pursuant to Section 5.7 hereof. In addition, in connection with each meeting at which a stockholder Determination will be made, the Company shall solicit proxies that expressly include a proposal to indemnify or reimburse the Indemnitee. Any Company proxy statement relating to a proposal to indemnify or reimburse the Indemnitee shall not include a recommendation against indemnification or reimbursement.

          5.5 Selection of Independent Legal Counsel. If the Determination required under Section 4 is to be made by independent legal counsel, such counsel shall be selected by the Indemnitee with the approval of the Board, which approval shall not be unreasonably withheld. The fees and expenses incurred by counsel in making any Determination (including Determinations pursuant to Section 5.8 hereof) shall be borne solely by the Company regardless of the results of any Determination and, if requested by counsel, the Company shall give such counsel an appropriate written agreement with respect to the payment of their fees and expenses and such other matters as may be reasonably requested by counsel.

          5.6 Right of Indemnitee to Appeal an Adverse Determination by Board. If a Determination is made by the Board or a committee thereof that the Indemnitee did not meet the applicable standard of conduct set forth in Section 1, 2 or 3 hereof, upon the written request of the Indemnitee and the Indemnitee’s delivery of $500 to the Company, the Company shall cause a new Determination to be made by the Company’s stockholders at the next regular or special meeting of stockholders. Subject to Section 8 hereof, such Determination by the Company’s stockholders shall be binding and conclusive for all purposes of this Agreement.

          5.7 Right of Indemnitee To Select Forum For Determination. If, at any time subsequent to the date of this Agreement, “Continuing Directors” do not constitute a majority of the members of the Board, or there is otherwise a change in control of the Company (as contemplated by Item 403(c) of Regulation S-K), then upon the request of the Indemnitee, the Company shall cause the Determination required by Section 4 hereof to be made by independent legal counsel selected by the Indemnitee and approved by the Board (which approval shall not be unreasonably withheld), which counsel shall be deemed to satisfy the requirements of clause (3) of Section 4 hereof. If none of the legal counsel selected by the Indemnitee are willing and/or able to make the Determination, then the Company shall cause the Determination to be made by a majority vote or consent of a Board committee consisting solely of Continuing Directors. For purposes of this Agreement, a “Continuing Director” means either a member of the Board at the date of this Agreement or a person nominated to serve as a member of the Board by a majority of the then Continuing Directors.

          5.8 Access by Indemnitee to Determination. The Company shall afford to the Indemnitee and his representatives ample opportunity to present evidence of the facts upon which the Indemnitee relies for indemnification or reimbursement, together with other information relating to any requested Determination. The Company shall also afford the Indemnitee the reasonable opportunity to include such evidence and information in any Company proxy statement relating to a stockholder Determination.

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          5.9 Judicial Determinations in Derivative Suits. In each action or suit described in Section 2 hereof, the Company shall cause its counsel to use its best efforts to obtain from the Court in which such action or suit was brought (i) an express adjudication whether the Indemnitee is liable for negligence or misconduct in the performance of his duty to the Company, and, if the Indemnitee is so liable, (ii) a determination whether and to what extent, despite the adjudication of liability but in view of all the circumstances of the case (including this Agreement), the Indemnitee is fairly and reasonably entitled to indemnification.

          Section 6. SCOPE OF INDEMNITY. The actions, suits and proceedings described in Sections 1 and 2 hereof shall include, for purposes of this Agreement, any actions that involve, directly or indirectly, activities of the Indemnitee both in his official capacities as a Company director or officer and actions taken in another capacity while serving as director or officer, including, but not limited to, actions or proceedings involving (i) compensation paid to the Indemnitee by the Company, (ii) activities by the Indemnitee on behalf of the Company, including actions in which the Indemnitee is plaintiff, (iii) actions alleging a misappropriation of a “corporate opportunity,” (iv) responses to a takeover attempt or threatened takeover attempt of the Company, (v) transactions by the Indemnitee in Company securities, and (vi) the Indemnitee’s preparation for and appearance (or potential appearance) as a witness in any proceeding relating, directly or indirectly, to the Company. In addition, the Company agrees that, for purposes of this Agreement, all services performed by the Indemnitee on behalf of, in connection with or related to any subsidiary of the Company, any employee benefit plan established for the benefit of employees of the Company or any subsidiary, any corporation or partnership or other entity in which the Company or any subsidiary has a 5% ownership interest, or any other affiliate of the Company, shall be deemed to be at the request of the Company.

          Section 7. ADVANCE FOR EXPENSES.

          7.1 Mandatory Advance. Expenses (including attorneys’ fees, court costs, judgments, fines, amounts paid in settlement and other payments) incurred by the Indemnitee in investigating, defending, settling or appealing any action, suit or proceeding described in Section 1 or 2 hereof shall be paid by the Company in advance of the final disposition of such action, suit or proceeding. The Company shall promptly pay the amount of such expenses to the Indemnitee, but in no event later than 10 days following the Indemnitee’s delivery to the Company of a written request for an advance pursuant to this Section 7, together with a reasonable accounting of such expenses.

          7.2 Undertaking to Repay. The Indemnitee hereby undertakes and agrees to repay to the Company any advances made pursuant to this Section 7 if and to the extent that it shall ultimately be found that the Indemnitee is not entitled to be indemnified by the Company for such amounts.

          7.3 Miscellaneous. The Company shall make the advances contemplated by this Section 7 regardless of the Indemnitee’s financial ability to make repayment, and regardless whether indemnification of the Indemnitee by the Company will ultimately be required. Any advances and undertakings to repay pursuant to this Section 7 shall be unsecured and interestfree.

          Section 8. COURT-ORDERED INDEMNIFICATION. Regardless whether the Indemnitee has met the standard of conduct set forth in Section 1, 2 or 3 hereof, as the case may be, and notwithstanding the presence or absence of any Determination whether such standards have been satisfied, the Indemnitee may apply for indemnification (and/or reimbursement pursuant to Section 3 or 12 hereof) to the court conducting any proceeding to which the Indemnitee is a party or to any other court of competent jurisdiction. On receipt of an application, the court, after giving any notice the court considers necessary, may order indemnification (and/or reimbursement) if it determines the Indemnitee is fairly and reasonably entitled to indemnification (and/or reimbursement) in view of all the relevant circumstances (including this Agreement).

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          Section 9. NONDISCLOSURE OF PAYMENTS. Except as expressly required by law, neither party shall disclose any payments under this Agreement unless prior approval of the other party is obtained. Any payments to the Indemnitee that must be disclosed shall, unless otherwise required by law, be described only in Company proxy or information statements relating to special and/or annual meetings of the Company’s stockholders, and the Company shall afford the Indemnitee the reasonable opportunity to review all such disclosures and, if requested, to explain in such statement any mitigating circumstances regarding the events reported.

          Section 10. COVENANT NOT TO SUE, LIMITATION OF ACTIONS AND RELEASE OF CLAIMS. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company (or any of its subsidiaries) against the Indemnitee, his spouse, heirs, executors, personal representatives or administrators after the expiration of two (2) years following the date the Indemnitee ceases (for any reason) to serve as either an executive officer or director of the Company, and any and all such claims and causes of action of the Company (or any of its subsidiaries) shall be extinguished and deemed released unless asserted by filing of a legal action within such twoyear period.

          Section 11. INDEMNIFICATION OF INDEMNITEE’S ESTATE. Notwithstanding any other provision of this Agreement, and regardless whether indemnification of the Indemnitee would be permitted and/or required under this Agreement, if the Indemnitee is deceased, the Company shall indemnify and hold harmless the Indemnitee’s estate, spouse, heirs, administrators, personal representatives and executors (collectively the “Indemnitee’s Estate”) against, and the Company shall assume, any and all claims, damages, expenses (including attorneys’ fees), penalties, judgments, fines and amounts paid in settlement actually incurred by the Indemnitee or the Indemnitee’s Estate in connection with the investigation, defense, settlement or appeal of any action described in Section 1 or 2 hereof. Indemnification of the Indemnitee’s Estate pursuant to this Section 11 shall be mandatory and not require a Determination or any other finding that the Indemnitee’s conduct satisfied a particular standard of conduct.

          Section 12. REIMBURSEMENT OF ALL LEGAL EXPENSES. Notwithstanding any other provision of this Agreement, and regardless of the presence or absence of any Determination, the Company promptly (but not later than 30 days following the Indemnitee’s submission of a reasonable accounting) shall reimburse the Indemnitee for all attorneys’ fees and related court costs and other expenses incurred by the Indemnitee (but not for judgments, penalties, fines or amounts paid in settlement) in connection with the investigation, defense, settlement or appeal of any action described in Section 1 or 2 hereof (including, but not limited to, the matters specified in Section 6 hereof).

          Section 13. MISCELLANEOUS.

          13.1 Notice Provision. Any notice, payment, demand or communication required or permitted to be delivered or given by the provisions of this Agreement shall be deemed to have been effectively delivered or given and received on the date personally delivered to the respective party to whom it is directed, or when deposited by registered or certified mail, with postage and charges prepaid and addressed to the parties at the respective addresses set forth below opposite their signatures to this Agreement, or to such other address as to which notice is given.

          13.2 Entire Agreement. Except for the Company’s Articles of Incorporation, this Agreement constitutes the entire understanding of the parties and supersedes all prior understandings, whether written or oral, between the parties with respect to the subject matter of this Agreement.

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          13.3 Severability of Provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of each such illegal, invalid or unenforceable provision there shall be added automatically as a part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

          13.4 Applicable Law. This Agreement shall be governed by and construed under the laws of the State of Delaware.

          13.5 Execution in Counterparts. This Agreement and any amendment may be executed simultaneously or in two or more counterparts, each of which together shall constitute one and the same instrument.

          13.6 Cooperation and Intent. The Company shall cooperate in good faith with the Indemnitee and use its best efforts to ensure that the Indemnitee is indemnified and/or reimbursed for liabilities described herein to the fullest extent permitted by law.

          13.7 Amendment. No amendment, modification or alteration of the terms of this Agreement shall be binding unless in writing, dated subsequent to the date of this Agreement, and executed by the parties.

          13.8 Binding Effect. The obligations of the Company to the Indemnitee hereunder shall survive and continue as to the Indemnitee even if the Indemnitee ceases to be a director, officer, employee and/or agent of the Company. Each and all of the covenants, terms and provisions of this Agreement shall be binding upon and inure to the benefit of the successors to the Company and, upon the death of the Indemnitee, to the benefit of the Indemnitee’s estate, heirs, executors, administrators and personal representatives of the Indemnitee.

          13.9 Gender and Number. Wherever the context shall so require, all words herein in the male gender shall be deemed to include the female or neuter gender, all singular words shall include the plural and all plural words shall include the singular.

          13.10 Nonexclusivity. The rights of indemnification and reimbursement provided in this Agreement shall be in addition to any rights to which the Indemnitee may otherwise be entitled by statute, bylaw, agreement, vote of stockholders or otherwise.

          13.11 Effective Date. The provisions of this Agreement shall cover claims, actions, suits and proceedings whether now pending or hereafter commenced and shall be retroactive to cover acts or omissions or alleged acts or omissions which heretofore have taken place.

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

ADDRESS:	THE COMPANY:
	By:
ADDRESS:	THE INDEMNITEE:

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EX-10.40

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.

     (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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EX-10.41

Exhibit 10.41

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”) is made and entered into on June 13, 2008 by and between TERREMARK WORLDWIDE, INC., a Delaware corporation (the “Company”), and Adam T. Smith (hereinafter, the “Executive”).

W I T N E S S E T H:

     WHEREAS, the Executive is currently employed as the Chief Legal Officer of the Company;

     WHEREAS, the Executive possesses intimate knowledge of the business and affairs of the Company, its policies, methods and personnel;

     WHEREAS, the Board recognizes that the Executive has contributed to the growth and success of the Company, and desires to assure the Company of the Executive’s continued employment and to compensate him therefor;

     WHEREAS, the Board has determined that this Agreement will reinforce and encourage the Executive’s continued attention and dedication to the Company; and

     WHEREAS, the Executive is willing to make his services available to the Company and on the terms and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are mutually acknowledged, the Company and the Executive hereby agree as follows:

     1. Definitions. When used in this Agreement, the following terms shall have the following meanings:

          (a) “Accrued Obligations” means:

               (i) all accrued but unpaid Base Salary through the end of the Term of Employment;

               (ii) any unpaid or unreimbursed expenses incurred in accordance with Company policy, including amounts due under Section 5(a) hereof, to the extent incurred during the Term of Employment;

               (iii) any benefits provided under the Company’s employee benefit plans upon a termination of employment, in accordance with the terms therein, including, without limitation, rights to equity in the Company pursuant to any plan or grant and payment of compensation for accrued but unused vacation days;

               (iv) any unpaid Bonus in respect to any completed fiscal year that has ended on or prior to the end of the Term of Employment; and

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               (v) rights to indemnification by virtue of the Executive’s position as an officer or director of the Company or its subsidiaries and the benefits under any directors’ and officers’ liability insurance policy maintained by the Company, in accordance with the terms thereof.

          (b) “Base Salary” means the salary provided for in Section 4(a) hereof or any increased salary granted to Executive pursuant to Section 4(a) hereof.

          (c) “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended.

          (d) “Board” means the Board of Directors of the Company.

          (e) “Bonus” means any bonus payable to the Executive pursuant to Section 4(b) hereof.

          (f) “Bonus Period” means each period for which a Bonus is payable. Unless otherwise specified by the Compensation Committee of the Board, the Bonus Period shall be the fiscal year of the Company.

          (g) “Cause” means:

               (i) a conviction of the Executive, or a plea of nolo contendere, to a felony involving dishonesty or a breach of trust; or

               (ii) willful misconduct or gross negligence by the Executive resulting, in either case, in material economic harm to the Company or any Related Entities; or

               (iii) a willful continued failure by the Executive to carry out the reasonable and lawful directions of the Board or the Chief Executive Officer of the Company; or

               (iv) fraud, embezzlement, theft or dishonesty of a material nature by the Executive against the Company or any Related Entity, or a willful material violation by the Executive of a policy or procedure of the Company or any Related Entity, resulting, in any case, in material economic harm to the Company or any Related Entity; or

               (v) a willful material breach by the Executive of this Agreement.

An act or failure to act shall not be “willful” if (i) done by the Executive in good faith or (ii) the Executive reasonably believed that such action or inaction was in the best interests of the Company and the Related Entities, and Cause shall not include any act or failure to act otherwise described in (ii), (iii), (iv) or (v) unless and until the Company shall have provided to the Executive written notice of such act or failure to act and ten (10) business days from the date of such notice to cure such matter and the Executive shall have failed to cure the same,

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          (h) “Change in Control” means:

               (i) The acquisition by any Person of Beneficial Ownership of more than thirty percent (30%) of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities) (the foregoing Beneficial Ownership hereinafter being referred to as a “Controlling Interest”); provided, however, that for purposes of this definition, the following acquisitions shall not constitute or result in a Change of Control: (x) any acquisition by the Company; (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary of the Company; or (z) any acquisition by any corporation pursuant to a transaction which complies with clauses (A) and (B) of subsection (iii) below; or

               (ii) During any period of two (2) consecutive years (not including any period prior to the Commencement Date) individuals who constitute the Board on the Commencement Date (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Commencement Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

               (iii) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the Beneficial Owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, and (B) at least a majority of the members of the Board of Directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

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               (iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

          (i) “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended from time to time.

          (j) “Code” means the Internal Revenue Code of 1986, as amended.

          (k) “Commencement Date” means June 13, 2008.

          (l) “Common Stock” means the common stock of the Company, par value $0.001 per share.

          (m) “Competitive Activity” means an activity that is in material direct competition with the Company in a business in which the Company was engaged while the Executive was employed by the Company, in any of the States within the United States, or countries within the world, in which the Company conducts business.

          (n) “Confidential Information” means all trade secrets and information disclosed to the Executive or known by the Executive as a consequence of or through the unique position of his employment with the Company or any Related Entity (including information conceived, originated, discovered or developed by the Executive and information acquired by the Company or any Related Entity from others) prior to or after the date hereof, and not generally or publicly known (other than as a result of unauthorized disclosure by the Executive), about the Company or any Related Entity or its business.

          (o) “Disability” means the Executive’s inability, or failure, to perform the essential functions of his or her position, with or without reasonable accommodation, for any period of six (6) months or more in any twelve (12) month period, by reason of any medically determinable physical or mental impairment.

          (p) “Equity Awards” means any stock options, restricted stock, restricted stock units, stock appreciation rights, phantom stock or other equity based awards granted by the Company to the Executive.

          (q) “Equity Plan” means the Company’s 2005 Executive Incentive Compensation Plan, as amended from time to time, and any successor plan thereto.

          (r) “Excise Tax” means any excise tax imposed by Section 4999 of the Code, together with any interest and penalties imposed with respect thereto, or any interest or penalties are incurred by the Executive with respect to any such excise tax.

          (s) “Expiration Date” means the date on which the Term of Employment, including any renewals thereof under Section 3(b), shall expire.

          (t) “Good Reason” means

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               (i) the assignment to the Executive of any duties inconsistent in any material respect with the Executive’s position (including status, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 2(b) of this Agreement, or any other action by the Company that results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

               (ii) any failure by the Company to comply with any of the provisions of Section 4 of this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by the Executive;

               (iii) the Company’s requiring the Executive to be based at any office or location outside of Miami, Florida, except for travel reasonably required in the performance of the Executive’s responsibilities;

               (iv) any purported termination by the Company of the Executive’s employment other than for Cause pursuant to Section 6(b), or by reason of the Executive’s Disability pursuant to Section 6(c) of this Agreement, prior to the Expiration Date;

               (v) the Executive is requested by the Company to engage in conduct that is reasonably likely to result in a violation of law; or

               (vi) the assignment to the Executive of any duties inconsistent in any material respect with the Executive’s then position (including status, offices, titles and reporting relationships), authority, duties or responsibilities which when taken as a whole results in a significant diminution in the Executive’s position, authority, duties or responsibilities, excluding for this purpose any isolated, immaterial and inadvertent action not taken in bad faith and which is remedied by the Company immediately after receipt of notice thereof given by the Executive.

     For purposes of this Agreement, any good faith determination made by the Board as to whether the circumstances resulting in the Executive’s termination of his employment fulfills the requirements set forth above to constitute “Good Reason” shall be binding and conclusive on all interested parties.

          (u) “Group” shall have the meaning ascribed to such term in Section 13(d) of the Securities Exchange Act of 1934.

          (v) “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Securities Exchange Act of 1934 and used in Sections 13(d) and 14(d) thereof.

          (w) “Related Entity” means any subsidiary or affiliate, and any business, corporation, partnership, limited liability company or other entity designated by Board in which the Company or a subsidiary holds a substantial ownership interest, directly or indirectly.

          (x) “Restricted Period” shall be the Term of Employment and the one (1) year period immediately following termination of the Term of Employment.

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          (y) “Severance Amount” shall mean an amount equal to two (2) times the sum of (A) the Executive’s annual Base Salary as in effect immediately prior to the Termination Date and (B) the Executive’s Target Bonus for the Bonus Period in which termination occurs.

          (z) “Severance Term” means the one (1) year period following the date on which the Term of Employment ends.

          (aa) “Target Bonus” means the target annual incentive award opportunity for the applicable Bonus Period.

          (bb) “Term of Employment” means the period during which the Executive shall be employed by the Company pursuant to the terms of this Agreement.

          (cc) “Termination Date” means the date on which the Term of Employment ends.

          (dd) “Termination Year Bonus” means Bonus payable under Section 4(b) hereof for the Bonus Period in which the Executive’s employment with the Company terminates for any reason.

     2. Employment.

          (a) Employment and Term. The Company hereby agrees to employ the Executive and the Executive hereby agrees to serve the Company during the Term of Employment on the terms and conditions set forth herein.

          (b) Duties of Executive. During the Term of Employment, the Executive shall be employed and serve as the Chief Legal Officer of the Company, and shall have such duties as are typically associated with such title. The Executive shall faithfully and diligently perform all services as may be assigned to him by the Board or the Chief Executive Officer of the Company provided that such services are consistent with the Executive’s position with the Company, and shall exercise such power and authority as may from time to time be delegated to him by the Board or the Chief Executive Officer of the Company. The Executive shall devote his full business time, attention and efforts to the performance of his duties under this Agreement, render such services to the best of his ability, and use his reasonable best efforts to promote the interests of the Company. The Executive shall not engage in any other business or occupation during the Term of Employment, including, without limitation, any activity that materially (i) conflicts with the interests of the Company or its subsidiaries, (ii) interferes with the proper and efficient performance of his duties for the Company, or (iii) interferes with the exercise of his judgment in the Company’s best interests. Notwithstanding the foregoing or any other provision of this Agreement, it shall not be a breach or violation of this Agreement for the Executive to (x) serve on corporate, civic or charitable boards or committees, (y) deliver lectures, fulfill speaking engagements or teach at educational institutions, or (z) manage personal investments, so long as such activities do not significantly interfere with or significantly detract from the performance of the Executive’s responsibilities to the Company in accordance with this Agreement.

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     3. Term.

          (a) Initial Term. The initial Term of Employment under this Agreement, and the employment of the Executive hereunder, shall commence on the Commencement Date and shall expire on the third anniversary of the Commencement Date (the “Initial Term”), unless sooner terminated in accordance with Section 6 hereof.

          (b) Renewal Terms. At the end of the Initial Term, the Term of Employment automatically shall renew for successive one (1) year terms (subject to earlier termination as provided in Section 6 hereof), unless the Company or the Executive delivers written notice to the other at least three (3) months prior to the Expiration Date of its or his election not to renew the Term of Employment.

     4. Compensation.

          (a) Base Salary. The Executive shall receive a Base Salary at the annual rate of $250,000 during the Term of Employment, with such Base Salary payable in installments consistent with the Company’s normal payroll schedule, subject to applicable withholding and other taxes. The Base Salary shall be reviewed, at least annually, for merit increases and may, by action and in the discretion of the Compensation Committee of the Board, be increased at any time or from time to time, but may not be decreased from the then current Base Salary.

          (b) Bonuses.

               (i) During the Term of Employment, the Executive shall participate in the Company’s annual incentive compensation program pursuant to and under the Company’s 2005 Executive Incentive Compensation Plan, or such other plan, program and/or arrangements applicable to senior-level executives as established and modified from time to time by the Compensation Committee of the Board in its sole discretion. During the Term of Employment, the Executive shall have a threshold bonus opportunity under such plan or program equal to 30% of his current Base Salary, a Target Bonus opportunity under such plan or program equal to 40% of his current Base Salary, and a maximum bonus under such plan or program equal to 50% of his current Base Salary, in each case based on satisfaction of performance criteria to be established by the Compensation Committee of the Board at the beginning of each fiscal year that begins during the Term of Employment. Payment of annual incentive compensation awards shall be made in the same manner and at the same time that other senior-level executives receive their annual incentive compensation awards.

               (ii) For the Bonus Period in which the Executive’s employment with the Company terminates for any reason other than by the Company for Cause under Section 6(b) hereof or by the Executive without Good Reason under Section 6(g) hereof, the Company shall pay the Executive a pro rata portion (based upon the period ending on the date on which the Executive’s employment with the Company terminates) of the Target Bonus for the Bonus Period in which such termination of employment occurs; provided, however, that (A) the Bonus Period shall be deemed to end on the last day of the fiscal quarter of the Company in which the Executive’s employment so terminates, and (B) the business criteria used to determine the bonus for this short Bonus Period shall be annualized and shall be determined based upon unaudited financial information prepared in accordance with generally accepted accounting principles, applied consistently with prior periods, and reviewed and approved by the Compensation Committee of the Board.

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               (iii) The Executive may receive such additional bonuses, if any, as the Compensation Committee of the Board may in its sole and absolute discretion determine.

               (iv) Any Bonus payable pursuant to this Section 4(b) shall be paid by the Company to the Executive on the fifteenth day of the third month after the end of the Bonus Period for which it is payable.

          (c) Repayment Provisions. If the Company is required to prepare an accounting restatement due to its material noncompliance, as a result of the Executive’s misconduct, with any financial reporting requirement under the United States securities laws, then, and only if Section 304 of the Sarbanes-Oxley Act of 2002, or a successor provision, is then in effect, the Executive shall reimburse the Company for (i) any bonus or other incentive-based or equity-based compensation received by the Executive from the Company during the twelve (12) month period following the first public issuance or filing with the Securities Exchange Commission (whichever first occurs) of the financial documents embodying such financial reporting requirement and (ii) any profits realized from the sale of securities of the Company during such twelve (12) month period.

     5. Expense Reimbursement and Other Benefits.

          (a) Reimbursement of Expenses. Upon the Executive’s submission of substantiation in accordance with, and otherwise subject to, such rules and guidelines as the Company may from time to time adopt with respect to the reimbursement of expenses of executive personnel, the Company shall reimburse the Executive for all reasonable expenses actually paid or incurred by the Executive during the Term of Employment in the course of and pursuant to the business of the Company. Notwithstanding anything herein to the contrary, the Executive’s first class travel and accommodations shall be considered reasonable. The Executive shall account to the Company in writing for all expenses for which reimbursement is sought and shall supply to the Company copies of all relevant invoices, receipts or other evidence reasonably requested by the Company.

          (b) Compensation/Benefit Programs. During the Term of Employment, the Executive shall be entitled to participate in all medical, dental, hospitalization, accidental death and dismemberment, disability, travel and life insurance plans, and any and all other plans as are presently and hereinafter offered by the Company to its executive personnel, including savings, pension, profit-sharing and deferred compensation plans, subject to the general eligibility and participation provisions set forth in such plans. The Executive shall designate in his sole discretion the beneficiary under such policies. If the life insurance cannot be purchased at standard rates, then the Company shall provide and/or pay for that amount of insurance that can be purchased for premiums equal to the coverage specified above at standard rates.

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          (c) Working Facilities. During the Term of Employment, the Company shall furnish the Executive with an office, secretarial help and such other facilities and services suitable to his position and adequate for the performance of his duties hereunder.

          (d) Equity Awards. During the Term of Employment, the Executive shall be eligible to be granted Equity Awards under (and therefore subject to all terms and conditions of) the Equity Plan or such other plans or programs as the Company may from time to time adopt, and subject to all rules of regulation of the Securities and Exchange Commission applicable thereto. The number and type of Equity Awards, and the terms and conditions thereof, shall be determined by the Compensation Committee of the Board, in its discretion and pursuant to the Equity Plan or the plan or arrangement pursuant to which they are granted.

          (e) Vacation. The Executive shall be entitled to four (4) weeks of paid vacation each calendar year during the Term of Employment, to be taken at such times as the Executive and the Company shall mutually determine and provided that no vacation time shall significantly interfere with the duties required to be rendered by the Executive hereunder. Any vacation time not taken by Executive during any fiscal year may be carried forward into any succeeding calendar year.

          (f) Other Benefits. Regardless of anything herein to the contrary, if at any time during the Term of Employment the Company or any Related Entity agrees to provide or provides any benefit to any other employee of the Company or Related Entity which benefit is not otherwise provided to the Executive hereunder, or which is greater than a similar benefit provided to the Executive hereunder, the Company shall provide such benefit to the Executive or increase his benefit to be at least equal to such benefit agreed to be provided or provided to such other employee.

     6. Termination.

          (a) General. The Term of Employment shall terminate upon the earliest to occur of (i) the Executive’s death, (ii) a termination by the Company by reason of the Executive’s Disability, (iii) a termination by the Company with or without Cause, or (iv) a termination by Executive with or without Good Reason. Upon any termination of Executive’s employment for any reason, except as may otherwise be requested by the Company in writing and agreed upon in writing by Executive, the Executive shall resign from any and all directorships, committee memberships or any other positions Executive holds with the Company or any of its subsidiaries.

          (b) Termination By Company for Cause. The Company shall at all times have the right, upon written notice to the Executive, to terminate the Term of Employment, for Cause. Cause shall in no event be deemed to exist except upon a decision made by the Board made at a special meeting of the Board to be called and held at a time reasonably convenient to the Board and the Executive, but in no less than five (5) business days or more than thirty (30) business days after the Executive’s receipt of notice from the Company specifying such alleged “Cause.” Such notice from the Company to the Executive specifying alleged “Cause” shall be in writing and shall set forth in detail all acts or omission constituting such Cause. The Executive shall have not less than three (3) days prior written notice of the time and place of, and shall have

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the right to appear before, such special meeting of the Board with legal counsel of his choosing to refute any allegation of Cause specified in such notice. No termination of the Executive’s employment by reason of Cause shall be effective until the Executive is afforded such opportunity to appear and after such appearance (or failure of the Executive to appear at the designated time), not less than a majority of the members of the entire Board (excluding the Executive if he is so a member) shall concur that such Cause specified in such notice exists. For purposes of this Section 6(b), any good faith determination by the Board of Cause, made in accordance with the procedure described above, shall be binding and conclusive on all interested parties. In the event that the Term of Employment is terminated by the Company for Cause, Executive shall be entitled only to the Accrued Obligations.

          (c) Disability. The Company shall have the option, in accordance with applicable law, to terminate the Term of Employment upon written notice to the Executive, at any time during which the Executive continues to suffer after having suffered from a Disability. In the event that the Term of Employment is terminated due to the Executive’s Disability, the Executive shall be entitled to:

               (i) The Accrued Obligations, payable as and when those amounts would have been payable had the Term of Employment not ended;

               (ii) The Termination Year Bonus, payable within 2-1/2 months after the last day of the Bonus Period in which the Termination Date occurs; and

               (iii) Vesting, immediately prior to such termination, in any Equity Awards that have not previously vested, provided that the Executive shall only have six (6) months after the Termination Date in order to exercise any stock options within such Equity Awards.

          (d) Death. In the event that the Term of Employment is terminated due to the Executive’s death, the Executive shall be entitled to:

               (i) The Accrued Obligations, payable as and when those amounts would have been payable had the Term of Employment not ended;

               (ii) The Termination Year Bonus, payable within 2-1/2 months after the last day of the Bonus Period in which the Termination Date occurs; and

               (iii) Vesting, immediately prior to such termination, in any Equity Awards that have not previously vested, provided that the Executive’s estate or beneficiary shall only have six (6) months after the Termination Date in order to exercise any stock options within such Equity Awards.

          (e) Termination Without Cause. The Company may terminate the Term of Employment at any time without Cause, by written notice to the Executive not less than thirty (30) days prior to the effective date of such termination. In the event that the Term of Employment is terminated by the Company without Cause (other than due to the Executive’s death or Disability) the Executive shall be entitled to:

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               (i) The Accrued Obligations, payable as and when those amounts would have been payable had the Term of Employment not ended;

               (ii) The Termination Year Bonus, payable within 2 1/2 months after the last day of the Bonus Period in which the Termination Date occurs;

               (iii) A lump sum payment equal to the Severance Amount, payable within the later of ten (10) business days after the Termination Date or the expiration of the seven (7) day revocation period for the general release described in Section 6(j);

               (iv) Continuation, at the Company’s expense, of the health benefits provided to Executive and his covered dependents under the Company health plans as in effect from time to time after the date of such termination at the same cost applicable to active employees until the earlier of: (A) the expiration of the Severance Term, or (B) the date the Executive commences employment with any person or entity and, thus, is eligible for health insurance benefits; provided, however, that as a condition of continuation of such benefits, the Company may require the Executive to elect to continue his health insurance pursuant to COBRA. In the event that the Company is unable to provide the Executive and his covered dependents with any health benefits required pursuant to this Section 6(e)(iv), then the Company shall pay the Executive cash equal to the value of the benefit that otherwise would have accrued for the Executive’s benefit under the plan, for the period during which such benefits could not be provided under the plans, said cash payments to be made monthly until such time as the benefits would otherwise terminate pursuant to this Section 6(e)(iv); and

               (v) Vesting, immediately prior to such termination, in any Equity Awards that have not previously vested.

          (f) Termination by Executive for Good Reason. The Executive may terminate the Term of Employment for Good Reason by providing the Company fifteen (15) days’ written notice setting forth in reasonable specificity the event that constitutes Good Reason, which written notice, to be effective, must be provided to the Company within sixty (60) days of the Executive’s first knowledge of the occurrence of such event. During such fifteen (15) day notice period, the Company shall have a cure right (if curable), and if not cured within such period, the Executive’s termination shall be effective upon the date immediately following the expiration of the fifteen (15) day notice period, and the Executive shall be entitled to the same payments and benefits as provided in Section 6(e) above for a termination without Cause.

          (g) Termination by Executive Without Good Reason. The Executive may terminate his employment without Good Reason by providing the Company thirty (30) days’ written notice of such termination. In the event of a termination of employment by the Executive under this Section 6(g), the Executive shall be entitled only to the Accrued Obligations. In the event of termination of the Executive’s employment under this Section 6(g), the Company may, in its sole and absolute discretion, by written notice, accelerate such date of termination and still have it treated as a termination without Good Reason.

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          (h) Termination Upon Expiration Date. In the event that Executive’s employment with the Company terminates upon the expiration of the Term of Employment, the Executive shall be entitled to:

               (i) The Accrued Obligations, payable as and when those amounts would have been payable had the Term of Employment not ended;

               (ii) The Termination Year Bonus, payable within 2-1/2 months after the last day of the Bonus Period in which the Termination Date occurs;

               (iii) A lump-sum payment equal to the Severance Amount, payable within the later of ten (10) business days after the Termination Date or the expiration of the seven (7) day revocation period for the general release described in Section 6(j); and

               (iv) Continuation, at the Company’s expense, of the health benefits provided to Executive and his covered dependants under the Company health plans as in effect from time to time after the date of such termination at the same cost applicable to active employees until the earlier of: (A) the expiration of the Severance Term, or (B) the date Executive commences employment with any person or entity and, thus, is eligible for health insurance benefits; provided, however, that as a condition of continuation of such benefits, the Company may require the Executive to elect to continue his health insurance pursuant to COBRA. In the event that the Company is unable to provide the Executive and his covered dependents with any health benefits required pursuant to this Section 6(h)(iv), then the Company shall pay the Executive cash equal to the value of the benefit that otherwise would have accrued for the Executive’s benefit under the plan, for the period during which such benefits could not be provided under the plans, said cash payments to be made monthly until such time as the benefits would otherwise terminate pursuant to this Section 6(h)(iv).

          (i) Change in Control of the Company. If the Executive’s employment is terminated by the Company without Cause during (x) the 6-month period preceding the date of the Change in Control or (y) the two (2) year period immediately following the Change in Control, then in lieu of any amounts otherwise payable under 6(e) or 6(f) hereof, the Executive shall be entitled to:

               (i) The Accrued Obligations, payable as and when those amounts would have been payable had the Term of Employment not ended;

               (ii) The Termination Year Bonus, payable within 2 1/2 months after the last day of the Bonus Period in which the Termination Date occurs;

               (iii) The Severance Amount, payable within the later of ten (10) business days after the Termination Date or the expiration of the seven (7) day revocation period for the general release described in Section 6(j); and

               (iv) Continuation, at the Company’s expense, of the health benefits provided to Executive and his covered dependants under the Company health plans as in effect from time to time after the date of such termination at the same cost applicable to active employees until the earlier of: (A) the expiration of the Severance Term, or (B) the date

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Executive commences employment with any person or entity and, thus, is eligible for health insurance benefits; provided, however, that as a condition of continuation of such benefits, the Company may require the Executive to elect to continue his health insurance pursuant to COBRA. In the event that the Company is unable to provide the Executive and his covered dependents with any health benefits required pursuant to this Section 6(i)(iv), then the Company shall pay the Executive cash equal to the value of the benefit that otherwise would have accrued for the Executive’s benefit under the plan, for the period during which such benefits could not be provided under the plans, said cash payments to be made monthly until such time as the benefits would otherwise terminate pursuant to this Section 6(i)(iv); and

               (v) Vesting, immediately prior to such termination, in any Equity Awards that have not previously vested.

          (j) Release. Any payments due to Executive under this Article 6 (other than the Accrued Obligations or any payments due on account of the Executive’s death) shall be conditioned upon Executive’s execution of a general release of claims in the form attached hereto as Exhibit A (subject to such modifications as the Company reasonably may request).

          (k) Section 280G Reductions and Additional Payments by the Company.

               (i) Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined that any payment, distribution, or other action by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of the Agreement or otherwise) (a “Payment”), would result in an “excess parachute payment” within the meaning of Section 280G(b)(1) of the Code, but that no portion of the Payments would be treated as excess parachute payments if the aggregate amount of the Payments pursuant to this Agreement (the “Agreement Payments”) were reduced by not more 10% of the aggregate present value of all of the Agreement Payments, then the Agreement Payments shall be reduced to the “Reduced Amount”. The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be an excess parachute payment under Section 280G(b)(1) of the Code. For purposes of this Section 6(k), present value shall be determined in accordance with Section 280G(d)(4) of the Code.

               (ii) If and to the extent that Section 6(k)(i) is not applicable, then, anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined that any Payment would be subject to an Excise Tax, the Company shall make a payment to the Executive (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any Excise Tax) imposed upon the Gross-Up Payment, the Executive retains (or has had paid to the Internal Revenue Service on his behalf) an amount of the Gross-Up Payment equal to the sum of (x) the Excise Tax imposed upon the Payments and (y) the product of any deductions disallowed because of the inclusion of the Gross-Up Payment in the Executive’s adjusted gross income and the highest applicable marginal rate of federal income taxation for the calendar year in which the Gross-Up Payment is to be made. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to (x) pay federal income taxes at the highest marginal rates of federal income taxation for the calendar year in which the Gross-Up Payment is to be made, and (y) pay applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

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               (iii) Subject to the provisions of paragraph (iv) of this Section 6(k), all determinations required to be made under this Section 6(k), including the amount of any Reduced Amount and the Payments that are to be reduced pursuant to Section 6(k)(i) and, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, and the assumptions (consistent with the above) to be utilized in arriving at such determination, shall be made by KPMG LLP (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive shall appoint another regionally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 6(k), shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm’s determination. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion that failure to report the Excise Tax on the Executive’s applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

               (iv) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

                    (A) give the Company any information reasonably requested by the Company relating to such claim,

                    (B) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company and approved by the Executive,

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                    (C) cooperate with the Company in good faith in order effectively to contest such claim, and

                    (D) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 6(k)(iii) and in a manner reasonably acceptable to the Executive, and provided that the Company shall keep the Executive informed of all matters in the proceedings, the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

               (v) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 6(k)(iii), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 6(k)(iii)) promptly pay to the Company the amount of such refund (together with any interest paid thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 6(k)(iii), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

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          (l) Cooperation. Following the Term of Employment, the Executive shall give his assistance and cooperation willingly, upon reasonable advance notice and with due consideration for his other business or personal commitments, in any matter relating to his position with the Company, or his expertise or experience as the Company may reasonably request, including his attendance and truthful testimony where deemed appropriate by the Company, with respect to any investigation or the Company’s defense or prosecution of any existing or future claims or litigations or other proceedings relating to matters in which he was involved or potentially had knowledge by virtue of his employment with the Company. In no event shall his cooperation materially interfere with his services for a subsequent employer or other similar service recipient. To the extent permitted by law, the Company agrees that (i) it shall promptly advance to the Executive (and reimburse him for any additional) reasonable and documented expenses in connection with his rendering assistance and/or cooperation under this Section 6(l) upon his presentation of documentation for such expenses and (ii) the Executive shall be reasonably compensated for any assistance or cooperation pursuant to this Section 6(l).

          (m) Return of Company Property. Following the Termination Date, the Executive or his personal representative shall return all Company property in his possession, including but not limited to all computer equipment (hardware and software), telephones, facsimile machines, palm pilots and other communication devices, credit cards, office keys, security access cards, badges, identification cards and all copies (including drafts) of any documentation or information (however stored) relating to the business of the Company, its customers and clients or its prospective customers and clients (provided that the Executive may retain a copy the addresses contained in his rolodex, his palm pilot, his PDA and any similar device).

          (n) Section 409A.

               (i) To the extent that the Executive otherwise would be entitled to any payment (whether pursuant to this Agreement or otherwise) during the six months beginning on the Termination Date that would be subject to the additional tax imposed under Section 409A of the Code (“Section 409A”), (x) the payment shall not be made to the Executive during such six month period, and (y) the payment shall be paid to the Executive on the earlier of the six-month anniversary of the Termination Date or the Executive’s death or Disability. Similarly, to the extent that the Executive otherwise would be entitled to any benefit (other than a payment) during the six months beginning on the Termination Date that would be subject to the Section 409A additional tax, the benefit shall be delayed and shall begin being provided (together, if applicable, with an adjustment to compensate the Executive for the delay) on the earlier of the six-month anniversary of the Termination Date, or the Executive’s death or Disability.

               (ii) It is the Company’s intention that the benefits and rights to which the Executive could become entitled in connection with termination of employment comply with Section 409A. If the Executive or the Company believes, at any time, that any of such benefit or right does not comply, it shall promptly advise the other and shall negotiate reasonably and in good faith to amend the terms of such benefits and rights such that they comply with Section 409A (with the most limited possible economic effect on the Executive and on the Company).

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          (o) Clawback of Certain Compensation and Benefits. If, after the termination of the Executive’s employment with the Company for any reason other than by the Company for Cause, a court of competent jurisdiction determines that the Executive breached Sections 7 hereof and has issued an injunction against the Executive in accordance with Section 7(i) hereof, then, in addition to any other remedy that may be available to the Company in law or equity and/or pursuant to any other provisions of this Agreement, the Executive’s employment shall be deemed to have been terminated for Cause retroactively to the Termination Date and the Executive also shall be subject to the following provisions:

               (i) the Executive shall be required to pay to the Company, immediately upon written demand by the Board, all amounts paid to him by the Company, whether or not pursuant to this Agreement, on or after the Termination Date (including the pre-tax cost to the Company of any benefits (other than those described in clause (iii) of this Section 6(o)) provided by the Company) that are in excess of the total amount that the Company would have been required to pay (and the pre-tax cost of any benefits (other than those described in clause (iii) of this Section 6(o)) that the Company would have been required to provide) to the Executive if the Executive’s employment with the Company had been terminated by the Company for Cause in accordance with Section 6(b) hereof;

               (ii) all vested and unvested Equity Awards then held by the Executive shall immediately expire; and

               (iii) the Executive shall be required to pay to the Company, immediately upon written demand by the Board, an amount equal to all Accelerated Equity Award Gains that the Executive has received.

          For purposes of this Section, the following terms shall have the following meanings:

          “Accelerated Equity Award Gains” shall mean the sum of (x) the Accelerated Option and SAR Gains and (y) the Accelerated Equity Award Gains.

          “Accelerated Options” shall mean those unvested stock options that become vested in accordance with Section 6(i) hereof.

          “Accelerated Option and SAR Gain” shall mean:

               (i) in the case of any Accelerated Option, or any Accelerated SAR that is settled in shares of the Company’s common stock, the product of:

               (ii) the number of shares of the Company’s common stock acquired by the Executive upon exercise of any Accelerated Option or Accelerated SAR, multiplied by

               (iii) the difference between (x) the fair market value per share of the Company’s common stock underlying such Accelerated Option or Accelerated SAR as of the date on which the Executive exercised the Accelerated Option or Accelerated SAR less (y) the exercise price or grant price (as equitably adjusted) of such Accelerated Option or Accelerated SAR; and

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               (iv) in the case of any Accelerated SAR that is settled in cash or in property, other than shares of the Company’s common stock, the amount of cash and fair market value of any property paid or transferred to the Executive with respect to the Accelerated Option or Accelerated SAR.

          “Accelerated Equity Award Gains” shall mean the aggregate value of the Accelerated Shares based on the closing price the Company’s common stock value determined on whichever of the following dates produces the greatest value:

               (i) the Termination Date;

               (ii) the date on which a court of competent jurisdiction determines that the Executive breached Section 7 hereof and has issued an injunction against the Executive in accordance with Section 7(i);

               (iii) the date on which the Executive transfers or otherwise disposes of the Accelerated Shares.

          “Accelerated SARs” shall mean those unvested stock appreciation rights that become vested in accordance with Section 6(i) hereof.

          “Accelerated Shares” shall mean those shares of the Company’s common stock granted by the Company to the Executive as compensation for services that would have been forfeited in the event that the Executive’s employment with the Company had been terminated by the Company for Cause in accordance with Section 6(b) hereof.

     7. Restrictive Covenants.

          (a) Non-competition. At all times during the Restricted Period, the Executive shall not, without the prior written consent of the Board, directly or indirectly (whether as a principal, agent, partner, employee, officer, investor, owner, consultant, board member, security holder, creditor or otherwise), engage in any Competitive Activity, or have any direct or indirect interest in any sole proprietorship, corporation, company, partnership, association, venture or business or any other person or entity that directly or indirectly (whether as a principal, agent, partner, employee, officer, investor, owner, consultant, board member, security holder, creditor, or otherwise) engages in a Competitive Activity; provided that the foregoing shall not apply to the Executive’s ownership of Common Stock of the Company or the acquisition by the Executive, solely as an investment, of securities of any issuer that is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, and that are listed or admitted for trading on any United States national securities exchange or that are quoted on the Nasdaq Stock Market, or any similar system or automated dissemination of quotations of securities prices in common use, so long as the Executive does not control, acquire a controlling interest in or become a member of a group which exercises direct or indirect control of, more than five percent (5%) of any class of capital stock of such corporation.

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          (b) Nonsolicitation of Employees and Certain Other Third Parties. At all times during the Restricted Period, the Executive shall not, without the prior written consent of the Board, directly or indirectly, for himself or for any other person, firm, corporation, partnership, association or other entity (i) employ or attempt to employ or enter into any contractual arrangement with any employee, consultant or independent contractor performing services for the Company, or any Related Entity, unless such employee, consultant or independent contractor, has not been employed or engaged by the Company for a period in excess of six (6) months, and/or (ii) call on or solicit any of the actual or targeted prospective customers or clients of the Company or any Related Entity on behalf of any person or entity in connection with any Competitive Activity, nor shall the Executive make known the names and addresses of such actual or targeted prospective customers or clients, or any information relating in any manner to the trade or business relationships of the Company or any Related Entities with such customers or clients, other than in connection with the performance of the Executive’s duties under this Agreement.

          (c) Confidential Information. At any time during the Restricted Period, the Executive shall not at any time divulge, communicate, use to the detriment of the Company or for the benefit of any other person or persons, or misuse in any way, any Confidential Information pertaining to the business of the Company. Any Confidential Information or data now or hereafter acquired by the Executive with respect to the business of the Company (which shall include, but not be limited to, information concerning the Company’s financial condition, prospects, technology, customers, suppliers, sources of leads and methods of doing business) shall be deemed a valuable, special and unique asset of the Company that is received by the Executive in confidence and as a fiduciary, and the Executive shall remain a fiduciary to the Company with respect to all of such information at all times during the Restricted Period. Notwithstanding the foregoing, nothing herein shall be deemed to restrict the Executive from disclosing Confidential Information as required to perform his duties under this Agreement or to the extent required by law or order of any court, agency or other appropriate governing authority. If any person or authority makes a demand on the Executive purporting to legally compel him to divulge any Confidential Information, the Executive immediately shall give notice of the demand to the Company so that the Company may first assess whether to challenge the demand prior to the Executive’s divulging of such Confidential Information. The Executive shall not divulge such Confidential Information until the Company either fails to respond to the Executive’s notice of such demand on a timely basis, has concluded not to challenge the demand, or has exhausted its challenge, including appeals, if any. Upon request by the Company, the Executive shall deliver promptly to the Company upon termination of his services for the Company, or at any time thereafter as the Company may request, all memoranda, notes, records, reports, manuals, drawings, designs, computer files in any media and other documents (and all copies thereof) containing such Confidential Information.

          (d) Ownership of Developments. All processes, concepts, techniques, inventions and works of authorship, including new contributions, improvements, formats, packages, programs, systems, machines, compositions of matter manufactured, developments, applications and discoveries, and all copyrights, patents, trade secrets, or other intellectual property rights associated therewith conceived, invented, made, developed or created by the Executive during the Term of Employment either during the course of performing work for the Companies or their clients or which are related in any manner to the business (commercial or experimental) of the Company or its clients (collectively, the “Work Product”) shall belong exclusively to the Company and shall, to the extent possible, be considered a work made by the Executive for hire for the Company within the meaning of Title 17 of the United States Code. To the extent the Work Product may not be considered work made by the Executive for hire for the Company, the Executive agrees to assign, at the Company’s expense, and automatically

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assign at the time of creation of the Work Product, without any requirement of further consideration, any right, title, or interest the Executive may have in such Work Product. Upon the request of the Company, and at its expense, the Executive shall take such further actions, including execution and delivery of instruments of conveyance, as may be appropriate to give full and proper effect to such assignment. The Executive shall further: (i) promptly disclose the Work Product to the Company; (ii) assign to the Company, without additional compensation, all patent or other rights to such Work Product for the United States and foreign countries; (iii) sign all papers necessary to carry out the foregoing; and (iv) give testimony in support of his inventions, all at the sole cost and expense of the Company.

          (e) Books and Records. All books, records, and accounts relating in any manner to the customers or clients of the Company, whether prepared by the Executive or otherwise coming into the Executive’s possession, shall be the exclusive property of the Company and shall be returned immediately to the Company on termination of the Executive’s employment hereunder or on the Company’s request at any time.

          (f) Acknowledgment by Executive. The Executive acknowledges and confirms that the restrictive covenants contained in this Article 7 (including without limitation the length of the term of the provisions of this Article 7) are reasonably necessary to protect the legitimate business interests of the Company, and are not overbroad, overlong, or unfair and are not the result of overreaching, duress or coercion of any kind. The Executive further acknowledges and confirms that the compensation payable to the Executive under this Agreement is in consideration for the duties and obligations of the Executive hereunder, including the restrictive covenants contained in this Article 7, and that such compensation is sufficient, fair and reasonable. The Executive further acknowledges and confirms that his full, uninhibited and faithful observance of each of the covenants contained in this Article 7 will not cause him any undue hardship, financial or otherwise, and that enforcement of each of the covenants contained herein will not impair his ability to obtain employment commensurate with his abilities and on terms fully acceptable to him or otherwise to obtain income required for the comfortable support of him and his family and the satisfaction of the needs of his creditors. The Executive acknowledges and confirms that his special knowledge of the business of the Company is such as would cause the Company serious injury or loss if he were to use such ability and knowledge to the benefit of a competitor or were to compete with the Company in violation of the terms of this Article 7. The Executive further acknowledges that the restrictions contained in this Article 7 are intended to be, and shall be, for the benefit of and shall be enforceable by, the Company’s successors and assigns. The Executive expressly agrees that upon any breach or violation of the provisions of this Article 6, the Company shall be entitled, as a matter of right, in addition to any other rights or remedies it may have, to (i) temporary and/or permanent injunctive relief in any court of competent jurisdiction as described in Section 7(i hereof, and (ii) such damages as are provided at law or in equity.

          (g) Reformation by Court. In the event that a court of competent jurisdiction shall determine that any provision of this Article 7 is invalid or more restrictive than permitted under the governing law of such jurisdiction, then only as to enforcement of this Article 7 within the jurisdiction of such court, such provision shall be interpreted or reformed and enforced as if it provided for the maximum restriction permitted under such governing law.

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          (h) Extension of Time. If the Executive shall be in violation of any provision of this Article 7, then each time limitation set forth in this Article 7 shall be extended for a period of time equal to the period of time during which such violation or violations occur. If the Company seeks injunctive relief from such violation in any court of competent jurisdiction and if such court determines that such violation by the Executive did occur, then the covenants set forth in this Article 7 shall be extended for a period of time equal to the pendency of such proceeding including all appeals by the Executive.

          (i) Injunction. It is recognized and hereby acknowledged by the parties hereto that a breach by the Executive of any of the covenants contained in Article 7 of this Agreement will cause irreparable harm and damage to the Company, for which monetary damages to the Company may be an inadequate remedy. As a result, the Executive recognizes and hereby acknowledges that the Company shall be entitled to an injunction from any court of competent jurisdiction enjoining and restraining any violation of any or all of the covenants contained in Article 7 of this Agreement by the Executive or any of his affiliates, associates, partners or agents, either directly or indirectly, and that such right to injunction shall be cumulative and in addition to whatever other remedies the Company may possess.

     8. Representations and Warranties of Executive. The Executive represents and warrants to the Company that:

          (a) The Executive’s employment will not conflict with or result in a material breach of any agreement to which he is a party or otherwise may be bound;

          (b) The Executive has not violated, and in connection with his employment with the Company will not violate, any non-solicitation, non-competition or other similar covenant or agreement of a prior employer by which he is or may be bound; and

          (c) In connection with Executive’s employment with the Company, he will not use any confidential or proprietary information that would violate the terms of any agreement between the Executive and any prior employer; and

          (d) The Executive has not (i) been convicted of any felony; or (ii) committed any criminal act with respect to Executive’s current or any prior employment.

     9. Taxes. Anything in this Agreement to the contrary notwithstanding, all payments required to be made by the Company hereunder to the Executive or his estate or beneficiaries shall be subject to the withholding of such amounts relating to taxes as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation. In lieu of withholding such amounts, in whole or in part, the Company may, in its sole discretion, accept other provisions for payment of taxes and withholding as required by law, provided it is satisfied that all requirements of law affecting its responsibilities to withhold have been satisfied.

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     10. Arbitration.

          (a) Exclusive Remedy. The parties recognize that litigation in federal or state courts or before federal or state administrative agencies of disputes arising out of the Executive’s employment with the Company or out of this Agreement, or the Executive’s termination of employment or termination of this Agreement, may not be in the best interests of either the Executive or the Company, and may result in unnecessary costs, delays, complexities, and uncertainty. The parties agree that any dispute between the parties arising out of or relating to the Executive’s employment, or to the negotiation, execution, performance or termination of this Agreement or the Executive’s employment, including, but not limited to, any claim arising out of this Agreement, claims under Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, Section 1981 of the Civil Rights Act of 1966, as amended, the Family Medical Leave Act, the Employee Retirement Income Security Act, and any similar federal, state or local law, statute, regulation, or any common law doctrine, whether that dispute arises during or after employment shall be resolved by arbitration in the Miami-Dade County, Florida area, in accordance with the National Employment Arbitration Rules of the American Arbitration Association, as modified by the provisions of this Section 10. Except as set forth below with respect to Section 7 of this Agreement, the parties each further agree that the arbitration provisions of this Agreement shall provide each party with its exclusive remedy, and each party expressly waives any right it might have to seek redress in any other forum, except as otherwise expressly provided in this Agreement. Notwithstanding anything in this Agreement to the contrary, the provisions of this Section 10 shall not apply to any injunctions that may be sought with respect to disputes arising out of or relating to Section 7 of this Agreement. The parties acknowledge and agree that their obligations under this arbitration agreement survive the expiration or termination of this Agreement and continue after the termination of the employment relationship between the Executive and the Company. By election of arbitration as the means for final settlement of all claims, the parties hereby waive their respective rights to, and agree not to, sue each other in any action in a Federal, State or local court with respect to such claims, but may seek to enforce in court an arbitration award rendered pursuant to this Agreement. The parties specifically agree to waive their respective rights to a trial by jury, and further agree that no demand, request or motion will be made for trial by jury.

          (b) Arbitration Procedure and Arbitrator’s Authority. In the arbitration proceeding, each party shall be entitled to engage in any type of discovery permitted by the Federal Rules of Civil Procedure, to retain its own counsel, to present evidence and cross-examine witnesses, to purchase a stenographic record of the proceedings, and to submit post-hearing briefs. In reaching his/her decision, the arbitrator shall have no authority to add to, detract from, or otherwise modify any provision of this Agreement. The arbitrator shall submit with the award a written opinion which shall include findings of fact and conclusions of law. Judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction.

          (c) Effect of Arbitrator’s Decision; Arbitrator’s Fees. The decision of the arbitrator shall be final and binding between the parties as to all claims which were or could have been raised in connection with the dispute, to the full extent permitted by law. In all cases in which applicable federal law precludes a waiver of judicial remedies, the parties agree that the decision of the arbitrator shall be a condition precedent to the institution or maintenance of any legal, equitable, administrative, or other formal proceeding by the Executive in connection with the dispute, and that the decision and opinion of the arbitrator may be presented in any other forum on the merits of the dispute. If the arbitrator finds that the Executive was terminated in violation of law or this Agreement, the parties agree that the arbitrator acting hereunder shall be empowered to provide the Executive with any remedy available should the matter have been tried in a court, including equitable and/or legal remedies, compensatory damages and back pay. The arbitrator’s fees and expenses and all administrative fees and expenses associated with the filing of the arbitration shall be borne by the non-prevailing party.

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     11. Assignment. The Company shall have the right to assign this Agreement and its rights and obligations hereunder in whole, but not in part, to any corporation or other entity with or into which the Company may hereafter merge or consolidate or to which the Company may transfer all or substantially all of its assets, and in any such case said corporation or other entity shall by operation of law or expressly in writing assume all obligations of the Company hereunder as fully as if it had been originally made a party hereto, but no assignment will release the Company from this Agreement or any of its obligations hereunder. The Company may not otherwise assign this Agreement or its rights and obligations hereunder. The Executive may not assign or transfer this Agreement or any rights or obligations hereunder.

     12. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Florida, without regard to principles of conflict of laws.

     13. Jurisdiction and Venue. The parties acknowledge that a substantial portion of the negotiations, anticipated performance and execution of this Agreement occurred or shall occur in Miami-Dade County, Florida, and that, therefore, without limiting the jurisdiction or venue of any other federal or state courts, each of the parties irrevocably and unconditionally (i) agrees that any suit, action or legal proceeding arising out of or relating to this Agreement which is expressly permitted by the terms of this Agreement to be brought in a court of law, shall be brought in the courts of record of the State of Florida in Miami-Dade County or the court of the United States, Southern District of Florida; (ii) consents to the jurisdiction of each such court in any such suit, action or proceeding; (iii) waives any objection which it or he may have to the laying of venue of any such suit, action or proceeding in any of such courts; and (iv) agrees that service of any court papers may be effected on such party by mail, as provided in this Agreement, or in such other manner as may be provided under applicable laws or court rules in such courts.

     14. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and, upon its effectiveness, shall supersede all prior agreements, understandings and arrangements, both oral and written, between the Executive and the Company (or any of its affiliates) with respect to such subject matter. This Agreement may not be modified in any way unless by a written instrument signed by both the Company and the Executive.

     15. Survival. The respective rights and obligations of the parties hereunder shall survive any termination of the Executive’s employment hereunder, including without limitation, the Company’s obligations under Section 6 and the Executive’s obligations under Section 7 above, and the expiration of the Term of Employment, to the extent necessary to the intended preservation of such rights and obligations.

     16. Notices. All notices required or permitted to be given hereunder shall be in writing and shall be personally delivered by courier, sent by registered or certified mail, return receipt requested or sent by confirmed facsimile transmission addressed as set forth herein. Notices personally delivered, sent by facsimile or sent by overnight courier shall be deemed given on the date of delivery and notices mailed in accordance with the foregoing shall be deemed given upon the earlier of receipt by the addressee, as evidenced by the return receipt thereof, or three (3) days after deposit in the U.S. mail. Notice shall be sent (i) if to the Company, addressed to 2 South Biscayne Boulevard, Suite 2900, Miami, Florida 33131, Attention: President, and (ii) if to the Executive, to his address as reflected on the payroll records of the Company, or to such other address as either party shall request by notice to the other in accordance with this provision.

     17. Benefits; Binding Effect. This Agreement shall be for the benefit of and binding upon the parties hereto and their respective heirs, personal representatives, legal representatives, successors and, where permitted and applicable, assigns, including, without limitation, any successor to the Company, whether by merger, consolidation, sale of stock, sale of assets or otherwise.

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     18. Right to Consult with Counsel; No Drafting Party. The Executive acknowledges having read and considered all of the provisions of this Agreement carefully, and having had the opportunity to consult with counsel of his own choosing, and, given this, the Executive agrees that the obligations created hereby are not unreasonable. The Executive acknowledges that he has had an opportunity to negotiate any and all of these provisions and no rule of construction shall be used that would interpret any provision in favor of or against a party on the basis of who drafted the Agreement.

     19. Severability. The invalidity of any one or more of the words, phrases, sentences, clauses, provisions, sections or articles contained in this Agreement shall not affect the enforceability of the remaining portions of this Agreement or any part thereof, all of which are inserted conditionally on their being valid in law, and, in the event that any one or more of the words, phrases, sentences, clauses, provisions, sections or articles contained in this Agreement shall be declared invalid, this Agreement shall be construed as if such invalid word or words, phrase or phrases, sentence or sentences, clause or clauses, provisions or provisions, section or sections or article or articles had not been inserted. If such invalidity is caused by length of time or size of area, or both, the otherwise invalid provision will be considered to be reduced to a period or area which would cure such invalidity.

     20. Damages; Attorneys Fees. Nothing contained herein shall be construed to prevent the Company or the Executive from seeking and recovering from the other damages sustained as a result of the other party’s breach of any term or provision of this Agreement to the extent such breach results from, arises out of or is otherwise in connection with the gross negligence or willful misconduct of such party. In the event that either party hereto seeks to collect any damages resulting from, or the injunction of any action constituting, a breach of any of the terms or provisions of this Agreement, then the party found to be at fault shall pay all reasonable costs and attorneys’ fees incurred by the other party in such action and any appeal thereof.

     21. Waivers. The waiver by either party hereto of a breach or violation of any term or provision of this Agreement shall not operate nor be construed as a waiver of any subsequent breach or violation.

     22. No Set-off or Mitigation. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and the amounts payable and the benefits to be provided by the Company to the Executive shall not be mitigated in any way by reason of the Executive’s future employment or otherwise.

     23. Section Headings. The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

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     24. No Third Party Beneficiary. Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any person other than the Company, the parties hereto and their respective heirs, personal representatives, legal representatives, successors and permitted assigns, any rights or remedies under or by reason of this Agreement.

     25. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument and agreement.

     26. Indemnification.

          (a) The Company shall indemnify and hold harmless the Executive to the fullest extent permitted by law from and against any and all claims, damages, expenses (including attorneys’ fees), judgments, penalties, fines, settlements, and all other liabilities incurred or paid by him in connection with the investigation, defense, prosecution, settlement or appeal of any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and to which the Executive was or is a party or is threatened to be made a party by reason of the fact that the Executive is or was an officer, director, employee or agent of the Company or any of its subsidiaries or affiliates, or by reason of anything done or not done by the Executive in any such capacity or capacities, provided that the Executive acted in good faith, in a manner that was not grossly negligent or constituted willful misconduct and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The Company also shall pay any and all expenses (including attorney’s fees) incurred by the Executive as a result of the Executive being called as a witness in connection with any matter involving the Company, its subsidiaries or affiliates, and/or any of its officers or directors.

          (b) The Company shall pay any expenses (including attorneys’ fees), judgments, penalties, fines, settlements, and other liabilities incurred by the Executive in investigating, defending, settling or appealing any action, suit or proceeding described in this Section 26 in advance of the final disposition of such action, suit or proceeding. The Company shall promptly pay the amount of such expenses to the Executive, but in no event later than 10 days following the Executive’s delivery to the Company of a written request for an advance pursuant to this Section 26, together with a reasonable accounting of such expenses.

          (c) The Executive hereby undertakes and agrees to repay to the Company any advances made pursuant to this Section 26 if and to the extent that it shall ultimately be found that the Executive is not entitled to be indemnified by the Company for such amounts.

          (d) The Company shall make the advances contemplated by this Section 26 regardless of the Executive’s financial ability to make repayment, and regardless whether indemnification of the Executive by the Company will ultimately be required. Any advances and undertakings to repay pursuant to this Section 26 shall be unsecured and interest-free.

          (e) The provisions of this Section 26 shall survive the termination of the Term of Employment or expiration of the term of this Agreement.

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     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

COMPANY: TERREMARK WORLDWIDE, INC., a Delaware corporation
By:	/s/ Manuel D. Medina
	Name:	Manuel D. Medina
	Title:	Chief Executive Officer and President

EXECUTIVE:
 

/s/ Adam T. Smith  

Adam T. Smith  

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EXHIBIT A
FORM OF RELEASE

GENERAL RELEASE OF CLAIMS

     1. _____________________ (“Executive”), for himself and his family, heirs, executors, administrators, legal representatives and their respective successors and assigns, in exchange for the consideration received pursuant to Sections 6(c) (in the case of Disability), Sections 6(e) or 6.(f) (other than the Accrued Obligations) of the Employment Agreement to which this release is attached as Exhibit A (the “Employment Agreement”), does hereby release and forever discharge ________________________ (the “Company”), its subsidiaries, affiliated companies, successors and assigns, and its current or former directors, officers, employees, shareholders or agents in such capacities (collectively with the Company, the “Released Parties”) from any and all actions, causes of action, suits, controversies, claims and demands whatsoever, for or by reason of any matter, cause or thing whatsoever, whether known or unknown including, but not limited to, all claims under any applicable laws arising under or in connection with Executive’s employment or termination thereof, whether for tort, breach of express or implied employment contract, wrongful discharge, intentional infliction of emotional distress, or defamation or injuries incurred on the job or incurred as a result of loss of employment. Executive acknowledges that the Company encouraged him to consult with an attorney of his choosing, and through this General Release of Claims encourages him to consult with his attorney with respect to possible claims under the Age Discrimination in Employment Act (“ADEA”) and that he understands that the ADEA is a Federal statute that, among other things, prohibits discrimination on the basis of age in employment and employee benefits and benefit plans. Without limiting the generality of the release provided above, Executive expressly waives any and all claims under ADEA that he may have as of the date hereof. Executive further understands that by signing this General Release of Claims he is in fact waiving, releasing and forever giving up any claim under the ADEA as well as all other laws within the scope of this paragraph 1 that may have existed on or prior to the date hereof. Notwithstanding anything in this paragraph 1 to the contrary, this General Release of Claims shall not apply to (i) any actions to enforce rights arising under, or any claim for benefits which may be due Executive pursuant to, the Employment Agreement, (ii) any rights or claims that may arise as a result of events occurring after the date this General Release of Claims is executed, (iii) any indemnification rights Executive may have as a former employee, officer or director of the Company or its subsidiaries or affiliated companies, (iv) any claims for benefits under any liability policy maintained by the Company or its subsidiaries or affiliated companies in accordance with the terms of such policy, and (v) any rights as a holder of equity securities of the Company.

     2. Executive represents that he has not filed against the Released Parties any complaints, charges, or lawsuits arising out of his employment, or any other matter arising on or prior to the date of this General Release of Claims, and covenants and agrees that he will never individually or with any person file, or commence the filing of, any charges, lawsuits, complaints or proceedings with any governmental agency, or against the Released Parties with respect to any of the matters released by Executive pursuant to paragraph 1 hereof (a “Proceeding”); provided, however, Executive shall not have relinquished his right to commence a Proceeding to challenge whether Executive knowingly and voluntarily waived his rights under ADEA.

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     3. Executive hereby acknowledges that the Company has informed him that he has up to twenty-one (21) days to sign this General Release of Claims and he may knowingly and voluntarily waive that twenty-one (21) day period by signing this General Release of Claims earlier. Executive also understands that he shall have seven (7) days following the date on which he signs this General Release of Claims within which to revoke it by providing a written notice of his revocation to the Company.

     4. Executive acknowledges that this General Release of Claims will be governed by and construed and enforced in accordance with the internal laws of the State of Florida applicable to contracts made and to be performed entirely within such State.

     5. Executive acknowledges that he has read this General Release of Claims, that he has been advised that he should consult with an attorney before he executes this general release of claims, and that he understands all of its terms and executes it voluntarily and with full knowledge of its significance and the consequences thereof.

     6. This General Release of Claims shall take effect on the eighth day following Executive’s execution of this General Release of Claims unless Executive’s written revocation is delivered to the Company within seven (7) days after such execution.

____________________________, 20___ 

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EX-10.42

Exhibit 10.42

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”) is made and entered into on June 13, 2008 by and between TERREMARK WORLDWIDE, INC., a Delaware corporation (the “Company”), and Jose A. Segrera (hereinafter, the “Executive”).

W I T N E S S E T H:

     WHEREAS, the Executive is currently employed as the Executive Vice President and Chief Financial Officer of the Company;

     WHEREAS, the Executive possesses intimate knowledge of the business and affairs of the Company, its policies, methods and personnel;

     WHEREAS, the Board recognizes that the Executive has contributed to the growth and success of the Company, and desires to assure the Company of the Executive’s continued employment and to compensate him therefor;

     WHEREAS, the Board has determined that this Agreement will reinforce and encourage the Executive’s continued attention and dedication to the Company; and

     WHEREAS, the Executive is willing to make his services available to the Company and on the terms and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are mutually acknowledged, the Company and the Executive hereby agree as follows:

     1. Definitions. When used in this Agreement, the following terms shall have the following meanings:

          (a) “Accrued Obligations” means:

               (i) all accrued but unpaid Base Salary through the end of the Term of Employment;

               (ii) any unpaid or unreimbursed expenses incurred in accordance with Company policy, including amounts due under Section 5(a) hereof, to the extent incurred during the Term of Employment;

               (iii) any benefits provided under the Company’s employee benefit plans upon a termination of employment, in accordance with the terms therein, including, without limitation, rights to equity in the Company pursuant to any plan or grant and payment of compensation for accrued but unused vacation days;

               (iv) any unpaid Bonus in respect to any completed fiscal year that has ended on or prior to the end of the Term of Employment; and

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               (v) rights to indemnification by virtue of the Executive’s position as an officer or director of the Company or its subsidiaries and the benefits under any directors’ and officers’ liability insurance policy maintained by the Company, in accordance with the terms thereof.

          (b) “Base Salary” means the salary provided for in Section 4(a) hereof or any increased salary granted to Executive pursuant to Section 4(a) hereof.

          (c) “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended.

          (d) “Board” means the Board of Directors of the Company.

          (e) “Bonus” means any bonus payable to the Executive pursuant to Section 4(b) hereof.

          (f) “Bonus Period” means each period for which a Bonus is payable. Unless otherwise specified by the Compensation Committee of the Board, the Bonus Period shall be the fiscal year of the Company.

          (g) “Cause” means:

               (i) a conviction of the Executive, or a plea of nolo contendere, to a felony involving dishonesty or a breach of trust; or

               (ii) willful misconduct or gross negligence by the Executive resulting, in either case, in material economic harm to the Company or any Related Entities; or

               (iii) a willful continued failure by the Executive to carry out the reasonable and lawful directions of the Board or the Chief Executive Officer of the Company; or

               (iv) fraud, embezzlement, theft or dishonesty of a material nature by the Executive against the Company or any Related Entity, or a willful material violation by the Executive of a policy or procedure of the Company or any Related Entity, resulting, in any case, in material economic harm to the Company or any Related Entity; or

               (v) a willful material breach by the Executive of this Agreement.

An act or failure to act shall not be “willful” if (i) done by the Executive in good faith or (ii) the Executive reasonably believed that such action or inaction was in the best interests of the Company and the Related Entities, and Cause shall not include any act or failure to act otherwise described in (ii), (iii), (iv) or (v) unless and until the Company shall have provided to the Executive written notice of such act or failure to act and ten (10) business days from the date of such notice to cure such matter and the Executive shall have failed to cure the same,

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          (h) “Change in Control” means:

               (i) The acquisition by any Person of Beneficial Ownership of more than thirty percent (30%) of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities) (the foregoing Beneficial Ownership hereinafter being referred to as a “Controlling Interest”); provided, however, that for purposes of this definition, the following acquisitions shall not constitute or result in a Change of Control: (x) any acquisition by the Company; (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary of the Company; or (z) any acquisition by any corporation pursuant to a transaction which complies with clauses (A) and (B) of subsection (iii) below; or

               (ii) During any period of two (2) consecutive years (not including any period prior to the Commencement Date) individuals who constitute the Board on the Commencement Date (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Commencement Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

               (iii) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the Beneficial Owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, and (B) at least a majority of the members of the Board of Directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

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               (iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

          (i) “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended from time to time.

          (j) “Code” means the Internal Revenue Code of 1986, as amended.

          (k) “Commencement Date” means June 13, 2008.

          (l) “Common Stock” means the common stock of the Company, par value $0.001 per share.

          (m) “Competitive Activity” means an activity that is in material direct competition with the Company in a business in which the Company was engaged while the Executive was employed by the Company, in any of the States within the United States, or countries within the world, in which the Company conducts business.

          (n) “Confidential Information” means all trade secrets and information disclosed to the Executive or known by the Executive as a consequence of or through the unique position of his employment with the Company or any Related Entity (including information conceived, originated, discovered or developed by the Executive and information acquired by the Company or any Related Entity from others) prior to or after the date hereof, and not generally or publicly known (other than as a result of unauthorized disclosure by the Executive), about the Company or any Related Entity or its business.

          (o) “Disability” means the Executive’s inability, or failure, to perform the essential functions of his or her position, with or without reasonable accommodation, for any period of six (6) months or more in any twelve (12) month period, by reason of any medically determinable physical or mental impairment.

          (p) “Equity Awards” means any stock options, restricted stock, restricted stock units, stock appreciation rights, phantom stock or other equity based awards granted by the Company to the Executive.

          (q) “Equity Plan” means the Company’s 2005 Executive Incentive Compensation Plan, as amended from time to time, and any successor plan thereto.

          (r) “Excise Tax” means any excise tax imposed by Section 4999 of the Code, together with any interest and penalties imposed with respect thereto, or any interest or penalties are incurred by the Executive with respect to any such excise tax.

          (s) “Expiration Date” means the date on which the Term of Employment, including any renewals thereof under Section 3(b), shall expire.

          (t) “Good Reason” means

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               (i) the assignment to the Executive of any duties inconsistent in any material respect with the Executive’s position (including status, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 2(b) of this Agreement, or any other action by the Company that results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

               (ii) any failure by the Company to comply with any of the provisions of Section 4 of this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by the Executive;

               (iii) the Company’s requiring the Executive to be based at any office or location outside of Miami, Florida, except for travel reasonably required in the performance of the Executive’s responsibilities;

               (iv) any purported termination by the Company of the Executive’s employment other than for Cause pursuant to Section 6(b), or by reason of the Executive’s Disability pursuant to Section 6(c) of this Agreement, prior to the Expiration Date;

               (v) the Executive is requested by the Company to engage in conduct that is reasonably likely to result in a violation of law; or

               (vi) the assignment to the Executive of any duties inconsistent in any material respect with the Executive’s then position (including status, offices, titles and reporting relationships), authority, duties or responsibilities which when taken as a whole results in a significant diminution in the Executive’s position, authority, duties or responsibilities, excluding for this purpose any isolated, immaterial and inadvertent action not taken in bad faith and which is remedied by the Company immediately after receipt of notice thereof given by the Executive.

     For purposes of this Agreement, any good faith determination made by the Board as to whether the circumstances resulting in the Executive’s termination of his employment fulfills the requirements set forth above to constitute “Good Reason” shall be binding and conclusive on all interested parties.

          (u) “Group” shall have the meaning ascribed to such term in Section 13(d) of the Securities Exchange Act of 1934.

          (v) “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Securities Exchange Act of 1934 and used in Sections 13(d) and 14(d) thereof.

          (w) “Related Entity” means any subsidiary or affiliate, and any business, corporation, partnership, limited liability company or other entity designated by Board in which the Company or a subsidiary holds a substantial ownership interest, directly or indirectly.

          (x) “Restricted Period” shall be the Term of Employment and the one (1) year period immediately following termination of the Term of Employment.

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          (y) “Severance Amount” shall mean an amount equal to two (2) times the sum of (A) the Executive’s annual Base Salary as in effect immediately prior to the Termination Date and (B) the Executive’s Target Bonus for the Bonus Period in which termination occurs.

          (z) “Severance Term” means the one (1) year period following the date on which the Term of Employment ends.

          (aa) “Target Bonus” means the target annual incentive award opportunity for the applicable Bonus Period.

          (bb) “Term of Employment” means the period during which the Executive shall be employed by the Company pursuant to the terms of this Agreement.

          (cc) “Termination Date” means the date on which the Term of Employment ends.

          (dd) “Termination Year Bonus” means Bonus payable under Section 4(b) hereof for the Bonus Period in which the Executive’s employment with the Company terminates for any reason.

     2. Employment.

          (a) Employment and Term. The Company hereby agrees to employ the Executive and the Executive hereby agrees to serve the Company during the Term of Employment on the terms and conditions set forth herein.

          (b) Duties of Executive. During the Term of Employment, the Executive shall be employed and serve as the Executive Vice President and Chief Financial Officer of the Company, and shall have such duties as are typically associated with such title. The Executive shall faithfully and diligently perform all services as may be assigned to him by the Board or the Chief Executive Officer of the Company provided that such services are consistent with the Executive’s position with the Company, and shall exercise such power and authority as may from time to time be delegated to him by the Board or the Chief Executive Officer of the Company. The Executive shall devote his full business time, attention and efforts to the performance of his duties under this Agreement, render such services to the best of his ability, and use his reasonable best efforts to promote the interests of the Company. The Executive shall not engage in any other business or occupation during the Term of Employment, including, without limitation, any activity that materially (i) conflicts with the interests of the Company or its subsidiaries, (ii) interferes with the proper and efficient performance of his duties for the Company, or (iii) interferes with the exercise of his judgment in the Company’s best interests. Notwithstanding the foregoing or any other provision of this Agreement, it shall not be a breach or violation of this Agreement for the Executive to (x) serve on corporate, civic or charitable boards or committees, (y) deliver lectures, fulfill speaking engagements or teach at educational institutions, or (z) manage personal investments, so long as such activities do not significantly interfere with or significantly detract from the performance of the Executive’s responsibilities to the Company in accordance with this Agreement.

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     3. Term.

          (a) Initial Term. The initial Term of Employment under this Agreement, and the employment of the Executive hereunder, shall commence on the Commencement Date and shall expire on the third anniversary of the Commencement Date (the “Initial Term”), unless sooner terminated in accordance with Section 6 hereof.

          (b) Renewal Terms. At the end of the Initial Term, the Term of Employment automatically shall renew for successive one (1) year terms (subject to earlier termination as provided in Section 6 hereof), unless the Company or the Executive delivers written notice to the other at least three (3) months prior to the Expiration Date of its or his election not to renew the Term of Employment.

     4. Compensation.

          (a) Base Salary. The Executive shall receive a Base Salary at the annual rate of $275,000 during the Term of Employment, with such Base Salary payable in installments consistent with the Company’s normal payroll schedule, subject to applicable withholding and other taxes. The Base Salary shall be reviewed, at least annually, for merit increases and may, by action and in the discretion of the Compensation Committee of the Board, be increased at any time or from time to time, but may not be decreased from the then current Base Salary.

          (b) Bonuses.

               (i) During the Term of Employment, the Executive shall participate in the Company’s annual incentive compensation program pursuant to and under the Company’s 2005 Executive Incentive Compensation Plan, or such other plan, program and/or arrangements applicable to senior-level executives as established and modified from time to time by the Compensation Committee of the Board in its sole discretion. During the Term of Employment, the Executive shall have a threshold bonus opportunity under such plan or program equal to 30% of his current Base Salary, a Target Bonus opportunity under such plan or program equal to 40% of his current Base Salary, and a maximum bonus under such plan or program equal to 50% of his current Base Salary, in each case based on satisfaction of performance criteria to be established by the Compensation Committee of the Board at the beginning of each fiscal year that begins during the Term of Employment. Payment of annual incentive compensation awards shall be made in the same manner and at the same time that other senior-level executives receive their annual incentive compensation awards.

               (ii) For the Bonus Period in which the Executive’s employment with the Company terminates for any reason other than by the Company for Cause under Section 6(b) hereof or by the Executive without Good Reason under Section 6(g) hereof, the Company shall pay the Executive a pro rata portion (based upon the period ending on the date on which the Executive’s employment with the Company terminates) of the Target Bonus for the Bonus Period in which such termination of employment occurs; provided, however, that (A) the Bonus Period shall be deemed to end on the last day of the fiscal quarter of the Company in which the Executive’s employment so terminates, and (B) the business criteria used to determine the bonus for this short Bonus Period shall be annualized and shall be determined based upon unaudited financial information prepared in accordance with generally accepted accounting principles, applied consistently with prior periods, and reviewed and approved by the Compensation Committee of the Board.

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               (iii) The Executive may receive such additional bonuses, if any, as the Compensation Committee of the Board may in its sole and absolute discretion determine.

               (iv) Any Bonus payable pursuant to this Section 4(b) shall be paid by the Company to the Executive on the fifteenth day of the third month after the end of the Bonus Period for which it is payable.

          (c) Repayment Provisions. If the Company is required to prepare an accounting restatement due to its material noncompliance, as a result of the Executive’s misconduct, with any financial reporting requirement under the United States securities laws, then, and only if Section 304 of the Sarbanes-Oxley Act of 2002, or a successor provision, is then in effect, the Executive shall reimburse the Company for (i) any bonus or other incentive-based or equity-based compensation received by the Executive from the Company during the twelve (12) month period following the first public issuance or filing with the Securities Exchange Commission (whichever first occurs) of the financial documents embodying such financial reporting requirement and (ii) any profits realized from the sale of securities of the Company during such twelve (12) month period.

     5. Expense Reimbursement and Other Benefits.

          (a) Reimbursement of Expenses. Upon the Executive’s submission of substantiation in accordance with, and otherwise subject to, such rules and guidelines as the Company may from time to time adopt with respect to the reimbursement of expenses of executive personnel, the Company shall reimburse the Executive for all reasonable expenses actually paid or incurred by the Executive during the Term of Employment in the course of and pursuant to the business of the Company. Notwithstanding anything herein to the contrary, the Executive’s first class travel and accommodations shall be considered reasonable. The Executive shall account to the Company in writing for all expenses for which reimbursement is sought and shall supply to the Company copies of all relevant invoices, receipts or other evidence reasonably requested by the Company.

          (b) Compensation/Benefit Programs. During the Term of Employment, the Executive shall be entitled to participate in all medical, dental, hospitalization, accidental death and dismemberment, disability, travel and life insurance plans, and any and all other plans as are presently and hereinafter offered by the Company to its executive personnel, including savings, pension, profit-sharing and deferred compensation plans, subject to the general eligibility and participation provisions set forth in such plans. The Executive shall designate in his sole discretion the beneficiary under such policies. If the life insurance cannot be purchased at standard rates, then the Company shall provide and/or pay for that amount of insurance that can be purchased for premiums equal to the coverage specified above at standard rates.

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          (c) Working Facilities. During the Term of Employment, the Company shall furnish the Executive with an office, secretarial help and such other facilities and services suitable to his position and adequate for the performance of his duties hereunder.

          (d) Equity Awards. During the Term of Employment, the Executive shall be eligible to be granted Equity Awards under (and therefore subject to all terms and conditions of) the Equity Plan or such other plans or programs as the Company may from time to time adopt, and subject to all rules of regulation of the Securities and Exchange Commission applicable thereto. The number and type of Equity Awards, and the terms and conditions thereof, shall be determined by the Compensation Committee of the Board, in its discretion and pursuant to the Equity Plan or the plan or arrangement pursuant to which they are granted.

          (e) Vacation. The Executive shall be entitled to four (4) weeks of paid vacation each calendar year during the Term of Employment, to be taken at such times as the Executive and the Company shall mutually determine and provided that no vacation time shall significantly interfere with the duties required to be rendered by the Executive hereunder. Any vacation time not taken by Executive during any fiscal year may be carried forward into any succeeding calendar year.

          (f) Other Benefits. Regardless of anything herein to the contrary, if at any time during the Term of Employment the Company or any Related Entity agrees to provide or provides any benefit to any other employee of the Company or Related Entity which benefit is not otherwise provided to the Executive hereunder, or which is greater than a similar benefit provided to the Executive hereunder, the Company shall provide such benefit to the Executive or increase his benefit to be at least equal to such benefit agreed to be provided or provided to such other employee.

     6. Termination.

          (a) General. The Term of Employment shall terminate upon the earliest to occur of (i) the Executive’s death, (ii) a termination by the Company by reason of the Executive’s Disability, (iii) a termination by the Company with or without Cause, or (iv) a termination by Executive with or without Good Reason. Upon any termination of Executive’s employment for any reason, except as may otherwise be requested by the Company in writing and agreed upon in writing by Executive, the Executive shall resign from any and all directorships, committee memberships or any other positions Executive holds with the Company or any of its subsidiaries.

          (b) Termination By Company for Cause. The Company shall at all times have the right, upon written notice to the Executive, to terminate the Term of Employment, for Cause. Cause shall in no event be deemed to exist except upon a decision made by the Board made at a special meeting of the Board to be called and held at a time reasonably convenient to the Board and the Executive, but in no less than five (5) business days or more than thirty (30) business days after the Executive’s receipt of notice from the Company specifying such alleged “Cause.” Such notice from the Company to the Executive specifying alleged “Cause” shall be in writing and shall set forth in detail all acts or omission constituting such Cause. The Executive shall have not less than three (3) days prior written notice of the time and place of, and shall have

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the right to appear before, such special meeting of the Board with legal counsel of his choosing to refute any allegation of Cause specified in such notice. No termination of the Executive’s employment by reason of Cause shall be effective until the Executive is afforded such opportunity to appear and after such appearance (or failure of the Executive to appear at the designated time), not less than a majority of the members of the entire Board (excluding the Executive if he is so a member) shall concur that such Cause specified in such notice exists. For purposes of this Section 6(b), any good faith determination by the Board of Cause, made in accordance with the procedure described above, shall be binding and conclusive on all interested parties. In the event that the Term of Employment is terminated by the Company for Cause, Executive shall be entitled only to the Accrued Obligations.

          (c) Disability. The Company shall have the option, in accordance with applicable law, to terminate the Term of Employment upon written notice to the Executive, at any time during which the Executive continues to suffer after having suffered from a Disability. In the event that the Term of Employment is terminated due to the Executive’s Disability, the Executive shall be entitled to:

               (i) The Accrued Obligations, payable as and when those amounts would have been payable had the Term of Employment not ended;

               (ii) The Termination Year Bonus, payable within 2-1/2 months after the last day of the Bonus Period in which the Termination Date occurs; and

               (iii) Vesting, immediately prior to such termination, in any Equity Awards that have not previously vested, provided that the Executive shall only have six (6) months after the Termination Date in order to exercise any stock options within such Equity Awards.

          (d) Death. In the event that the Term of Employment is terminated due to the Executive’s death, the Executive shall be entitled to:

               (i) The Accrued Obligations, payable as and when those amounts would have been payable had the Term of Employment not ended;

               (ii) The Termination Year Bonus, payable within 2-1/2 months after the last day of the Bonus Period in which the Termination Date occurs; and

               (iii) Vesting, immediately prior to such termination, in any Equity Awards that have not previously vested, provided that the Executive’s estate or beneficiary shall only have six (6) months after the Termination Date in order to exercise any stock options within such Equity Awards.

          (e) Termination Without Cause. The Company may terminate the Term of Employment at any time without Cause, by written notice to the Executive not less than thirty (30) days prior to the effective date of such termination. In the event that the Term of Employment is terminated by the Company without Cause (other than due to the Executive’s death or Disability) the Executive shall be entitled to:

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               (i) The Accrued Obligations, payable as and when those amounts would have been payable had the Term of Employment not ended;

               (ii) The Termination Year Bonus, payable within 2 1/2 months after the last day of the Bonus Period in which the Termination Date occurs;

               (iii) A lump sum payment equal to the Severance Amount, payable within the later of ten (10) business days after the Termination Date or the expiration of the seven (7) day revocation period for the general release described in Section 6(j);

               (iv) Continuation, at the Company’s expense, of the health benefits provided to Executive and his covered dependents under the Company health plans as in effect from time to time after the date of such termination at the same cost applicable to active employees until the earlier of: (A) the expiration of the Severance Term, or (B) the date the Executive commences employment with any person or entity and, thus, is eligible for health insurance benefits; provided, however, that as a condition of continuation of such benefits, the Company may require the Executive to elect to continue his health insurance pursuant to COBRA. In the event that the Company is unable to provide the Executive and his covered dependents with any health benefits required pursuant to this Section 6(e)(iv), then the Company shall pay the Executive cash equal to the value of the benefit that otherwise would have accrued for the Executive’s benefit under the plan, for the period during which such benefits could not be provided under the plans, said cash payments to be made monthly until such time as the benefits would otherwise terminate pursuant to this Section 6(e)(iv); and

               (v) Vesting, immediately prior to such termination, in any Equity Awards that have not previously vested.

          (f) Termination by Executive for Good Reason. The Executive may terminate the Term of Employment for Good Reason by providing the Company fifteen (15) days’ written notice setting forth in reasonable specificity the event that constitutes Good Reason, which written notice, to be effective, must be provided to the Company within sixty (60) days of the Executive’s first knowledge of the occurrence of such event. During such fifteen (15) day notice period, the Company shall have a cure right (if curable), and if not cured within such period, the Executive’s termination shall be effective upon the date immediately following the expiration of the fifteen (15) day notice period, and the Executive shall be entitled to the same payments and benefits as provided in Section 6(e) above for a termination without Cause.

          (g) Termination by Executive Without Good Reason. The Executive may terminate his employment without Good Reason by providing the Company thirty (30) days’ written notice of such termination. In the event of a termination of employment by the Executive under this Section 6(g), the Executive shall be entitled only to the Accrued Obligations. In the event of termination of the Executive’s employment under this Section 6(g), the Company may, in its sole and absolute discretion, by written notice, accelerate such date of termination and still have it treated as a termination without Good Reason.

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          (h) Termination Upon Expiration Date. In the event that Executive’s employment with the Company terminates upon the expiration of the Term of Employment, the Executive shall be entitled to:

               (i) The Accrued Obligations, payable as and when those amounts would have been payable had the Term of Employment not ended;

               (ii) The Termination Year Bonus, payable within 2-1/2 months after the last day of the Bonus Period in which the Termination Date occurs;

               (iii) A lump-sum payment equal to the Severance Amount, payable within the later of ten (10) business days after the Termination Date or the expiration of the seven (7) day revocation period for the general release described in Section 6(j); and

               (iv) Continuation, at the Company’s expense, of the health benefits provided to Executive and his covered dependants under the Company health plans as in effect from time to time after the date of such termination at the same cost applicable to active employees until the earlier of: (A) the expiration of the Severance Term, or (B) the date Executive commences employment with any person or entity and, thus, is eligible for health insurance benefits; provided, however, that as a condition of continuation of such benefits, the Company may require the Executive to elect to continue his health insurance pursuant to COBRA. In the event that the Company is unable to provide the Executive and his covered dependents with any health benefits required pursuant to this Section 6(h)(iv), then the Company shall pay the Executive cash equal to the value of the benefit that otherwise would have accrued for the Executive’s benefit under the plan, for the period during which such benefits could not be provided under the plans, said cash payments to be made monthly until such time as the benefits would otherwise terminate pursuant to this Section 6(h)(iv).

          (i) Change in Control of the Company. If the Executive’s employment is terminated by the Company without Cause during (x) the 6-month period preceding the date of the Change in Control or (y) the two (2) year period immediately following the Change in Control, then in lieu of any amounts otherwise payable under 6(e) or 6(f) hereof, the Executive shall be entitled to:

               (i) The Accrued Obligations, payable as and when those amounts would have been payable had the Term of Employment not ended;

               (ii) The Termination Year Bonus, payable within 2 1/2 months after the last day of the Bonus Period in which the Termination Date occurs;

               (iii) The Severance Amount, payable within the later of ten (10) business days after the Termination Date or the expiration of the seven (7) day revocation period for the general release described in Section 6(j); and

               (iv) Continuation, at the Company’s expense, of the health benefits provided to Executive and his covered dependants under the Company health plans as in effect from time to time after the date of such termination at the same cost applicable to active employees until the earlier of: (A) the expiration of the Severance Term, or (B) the date

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Executive commences employment with any person or entity and, thus, is eligible for health insurance benefits; provided, however, that as a condition of continuation of such benefits, the Company may require the Executive to elect to continue his health insurance pursuant to COBRA. In the event that the Company is unable to provide the Executive and his covered dependents with any health benefits required pursuant to this Section 6(i)(iv), then the Company shall pay the Executive cash equal to the value of the benefit that otherwise would have accrued for the Executive’s benefit under the plan, for the period during which such benefits could not be provided under the plans, said cash payments to be made monthly until such time as the benefits would otherwise terminate pursuant to this Section 6(i)(iv); and

               (v) Vesting, immediately prior to such termination, in any Equity Awards that have not previously vested.

          (j) Release. Any payments due to Executive under this Article 6 (other than the Accrued Obligations or any payments due on account of the Executive’s death) shall be conditioned upon Executive’s execution of a general release of claims in the form attached hereto as Exhibit A (subject to such modifications as the Company reasonably may request).

          (k) Section 280G Reductions and Additional Payments by the Company.

               (i) Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined that any payment, distribution, or other action by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of the Agreement or otherwise) (a “Payment”), would result in an “excess parachute payment” within the meaning of Section 280G(b)(1) of the Code, but that no portion of the Payments would be treated as excess parachute payments if the aggregate amount of the Payments pursuant to this Agreement (the “Agreement Payments”) were reduced by not more 10% of the aggregate present value of all of the Agreement Payments, then the Agreement Payments shall be reduced to the “Reduced Amount”. The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be an excess parachute payment under Section 280G(b)(1) of the Code. For purposes of this Section 6(k), present value shall be determined in accordance with Section 280G(d)(4) of the Code.

               (ii) If and to the extent that Section 6(k)(i) is not applicable, then, anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined that any Payment would be subject to an Excise Tax, the Company shall make a payment to the Executive (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any Excise Tax) imposed upon the Gross-Up Payment, the Executive retains (or has had paid to the Internal Revenue Service on his behalf) an amount of the Gross-Up Payment equal to the sum of (x) the Excise Tax imposed upon the Payments and (y) the product of any deductions disallowed because of the inclusion of the Gross-Up Payment in the Executive’s adjusted gross income and the highest applicable marginal rate of federal income taxation for the calendar year in which the Gross-Up Payment is to be made. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to (x) pay federal income taxes at the highest marginal rates of federal income taxation for the calendar year in which the Gross-Up Payment is to be made, and (y) pay applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

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               (iii) Subject to the provisions of paragraph (iv) of this Section 6(k), all determinations required to be made under this Section 6(k), including the amount of any Reduced Amount and the Payments that are to be reduced pursuant to Section 6(k)(i) and, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, and the assumptions (consistent with the above) to be utilized in arriving at such determination, shall be made by KPMG LLP (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive shall appoint another regionally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 6(k), shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm’s determination. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion that failure to report the Excise Tax on the Executive’s applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

               (iv) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

                    (A) give the Company any information reasonably requested by the Company relating to such claim,

                    (B) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company and approved by the Executive,

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                    (C) cooperate with the Company in good faith in order effectively to contest such claim, and

                    (D) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 6(k)(iii) and in a manner reasonably acceptable to the Executive, and provided that the Company shall keep the Executive informed of all matters in the proceedings, the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

               (v) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 6(k)(iii), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 6(k)(iii)) promptly pay to the Company the amount of such refund (together with any interest paid thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 6(k)(iii), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

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          (l) Cooperation. Following the Term of Employment, the Executive shall give his assistance and cooperation willingly, upon reasonable advance notice and with due consideration for his other business or personal commitments, in any matter relating to his position with the Company, or his expertise or experience as the Company may reasonably request, including his attendance and truthful testimony where deemed appropriate by the Company, with respect to any investigation or the Company’s defense or prosecution of any existing or future claims or litigations or other proceedings relating to matters in which he was involved or potentially had knowledge by virtue of his employment with the Company. In no event shall his cooperation materially interfere with his services for a subsequent employer or other similar service recipient. To the extent permitted by law, the Company agrees that (i) it shall promptly advance to the Executive (and reimburse him for any additional) reasonable and documented expenses in connection with his rendering assistance and/or cooperation under this Section 6(l) upon his presentation of documentation for such expenses and (ii) the Executive shall be reasonably compensated for any assistance or cooperation pursuant to this Section 6(l).

          (m) Return of Company Property. Following the Termination Date, the Executive or his personal representative shall return all Company property in his possession, including but not limited to all computer equipment (hardware and software), telephones, facsimile machines, palm pilots and other communication devices, credit cards, office keys, security access cards, badges, identification cards and all copies (including drafts) of any documentation or information (however stored) relating to the business of the Company, its customers and clients or its prospective customers and clients (provided that the Executive may retain a copy the addresses contained in his rolodex, his palm pilot, his PDA and any similar device).

          (n) Section 409A.

               (i) To the extent that the Executive otherwise would be entitled to any payment (whether pursuant to this Agreement or otherwise) during the six months beginning on the Termination Date that would be subject to the additional tax imposed under Section 409A of the Code (“Section 409A”), (x) the payment shall not be made to the Executive during such six month period, and (y) the payment shall be paid to the Executive on the earlier of the six-month anniversary of the Termination Date or the Executive’s death or Disability. Similarly, to the extent that the Executive otherwise would be entitled to any benefit (other than a payment) during the six months beginning on the Termination Date that would be subject to the Section 409A additional tax, the benefit shall be delayed and shall begin being provided (together, if applicable, with an adjustment to compensate the Executive for the delay) on the earlier of the six-month anniversary of the Termination Date, or the Executive’s death or Disability.

               (ii) It is the Company’s intention that the benefits and rights to which the Executive could become entitled in connection with termination of employment comply with Section 409A. If the Executive or the Company believes, at any time, that any of such benefit or right does not comply, it shall promptly advise the other and shall negotiate reasonably and in good faith to amend the terms of such benefits and rights such that they comply with Section 409A (with the most limited possible economic effect on the Executive and on the Company).

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          (o) Clawback of Certain Compensation and Benefits. If, after the termination of the Executive’s employment with the Company for any reason other than by the Company for Cause, a court of competent jurisdiction determines that the Executive breached Sections 7 hereof and has issued an injunction against the Executive in accordance with Section 7(i) hereof, then, in addition to any other remedy that may be available to the Company in law or equity and/or pursuant to any other provisions of this Agreement, the Executive’s employment shall be deemed to have been terminated for Cause retroactively to the Termination Date and the Executive also shall be subject to the following provisions:

               (i) the Executive shall be required to pay to the Company, immediately upon written demand by the Board, all amounts paid to him by the Company, whether or not pursuant to this Agreement, on or after the Termination Date (including the pre-tax cost to the Company of any benefits (other than those described in clause (iii) of this Section 6(o)) provided by the Company) that are in excess of the total amount that the Company would have been required to pay (and the pre-tax cost of any benefits (other than those described in clause (iii) of this Section 6(o)) that the Company would have been required to provide) to the Executive if the Executive’s employment with the Company had been terminated by the Company for Cause in accordance with Section 6(b) hereof;

               (ii) all vested and unvested Equity Awards then held by the Executive shall immediately expire; and

               (iii) the Executive shall be required to pay to the Company, immediately upon written demand by the Board, an amount equal to all Accelerated Equity Award Gains that the Executive has received.

          For purposes of this Section, the following terms shall have the following meanings:

          “Accelerated Equity Award Gains” shall mean the sum of (x) the Accelerated Option and SAR Gains and (y) the Accelerated Equity Award Gains.

          “Accelerated Options” shall mean those unvested stock options that become vested in accordance with Section 6(i) hereof.

          “Accelerated Option and SAR Gain” shall mean:

               (i) in the case of any Accelerated Option, or any Accelerated SAR that is settled in shares of the Company’s common stock, the product of:

               (ii) the number of shares of the Company’s common stock acquired by the Executive upon exercise of any Accelerated Option or Accelerated SAR, multiplied by

               (iii) the difference between (x) the fair market value per share of the Company’s common stock underlying such Accelerated Option or Accelerated SAR as of the date on which the Executive exercised the Accelerated Option or Accelerated SAR less (y) the exercise price or grant price (as equitably adjusted) of such Accelerated Option or Accelerated SAR; and

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               (iv) in the case of any Accelerated SAR that is settled in cash or in property, other than shares of the Company’s common stock, the amount of cash and fair market value of any property paid or transferred to the Executive with respect to the Accelerated Option or Accelerated SAR.

          “Accelerated Equity Award Gains” shall mean the aggregate value of the Accelerated Shares based on the closing price the Company’s common stock value determined on whichever of the following dates produces the greatest value:

               (i) the Termination Date;

               (ii) the date on which a court of competent jurisdiction determines that the Executive breached Section 7 hereof and has issued an injunction against the Executive in accordance with Section 7(i);

               (iii) the date on which the Executive transfers or otherwise disposes of the Accelerated Shares.

          “Accelerated SARs” shall mean those unvested stock appreciation rights that become vested in accordance with Section 6(i) hereof.

          “Accelerated Shares” shall mean those shares of the Company’s common stock granted by the Company to the Executive as compensation for services that would have been forfeited in the event that the Executive’s employment with the Company had been terminated by the Company for Cause in accordance with Section 6(b) hereof.

     7. Restrictive Covenants.

          (a) Non-competition. At all times during the Restricted Period, the Executive shall not, without the prior written consent of the Board, directly or indirectly (whether as a principal, agent, partner, employee, officer, investor, owner, consultant, board member, security holder, creditor or otherwise), engage in any Competitive Activity, or have any direct or indirect interest in any sole proprietorship, corporation, company, partnership, association, venture or business or any other person or entity that directly or indirectly (whether as a principal, agent, partner, employee, officer, investor, owner, consultant, board member, security holder, creditor, or otherwise) engages in a Competitive Activity; provided that the foregoing shall not apply to the Executive’s ownership of Common Stock of the Company or the acquisition by the Executive, solely as an investment, of securities of any issuer that is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, and that are listed or admitted for trading on any United States national securities exchange or that are quoted on the Nasdaq Stock Market, or any similar system or automated dissemination of quotations of securities prices in common use, so long as the Executive does not control, acquire a controlling interest in or become a member of a group which exercises direct or indirect control of, more than five percent (5%) of any class of capital stock of such corporation.

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          (b) Nonsolicitation of Employees and Certain Other Third Parties. At all times during the Restricted Period, the Executive shall not, without the prior written consent of the Board, directly or indirectly, for himself or for any other person, firm, corporation, partnership, association or other entity (i) employ or attempt to employ or enter into any contractual arrangement with any employee, consultant or independent contractor performing services for the Company, or any Related Entity, unless such employee, consultant or independent contractor, has not been employed or engaged by the Company for a period in excess of six (6) months, and/or (ii) call on or solicit any of the actual or targeted prospective customers or clients of the Company or any Related Entity on behalf of any person or entity in connection with any Competitive Activity, nor shall the Executive make known the names and addresses of such actual or targeted prospective customers or clients, or any information relating in any manner to the trade or business relationships of the Company or any Related Entities with such customers or clients, other than in connection with the performance of the Executive’s duties under this Agreement.

          (c) Confidential Information. At any time during the Restricted Period, the Executive shall not at any time divulge, communicate, use to the detriment of the Company or for the benefit of any other person or persons, or misuse in any way, any Confidential Information pertaining to the business of the Company. Any Confidential Information or data now or hereafter acquired by the Executive with respect to the business of the Company (which shall include, but not be limited to, information concerning the Company’s financial condition, prospects, technology, customers, suppliers, sources of leads and methods of doing business) shall be deemed a valuable, special and unique asset of the Company that is received by the Executive in confidence and as a fiduciary, and the Executive shall remain a fiduciary to the Company with respect to all of such information at all times during the Restricted Period. Notwithstanding the foregoing, nothing herein shall be deemed to restrict the Executive from disclosing Confidential Information as required to perform his duties under this Agreement or to the extent required by law or order of any court, agency or other appropriate governing authority. If any person or authority makes a demand on the Executive purporting to legally compel him to divulge any Confidential Information, the Executive immediately shall give notice of the demand to the Company so that the Company may first assess whether to challenge the demand prior to the Executive’s divulging of such Confidential Information. The Executive shall not divulge such Confidential Information until the Company either fails to respond to the Executive’s notice of such demand on a timely basis, has concluded not to challenge the demand, or has exhausted its challenge, including appeals, if any. Upon request by the Company, the Executive shall deliver promptly to the Company upon termination of his services for the Company, or at any time thereafter as the Company may request, all memoranda, notes, records, reports, manuals, drawings, designs, computer files in any media and other documents (and all copies thereof) containing such Confidential Information.

          (d) Ownership of Developments. All processes, concepts, techniques, inventions and works of authorship, including new contributions, improvements, formats, packages, programs, systems, machines, compositions of matter manufactured, developments, applications and discoveries, and all copyrights, patents, trade secrets, or other intellectual property rights associated therewith conceived, invented, made, developed or created by the Executive during the Term of Employment either during the course of performing work for the Companies or their clients or which are related in any manner to the business (commercial or experimental) of the Company or its clients (collectively, the “Work Product”) shall belong exclusively to the Company and shall, to the extent possible, be considered a work made by the Executive for hire for the Company within the meaning of Title 17 of the United States Code. To the extent the Work Product may not be considered work made by the Executive for hire for the Company, the Executive agrees to assign, at the Company’s expense, and automatically

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assign at the time of creation of the Work Product, without any requirement of further consideration, any right, title, or interest the Executive may have in such Work Product. Upon the request of the Company, and at its expense, the Executive shall take such further actions, including execution and delivery of instruments of conveyance, as may be appropriate to give full and proper effect to such assignment. The Executive shall further: (i) promptly disclose the Work Product to the Company; (ii) assign to the Company, without additional compensation, all patent or other rights to such Work Product for the United States and foreign countries; (iii) sign all papers necessary to carry out the foregoing; and (iv) give testimony in support of his inventions, all at the sole cost and expense of the Company.

          (e) Books and Records. All books, records, and accounts relating in any manner to the customers or clients of the Company, whether prepared by the Executive or otherwise coming into the Executive’s possession, shall be the exclusive property of the Company and shall be returned immediately to the Company on termination of the Executive’s employment hereunder or on the Company’s request at any time.

          (f) Acknowledgment by Executive. The Executive acknowledges and confirms that the restrictive covenants contained in this Article 7 (including without limitation the length of the term of the provisions of this Article 7) are reasonably necessary to protect the legitimate business interests of the Company, and are not overbroad, overlong, or unfair and are not the result of overreaching, duress or coercion of any kind. The Executive further acknowledges and confirms that the compensation payable to the Executive under this Agreement is in consideration for the duties and obligations of the Executive hereunder, including the restrictive covenants contained in this Article 7, and that such compensation is sufficient, fair and reasonable. The Executive further acknowledges and confirms that his full, uninhibited and faithful observance of each of the covenants contained in this Article 7 will not cause him any undue hardship, financial or otherwise, and that enforcement of each of the covenants contained herein will not impair his ability to obtain employment commensurate with his abilities and on terms fully acceptable to him or otherwise to obtain income required for the comfortable support of him and his family and the satisfaction of the needs of his creditors. The Executive acknowledges and confirms that his special knowledge of the business of the Company is such as would cause the Company serious injury or loss if he were to use such ability and knowledge to the benefit of a competitor or were to compete with the Company in violation of the terms of this Article 7. The Executive further acknowledges that the restrictions contained in this Article 7 are intended to be, and shall be, for the benefit of and shall be enforceable by, the Company’s successors and assigns. The Executive expressly agrees that upon any breach or violation of the provisions of this Article 6, the Company shall be entitled, as a matter of right, in addition to any other rights or remedies it may have, to (i) temporary and/or permanent injunctive relief in any court of competent jurisdiction as described in Section 7(i hereof, and (ii) such damages as are provided at law or in equity.

          (g) Reformation by Court. In the event that a court of competent jurisdiction shall determine that any provision of this Article 7 is invalid or more restrictive than permitted under the governing law of such jurisdiction, then only as to enforcement of this Article 7 within the jurisdiction of such court, such provision shall be interpreted or reformed and enforced as if it provided for the maximum restriction permitted under such governing law.

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          (h) Extension of Time. If the Executive shall be in violation of any provision of this Article 7, then each time limitation set forth in this Article 7 shall be extended for a period of time equal to the period of time during which such violation or violations occur. If the Company seeks injunctive relief from such violation in any court of competent jurisdiction and if such court determines that such violation by the Executive did occur, then the covenants set forth in this Article 7 shall be extended for a period of time equal to the pendency of such proceeding including all appeals by the Executive.

          (i) Injunction. It is recognized and hereby acknowledged by the parties hereto that a breach by the Executive of any of the covenants contained in Article 7 of this Agreement will cause irreparable harm and damage to the Company, for which monetary damages to the Company may be an inadequate remedy. As a result, the Executive recognizes and hereby acknowledges that the Company shall be entitled to an injunction from any court of competent jurisdiction enjoining and restraining any violation of any or all of the covenants contained in Article 7 of this Agreement by the Executive or any of his affiliates, associates, partners or agents, either directly or indirectly, and that such right to injunction shall be cumulative and in addition to whatever other remedies the Company may possess.

     8. Representations and Warranties of Executive. The Executive represents and warrants to the Company that:

          (a) The Executive’s employment will not conflict with or result in a material breach of any agreement to which he is a party or otherwise may be bound;

          (b) The Executive has not violated, and in connection with his employment with the Company will not violate, any non-solicitation, non-competition or other similar covenant or agreement of a prior employer by which he is or may be bound; and

          (c) In connection with Executive’s employment with the Company, he will not use any confidential or proprietary information that would violate the terms of any agreement between the Executive and any prior employer; and

          (d) The Executive has not (i) been convicted of any felony; or (ii) committed any criminal act with respect to Executive’s current or any prior employment.

     9. Taxes. Anything in this Agreement to the contrary notwithstanding, all payments required to be made by the Company hereunder to the Executive or his estate or beneficiaries shall be subject to the withholding of such amounts relating to taxes as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation. In lieu of withholding such amounts, in whole or in part, the Company may, in its sole discretion, accept other provisions for payment of taxes and withholding as required by law, provided it is satisfied that all requirements of law affecting its responsibilities to withhold have been satisfied.

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     10. Arbitration.

          (a) Exclusive Remedy. The parties recognize that litigation in federal or state courts or before federal or state administrative agencies of disputes arising out of the Executive’s employment with the Company or out of this Agreement, or the Executive’s termination of employment or termination of this Agreement, may not be in the best interests of either the Executive or the Company, and may result in unnecessary costs, delays, complexities, and uncertainty. The parties agree that any dispute between the parties arising out of or relating to the Executive’s employment, or to the negotiation, execution, performance or termination of this Agreement or the Executive’s employment, including, but not limited to, any claim arising out of this Agreement, claims under Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, Section 1981 of the Civil Rights Act of 1966, as amended, the Family Medical Leave Act, the Employee Retirement Income Security Act, and any similar federal, state or local law, statute, regulation, or any common law doctrine, whether that dispute arises during or after employment shall be resolved by arbitration in the Miami-Dade County, Florida area, in accordance with the National Employment Arbitration Rules of the American Arbitration Association, as modified by the provisions of this Section 10. Except as set forth below with respect to Section 7 of this Agreement, the parties each further agree that the arbitration provisions of this Agreement shall provide each party with its exclusive remedy, and each party expressly waives any right it might have to seek redress in any other forum, except as otherwise expressly provided in this Agreement. Notwithstanding anything in this Agreement to the contrary, the provisions of this Section 10 shall not apply to any injunctions that may be sought with respect to disputes arising out of or relating to Section 7 of this Agreement. The parties acknowledge and agree that their obligations under this arbitration agreement survive the expiration or termination of this Agreement and continue after the termination of the employment relationship between the Executive and the Company. By election of arbitration as the means for final settlement of all claims, the parties hereby waive their respective rights to, and agree not to, sue each other in any action in a Federal, State or local court with respect to such claims, but may seek to enforce in court an arbitration award rendered pursuant to this Agreement. The parties specifically agree to waive their respective rights to a trial by jury, and further agree that no demand, request or motion will be made for trial by jury.

          (b) Arbitration Procedure and Arbitrator’s Authority. In the arbitration proceeding, each party shall be entitled to engage in any type of discovery permitted by the Federal Rules of Civil Procedure, to retain its own counsel, to present evidence and cross-examine witnesses, to purchase a stenographic record of the proceedings, and to submit post-hearing briefs. In reaching his/her decision, the arbitrator shall have no authority to add to, detract from, or otherwise modify any provision of this Agreement. The arbitrator shall submit with the award a written opinion which shall include findings of fact and conclusions of law. Judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction.

          (c) Effect of Arbitrator’s Decision; Arbitrator’s Fees. The decision of the arbitrator shall be final and binding between the parties as to all claims which were or could have been raised in connection with the dispute, to the full extent permitted by law. In all cases in which applicable federal law precludes a waiver of judicial remedies, the parties agree that the decision of the arbitrator shall be a condition precedent to the institution or maintenance of any legal, equitable, administrative, or other formal proceeding by the Executive in connection with the dispute, and that the decision and opinion of the arbitrator may be presented in any other forum on the merits of the dispute. If the arbitrator finds that the Executive was terminated in violation of law or this Agreement, the parties agree that the arbitrator acting hereunder shall be empowered to provide the Executive with any remedy available should the matter have been tried in a court, including equitable and/or legal remedies, compensatory damages and back pay. The arbitrator’s fees and expenses and all administrative fees and expenses associated with the filing of the arbitration shall be borne by the non-prevailing party.

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     11. Assignment. The Company shall have the right to assign this Agreement and its rights and obligations hereunder in whole, but not in part, to any corporation or other entity with or into which the Company may hereafter merge or consolidate or to which the Company may transfer all or substantially all of its assets, and in any such case said corporation or other entity shall by operation of law or expressly in writing assume all obligations of the Company hereunder as fully as if it had been originally made a party hereto, but no assignment will release the Company from this Agreement or any of its obligations hereunder. The Company may not otherwise assign this Agreement or its rights and obligations hereunder. The Executive may not assign or transfer this Agreement or any rights or obligations hereunder.

     12. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Florida, without regard to principles of conflict of laws.

     13. Jurisdiction and Venue. The parties acknowledge that a substantial portion of the negotiations, anticipated performance and execution of this Agreement occurred or shall occur in Miami-Dade County, Florida, and that, therefore, without limiting the jurisdiction or venue of any other federal or state courts, each of the parties irrevocably and unconditionally (i) agrees that any suit, action or legal proceeding arising out of or relating to this Agreement which is expressly permitted by the terms of this Agreement to be brought in a court of law, shall be brought in the courts of record of the State of Florida in Miami-Dade County or the court of the United States, Southern District of Florida; (ii) consents to the jurisdiction of each such court in any such suit, action or proceeding; (iii) waives any objection which it or he may have to the laying of venue of any such suit, action or proceeding in any of such courts; and (iv) agrees that service of any court papers may be effected on such party by mail, as provided in this Agreement, or in such other manner as may be provided under applicable laws or court rules in such courts.

     14. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and, upon its effectiveness, shall supersede all prior agreements, understandings and arrangements, both oral and written, between the Executive and the Company (or any of its affiliates) with respect to such subject matter. This Agreement may not be modified in any way unless by a written instrument signed by both the Company and the Executive.

     15. Survival. The respective rights and obligations of the parties hereunder shall survive any termination of the Executive’s employment hereunder, including without limitation, the Company’s obligations under Section 6 and the Executive’s obligations under Section 7 above, and the expiration of the Term of Employment, to the extent necessary to the intended preservation of such rights and obligations.

     16. Notices. All notices required or permitted to be given hereunder shall be in writing and shall be personally delivered by courier, sent by registered or certified mail, return receipt requested or sent by confirmed facsimile transmission addressed as set forth herein. Notices personally delivered, sent by facsimile or sent by overnight courier shall be deemed given on the date of delivery and notices mailed in accordance with the foregoing shall be deemed given upon the earlier of receipt by the addressee, as evidenced by the return receipt thereof, or three (3) days after deposit in the U.S. mail. Notice shall be sent (i) if to the Company, addressed to 2 South Biscayne Boulevard, Suite 2900, Miami, Florida 33131, Attention: President, and (ii) if to the Executive, to his address as reflected on the payroll records of the Company, or to such other address as either party shall request by notice to the other in accordance with this provision.

     17. Benefits; Binding Effect. This Agreement shall be for the benefit of and binding upon the parties hereto and their respective heirs, personal representatives, legal representatives, successors and, where permitted and applicable, assigns, including, without limitation, any successor to the Company, whether by merger, consolidation, sale of stock, sale of assets or otherwise.

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     18. Right to Consult with Counsel; No Drafting Party. The Executive acknowledges having read and considered all of the provisions of this Agreement carefully, and having had the opportunity to consult with counsel of his own choosing, and, given this, the Executive agrees that the obligations created hereby are not unreasonable. The Executive acknowledges that he has had an opportunity to negotiate any and all of these provisions and no rule of construction shall be used that would interpret any provision in favor of or against a party on the basis of who drafted the Agreement.

     19. Severability. The invalidity of any one or more of the words, phrases, sentences, clauses, provisions, sections or articles contained in this Agreement shall not affect the enforceability of the remaining portions of this Agreement or any part thereof, all of which are inserted conditionally on their being valid in law, and, in the event that any one or more of the words, phrases, sentences, clauses, provisions, sections or articles contained in this Agreement shall be declared invalid, this Agreement shall be construed as if such invalid word or words, phrase or phrases, sentence or sentences, clause or clauses, provisions or provisions, section or sections or article or articles had not been inserted. If such invalidity is caused by length of time or size of area, or both, the otherwise invalid provision will be considered to be reduced to a period or area which would cure such invalidity.

     20. Damages; Attorneys Fees. Nothing contained herein shall be construed to prevent the Company or the Executive from seeking and recovering from the other damages sustained as a result of the other party’s breach of any term or provision of this Agreement to the extent such breach results from, arises out of or is otherwise in connection with the gross negligence or willful misconduct of such party. In the event that either party hereto seeks to collect any damages resulting from, or the injunction of any action constituting, a breach of any of the terms or provisions of this Agreement, then the party found to be at fault shall pay all reasonable costs and attorneys’ fees incurred by the other party in such action and any appeal thereof.

     21. Waivers. The waiver by either party hereto of a breach or violation of any term or provision of this Agreement shall not operate nor be construed as a waiver of any subsequent breach or violation.

     22. No Set-off or Mitigation. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and the amounts payable and the benefits to be provided by the Company to the Executive shall not be mitigated in any way by reason of the Executive’s future employment or otherwise.

     23. Section Headings. The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

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     24. No Third Party Beneficiary. Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any person other than the Company, the parties hereto and their respective heirs, personal representatives, legal representatives, successors and permitted assigns, any rights or remedies under or by reason of this Agreement.

     25. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument and agreement.

     26. Indemnification.

          (a) The Company shall indemnify and hold harmless the Executive to the fullest extent permitted by law from and against any and all claims, damages, expenses (including attorneys’ fees), judgments, penalties, fines, settlements, and all other liabilities incurred or paid by him in connection with the investigation, defense, prosecution, settlement or appeal of any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and to which the Executive was or is a party or is threatened to be made a party by reason of the fact that the Executive is or was an officer, director, employee or agent of the Company or any of its subsidiaries or affiliates, or by reason of anything done or not done by the Executive in any such capacity or capacities, provided that the Executive acted in good faith, in a manner that was not grossly negligent or constituted willful misconduct and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The Company also shall pay any and all expenses (including attorney’s fees) incurred by the Executive as a result of the Executive being called as a witness in connection with any matter involving the Company, its subsidiaries or affiliates, and/or any of its officers or directors.

          (b) The Company shall pay any expenses (including attorneys’ fees), judgments, penalties, fines, settlements, and other liabilities incurred by the Executive in investigating, defending, settling or appealing any action, suit or proceeding described in this Section 26 in advance of the final disposition of such action, suit or proceeding. The Company shall promptly pay the amount of such expenses to the Executive, but in no event later than 10 days following the Executive’s delivery to the Company of a written request for an advance pursuant to this Section 26, together with a reasonable accounting of such expenses.

          (c) The Executive hereby undertakes and agrees to repay to the Company any advances made pursuant to this Section 26 if and to the extent that it shall ultimately be found that the Executive is not entitled to be indemnified by the Company for such amounts.

          (d) The Company shall make the advances contemplated by this Section 26 regardless of the Executive’s financial ability to make repayment, and regardless whether indemnification of the Executive by the Company will ultimately be required. Any advances and undertakings to repay pursuant to this Section 26 shall be unsecured and interest-free.

          (e) The provisions of this Section 26 shall survive the termination of the Term of Employment or expiration of the term of this Agreement.

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     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

COMPANY: TERREMARK WORLDWIDE, INC., a Delaware corporation
By:	/s/ Manuel D. Medina
	Name:	Manuel D. Medina
	Title:	Chief Executive Officer and President

EXECUTIVE:
 

/s/ Jose A. Segrera  

Jose A. Segrera 

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EXHIBIT A
FORM OF RELEASE

GENERAL RELEASE OF CLAIMS

     1. _____________________ (“Executive”), for himself and his family, heirs, executors, administrators, legal representatives and their respective successors and assigns, in exchange for the consideration received pursuant to Sections 6(c) (in the case of Disability), Sections 6(e) or 6.(f) (other than the Accrued Obligations) of the Employment Agreement to which this release is attached as Exhibit A (the “Employment Agreement”), does hereby release and forever discharge ________________________ (the “Company”), its subsidiaries, affiliated companies, successors and assigns, and its current or former directors, officers, employees, shareholders or agents in such capacities (collectively with the Company, the “Released Parties”) from any and all actions, causes of action, suits, controversies, claims and demands whatsoever, for or by reason of any matter, cause or thing whatsoever, whether known or unknown including, but not limited to, all claims under any applicable laws arising under or in connection with Executive’s employment or termination thereof, whether for tort, breach of express or implied employment contract, wrongful discharge, intentional infliction of emotional distress, or defamation or injuries incurred on the job or incurred as a result of loss of employment. Executive acknowledges that the Company encouraged him to consult with an attorney of his choosing, and through this General Release of Claims encourages him to consult with his attorney with respect to possible claims under the Age Discrimination in Employment Act (“ADEA”) and that he understands that the ADEA is a Federal statute that, among other things, prohibits discrimination on the basis of age in employment and employee benefits and benefit plans. Without limiting the generality of the release provided above, Executive expressly waives any and all claims under ADEA that he may have as of the date hereof. Executive further understands that by signing this General Release of Claims he is in fact waiving, releasing and forever giving up any claim under the ADEA as well as all other laws within the scope of this paragraph 1 that may have existed on or prior to the date hereof. Notwithstanding anything in this paragraph 1 to the contrary, this General Release of Claims shall not apply to (i) any actions to enforce rights arising under, or any claim for benefits which may be due Executive pursuant to, the Employment Agreement, (ii) any rights or claims that may arise as a result of events occurring after the date this General Release of Claims is executed, (iii) any indemnification rights Executive may have as a former employee, officer or director of the Company or its subsidiaries or affiliated companies, (iv) any claims for benefits under any liability policy maintained by the Company or its subsidiaries or affiliated companies in accordance with the terms of such policy, and (v) any rights as a holder of equity securities of the Company.

     2. Executive represents that he has not filed against the Released Parties any complaints, charges, or lawsuits arising out of his employment, or any other matter arising on or prior to the date of this General Release of Claims, and covenants and agrees that he will never individually or with any person file, or commence the filing of, any charges, lawsuits, complaints or proceedings with any governmental agency, or against the Released Parties with respect to any of the matters released by Executive pursuant to paragraph 1 hereof (a “Proceeding”); provided, however, Executive shall not have relinquished his right to commence a Proceeding to challenge whether Executive knowingly and voluntarily waived his rights under ADEA.

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     3. Executive hereby acknowledges that the Company has informed him that he has up to twenty-one (21) days to sign this General Release of Claims and he may knowingly and voluntarily waive that twenty-one (21) day period by signing this General Release of Claims earlier. Executive also understands that he shall have seven (7) days following the date on which he signs this General Release of Claims within which to revoke it by providing a written notice of his revocation to the Company.

     4. Executive acknowledges that this General Release of Claims will be governed by and construed and enforced in accordance with the internal laws of the State of Florida applicable to contracts made and to be performed entirely within such State.

     5. Executive acknowledges that he has read this General Release of Claims, that he has been advised that he should consult with an attorney before he executes this general release of claims, and that he understands all of its terms and executes it voluntarily and with full knowledge of its significance and the consequences thereof.

     6. This General Release of Claims shall take effect on the eighth day following Executive’s execution of this General Release of Claims unless Executive’s written revocation is delivered to the Company within seven (7) days after such execution.

____________________________, 20___ 

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EX-10.43

Exhibit 10.43

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”) is made and entered into on June 13, 2008 by and between TERREMARK WORLDWIDE, INC., a Delaware corporation (the “Company”), and Marvin Wheeler (hereinafter, the “Executive”).

W I T N E S S E T H:

     WHEREAS, the Executive is currently employed as the Chief Operations Officer of the Company;

     WHEREAS, the Executive possesses intimate knowledge of the business and affairs of the Company, its policies, methods and personnel;

     WHEREAS, the Board recognizes that the Executive has contributed to the growth and success of the Company, and desires to assure the Company of the Executive’s continued employment and to compensate him therefor;

     WHEREAS, the Board has determined that this Agreement will reinforce and encourage the Executive’s continued attention and dedication to the Company; and

     WHEREAS, the Executive is willing to make his services available to the Company and on the terms and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are mutually acknowledged, the Company and the Executive hereby agree as follows:

     1. Definitions. When used in this Agreement, the following terms shall have the following meanings:

          (a) “Accrued Obligations” means:

               (i) all accrued but unpaid Base Salary through the end of the Term of Employment;

               (ii) any unpaid or unreimbursed expenses incurred in accordance with Company policy, including amounts due under Section 5(a) hereof, to the extent incurred during the Term of Employment;

               (iii) any benefits provided under the Company’s employee benefit plans upon a termination of employment, in accordance with the terms therein, including, without limitation, rights to equity in the Company pursuant to any plan or grant and payment of compensation for accrued but unused vacation days;

               (iv) any unpaid Bonus in respect to any completed fiscal year that has ended on or prior to the end of the Term of Employment; and

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               (v) rights to indemnification by virtue of the Executive’s position as an officer or director of the Company or its subsidiaries and the benefits under any directors’ and officers’ liability insurance policy maintained by the Company, in accordance with the terms thereof.

          (b) “Base Salary” means the salary provided for in Section 4(a) hereof or any increased salary granted to Executive pursuant to Section 4(a) hereof.

          (c) “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended.

          (d) “Board” means the Board of Directors of the Company.

          (e) “Bonus” means any bonus payable to the Executive pursuant to Section 4(b) hereof.

          (f) “Bonus Period” means each period for which a Bonus is payable. Unless otherwise specified by the Compensation Committee of the Board, the Bonus Period shall be the fiscal year of the Company.

          (g) “Cause” means:

               (i) a conviction of the Executive, or a plea of nolo contendere, to a felony involving dishonesty or a breach of trust; or

               (ii) willful misconduct or gross negligence by the Executive resulting, in either case, in material economic harm to the Company or any Related Entities; or

               (iii) a willful continued failure by the Executive to carry out the reasonable and lawful directions of the Board or the Chief Executive Officer of the Company; or

               (iv) fraud, embezzlement, theft or dishonesty of a material nature by the Executive against the Company or any Related Entity, or a willful material violation by the Executive of a policy or procedure of the Company or any Related Entity, resulting, in any case, in material economic harm to the Company or any Related Entity; or

               (v) a willful material breach by the Executive of this Agreement.

An act or failure to act shall not be “willful” if (i) done by the Executive in good faith or (ii) the Executive reasonably believed that such action or inaction was in the best interests of the Company and the Related Entities, and Cause shall not include any act or failure to act otherwise described in (ii), (iii), (iv) or (v) unless and until the Company shall have provided to the Executive written notice of such act or failure to act and ten (10) business days from the date of such notice to cure such matter and the Executive shall have failed to cure the same,

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          (h) “Change in Control” means:

               (i) The acquisition by any Person of Beneficial Ownership of more than thirty percent (30%) of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities) (the foregoing Beneficial Ownership hereinafter being referred to as a “Controlling Interest”); provided, however, that for purposes of this definition, the following acquisitions shall not constitute or result in a Change of Control: (x) any acquisition by the Company; (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary of the Company; or (z) any acquisition by any corporation pursuant to a transaction which complies with clauses (A) and (B) of subsection (iii) below; or

               (ii) During any period of two (2) consecutive years (not including any period prior to the Commencement Date) individuals who constitute the Board on the Commencement Date (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Commencement Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

               (iii) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the Beneficial Owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, and (B) at least a majority of the members of the Board of Directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

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               (iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

          (i) “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended from time to time.

          (j) “Code” means the Internal Revenue Code of 1986, as amended.

          (k) “Commencement Date” means June 13, 2008.

          (l) “Common Stock” means the common stock of the Company, par value $0.001 per share.

          (m) “Competitive Activity” means an activity that is in material direct competition with the Company in a business in which the Company was engaged while the Executive was employed by the Company, in any of the States within the United States, or countries within the world, in which the Company conducts business.

          (n) “Confidential Information” means all trade secrets and information disclosed to the Executive or known by the Executive as a consequence of or through the unique position of his employment with the Company or any Related Entity (including information conceived, originated, discovered or developed by the Executive and information acquired by the Company or any Related Entity from others) prior to or after the date hereof, and not generally or publicly known (other than as a result of unauthorized disclosure by the Executive), about the Company or any Related Entity or its business.

          (o) “Disability” means the Executive’s inability, or failure, to perform the essential functions of his or her position, with or without reasonable accommodation, for any period of six (6) months or more in any twelve (12) month period, by reason of any medically determinable physical or mental impairment.

          (p) “Equity Awards” means any stock options, restricted stock, restricted stock units, stock appreciation rights, phantom stock or other equity based awards granted by the Company to the Executive.

          (q) “Equity Plan” means the Company’s 2005 Executive Incentive Compensation Plan, as amended from time to time, and any successor plan thereto.

          (r) “Excise Tax” means any excise tax imposed by Section 4999 of the Code, together with any interest and penalties imposed with respect thereto, or any interest or penalties are incurred by the Executive with respect to any such excise tax.

          (s) “Expiration Date” means the date on which the Term of Employment, including any renewals thereof under Section 3(b), shall expire.

          (t) “Good Reason” means

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               (i) the assignment to the Executive of any duties inconsistent in any material respect with the Executive’s position (including status, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 2(b) of this Agreement, or any other action by the Company that results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

               (ii) any failure by the Company to comply with any of the provisions of Section 4 of this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by the Executive;

               (iii) the Company’s requiring the Executive to be based at any office or location outside of Miami, Florida, except for travel reasonably required in the performance of the Executive’s responsibilities;

               (iv) any purported termination by the Company of the Executive’s employment other than for Cause pursuant to Section 6(b), or by reason of the Executive’s Disability pursuant to Section 6(c) of this Agreement, prior to the Expiration Date;

               (v) the Executive is requested by the Company to engage in conduct that is reasonably likely to result in a violation of law; or

               (vi) the assignment to the Executive of any duties inconsistent in any material respect with the Executive’s then position (including status, offices, titles and reporting relationships), authority, duties or responsibilities which when taken as a whole results in a significant diminution in the Executive’s position, authority, duties or responsibilities, excluding for this purpose any isolated, immaterial and inadvertent action not taken in bad faith and which is remedied by the Company immediately after receipt of notice thereof given by the Executive.

     For purposes of this Agreement, any good faith determination made by the Board as to whether the circumstances resulting in the Executive’s termination of his employment fulfills the requirements set forth above to constitute “Good Reason” shall be binding and conclusive on all interested parties.

          (u) “Group” shall have the meaning ascribed to such term in Section 13(d) of the Securities Exchange Act of 1934.

          (v) “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Securities Exchange Act of 1934 and used in Sections 13(d) and 14(d) thereof.

          (w) “Related Entity” means any subsidiary or affiliate, and any business, corporation, partnership, limited liability company or other entity designated by Board in which the Company or a subsidiary holds a substantial ownership interest, directly or indirectly.

          (x) “Restricted Period” shall be the Term of Employment and the one (1) year period immediately following termination of the Term of Employment.

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          (y) “Severance Amount” shall mean an amount equal to two (2) times the sum of (A) the Executive’s annual Base Salary as in effect immediately prior to the Termination Date and (B) the Executive’s Target Bonus for the Bonus Period in which termination occurs.

          (z) “Severance Term” means the one (1) year period following the date on which the Term of Employment ends.

          (aa) “Target Bonus” means the target annual incentive award opportunity for the applicable Bonus Period.

          (bb) “Term of Employment” means the period during which the Executive shall be employed by the Company pursuant to the terms of this Agreement.

          (cc) “Termination Date” means the date on which the Term of Employment ends.

          (dd) “Termination Year Bonus” means Bonus payable under Section 4(b) hereof for the Bonus Period in which the Executive’s employment with the Company terminates for any reason.

     2. Employment.

          (a) Employment and Term. The Company hereby agrees to employ the Executive and the Executive hereby agrees to serve the Company during the Term of Employment on the terms and conditions set forth herein.

          (b) Duties of Executive. During the Term of Employment, the Executive shall be employed and serve as the Chief Operations Officer of the Company, and shall have such duties as are typically associated with such title. The Executive shall faithfully and diligently perform all services as may be assigned to him by the Board or the Chief Executive Officer of the Company provided that such services are consistent with the Executive’s position with the Company, and shall exercise such power and authority as may from time to time be delegated to him by the Board or the Chief Executive Officer of the Company. The Executive shall devote his full business time, attention and efforts to the performance of his duties under this Agreement, render such services to the best of his ability, and use his reasonable best efforts to promote the interests of the Company. The Executive shall not engage in any other business or occupation during the Term of Employment, including, without limitation, any activity that materially (i) conflicts with the interests of the Company or its subsidiaries, (ii) interferes with the proper and efficient performance of his duties for the Company, or (iii) interferes with the exercise of his judgment in the Company’s best interests. Notwithstanding the foregoing or any other provision of this Agreement, it shall not be a breach or violation of this Agreement for the Executive to (x) serve on corporate, civic or charitable boards or committees, (y) deliver lectures, fulfill speaking engagements or teach at educational institutions, or (z) manage personal investments, so long as such activities do not significantly interfere with or significantly detract from the performance of the Executive’s responsibilities to the Company in accordance with this Agreement.

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     3. Term.

          (a) Initial Term. The initial Term of Employment under this Agreement, and the employment of the Executive hereunder, shall commence on the Commencement Date and shall expire on the third anniversary of the Commencement Date (the “Initial Term”), unless sooner terminated in accordance with Section 6 hereof.

          (b) Renewal Terms. At the end of the Initial Term, the Term of Employment automatically shall renew for successive one (1) year terms (subject to earlier termination as provided in Section 6 hereof), unless the Company or the Executive delivers written notice to the other at least three (3) months prior to the Expiration Date of its or his election not to renew the Term of Employment.

     4. Compensation.

          (a) Base Salary. The Executive shall receive a Base Salary at the annual rate of $275,000 during the Term of Employment, with such Base Salary payable in installments consistent with the Company’s normal payroll schedule, subject to applicable withholding and other taxes. The Base Salary shall be reviewed, at least annually, for merit increases and may, by action and in the discretion of the Compensation Committee of the Board, be increased at any time or from time to time, but may not be decreased from the then current Base Salary.

          (b) Bonuses.

               (i) During the Term of Employment, the Executive shall participate in the Company’s annual incentive compensation program pursuant to and under the Company’s 2005 Executive Incentive Compensation Plan, or such other plan, program and/or arrangements applicable to senior-level executives as established and modified from time to time by the Compensation Committee of the Board in its sole discretion. During the Term of Employment, the Executive shall have a threshold bonus opportunity under such plan or program equal to 30% of his current Base Salary, a Target Bonus opportunity under such plan or program equal to 40% of his current Base Salary, and a maximum bonus under such plan or program equal to 50% of his current Base Salary, in each case based on satisfaction of performance criteria to be established by the Compensation Committee of the Board at the beginning of each fiscal year that begins during the Term of Employment. Payment of annual incentive compensation awards shall be made in the same manner and at the same time that other senior-level executives receive their annual incentive compensation awards.

               (ii) For the Bonus Period in which the Executive’s employment with the Company terminates for any reason other than by the Company for Cause under Section 6(b) hereof or by the Executive without Good Reason under Section 6(g) hereof, the Company shall pay the Executive a pro rata portion (based upon the period ending on the date on which the Executive’s employment with the Company terminates) of the Target Bonus for the Bonus Period in which such termination of employment occurs; provided, however, that (A) the Bonus Period shall be deemed to end on the last day of the fiscal quarter of the Company in which the Executive’s employment so terminates, and (B) the business criteria used to determine the bonus for this short Bonus Period shall be annualized and shall be determined based upon unaudited financial information prepared in accordance with generally accepted accounting principles, applied consistently with prior periods, and reviewed and approved by the Compensation Committee of the Board.

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               (iii) The Executive may receive such additional bonuses, if any, as the Compensation Committee of the Board may in its sole and absolute discretion determine.

               (iv) Any Bonus payable pursuant to this Section 4(b) shall be paid by the Company to the Executive on the fifteenth day of the third month after the end of the Bonus Period for which it is payable.

          (c) Repayment Provisions. If the Company is required to prepare an accounting restatement due to its material noncompliance, as a result of the Executive’s misconduct, with any financial reporting requirement under the United States securities laws, then, and only if Section 304 of the Sarbanes-Oxley Act of 2002, or a successor provision, is then in effect, the Executive shall reimburse the Company for (i) any bonus or other incentive-based or equity-based compensation received by the Executive from the Company during the twelve (12) month period following the first public issuance or filing with the Securities Exchange Commission (whichever first occurs) of the financial documents embodying such financial reporting requirement and (ii) any profits realized from the sale of securities of the Company during such twelve (12) month period.

     5. Expense Reimbursement and Other Benefits.

          (a) Reimbursement of Expenses. Upon the Executive’s submission of substantiation in accordance with, and otherwise subject to, such rules and guidelines as the Company may from time to time adopt with respect to the reimbursement of expenses of executive personnel, the Company shall reimburse the Executive for all reasonable expenses actually paid or incurred by the Executive during the Term of Employment in the course of and pursuant to the business of the Company. Notwithstanding anything herein to the contrary, the Executive’s first class travel and accommodations shall be considered reasonable. The Executive shall account to the Company in writing for all expenses for which reimbursement is sought and shall supply to the Company copies of all relevant invoices, receipts or other evidence reasonably requested by the Company.

          (b) Compensation/Benefit Programs. During the Term of Employment, the Executive shall be entitled to participate in all medical, dental, hospitalization, accidental death and dismemberment, disability, travel and life insurance plans, and any and all other plans as are presently and hereinafter offered by the Company to its executive personnel, including savings, pension, profit-sharing and deferred compensation plans, subject to the general eligibility and participation provisions set forth in such plans. The Executive shall designate in his sole discretion the beneficiary under such policies. If the life insurance cannot be purchased at standard rates, then the Company shall provide and/or pay for that amount of insurance that can be purchased for premiums equal to the coverage specified above at standard rates.

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          (c) Working Facilities. During the Term of Employment, the Company shall furnish the Executive with an office, secretarial help and such other facilities and services suitable to his position and adequate for the performance of his duties hereunder.

          (d) Equity Awards. During the Term of Employment, the Executive shall be eligible to be granted Equity Awards under (and therefore subject to all terms and conditions of) the Equity Plan or such other plans or programs as the Company may from time to time adopt, and subject to all rules of regulation of the Securities and Exchange Commission applicable thereto. The number and type of Equity Awards, and the terms and conditions thereof, shall be determined by the Compensation Committee of the Board, in its discretion and pursuant to the Equity Plan or the plan or arrangement pursuant to which they are granted.

          (e) Vacation. The Executive shall be entitled to four (4) weeks of paid vacation each calendar year during the Term of Employment, to be taken at such times as the Executive and the Company shall mutually determine and provided that no vacation time shall significantly interfere with the duties required to be rendered by the Executive hereunder. Any vacation time not taken by Executive during any fiscal year may be carried forward into any succeeding calendar year.

          (f) Other Benefits. Regardless of anything herein to the contrary, if at any time during the Term of Employment the Company or any Related Entity agrees to provide or provides any benefit to any other employee of the Company or Related Entity which benefit is not otherwise provided to the Executive hereunder, or which is greater than a similar benefit provided to the Executive hereunder, the Company shall provide such benefit to the Executive or increase his benefit to be at least equal to such benefit agreed to be provided or provided to such other employee.

     6. Termination.

          (a) General. The Term of Employment shall terminate upon the earliest to occur of (i) the Executive’s death, (ii) a termination by the Company by reason of the Executive’s Disability, (iii) a termination by the Company with or without Cause, or (iv) a termination by Executive with or without Good Reason. Upon any termination of Executive’s employment for any reason, except as may otherwise be requested by the Company in writing and agreed upon in writing by Executive, the Executive shall resign from any and all directorships, committee memberships or any other positions Executive holds with the Company or any of its subsidiaries.

          (b) Termination By Company for Cause. The Company shall at all times have the right, upon written notice to the Executive, to terminate the Term of Employment, for Cause. Cause shall in no event be deemed to exist except upon a decision made by the Board made at a special meeting of the Board to be called and held at a time reasonably convenient to the Board and the Executive, but in no less than five (5) business days or more than thirty (30) business days after the Executive’s receipt of notice from the Company specifying such alleged “Cause.” Such notice from the Company to the Executive specifying alleged “Cause” shall be in writing and shall set forth in detail all acts or omission constituting such Cause. The Executive shall have not less than three (3) days prior written notice of the time and place of, and shall have

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the right to appear before, such special meeting of the Board with legal counsel of his choosing to refute any allegation of Cause specified in such notice. No termination of the Executive’s employment by reason of Cause shall be effective until the Executive is afforded such opportunity to appear and after such appearance (or failure of the Executive to appear at the designated time), not less than a majority of the members of the entire Board (excluding the Executive if he is so a member) shall concur that such Cause specified in such notice exists. For purposes of this Section 6(b), any good faith determination by the Board of Cause, made in accordance with the procedure described above, shall be binding and conclusive on all interested parties. In the event that the Term of Employment is terminated by the Company for Cause, Executive shall be entitled only to the Accrued Obligations.

          (c) Disability. The Company shall have the option, in accordance with applicable law, to terminate the Term of Employment upon written notice to the Executive, at any time during which the Executive continues to suffer after having suffered from a Disability. In the event that the Term of Employment is terminated due to the Executive’s Disability, the Executive shall be entitled to:

               (i) The Accrued Obligations, payable as and when those amounts would have been payable had the Term of Employment not ended;

               (ii) The Termination Year Bonus, payable within 2-1/2 months after the last day of the Bonus Period in which the Termination Date occurs; and

               (iii) Vesting, immediately prior to such termination, in any Equity Awards that have not previously vested, provided that the Executive shall only have six (6) months after the Termination Date in order to exercise any stock options within such Equity Awards.

          (d) Death. In the event that the Term of Employment is terminated due to the Executive’s death, the Executive shall be entitled to:

               (i) The Accrued Obligations, payable as and when those amounts would have been payable had the Term of Employment not ended;

               (ii) The Termination Year Bonus, payable within 2-1/2 months after the last day of the Bonus Period in which the Termination Date occurs; and

               (iii) Vesting, immediately prior to such termination, in any Equity Awards that have not previously vested, provided that the Executive’s estate or beneficiary shall only have six (6) months after the Termination Date in order to exercise any stock options within such Equity Awards.

          (e) Termination Without Cause. The Company may terminate the Term of Employment at any time without Cause, by written notice to the Executive not less than thirty (30) days prior to the effective date of such termination. In the event that the Term of Employment is terminated by the Company without Cause (other than due to the Executive’s death or Disability) the Executive shall be entitled to:

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               (i) The Accrued Obligations, payable as and when those amounts would have been payable had the Term of Employment not ended;

               (ii) The Termination Year Bonus, payable within 2 1/2 months after the last day of the Bonus Period in which the Termination Date occurs;

               (iii) A lump sum payment equal to the Severance Amount, payable within the later of ten (10) business days after the Termination Date or the expiration of the seven (7) day revocation period for the general release described in Section 6(j);

               (iv) Continuation, at the Company’s expense, of the health benefits provided to Executive and his covered dependents under the Company health plans as in effect from time to time after the date of such termination at the same cost applicable to active employees until the earlier of: (A) the expiration of the Severance Term, or (B) the date the Executive commences employment with any person or entity and, thus, is eligible for health insurance benefits; provided, however, that as a condition of continuation of such benefits, the Company may require the Executive to elect to continue his health insurance pursuant to COBRA. In the event that the Company is unable to provide the Executive and his covered dependents with any health benefits required pursuant to this Section 6(e)(iv), then the Company shall pay the Executive cash equal to the value of the benefit that otherwise would have accrued for the Executive’s benefit under the plan, for the period during which such benefits could not be provided under the plans, said cash payments to be made monthly until such time as the benefits would otherwise terminate pursuant to this Section 6(e)(iv); and

               (v) Vesting, immediately prior to such termination, in any Equity Awards that have not previously vested.

          (f) Termination by Executive for Good Reason. The Executive may terminate the Term of Employment for Good Reason by providing the Company fifteen (15) days’ written notice setting forth in reasonable specificity the event that constitutes Good Reason, which written notice, to be effective, must be provided to the Company within sixty (60) days of the Executive’s first knowledge of the occurrence of such event. During such fifteen (15) day notice period, the Company shall have a cure right (if curable), and if not cured within such period, the Executive’s termination shall be effective upon the date immediately following the expiration of the fifteen (15) day notice period, and the Executive shall be entitled to the same payments and benefits as provided in Section 6(e) above for a termination without Cause.

          (g) Termination by Executive Without Good Reason. The Executive may terminate his employment without Good Reason by providing the Company thirty (30) days’ written notice of such termination. In the event of a termination of employment by the Executive under this Section 6(g), the Executive shall be entitled only to the Accrued Obligations. In the event of termination of the Executive’s employment under this Section 6(g), the Company may, in its sole and absolute discretion, by written notice, accelerate such date of termination and still have it treated as a termination without Good Reason.

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          (h) Termination Upon Expiration Date. In the event that Executive’s employment with the Company terminates upon the expiration of the Term of Employment, the Executive shall be entitled to:

               (i) The Accrued Obligations, payable as and when those amounts would have been payable had the Term of Employment not ended;

               (ii) The Termination Year Bonus, payable within 2-1/2 months after the last day of the Bonus Period in which the Termination Date occurs;

               (iii) A lump-sum payment equal to the Severance Amount, payable within the later of ten (10) business days after the Termination Date or the expiration of the seven (7) day revocation period for the general release described in Section 6(j); and

               (iv) Continuation, at the Company’s expense, of the health benefits provided to Executive and his covered dependants under the Company health plans as in effect from time to time after the date of such termination at the same cost applicable to active employees until the earlier of: (A) the expiration of the Severance Term, or (B) the date Executive commences employment with any person or entity and, thus, is eligible for health insurance benefits; provided, however, that as a condition of continuation of such benefits, the Company may require the Executive to elect to continue his health insurance pursuant to COBRA. In the event that the Company is unable to provide the Executive and his covered dependents with any health benefits required pursuant to this Section 6(h)(iv), then the Company shall pay the Executive cash equal to the value of the benefit that otherwise would have accrued for the Executive’s benefit under the plan, for the period during which such benefits could not be provided under the plans, said cash payments to be made monthly until such time as the benefits would otherwise terminate pursuant to this Section 6(h)(iv).

          (i) Change in Control of the Company. If the Executive’s employment is terminated by the Company without Cause during (x) the 6-month period preceding the date of the Change in Control or (y) the two (2) year period immediately following the Change in Control, then in lieu of any amounts otherwise payable under 6(e) or 6(f) hereof, the Executive shall be entitled to:

               (i) The Accrued Obligations, payable as and when those amounts would have been payable had the Term of Employment not ended;

               (ii) The Termination Year Bonus, payable within 2 1/2 months after the last day of the Bonus Period in which the Termination Date occurs;

               (iii) The Severance Amount, payable within the later of ten (10) business days after the Termination Date or the expiration of the seven (7) day revocation period for the general release described in Section 6(j); and

               (iv) Continuation, at the Company’s expense, of the health benefits provided to Executive and his covered dependants under the Company health plans as in effect from time to time after the date of such termination at the same cost applicable to active employees until the earlier of: (A) the expiration of the Severance Term, or (B) the date

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Executive commences employment with any person or entity and, thus, is eligible for health insurance benefits; provided, however, that as a condition of continuation of such benefits, the Company may require the Executive to elect to continue his health insurance pursuant to COBRA. In the event that the Company is unable to provide the Executive and his covered dependents with any health benefits required pursuant to this Section 6(i)(iv), then the Company shall pay the Executive cash equal to the value of the benefit that otherwise would have accrued for the Executive’s benefit under the plan, for the period during which such benefits could not be provided under the plans, said cash payments to be made monthly until such time as the benefits would otherwise terminate pursuant to this Section 6(i)(iv); and

               (v) Vesting, immediately prior to such termination, in any Equity Awards that have not previously vested.

          (j) Release. Any payments due to Executive under this Article 6 (other than the Accrued Obligations or any payments due on account of the Executive’s death) shall be conditioned upon Executive’s execution of a general release of claims in the form attached hereto as Exhibit A (subject to such modifications as the Company reasonably may request).

          (k) Section 280G Reductions and Additional Payments by the Company.

               (i) Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined that any payment, distribution, or other action by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of the Agreement or otherwise) (a “Payment”), would result in an “excess parachute payment” within the meaning of Section 280G(b)(1) of the Code, but that no portion of the Payments would be treated as excess parachute payments if the aggregate amount of the Payments pursuant to this Agreement (the “Agreement Payments”) were reduced by not more 10% of the aggregate present value of all of the Agreement Payments, then the Agreement Payments shall be reduced to the “Reduced Amount”. The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be an excess parachute payment under Section 280G(b)(1) of the Code. For purposes of this Section 6(k), present value shall be determined in accordance with Section 280G(d)(4) of the Code.

               (ii) If and to the extent that Section 6(k)(i) is not applicable, then, anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined that any Payment would be subject to an Excise Tax, the Company shall make a payment to the Executive (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any Excise Tax) imposed upon the Gross-Up Payment, the Executive retains (or has had paid to the Internal Revenue Service on his behalf) an amount of the Gross-Up Payment equal to the sum of (x) the Excise Tax imposed upon the Payments and (y) the product of any deductions disallowed because of the inclusion of the Gross-Up Payment in the Executive’s adjusted gross income and the highest applicable marginal rate of federal income taxation for the calendar year in which the Gross-Up Payment is to be made. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to (x) pay federal income taxes at the highest marginal rates of federal income taxation for the calendar year in which the Gross-Up Payment is to be made, and (y) pay applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

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               (iii) Subject to the provisions of paragraph (iv) of this Section 6(k), all determinations required to be made under this Section 6(k), including the amount of any Reduced Amount and the Payments that are to be reduced pursuant to Section 6(k)(i) and, whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, and the assumptions (consistent with the above) to be utilized in arriving at such determination, shall be made by KPMG LLP (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive shall appoint another regionally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 6(k), shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm’s determination. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion that failure to report the Excise Tax on the Executive’s applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

               (iv) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

                    (A) give the Company any information reasonably requested by the Company relating to such claim,

                    (B) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company and approved by the Executive,

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                    (C) cooperate with the Company in good faith in order effectively to contest such claim, and

                    (D) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 6(k)(iii) and in a manner reasonably acceptable to the Executive, and provided that the Company shall keep the Executive informed of all matters in the proceedings, the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

               (v) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 6(k)(iii), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 6(k)(iii)) promptly pay to the Company the amount of such refund (together with any interest paid thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 6(k)(iii), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

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          (l) Cooperation. Following the Term of Employment, the Executive shall give his assistance and cooperation willingly, upon reasonable advance notice and with due consideration for his other business or personal commitments, in any matter relating to his position with the Company, or his expertise or experience as the Company may reasonably request, including his attendance and truthful testimony where deemed appropriate by the Company, with respect to any investigation or the Company’s defense or prosecution of any existing or future claims or litigations or other proceedings relating to matters in which he was involved or potentially had knowledge by virtue of his employment with the Company. In no event shall his cooperation materially interfere with his services for a subsequent employer or other similar service recipient. To the extent permitted by law, the Company agrees that (i) it shall promptly advance to the Executive (and reimburse him for any additional) reasonable and documented expenses in connection with his rendering assistance and/or cooperation under this Section 6(l) upon his presentation of documentation for such expenses and (ii) the Executive shall be reasonably compensated for any assistance or cooperation pursuant to this Section 6(l).

          (m) Return of Company Property. Following the Termination Date, the Executive or his personal representative shall return all Company property in his possession, including but not limited to all computer equipment (hardware and software), telephones, facsimile machines, palm pilots and other communication devices, credit cards, office keys, security access cards, badges, identification cards and all copies (including drafts) of any documentation or information (however stored) relating to the business of the Company, its customers and clients or its prospective customers and clients (provided that the Executive may retain a copy the addresses contained in his rolodex, his palm pilot, his PDA and any similar device).

          (n) Section 409A.

               (i) To the extent that the Executive otherwise would be entitled to any payment (whether pursuant to this Agreement or otherwise) during the six months beginning on the Termination Date that would be subject to the additional tax imposed under Section 409A of the Code (“Section 409A”), (x) the payment shall not be made to the Executive during such six month period, and (y) the payment shall be paid to the Executive on the earlier of the six-month anniversary of the Termination Date or the Executive’s death or Disability. Similarly, to the extent that the Executive otherwise would be entitled to any benefit (other than a payment) during the six months beginning on the Termination Date that would be subject to the Section 409A additional tax, the benefit shall be delayed and shall begin being provided (together, if applicable, with an adjustment to compensate the Executive for the delay) on the earlier of the six-month anniversary of the Termination Date, or the Executive’s death or Disability.

               (ii) It is the Company’s intention that the benefits and rights to which the Executive could become entitled in connection with termination of employment comply with Section 409A. If the Executive or the Company believes, at any time, that any of such benefit or right does not comply, it shall promptly advise the other and shall negotiate reasonably and in good faith to amend the terms of such benefits and rights such that they comply with Section 409A (with the most limited possible economic effect on the Executive and on the Company).

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          (o) Clawback of Certain Compensation and Benefits. If, after the termination of the Executive’s employment with the Company for any reason other than by the Company for Cause, a court of competent jurisdiction determines that the Executive breached Sections 7 hereof and has issued an injunction against the Executive in accordance with Section 7(i) hereof, then, in addition to any other remedy that may be available to the Company in law or equity and/or pursuant to any other provisions of this Agreement, the Executive’s employment shall be deemed to have been terminated for Cause retroactively to the Termination Date and the Executive also shall be subject to the following provisions:

               (i) the Executive shall be required to pay to the Company, immediately upon written demand by the Board, all amounts paid to him by the Company, whether or not pursuant to this Agreement, on or after the Termination Date (including the pre-tax cost to the Company of any benefits (other than those described in clause (iii) of this Section 6(o)) provided by the Company) that are in excess of the total amount that the Company would have been required to pay (and the pre-tax cost of any benefits (other than those described in clause (iii) of this Section 6(o)) that the Company would have been required to provide) to the Executive if the Executive’s employment with the Company had been terminated by the Company for Cause in accordance with Section 6(b) hereof;

               (ii) all vested and unvested Equity Awards then held by the Executive shall immediately expire; and

               (iii) the Executive shall be required to pay to the Company, immediately upon written demand by the Board, an amount equal to all Accelerated Equity Award Gains that the Executive has received.

          For purposes of this Section, the following terms shall have the following meanings:

          “Accelerated Equity Award Gains” shall mean the sum of (x) the Accelerated Option and SAR Gains and (y) the Accelerated Equity Award Gains.

          “Accelerated Options” shall mean those unvested stock options that become vested in accordance with Section 6(i) hereof.

          “Accelerated Option and SAR Gain” shall mean:

               (i) in the case of any Accelerated Option, or any Accelerated SAR that is settled in shares of the Company’s common stock, the product of:

               (ii) the number of shares of the Company’s common stock acquired by the Executive upon exercise of any Accelerated Option or Accelerated SAR, multiplied by

               (iii) the difference between (x) the fair market value per share of the Company’s common stock underlying such Accelerated Option or Accelerated SAR as of the date on which the Executive exercised the Accelerated Option or Accelerated SAR less (y) the exercise price or grant price (as equitably adjusted) of such Accelerated Option or Accelerated SAR; and

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               (iv) in the case of any Accelerated SAR that is settled in cash or in property, other than shares of the Company’s common stock, the amount of cash and fair market value of any property paid or transferred to the Executive with respect to the Accelerated Option or Accelerated SAR.

          “Accelerated Equity Award Gains” shall mean the aggregate value of the Accelerated Shares based on the closing price the Company’s common stock value determined on whichever of the following dates produces the greatest value:

               (i) the Termination Date;

               (ii) the date on which a court of competent jurisdiction determines that the Executive breached Section 7 hereof and has issued an injunction against the Executive in accordance with Section 7(i);

               (iii) the date on which the Executive transfers or otherwise disposes of the Accelerated Shares.

          “Accelerated SARs” shall mean those unvested stock appreciation rights that become vested in accordance with Section 6(i) hereof.

          “Accelerated Shares” shall mean those shares of the Company’s common stock granted by the Company to the Executive as compensation for services that would have been forfeited in the event that the Executive’s employment with the Company had been terminated by the Company for Cause in accordance with Section 6(b) hereof.

     7. Restrictive Covenants.

          (a) Non-competition. At all times during the Restricted Period, the Executive shall not, without the prior written consent of the Board, directly or indirectly (whether as a principal, agent, partner, employee, officer, investor, owner, consultant, board member, security holder, creditor or otherwise), engage in any Competitive Activity, or have any direct or indirect interest in any sole proprietorship, corporation, company, partnership, association, venture or business or any other person or entity that directly or indirectly (whether as a principal, agent, partner, employee, officer, investor, owner, consultant, board member, security holder, creditor, or otherwise) engages in a Competitive Activity; provided that the foregoing shall not apply to the Executive’s ownership of Common Stock of the Company or the acquisition by the Executive, solely as an investment, of securities of any issuer that is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, and that are listed or admitted for trading on any United States national securities exchange or that are quoted on the Nasdaq Stock Market, or any similar system or automated dissemination of quotations of securities prices in common use, so long as the Executive does not control, acquire a controlling interest in or become a member of a group which exercises direct or indirect control of, more than five percent (5%) of any class of capital stock of such corporation.

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          (b) Nonsolicitation of Employees and Certain Other Third Parties. At all times during the Restricted Period, the Executive shall not, without the prior written consent of the Board, directly or indirectly, for himself or for any other person, firm, corporation, partnership, association or other entity (i) employ or attempt to employ or enter into any contractual arrangement with any employee, consultant or independent contractor performing services for the Company, or any Related Entity, unless such employee, consultant or independent contractor, has not been employed or engaged by the Company for a period in excess of six (6) months, and/or (ii) call on or solicit any of the actual or targeted prospective customers or clients of the Company or any Related Entity on behalf of any person or entity in connection with any Competitive Activity, nor shall the Executive make known the names and addresses of such actual or targeted prospective customers or clients, or any information relating in any manner to the trade or business relationships of the Company or any Related Entities with such customers or clients, other than in connection with the performance of the Executive’s duties under this Agreement.

          (c) Confidential Information. At any time during the Restricted Period, the Executive shall not at any time divulge, communicate, use to the detriment of the Company or for the benefit of any other person or persons, or misuse in any way, any Confidential Information pertaining to the business of the Company. Any Confidential Information or data now or hereafter acquired by the Executive with respect to the business of the Company (which shall include, but not be limited to, information concerning the Company’s financial condition, prospects, technology, customers, suppliers, sources of leads and methods of doing business) shall be deemed a valuable, special and unique asset of the Company that is received by the Executive in confidence and as a fiduciary, and the Executive shall remain a fiduciary to the Company with respect to all of such information at all times during the Restricted Period. Notwithstanding the foregoing, nothing herein shall be deemed to restrict the Executive from disclosing Confidential Information as required to perform his duties under this Agreement or to the extent required by law or order of any court, agency or other appropriate governing authority. If any person or authority makes a demand on the Executive purporting to legally compel him to divulge any Confidential Information, the Executive immediately shall give notice of the demand to the Company so that the Company may first assess whether to challenge the demand prior to the Executive’s divulging of such Confidential Information. The Executive shall not divulge such Confidential Information until the Company either fails to respond to the Executive’s notice of such demand on a timely basis, has concluded not to challenge the demand, or has exhausted its challenge, including appeals, if any. Upon request by the Company, the Executive shall deliver promptly to the Company upon termination of his services for the Company, or at any time thereafter as the Company may request, all memoranda, notes, records, reports, manuals, drawings, designs, computer files in any media and other documents (and all copies thereof) containing such Confidential Information.

          (d) Ownership of Developments. All processes, concepts, techniques, inventions and works of authorship, including new contributions, improvements, formats, packages, programs, systems, machines, compositions of matter manufactured, developments, applications and discoveries, and all copyrights, patents, trade secrets, or other intellectual property rights associated therewith conceived, invented, made, developed or created by the Executive during the Term of Employment either during the course of performing work for the Companies or their clients or which are related in any manner to the business (commercial or experimental) of the Company or its clients (collectively, the “Work Product”) shall belong exclusively to the Company and shall, to the extent possible, be considered a work made by the Executive for hire for the Company within the meaning of Title 17 of the United States Code. To the extent the Work Product may not be considered work made by the Executive for hire for the Company, the Executive agrees to assign, at the Company’s expense, and automatically

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assign at the time of creation of the Work Product, without any requirement of further consideration, any right, title, or interest the Executive may have in such Work Product. Upon the request of the Company, and at its expense, the Executive shall take such further actions, including execution and delivery of instruments of conveyance, as may be appropriate to give full and proper effect to such assignment. The Executive shall further: (i) promptly disclose the Work Product to the Company; (ii) assign to the Company, without additional compensation, all patent or other rights to such Work Product for the United States and foreign countries; (iii) sign all papers necessary to carry out the foregoing; and (iv) give testimony in support of his inventions, all at the sole cost and expense of the Company.

          (e) Books and Records. All books, records, and accounts relating in any manner to the customers or clients of the Company, whether prepared by the Executive or otherwise coming into the Executive’s possession, shall be the exclusive property of the Company and shall be returned immediately to the Company on termination of the Executive’s employment hereunder or on the Company’s request at any time.

          (f) Acknowledgment by Executive. The Executive acknowledges and confirms that the restrictive covenants contained in this Article 7 (including without limitation the length of the term of the provisions of this Article 7) are reasonably necessary to protect the legitimate business interests of the Company, and are not overbroad, overlong, or unfair and are not the result of overreaching, duress or coercion of any kind. The Executive further acknowledges and confirms that the compensation payable to the Executive under this Agreement is in consideration for the duties and obligations of the Executive hereunder, including the restrictive covenants contained in this Article 7, and that such compensation is sufficient, fair and reasonable. The Executive further acknowledges and confirms that his full, uninhibited and faithful observance of each of the covenants contained in this Article 7 will not cause him any undue hardship, financial or otherwise, and that enforcement of each of the covenants contained herein will not impair his ability to obtain employment commensurate with his abilities and on terms fully acceptable to him or otherwise to obtain income required for the comfortable support of him and his family and the satisfaction of the needs of his creditors. The Executive acknowledges and confirms that his special knowledge of the business of the Company is such as would cause the Company serious injury or loss if he were to use such ability and knowledge to the benefit of a competitor or were to compete with the Company in violation of the terms of this Article 7. The Executive further acknowledges that the restrictions contained in this Article 7 are intended to be, and shall be, for the benefit of and shall be enforceable by, the Company’s successors and assigns. The Executive expressly agrees that upon any breach or violation of the provisions of this Article 6, the Company shall be entitled, as a matter of right, in addition to any other rights or remedies it may have, to (i) temporary and/or permanent injunctive relief in any court of competent jurisdiction as described in Section 7(i hereof, and (ii) such damages as are provided at law or in equity.

          (g) Reformation by Court. In the event that a court of competent jurisdiction shall determine that any provision of this Article 7 is invalid or more restrictive than permitted under the governing law of such jurisdiction, then only as to enforcement of this Article 7 within the jurisdiction of such court, such provision shall be interpreted or reformed and enforced as if it provided for the maximum restriction permitted under such governing law.

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          (h) Extension of Time. If the Executive shall be in violation of any provision of this Article 7, then each time limitation set forth in this Article 7 shall be extended for a period of time equal to the period of time during which such violation or violations occur. If the Company seeks injunctive relief from such violation in any court of competent jurisdiction and if such court determines that such violation by the Executive did occur, then the covenants set forth in this Article 7 shall be extended for a period of time equal to the pendency of such proceeding including all appeals by the Executive.

          (i) Injunction. It is recognized and hereby acknowledged by the parties hereto that a breach by the Executive of any of the covenants contained in Article 7 of this Agreement will cause irreparable harm and damage to the Company, for which monetary damages to the Company may be an inadequate remedy. As a result, the Executive recognizes and hereby acknowledges that the Company shall be entitled to an injunction from any court of competent jurisdiction enjoining and restraining any violation of any or all of the covenants contained in Article 7 of this Agreement by the Executive or any of his affiliates, associates, partners or agents, either directly or indirectly, and that such right to injunction shall be cumulative and in addition to whatever other remedies the Company may possess.

     8. Representations and Warranties of Executive. The Executive represents and warrants to the Company that:

          (a) The Executive’s employment will not conflict with or result in a material breach of any agreement to which he is a party or otherwise may be bound;

          (b) The Executive has not violated, and in connection with his employment with the Company will not violate, any non-solicitation, non-competition or other similar covenant or agreement of a prior employer by which he is or may be bound; and

          (c) In connection with Executive’s employment with the Company, he will not use any confidential or proprietary information that would violate the terms of any agreement between the Executive and any prior employer; and

          (d) The Executive has not (i) been convicted of any felony; or (ii) committed any criminal act with respect to Executive’s current or any prior employment.

     9. Taxes. Anything in this Agreement to the contrary notwithstanding, all payments required to be made by the Company hereunder to the Executive or his estate or beneficiaries shall be subject to the withholding of such amounts relating to taxes as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation. In lieu of withholding such amounts, in whole or in part, the Company may, in its sole discretion, accept other provisions for payment of taxes and withholding as required by law, provided it is satisfied that all requirements of law affecting its responsibilities to withhold have been satisfied.

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     10. Arbitration.

          (a) Exclusive Remedy. The parties recognize that litigation in federal or state courts or before federal or state administrative agencies of disputes arising out of the Executive’s employment with the Company or out of this Agreement, or the Executive’s termination of employment or termination of this Agreement, may not be in the best interests of either the Executive or the Company, and may result in unnecessary costs, delays, complexities, and uncertainty. The parties agree that any dispute between the parties arising out of or relating to the Executive’s employment, or to the negotiation, execution, performance or termination of this Agreement or the Executive’s employment, including, but not limited to, any claim arising out of this Agreement, claims under Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, Section 1981 of the Civil Rights Act of 1966, as amended, the Family Medical Leave Act, the Employee Retirement Income Security Act, and any similar federal, state or local law, statute, regulation, or any common law doctrine, whether that dispute arises during or after employment shall be resolved by arbitration in the Miami-Dade County, Florida area, in accordance with the National Employment Arbitration Rules of the American Arbitration Association, as modified by the provisions of this Section 10. Except as set forth below with respect to Section 7 of this Agreement, the parties each further agree that the arbitration provisions of this Agreement shall provide each party with its exclusive remedy, and each party expressly waives any right it might have to seek redress in any other forum, except as otherwise expressly provided in this Agreement. Notwithstanding anything in this Agreement to the contrary, the provisions of this Section 10 shall not apply to any injunctions that may be sought with respect to disputes arising out of or relating to Section 7 of this Agreement. The parties acknowledge and agree that their obligations under this arbitration agreement survive the expiration or termination of this Agreement and continue after the termination of the employment relationship between the Executive and the Company. By election of arbitration as the means for final settlement of all claims, the parties hereby waive their respective rights to, and agree not to, sue each other in any action in a Federal, State or local court with respect to such claims, but may seek to enforce in court an arbitration award rendered pursuant to this Agreement. The parties specifically agree to waive their respective rights to a trial by jury, and further agree that no demand, request or motion will be made for trial by jury.

          (b) Arbitration Procedure and Arbitrator’s Authority. In the arbitration proceeding, each party shall be entitled to engage in any type of discovery permitted by the Federal Rules of Civil Procedure, to retain its own counsel, to present evidence and cross-examine witnesses, to purchase a stenographic record of the proceedings, and to submit post-hearing briefs. In reaching his/her decision, the arbitrator shall have no authority to add to, detract from, or otherwise modify any provision of this Agreement. The arbitrator shall submit with the award a written opinion which shall include findings of fact and conclusions of law. Judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction.

          (c) Effect of Arbitrator’s Decision; Arbitrator’s Fees. The decision of the arbitrator shall be final and binding between the parties as to all claims which were or could have been raised in connection with the dispute, to the full extent permitted by law. In all cases in which applicable federal law precludes a waiver of judicial remedies, the parties agree that the decision of the arbitrator shall be a condition precedent to the institution or maintenance of any legal, equitable, administrative, or other formal proceeding by the Executive in connection with the dispute, and that the decision and opinion of the arbitrator may be presented in any other forum on the merits of the dispute. If the arbitrator finds that the Executive was terminated in violation of law or this Agreement, the parties agree that the arbitrator acting hereunder shall be empowered to provide the Executive with any remedy available should the matter have been tried in a court, including equitable and/or legal remedies, compensatory damages and back pay. The arbitrator’s fees and expenses and all administrative fees and expenses associated with the filing of the arbitration shall be borne by the non-prevailing party.

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     11. Assignment. The Company shall have the right to assign this Agreement and its rights and obligations hereunder in whole, but not in part, to any corporation or other entity with or into which the Company may hereafter merge or consolidate or to which the Company may transfer all or substantially all of its assets, and in any such case said corporation or other entity shall by operation of law or expressly in writing assume all obligations of the Company hereunder as fully as if it had been originally made a party hereto, but no assignment will release the Company from this Agreement or any of its obligations hereunder. The Company may not otherwise assign this Agreement or its rights and obligations hereunder. The Executive may not assign or transfer this Agreement or any rights or obligations hereunder.

     12. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Florida, without regard to principles of conflict of laws.

     13. Jurisdiction and Venue. The parties acknowledge that a substantial portion of the negotiations, anticipated performance and execution of this Agreement occurred or shall occur in Miami-Dade County, Florida, and that, therefore, without limiting the jurisdiction or venue of any other federal or state courts, each of the parties irrevocably and unconditionally (i) agrees that any suit, action or legal proceeding arising out of or relating to this Agreement which is expressly permitted by the terms of this Agreement to be brought in a court of law, shall be brought in the courts of record of the State of Florida in Miami-Dade County or the court of the United States, Southern District of Florida; (ii) consents to the jurisdiction of each such court in any such suit, action or proceeding; (iii) waives any objection which it or he may have to the laying of venue of any such suit, action or proceeding in any of such courts; and (iv) agrees that service of any court papers may be effected on such party by mail, as provided in this Agreement, or in such other manner as may be provided under applicable laws or court rules in such courts.

     14. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and, upon its effectiveness, shall supersede all prior agreements, understandings and arrangements, both oral and written, between the Executive and the Company (or any of its affiliates) with respect to such subject matter. This Agreement may not be modified in any way unless by a written instrument signed by both the Company and the Executive.

     15. Survival. The respective rights and obligations of the parties hereunder shall survive any termination of the Executive’s employment hereunder, including without limitation, the Company’s obligations under Section 6 and the Executive’s obligations under Section 7 above, and the expiration of the Term of Employment, to the extent necessary to the intended preservation of such rights and obligations.

     16. Notices. All notices required or permitted to be given hereunder shall be in writing and shall be personally delivered by courier, sent by registered or certified mail, return receipt requested or sent by confirmed facsimile transmission addressed as set forth herein. Notices personally delivered, sent by facsimile or sent by overnight courier shall be deemed given on the date of delivery and notices mailed in accordance with the foregoing shall be deemed given upon the earlier of receipt by the addressee, as evidenced by the return receipt thereof, or three (3) days after deposit in the U.S. mail. Notice shall be sent (i) if to the Company, addressed to 2 South Biscayne Boulevard, Suite 2900, Miami, Florida 33131, Attention: President, and (ii) if to the Executive, to his address as reflected on the payroll records of the Company, or to such other address as either party shall request by notice to the other in accordance with this provision.

     17. Benefits; Binding Effect. This Agreement shall be for the benefit of and binding upon the parties hereto and their respective heirs, personal representatives, legal representatives, successors and, where permitted and applicable, assigns, including, without limitation, any successor to the Company, whether by merger, consolidation, sale of stock, sale of assets or otherwise.

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     18. Right to Consult with Counsel; No Drafting Party. The Executive acknowledges having read and considered all of the provisions of this Agreement carefully, and having had the opportunity to consult with counsel of his own choosing, and, given this, the Executive agrees that the obligations created hereby are not unreasonable. The Executive acknowledges that he has had an opportunity to negotiate any and all of these provisions and no rule of construction shall be used that would interpret any provision in favor of or against a party on the basis of who drafted the Agreement.

     19. Severability. The invalidity of any one or more of the words, phrases, sentences, clauses, provisions, sections or articles contained in this Agreement shall not affect the enforceability of the remaining portions of this Agreement or any part thereof, all of which are inserted conditionally on their being valid in law, and, in the event that any one or more of the words, phrases, sentences, clauses, provisions, sections or articles contained in this Agreement shall be declared invalid, this Agreement shall be construed as if such invalid word or words, phrase or phrases, sentence or sentences, clause or clauses, provisions or provisions, section or sections or article or articles had not been inserted. If such invalidity is caused by length of time or size of area, or both, the otherwise invalid provision will be considered to be reduced to a period or area which would cure such invalidity.

     20. Damages; Attorneys Fees. Nothing contained herein shall be construed to prevent the Company or the Executive from seeking and recovering from the other damages sustained as a result of the other party’s breach of any term or provision of this Agreement to the extent such breach results from, arises out of or is otherwise in connection with the gross negligence or willful misconduct of such party. In the event that either party hereto seeks to collect any damages resulting from, or the injunction of any action constituting, a breach of any of the terms or provisions of this Agreement, then the party found to be at fault shall pay all reasonable costs and attorneys’ fees incurred by the other party in such action and any appeal thereof.

     21. Waivers. The waiver by either party hereto of a breach or violation of any term or provision of this Agreement shall not operate nor be construed as a waiver of any subsequent breach or violation.

     22. No Set-off or Mitigation. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and the amounts payable and the benefits to be provided by the Company to the Executive shall not be mitigated in any way by reason of the Executive’s future employment or otherwise.

     23. Section Headings. The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

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     24. No Third Party Beneficiary. Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any person other than the Company, the parties hereto and their respective heirs, personal representatives, legal representatives, successors and permitted assigns, any rights or remedies under or by reason of this Agreement.

     25. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument and agreement.

     26. Indemnification.

          (a) The Company shall indemnify and hold harmless the Executive to the fullest extent permitted by law from and against any and all claims, damages, expenses (including attorneys’ fees), judgments, penalties, fines, settlements, and all other liabilities incurred or paid by him in connection with the investigation, defense, prosecution, settlement or appeal of any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and to which the Executive was or is a party or is threatened to be made a party by reason of the fact that the Executive is or was an officer, director, employee or agent of the Company or any of its subsidiaries or affiliates, or by reason of anything done or not done by the Executive in any such capacity or capacities, provided that the Executive acted in good faith, in a manner that was not grossly negligent or constituted willful misconduct and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The Company also shall pay any and all expenses (including attorney’s fees) incurred by the Executive as a result of the Executive being called as a witness in connection with any matter involving the Company, its subsidiaries or affiliates, and/or any of its officers or directors.

          (b) The Company shall pay any expenses (including attorneys’ fees), judgments, penalties, fines, settlements, and other liabilities incurred by the Executive in investigating, defending, settling or appealing any action, suit or proceeding described in this Section 26 in advance of the final disposition of such action, suit or proceeding. The Company shall promptly pay the amount of such expenses to the Executive, but in no event later than 10 days following the Executive’s delivery to the Company of a written request for an advance pursuant to this Section 26, together with a reasonable accounting of such expenses.

          (c) The Executive hereby undertakes and agrees to repay to the Company any advances made pursuant to this Section 26 if and to the extent that it shall ultimately be found that the Executive is not entitled to be indemnified by the Company for such amounts.

          (d) The Company shall make the advances contemplated by this Section 26 regardless of the Executive’s financial ability to make repayment, and regardless whether indemnification of the Executive by the Company will ultimately be required. Any advances and undertakings to repay pursuant to this Section 26 shall be unsecured and interest-free.

          (e) The provisions of this Section 26 shall survive the termination of the Term of Employment or expiration of the term of this Agreement.

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     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

COMPANY: TERREMARK WORLDWIDE, INC., a Delaware corporation
By:	/s/ Manuel D. Medina
	Name:	Manuel D. Medina
	Title:	Chief Executive Officer and President

EXECUTIVE:
 

/s/ Marvin Wheeler  

Marvin Wheeler 

26

EXHIBIT A
FORM OF RELEASE

GENERAL RELEASE OF CLAIMS

     1. _____________________ (“Executive”), for himself and his family, heirs, executors, administrators, legal representatives and their respective successors and assigns, in exchange for the consideration received pursuant to Sections 6(c) (in the case of Disability), Sections 6(e) or 6.(f) (other than the Accrued Obligations) of the Employment Agreement to which this release is attached as Exhibit A (the “Employment Agreement”), does hereby release and forever discharge ________________________ (the “Company”), its subsidiaries, affiliated companies, successors and assigns, and its current or former directors, officers, employees, shareholders or agents in such capacities (collectively with the Company, the “Released Parties”) from any and all actions, causes of action, suits, controversies, claims and demands whatsoever, for or by reason of any matter, cause or thing whatsoever, whether known or unknown including, but not limited to, all claims under any applicable laws arising under or in connection with Executive’s employment or termination thereof, whether for tort, breach of express or implied employment contract, wrongful discharge, intentional infliction of emotional distress, or defamation or injuries incurred on the job or incurred as a result of loss of employment. Executive acknowledges that the Company encouraged him to consult with an attorney of his choosing, and through this General Release of Claims encourages him to consult with his attorney with respect to possible claims under the Age Discrimination in Employment Act (“ADEA”) and that he understands that the ADEA is a Federal statute that, among other things, prohibits discrimination on the basis of age in employment and employee benefits and benefit plans. Without limiting the generality of the release provided above, Executive expressly waives any and all claims under ADEA that he may have as of the date hereof. Executive further understands that by signing this General Release of Claims he is in fact waiving, releasing and forever giving up any claim under the ADEA as well as all other laws within the scope of this paragraph 1 that may have existed on or prior to the date hereof. Notwithstanding anything in this paragraph 1 to the contrary, this General Release of Claims shall not apply to (i) any actions to enforce rights arising under, or any claim for benefits which may be due Executive pursuant to, the Employment Agreement, (ii) any rights or claims that may arise as a result of events occurring after the date this General Release of Claims is executed, (iii) any indemnification rights Executive may have as a former employee, officer or director of the Company or its subsidiaries or affiliated companies, (iv) any claims for benefits under any liability policy maintained by the Company or its subsidiaries or affiliated companies in accordance with the terms of such policy, and (v) any rights as a holder of equity securities of the Company.

     2. Executive represents that he has not filed against the Released Parties any complaints, charges, or lawsuits arising out of his employment, or any other matter arising on or prior to the date of this General Release of Claims, and covenants and agrees that he will never individually or with any person file, or commence the filing of, any charges, lawsuits, complaints or proceedings with any governmental agency, or against the Released Parties with respect to any of the matters released by Executive pursuant to paragraph 1 hereof (a “Proceeding”); provided, however, Executive shall not have relinquished his right to commence a Proceeding to challenge whether Executive knowingly and voluntarily waived his rights under ADEA.

A-1

     3. Executive hereby acknowledges that the Company has informed him that he has up to twenty-one (21) days to sign this General Release of Claims and he may knowingly and voluntarily waive that twenty-one (21) day period by signing this General Release of Claims earlier. Executive also understands that he shall have seven (7) days following the date on which he signs this General Release of Claims within which to revoke it by providing a written notice of his revocation to the Company.

     4. Executive acknowledges that this General Release of Claims will be governed by and construed and enforced in accordance with the internal laws of the State of Florida applicable to contracts made and to be performed entirely within such State.

     5. Executive acknowledges that he has read this General Release of Claims, that he has been advised that he should consult with an attorney before he executes this general release of claims, and that he understands all of its terms and executes it voluntarily and with full knowledge of its significance and the consequences thereof.

     6. This General Release of Claims shall take effect on the eighth day following Executive’s execution of this General Release of Claims unless Executive’s written revocation is delivered to the Company within seven (7) days after such execution.

____________________________, 20___ 

A-2

EX-21.1

EXHIBIT 21.1

SUBSIDIARIES

NAP of the Americas/West Inc., a Florida corporation

Park West Telecommunications Investors, Inc., a Florida corporation

TECOTA Services Corp., a Delaware corporation

Terremark Trademark Holdings, Inc., a Nevada corporation

TerreNAP Data Centers, Inc., a Florida corporation

TerreNAP Services, Inc., a Florida corporation

Optical Communications, Inc., a Florida corporation

NAP of the Capital Region LLC, a Florida corporation

TECOTA Services Corp. owns a 100% interest in:

Technology Center of the Americas, LLC, a Delaware limited liability corporation

TerreNAP Data Centers, Inc., is the sole shareholder of:

NAP of the Americas, Inc., a Florida corporation

Terremark Asia Company, Ltd., a Bermuda corporation

Terremark Latin America, Inc., a Florida corporation

Terremark Europe, Inc., a Florida corporation

Data Return LLC, a Delaware limited liability company

TerreNAP Services, Inc. is the sole shareholder of:

Terremark Financial Services, Inc., a Florida corporation

Terremark Fortune House #1, Inc., a Florida corporation

Terremark Management Services, Inc., a Florida corporation

Terremark Realty, Inc., a Florida corporation

Terremark Technology Contractors, Inc., a Florida corporation

Terremark Latin America, Inc. is the sole shareholder of:

Terremark Colombia Inc., a BVI company

Spectrum Telecommunications Corp., a Delaware corporation

Terremark del Caribe, Inc., a BVI company

Terremark Latin America, Inc. owns 99% of:

Terremark Latin America de Argentina, S.A., an Argentine sociedad anónima (Dormant)

Terremark Latin America (Brasil) Ltda., a Brazilian corporation

Terremark Latin America de Mexico, S.A. de C.V., a Mexican sociedad anónima de capital variable

Terremark Latin America, Inc. is a minority shareholder of:

Terremark do Brasil Ltda., a Brazil corporation

Terremark Latin America (Brasil) Ltda, a Brazil corporation, is a majority shareholder of:

Terremark do Brasil Ltda., a Brazil corporation

Terremark Europe, Inc. is the sole shareholder of:

Terremark, N.V., a Netherlands corporation

Terremark West Africa Canary Islands, S.L.U., a Spain corporation

Terremark Worldwide, Inc. owns a minority shareholder interest in:

Terremark Latin America de Argentina, S.A., an Argentine sociedad anónima (Dormant)

Terremark Latin America (Brasil) Ltda, a Brazil corporation

Terremark Latin America de Mexico, S.A. de C.V., a Mexican sociedad anónima de capital variable

Terremark Worldwide is the sole shareholder of:

Terremark Federal Group Inc., a Delaware corporation

Terremark Worldwide owns 100% of:

NAP de las Americas — Madrid, S.A.

Terremark Asia is a majority shareholder of:

Terremark (Hong Kong) — Limited, a Hong Kong Corp. (Dormant)

Terremark Federal Group owns 49% of Terre Light, LLC, a Delaware corporation

Data Return LLC is the sole shareholder of:

digital OPS LLC, a Delaware limited liability company

Terremark UK Limited, a United Kingdom company

EX-23.2

EXHIBIT 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors

Terremark Worldwide, Inc.:

We have issued our reports dated June 13, 2008, with respect to the consolidated financial statements of Terremark Worldwide, Inc. and subsidiaries and the effectiveness of internal control over financial reporting of Terremark Worldwide, Inc. and subsidiaries, included in the 2008 Annual Report to Stockholders of Terremark Worldwide, Inc. and subsidiaries. We hereby consent to the incorporation by reference to this Annual Report on Form 10-K of Terremark Worldwide, Inc. and subsidiaries of the aforementioned reports. We consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-118369, 333-98331, 333-132995 and 333-146848) and on Form S-3 (Nos. 333-102286, 333-121133, 333-123775, 333-127622, 333-140836 and 333-146589).

As discussed in Note 2 to the consolidated financial statements, effective April 1, 2007 the Company adopted Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an Interpretation of FASB No. 109. Also, as discussed in Note 2 to the consolidated financial statements, on April 1, 2006, the Company changed its method of accounting for share-based compensation.

/s/  KPMG LLP

Miami, Florida

June 13, 2008

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Manuel D. Medina, certify that:

1. I have reviewed this annual report on Form 10-K of Terremark Worldwide, Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

/s/  Manuel D. Medina

Chairman, President and Chief Executive Officer

(Principal Executive Officer)

Date: June 16, 2008

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Jose A. Segrera, certify that:

1. I have reviewed this annual report on Form 10-K of Terremark Worldwide, Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

/s/  Jose A. Segrera

Chief Financial Officer

(Principal Financial and Accounting Officer)

Date: June 16, 2008

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT
TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Manuel D. Medina, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The accompanying annual report on Form 10-K for the fiscal year ended March 31, 2008 fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in such report fairly presents, in all material respects, the financial condition and results of operations of Terremark Worldwide, Inc.

/s/  Manuel D. Medina

Chairman, President and Chief Executive Officer

(Principal Executive Officer)

Date: June 16, 2008

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT
TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Jose A. Segrera, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The accompanying annual report on Form 10-K for the fiscal year ended March 31, 2008 fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in such report fairly presents, in all material respects, the financial condition and results of operations of Terremark Worldwide, Inc.

/s/  Jose A. Segrera

Chief Financial Officer

(Principal Financial and Accounting Officer)

Date: June 16, 2008