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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K/A

(Amendment No. 1)


þ		ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the fiscal year ended March 31, 2009
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 2800 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 whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes o 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	Smaller reporting company o
	(Do not check if a smaller reporting company)

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 computed by reference to the price at which the common stock was last sold as of the last business day of the registrant’s most recently completed second quarter was approximately $408,325,938 (based on the closing market price of $6.87 per share for the registrant’s common stock as reported on the Nasdaq Global Market on September 30, 2008). 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 July 28, 2009 was 65,363,215.

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 solutions with data centers in the United States, Europe and Latin America. We provide carrier neutral colocation, managed services and exchange point services to approximately 1,100 customers worldwide across a broad range of sectors, including enterprises, government agencies, systems integrators, Internet content and portal companies and the world’s largest network providers. We house and manage our customers’ mission-critical IT infrastructure, enabling our customers to reduce capital and operational expenses while improving application performance, availability and security. As a result of our expertise and our full suite of product offerings, customers find it more cost effective and secure to contract us rather than hire dedicated IT staff. Furthermore, as a carrier neutral provider we have more than 160 competing carriers connected to our data centers enabling our customers to realize significant cost savings and easily scale their network requirements to meet their growth. We continue to see an increase in outsourcing as customers face escalating operating and capital expenditures and increased technical demands associated with their IT infrastructure.

We deliver our solutions primarily through three highly specialized data centers, or Network Access Points (NAPs) that were purpose-built and have been strategically located to enable us to become one of the industry leaders in terms of reliability, power availability and connectivity. Our owned NAP of the Americas facility, located in Miami, Florida, is one of the most interconnected data centers in the world and is a primary exchange point for high levels of traffic between the United States, Europe and Latin America; our owned NAP of the Capital Region, or NCR, located outside Washington, D.C., has been designed to address the specific security and connectivity needs of our federal customers; and our leased NAP of the Americas/West, located in Santa Clara, California, is strategically located in Silicon Valley to serve the technology and Internet content provider segments as well as provide access to connectivity to the U.S. west coast, Asia, Pacific Rim and other international locations. Each facility offers our customers access to carrier neutral connectivity as well as technologically advanced security, reliability and redundancy through 100% service level agreements, or SLAs, which means that we agree to provide 100% uptime for all of our customers’ IT equipment contained in our facilities. Our facilities and our IT platform can be expanded on a cost effective basis to meet growing customer demand.

Our primary products and services include colocation, managed services and exchange point services.


	•	Colocation Services: We provide customers with the space, power and a secure environment to deploy their own computing, network, storage and IT infrastructure.

	•	Managed Services: We design, deploy, operate, monitor and manage our clients’ IT infrastructure at our facilities.

	•	Exchange Point Services: We enable our customers to exchange Internet and other data traffic through direct connection with each other or through peering connections with multiple parties.

Our business is characterized by long term contracts, which provide for monthly recurring revenue from a diversified customer base. Our customer contracts are generally 3 years in duration and our average quarterly

revenue churn rate for the past four quarters has been less than 2% and we experienced no revenue churn in our federal customer base, which we believe is a reflection of the value of our integrated technology solutions and our ability to deliver the highest quality service. As an illustration of this principle, during the year ended March 31, 2009, approximately 90% of our overall revenue was recurring and over 70% of our new bookings were derived from existing customers.

Our principal executive office is located at 2 South Biscayne Boulevard, Suite 2800, Miami, Florida 33131. Our telephone number is (305) 856-3200.

Competitive Strengths

Our business is characterized by the following strengths:


	•	Strategically located carrier neutral data centers — Our purpose-built, carrier neutral data centers have been established in regions with considerable demand for our services. Because we are not a carrier and are not affiliated with a particular carrier, we can provide direct access to more than 160 carriers, including all global Tier 1 carriers, enabling our customers to realize significant cost savings, flexibility and the option to scale their network needs as their businesses grow. Our facilities are in immediate proximity to major fiber routes, providing convenient access to the United States, Europe and Latin America. The NAP of the Americas located in Miami, Florida was the first purpose-built, carrier neutral Network Access Point of its kind and is specifically designed to link the United States with the rest of the world.

	•	Competitive advantage in serving the federal sector — We believe the combination of our long-standing relationships with the federal government, high level security clearances and our dedicated federal sales force provides us with a competitive advantage. Approximately 10% of our employee base has federal security clearances, and we are the only company awarded a GSA Schedule contract offering colocation space that satisfies the federal government’s requirements to be accredited as a Sensitive Compartmented Information Facility (SCIF). Since we were awarded our first federal contract in 2004, we have had success in expanding our business with the Departments of Defense and State and we continue to collaborate with key federal IT integrators such as Computer Sciences Corporation and General Dynamics. Our market presence with the federal sector and system integrators is increasing as a result of the success of the NAP of the Capital Region together with the federal government’s current focus on civilian agency IT infrastructure. The federal sector accounted for approximately 24% of our revenue for the year ended March 31, 2009.

	•	Comprehensive portfolio of IT solutions — We offer our customers a comprehensive suite of services, including colocation, managed hosting, managed network, disaster recovery, security and cloud computing services. We believe that the breadth of our service offerings enables us to better meet our existing customers’ changing demands and to cross-sell various products and services within our portfolio. We have had significant success in cross-selling our products, with approximately 70% of our new bookings for the year ended March 31, 2009 generated by existing customers.

	•	Scalable infrastructure — Our infrastructure is focused around our three primary facilities in Florida, Virginia and California, where visibility of future revenues is high and where we believe the probability of success is significant. We are able to spread the operating expenses and capital expenditures of each facility across the facility’s growing customer base. Our current purpose-built infrastructure also allows us to build out in incremental data centers within our facilities with relatively low incremental capital expenditures as demand increases.

	•	Diversified customer base — We have a diverse customer base of approximately 1,100 enterprises, government agencies, systems integrators, Internet content and portal companies and network providers, which are attracted by our fully integrated suite of products and services. Given the breadth of our customer base, no commercial customer represents more than 5% of total recurring revenue.

	•	Strong management team — We have a seasoned operational, sales and financial management team, comprising individuals who have an average of 8.5 years of communication and data center expertise. Most of our operational and sales team has been assembled from several of the world’s leading communication service providers.

Strategy

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


	•	Increase revenue from our existing customer base — We will continue to pursue opportunities to provide new services to existing customers and capture an increasing portion of each customer’s IT spending. We believe that our comprehensive set of services establishes a foundation for cross-selling opportunities across our broad customer base. We will focus on cross-selling managed services to our existing colocation customers, as well as providing colocation services to existing managed services customers. We expect our focus on cross-selling to existing customers to maintain or lower our existing churn rates, which will provide us with increased revenue visibility.

	•	Leverage our competitive advantage to serve the federal sector — We will broaden our reach with customers in the federal sector, including increasing our penetration of civilian agencies. We will do so by leveraging our dedicated resources, existing relationships, preferred GSA provider status and the prime location and design of our NAP in the Washington D.C. area. We believe that our prior experience and existing relationships in the federal sector have resulted in our ability to offer federal sector customers tailored colocation and managed services. We plan to further capitalize on the current federal administration’s plans to increase their use of cloud computing, building off our recently awarded federal cloud computing contracts to host the USA.gov and Data.gov websites. We believe we are well-positioned to win additional business in the federal sector, increase our penetration of the civilian agencies and further augment our relationships with the large federal IT integrators and other potential partners.

	•	Continue our disciplined approach to expansion — Our current expansion plans are focused on growth within our existing footprint when the demand for our services is established, where there are significant opportunities to grow revenue and where the probability of success is significant. The development of our NAP of the Capital Region, or NCR, is an example of this. We opened Pod 1 at NCR in July 2008 and were able to contract over 80% of its total built-out space by January 2009. Similarly, over 30% of the expected built-out space in Pod 2 is already under contract despite beginning construction in January 2009 and having an opening scheduled for early 2010. With more than 90% of the built out space in the NAP of the Americas/West currently contracted, we intend to apply the same disciplined approach to expansion in that and our other markets.

	•	Invest in our proprietary service delivery technology and products — We will continue to invest in proprietary technologies that provide reliable, cost-effective and flexible solutions to our customers and a technological advantage over our competitors. Our investment in proprietary technology and products enables us to automate service delivery processes, which will allow us to drive efficiencies and lower our operating costs.

Products and Services

Our primary products and services include colocation, managed services and exchange point services.

Colocation

Our colocation services, which represented 34% of our revenue, or $85.4 million, for the year ended March 31, 2009, provide clients with the space and power to deploy computing, network, storage and IT infrastructure in our world-class data centers. Through a number of redundant subsystems, including power, fiber and satellite connections, we are able to provide our customers with 100% Service Level Agreements (SLAs) for power and environmental systems, which means that we can agree to provide 100% uptime for all of our customers’ IT equipment contained in our facilities. Our colocation solutions are scalable, allowing our customers to upgrade space, connectivity and services as their requirements evolve. As a result of the scalability, cost effectiveness and flexibility of our colocation solutions, our customers continue to increase their outsourcing to us, allowing them to reduce their cost of powering and cooling their infrastructure. Furthermore, customers benefit from our data centers’ 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. Our customers sign long-term contracts and are billed on a monthly basis, in advance, by the square foot or by cabinet for space and by the circuit (based on the number of amps) for power. We provide the following colocation services:

Space and Power — Each of our data centers house IT infrastructure in a safe, secure and highly connected facility, and customers enjoy a high level of network reliability, which enables them to focus on their core business. This service provides space and power to our clients to deploy their own computing, networking and IT infrastructure. Customers can choose individual cabinets or a secure cage depending on their space and security requirements.

Sensitive Compartmented Information Facility (“SCIF”) Services — A service used by the federal sector that includes the buildout and management of a colocation facility including extraordinary security safeguards meeting Director of Central Intelligence Directive (“DCID”) 6/9 Physical Security Standards for SCIF facilities. Facilities meeting DCID 6/9 standards may be utilized for mission-critical federal infrastructure, including colocation, network services, managed hosting and security services delivered by our wholly owned federal subsidiary, Terremark Federal Group, Inc. As of the date of this report, we are unaware of any other company that has been awarded a GSA Schedule contract offering colocation space that satisfies the federal government’s requirements to be accredited as a SCIF.

Remote Hands/Smart Hands — Reduces cost and maximizes uptime with on-site troubleshooting and maintenance services. Remote Hands service performs simple functions to customers’ equipment upon request, while Smart Hands service offers clients remote assistance using industry-certified engineers to install and maintain complex network environments.

Managed Services

Our managed services represented 56% of our revenue, or $139.5 million for the year ended March 31, 2009. We design, deploy, operate, monitor and manage our clients’ IT infrastructure at our facilities. Our customers sign long-term contracts and are billed on a monthly basis, in advance, to use these applications, which minimizes the capital expenditure necessary for them to build this platform in-house while also allowing them to maintain full control over the operating system and application infrastructure. This platform is scalable, allowing us to increase margins as we replicate the service for incremental customers. The division is composed of four subdivisions — managed hosting services, managed network services, managed security/data infrastructure services and equipment/other. The key managed services we provide include:

Managed Hosting Services — We offer managed hosting services, in which we house, serve and maintain data environments for various computing environments. These environments can include, without limitation, websites, enterprise resource planning, or ERP, tools and databases. Our managed hosting services, which represented approximately 57% of our managed services revenue for the year ended March 31, 2009, are designed to support complex, transaction-intensive, mission-critical line-of-business and Internet facing applications. Our full suite of managed hosting services allows companies and organizations to reduce their total cost of ownership while increasing IT capability through access to our significant technical expertise and capability as well as our technologically advanced data center, network and computing infrastructure. We provide managed hosting services on dedicated or virtualized servers located within our facilities. We offer the following managed hosting services to our customers:


Service		Description

Managed Hosting		Offers flexibility, scalability and operating efficiency through our full-service, utility-enabled hosting solutions. We also provide a more comprehensive suite of hosting services, built around an application-centric philosophy, with application-level deep monitoring, return-to-service and code troubleshooting services. Includes full support for leading database and application platforms.
Enterprise Cloud^tm		The Enterprise Cloud service allows our customers to control a pool of processing, storage and networking resources that allow them to deploy server capacity on demand instead of investing in their own infrastructure.

Managed Network Services — Represented approximately 32% of managed services revenue for the year ended March 31, 2009 , and leverages our robust connectivity and our Commercial and Secure Network Operations Centers, or NOC, to deliver cost savings, flexibility and the performance that customers demand. We generate monthly recurring revenues by providing the following managed network services to our customers.


Service		Description

Managed NOC Services		Provide 24x7 immediate response, customer network monitoring and management and vendor support management.
Managed Routing Service		Provides managed access to the telecommunication backbones of the world’s leading carriers. The facilities are complete with redundant systems and infrastructure. Intelligent routing maximizes optimal network connectivity.
Managed Satellite Services		Provide 24x7 monitoring and management, vendor support management, spectrum management and on-demand move/add/change.

Equipment/Other — Represented approximately 6% of managed services revenue for the year ended March 31, 2009 and consists primarily of services we provide to procure and install equipment utilized as part of our managed services contracts.

We use the following proprietary software tools and technologies to deliver these services:

Infinistructure^® — A virtualized computing platform that allows customers to scale across equipment and geographies with limited capital expenditure. This technology eliminates the physical server as a point of failure and allows customers to leverage a comprehensive on-demand computing environment with a substantial enterprise-class computing grid partitioned into secure virtual servers. The system guarantees a highly secure environment using complete server isolation, VLAN network partitioning and PCI-compliant firewalls, and is managed and administered with our digitalOps service delivery platform.

digitalOps — A service delivery software tool that facilitates the management of most of our colocation, hosting and network services, including computing network design, operations and management environments. The technology also serves as a portal and user interface, enabling customers to monitor and provision their own servers. This advanced technology represents the optimization of the surrounding technical operations and business processes to create the architectural logic of an entire managed environment.

Exchange Point Services

Our Exchange Point Services platform represented $15.9 million, or approximately 6%, of revenue for the year ended March 31, 2009 and is designed to allow our customers to connect their networks and equipment with that of others in a flexible and cost-effective manner. The attractiveness of our exchange point services to customers is

enhanced by our substantial connectivity with more than 160 competing carriers, which allows our customers to reduce costs while enhancing the reliability and performance associated with the exchange of Internet and other data traffic. Our connectivity options offer our customers a key strategic advantage by providing direct, high-speed connections to peers, partners and some of the most important sources of IP data, content and distribution in the world. Key Exchange Point Services include:

Interconnect Services — These services represent physical links that enable our customers to share data with any other clients connected to our exchange point platform. We charge for these links, or Cross-Connect services, through an initial installation fee and an ongoing monthly recurring charge.

Peering Services — Provide a highly secure and reliable means to exchange data, deliver IP-based services and deliver 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.

Industry Trends

According to Tier1 Research, global demand for data center space increased by 116% from 2002 to 2007 while supply increased by a modest 15% over the same period. Since 2007, demand has continued to outgrow supply, and Tier1 projects that demand will outgrow supply by 2.5x through 2012. This supply and demand imbalance is replacing what was previously considered a market with excess supply. We believe this growth is being driven by escalating broadband utilization trends, rising power and cooling requirements and an increasing enterprise trend for outsourcing bolstered by a growing need for advanced networking technology provided through reliable and secure infrastructure.


	•	Global Bandwidth Utilization Trends. Demand for global IP traffic, according to Cisco Systems, Inc, increased at a CAGR of 60% from 2006 to 2008. This growth in end-user traffic over IP networks is expected to continue to grow due to continued adoption of broadband access to the Internet by businesses and consumers and significant mass adoption of high bandwidth and data-intensive consumer and business applications that have large file content. The introduction of more powerful computers and software applications will further exacerbate this trend, and Cisco projects IP traffic will grow at a CAGR of 46% from 2007 through 2012. Penetration rates are also expected to increase and, when combined with increasing connection speeds, indicate that global IP traffic will continue to increase exponentially. Regional internet traffic is growing fastest in Latin America. Cisco projects total regional IP traffic in Latin America to grow at a 57% CAGR from 2007 to 2012. The growth is driven mainly by increasing internet penetration and the advent of high-speed connections in some of the fastest and largest developing economies in the world such as Brazil, Argentina and Colombia. As the increase in global internet traffic continues to drive demand for IT infrastructure, we believe we are well positioned to benefit from these trends. Our facilities handle a significant amount of internet traffic in the U.S., our flagship facility, the NAP of the Americas, handles approximately 90% of Latin American IP traffic, and our Brazilian facility is the largest Internet exchange in South America.

	•	Rising Power and Cooling Requirements. Power availability for equipment and cooling is one of the most important challenges facing data centers today. The power requirement of a modern server environment has grown significantly, making many legacy data centers which were not adequately equipped obsolete. While the size of networking and computing equipment continues to shrink, the increasing speed at which this equipment can receive, process and transmit data continues to fuel power requirements. Robert Frances Group research highlights that while the average power requirement per rack was 1 to 3 kilowatts five years ago, a typical rack now requires 4 to 6 kilowatts with high density blade servers consuming 24 — 30 kilowatts per rack. Concurrently, increased cooling requirements for these dense servers coupled with increasing memory and storage requirements are also driving power demand. Industry estimates indicate that one equipment rack of 24 kilowatts of power requires six to seven tons of cooling capacity and approximately 3,800 cubic feet per minute of airflow. According to a recent study, aggregate electricity use for servers doubled over the period 2000 to 2005, both in the US and worldwide. Additionally, IDC expects the blade server market to continue to grow at by estimated 20.8% in unit shipments from 2008 to 2013,


		accounting for nearly 29.8% of the server market by 2011. We expect the demand for the higher power density and advanced cooling systems provided by our data centers to continue.


	•	Increasing Enterprise Demand for Outsourcing. In the U.S., the following factors have contributed to enterprise customers increasingly outsourcing their data center operations:

Increased Technical Demands and Technological Developments. Advanced equipment and new developments have required greater sophistication and augmented the specifications required of data centers. As a result, companies are now faced with a choice of either upgrading their existing facilities or outsourcing all or a portion of their IT infrastructure to a data center with more advanced networking technology and a more reliable and secure infrastructure.

Increased Reliance on the Internet. As more businesses rely on the Internet for e-commerce, email and centralized databases, connectivity, speed and reliability have become a priority, and demands on their IT infrastructure have increased. We believe that the lack of adequate security, climate control and bandwidth in most in-house data centers has led to an increase in data center outsourcing.

Adoption of Network-Centric Computing and IP Services. Technologies such as IP/Ethernet, softswitches and wireless broadband have driven traffic onto multi-purpose IP networks, enabling new applications to be purchased separate from network access. These technologies require increased broadband speeds and reduced latency. Because these requirements have become increasingly difficult for in-house data center solutions to provide, we believe that they have driven the demand for data center outsourcing.

Business Continuity and Disaster Recovery. As businesses have become increasingly dependent upon their data systems and IT infrastructure, business continuity concerns and disaster recovery planning are leading businesses to store an increasing amount of data in secure, off-site facilities that enable them to access this data in real-time. Our secure data centers contain redundant systems (e.g., power and cooling), which are required under many companies’ business continuity and disaster recovery policies. Additionally, our data centers and services enable our customers to regularly scan data to track compliance with such policies.

Regulatory Compliance. Regulations have increasingly addressed enterprises’ use of electronic systems, which we believe will drive growth in demand for our secure, outsourced services. Examples of such regulations include Basel II, which provides direction for managing capital risk, supervisory interaction and public risk disclosure for large banks, as well as Check 21, which permits banks to truncate original checks and process check information electronically.


	•	Increased government demand for outsourcing: The current federal administration announced plans to increase the outsourcing of IT needs, which we expect will significantly boost federal demand for colocation and managed services, reducing government costs and increasing efficiency. Cloud computing is likely to be one of the key managed hosting services utilized in this initiative. Outsourcing through cloud computing allows the government to use a pool of processing, storage and networking resources that can be provisioned on demand, and offers advanced capabilities in cyber security.

Customers

Our customers include enterprises, government agencies, systems integrators, Internet content and portal companies as well as the world’s largest network providers. As of March 31, 2009, we had approximately 1,100 customers worldwide. The federal sector accounted for approximately 24% of our revenues for the year ended March 31, 2009. The largest commercial customer accounted for less than 5% of our revenues for the year ended March 31, 2009.

Sales and Marketing

Sales

The Terremark sales force markets our services to enterprise, federal sector, interactive entertainment, Internet infrastructure, carrier, and channel customers and is organized by business unit, corresponding to U.S. commercial, Federal, Europe and Latin American. Our sales force works with our team of trained support engineers to apply our strategic approach in targeting customers, which focuses on the design of a package of Terremark products and IT infrastructure services based solely on a particular customer’s needs. We sell our products and services through three primary channels:


	•	Direct sales — our direct salesforce is comprised of 29 quota-bearing sales people based primarily in the U.S.

	•	Sales engagement team — team of 5 professionals responsible for managing inbound demand from marketing campaigns and website visitors as well as conducting targeted sales outreach.

	•	Our Channels & Strategic Alliances group — responsible for the acquisition, education and retention of channel partners and reseller agents.

Marketing

Our marketing organization is responsible for building and communicating a distinct brand, driving qualified leads into the sales pipeline, and ensuring strategic alignment with key partners. Our marketing team supports our strategic priorities through the following primary objectives:


	•	Brand management and positioning — This includes brand identity unification, positioning at the corporate and product levels, the development of methodology, marketing assets and brand awareness programs for all of our business units.

	•	Lead generation — Utilizing online marketing, targeted advertising, direct marketing, event marketing, and public relations programs and strategies to design and execute successful lead generation campaigns leveraging inside and direct sales and channel teams and contribute meaningfully and measurably to pipeline and revenue goals.

Competition

Our 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 that constructed data centers primarily to help sell bandwidth, we have aggregated multiple networks in each of our carrier neutral data centers, providing superior diversity, pricing and performance. Telecommunications companies’ data centers generally provide only one choice of carrier and prefer customers with high managed services needs as part of their pricing structures. Locating in our data centers provides access to a wide choice of top tier networks and allows customers to negotiate the best prices with a number of carriers, which we believe results in better economics and redundancy.

	•	Infrastructure service providers such as Equinix, Global Switch, Internap Network Services Corporation and Switch and Data. Infrastructure service providers often provide either colocation or managed services or a combination with limited managed services. In contrast, we offer a full suite of both colocation and managed services through high quality, technologically advanced, secure data centers with 24-hour support.

	•	Large scale system integrators such as IBM and Electronic Data Systems. Most system integrators are primarily engaged to deliver large scale information systems, including their design and development, the management of vendor contracts, the purchase of equipment and technical integration. While there may be some overlap with our services, we focus on providing an end-to-end service offering in colocation and managed services.


	•	Wholesale providers of data center space such as Digital Realty Trust, Dupont Fabros and 365 Main Inc. These companies have data centers focused on meeting the outsourced data center needs of wholesale customer deployments. These centers primarily provide space and power on a wholesale basis without additional services. While certain of our customers demand the use of only the basic elements of our data centers (e.g. power, space and cooling), our focus is on attracting those customers who demand services in addition to the physical facilities necessary to house their equipment. In addition, wholesale customers are not typically suited to our model as we focus on providing space and services to a large number of diverse customers in each data center, which allows our customers and maximizes our financial returns on a per site basis.

	•	Managed hosting and cloud computing providers including Rackspace, SAVVIS, AT&T, Pipex, The Planet and Verio. Microsoft, Google and Amazon are also emerging competition, as they are currently making investments in cloud computing capabilities. These services allow customers to use shared or dedicated physical or virtual computer servers to house, serve and maintain various computing environments including websites and databases.

Employees

As of March 31, 2009, we had 670 full-time employees in the United States, 77 full-time employees in Europe and 38 full-time employees in Latin America. Of these employees, 527 were in data center operations, 98 were in sales and marketing and 160 were in management, finance and administration. Approximately 10% of employees have high level federal security clearance. We have no union contracts, and we believe that our relationship with our employees is good.

Primary Data Centers

NAP of the Americas

Constructed in 2001, our owned flagship facility, the NAP of the Americas, located in Miami, Florida is one of the most significant telecommunications projects in the world. This 750,000 gross square-foot facility was the first purpose-built, carrier neutral Network Access Point and is 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. Our 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. This convergence of telecommunications infrastructure, together with the NAP of the Americas’ capabilities, are reasons why global carriers, Internet service providers and other Internet-related businesses, educational institutions, the federal sector and enterprises have chosen to become our clients.

Our Network Operations Center, or NOC, provides continuous 24-hour support, monitoring and management of all elements in a customer’s computing infrastructure. This service allows our customers to leverage our investment in hardware, software tools and expertise and 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 customers and the other serving our federal sector customers.

NAP of the Capital Region

Constructed in 2008 and strategically located in Culpeper, Virginia, outside of the 50-mile blast zone surrounding downtown Washington, D.C., the owned NAP of the Capital Region (“NCR”) is one of the most secure and technologically sophisticated data centers on the Eastern seaboard.

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

The NCR campus supports up to five 50,000 square-foot independent data center structures and a 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 data center, a professional security staff maintains and operates sophisticated surveillance systems, biometric scanners and secured areas for processing of staff, customers and visitors. Computer Sciences Corporation serves as an anchor customer, and we have already contracted with several new and existing federal and commercial customers.

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

NAP of the Americas/West

Located in Santa Clara, California in Silicon Valley, our leased NAP of the Americas/West (“NAP West”) strategically positions us to service the Asian/Pacific Rim markets and is a key component of our international reach. The facility was engineered to exceed industry standards for power and cooling and is on the critical grid for Silicon Valley Power. Additionally, NAP West’s access to major carriers provides a competitive marketplace that lowers bandwidth costs for our customers while allowing them to select the connectivity best suited to their business. In addition, we own the land adjacent to this facility which we may use to construct an additional 50,000 square foot data facility.

Data Center Summary

We own or lease properties on which we operate Internet exchange facilities from which we may provide our colocation, interconnection and managed services to the federal and commercial sectors. The following tables, together, contain information on these properties and facilities as of March 31, 2009:


			Potential
			Colocation
			space
Location	Type		(sq. ft.)			Services Provided

United States
NAP of the Americas (Miami, FL)		Owned		315,000		Colocation; Exchange; Managed Services
NAP of the Capital Region (Culpeper, VA)		Owned		250,000	(1)	Colocation; Exchange; Managed Services
Pod 1				50,000		Open / fully constructed
Pod 2				50,000		Expect opening early 2010
Pods 3 through 5				150,000		For future expansion

NAP of the Americas/West (Santa Clara, CA)		Leased		30,000		Colocation; Exchange; Managed Services
CA Expansion		Owned		50,000		Colocation; Exchange; Managed Services
Dallas		Leased		7,100		Managed Services
Herndon		Leased		—		Colocation; Exchange
International
Colombia		Leased		18,000		Colocation; Exchange; Managed Services
Madrid		Leased		6,500		Colocation; Exchange; Managed Services
Sao Paolo		Leased		3,400		Colocation; Exchange; Managed Services
Benelux		Leased		1,000		Managed Services
London		Leased		270		Managed Services


(1)		Represents total potential colocation space upon completion of five, 50,000 square foot pods. As of March 31, 2009, Pod 1 has been completed and Pod 2 is under construction. Pod 2 is scheduled to open in early 2010. We intend to construct Pods 3, 4 and 5 as needed to satisfy future demand for space in NAP of the Capital Region.

Financial Information About Geographic Areas

For our fiscal years ended 2009, 2008 and 2007, our revenue from external customers attributable to the United States and internationally is as set forth below (dollars in thousands):


	March 31,
	2009		2008		2007

Revenues:
United States	$	218,935	$	163,278	$	85,167
International		31,535		24,136		15,781

	$	250,470	$	187,414	$	100,948

As of the year ended March 31, 2009, our long lived assets, including property and equipment, net and identifiable and intangible assets, are located in the following geographic areas (dollars in thousands):


	March 31,
	2009		2008

United States	$	390,790	$	327,048
International		9,343		5,963

	$	400,133	$	333,011

Where You Can Find Additional Information

We file annual, quarterly, and special reports, proxy statements and other information with the SEC. You may read and copy any materials 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 stockholder who requests them. The reference to our website address does not constitute incorporation by reference of the information contained in the website and should not be considered part of this report.


ITEM 1A.	*RISK FACTORS.*

You should carefully consider the following risks and all other information contained in this Annual Report on Form 10-K. If any of the following risks actually occur, our business, financial condition and results of operations could be materially and adversely affected, and the trading price of our common stock could decline. 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, financial condition and results of operations.

We have incurred substantial losses in the past and expect to continue to incur additional losses in the future, which may reduce our ability to raise capital.

For the years ended March 31, 2009, 2008, 2007 and 2006, we incurred net losses of $10.6 million, $42.2 million, $15.0 million and $37.1 million, respectively. The net loss for year ended March 31, 2009 included a $3.9 million non-cash loss on change in fair value of derivatives. The net loss for the year ended March 31, 2008 included a $26.9 million non-cash loss on the early extinguishment of debt. We are currently investing heavily in our expansion in Virginia, upgrades to support our infrastructure in Miami and expansion in Silicon Valley. 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. Our continuing losses may limit our ability to raise needed financing, or to do so on favorable terms, as those losses are taken into account by the organizations that issue investment ratings on our indebtedness.

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 carrier 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.

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.

For the year ended March 31, 2009, revenues under contracts with the federal sector constituted approximately 24% 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.

For the years ended March 31, 2009 and 2008, we derived approximately 24% and 22% of our revenues from the federal sector, respectively. 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.

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.

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 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 infrastructure 24 hours a day, seven days a week, without interruption. We must, therefore, protect our network 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, including networking equipment, 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 or worsen our reputation with our customers.

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.

If we are unable to protect our intellectual property and prevent its use by third parties, our ability to compete in the market will be harmed.

We rely on a combination of patent, copyright, trade secret and trademark laws to protect our proprietary technology and prevent others from duplicating our products and services. However, these means may afford only limited protection and may not: (1) prevent our competitors from duplicating our products or services; (2) prevent our competitors from gaining access to our proprietary information and technology; or (3) permit us to gain or maintain a competitive advantage.

Any of our patents may be challenged, invalidated, circumvented or rendered unenforceable. We cannot assure you that we will be successful should one or more of our patents be challenged for any reason. If our patent claims are rendered invalid or unenforceable, or narrowed in scope, the patent coverage afforded our products or services could be impaired, which could significantly impede our ability to market our products or services, negatively affect our competitive position and harm our business and operating results.

We cannot assure you that any pending or future patent applications held by us will result in an issued patent or that, if patents are issued to us, that such patents will provide meaningful protection against competitors or against competitive technologies. The issuance of a patent is not conclusive as to its validity or its enforceability. The United States federal courts or equivalent national courts or patent offices elsewhere may invalidate our patents or find them unenforceable. Competitors may also be able to design around our patents. Other parties may develop and obtain patent protection for more effective technologies, designs or methods. If these developments were to occur, it could have an adverse effect on our sales. We may not be able to prevent the unauthorized disclosure or use of our technical knowledge or trade secrets by consultants, vendors, former employees and current employees, despite the existence of nondisclosure and confidentiality agreements and other contractual restrictions. Furthermore, the laws of foreign countries may not protect our intellectual property rights effectively or to the same extent as the laws of the United States. If our intellectual property rights are not adequately protected, we may not be able to commercialize our technologies, products or services and our competitors could commercialize our technologies, which could result in a decrease in our sales and market share that would harm our business and operating results.

Our products or services could infringe on the intellectual property rights of others, which may lead to litigation that could itself be costly, could result in the payment of substantial damages or royalties and/or prevent us from using technology that is essential to our products or services.

We cannot assure you that our products, services or other methods do not infringe the patents or other intellectual property rights of third parties. Infringement and other intellectual property claims and proceedings brought against us, whether successful or not, could result in substantial costs and harm our reputation. Such claims and proceedings can also distract and divert management and key personnel from other tasks important to the success of our business. In addition, intellectual property litigation or claims could force us to do one or more of the following:


	•	cease selling or using any of our products or services that incorporate or makes use of the asserted intellectual property, which would adversely affect our revenue;

	•	pay substantial damages for past use of the asserted intellectual property;

	•	obtain a license from the holder of the asserted intellectual property, which license may not be available on reasonable terms, if at all; or

	•	redesign or rename, in the case of trademark claims, our products or services to avoid infringing the intellectual property rights of third parties, which may not be possible and could be costly and time-consuming if it is possible to do.

In the event of an adverse determination in an intellectual property suit or proceeding, or our failure to license essential technology, our sales could be harmed and/or our costs increase, which would harm our financial condition and our stock price may likely decline.

We license intellectual property rights from third-party owners. If such owners do not properly maintain or enforce the intellectual property underlying such licenses, our competitive position and business prospects could be harmed. Our licensor may also seek to terminate our license.

We are a party to a number of licenses that give us rights to third-party intellectual property that is necessary or useful to our business. Our success will depend in part on the ability of our licensors to obtain, maintain and enforce our licensed intellectual property. Our licensors may not successfully prosecute the applications for intellectual property to which we have licenses. Even if patents or other intellectual property registrations issue in respect of these applications, our licensors may fail to maintain these patents or intellectual property registrations, may determine not to pursue litigation against other companies that are infringing these patents or intellectual property registrations, or may pursue such litigation less aggressively than we would. Without protection for the intellectual property we license, other companies might be able to offer substantially identical products or services for sale, which could adversely affect our competitive business position and harm our business prospects.

One or more of our licensors may allege that we have breached our license agreement with them and accordingly seek to terminate our license. If successful, this could result in our loss of the right to use the licensed intellectual property, which could adversely affect our ability to commercialize our technologies, products or services, as well as harm our competitive business position and our business prospects.

We rely on trade secrets and other forms of non-patent intellectual property protection. If we are unable to protect our trade secrets, other companies may be able to compete more effectively against us.

We rely on trade secrets, know-how and technology, which are not protected by patents, to maintain our competitive position. Our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our commercial partners, collaborators, employees and consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. If any of our trade secrets, know-how or other technologies not protected by a patent were to be disclosed to or independently developed by a competitor, our business, financial condition and results of operations could be materially adversely affected.

We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

Some of our employees may have been previously employed by other companies, including our competitors or potential competitors. As such, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. If we fail in defending such claims, in addition to paying money claims, we may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent our ability to commercialize certain products or services, which would adversely affect our business.

We may be exposed to liability under non-solicitation agreements to which one or more of our employees may be a party with certain of our competitors.

From time to time, we may hire employees who may be parties to non-solicitation or non-competition agreements with one or more of our competitors. Although we expect that all such employees will comply with the terms of their non-solicitation agreements, it is possible that if customers of our competitors chose to move their business to us, or employees of a competitor seek employment with us, even without any action on the part of any employee bound by any such agreement, one or more of our competitors may chose to bring a claim against us and our employee.

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 each of the years ended March 31, 2009 and 2008, 13% of our total revenue was generated in countries outside of the United States, respectively. 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.

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.

On June 30, 2009, our 9% Senior Convertible Notes and 0.5% Series B Senior Subordinated Convertible Notes, with an aggregate face value of $33.1 million, mature and become due. We may not have sufficient liquidity to satisfy these repayment obligations and remain in compliance with the covenants set forth in our senior credit facilities which prohibit us from having cash and cash equivalents less than $10.0 million at any time. A default could result in acceleration of our indebtedness. If this occurs, our business and financial condition would be adversely affected. Furthermore, even if we are able to satisfy these obligations, after these repayments are made, we may have insufficent liquidity to implement our business plan. 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.

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.”

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

Our common stock trades 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 key man 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 facilities in those domestic and international locations where we believe there is significant demand for our services and to expand our facilities in those locations we currently own such as Culpeper, Virginia, where we have the capacity to construct 4 additional pods, each yielding 50,000 square feet of net colocation space, and Santa Clara, California, where we have the capacity to construct an additional 50,000 square feet of net colocation space. 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.

If the world-wide financial crisis and the ongoing economic recession continues or intensifies, our ability to meet long-term commitments and our ability to grow our business would be adversely affected; this could adversely affect our results of operations, cash flows and financial condition.

The global economy is currently experiencing a significant contraction, with an almost unprecedented lack of availability of business and consumer credit. We rely on the capital markets, particularly for publicly offered debt, as well as the credit markets, to meet our financial commitments and short-term liquidity needs if internal funds are not available from our operations. Long-term disruptions in the capital and credit markets, similar to those that are currently being experienced, could result from uncertainty, changing or increased regulation, reduced alternatives or failures of significant financial institutions and could adversely affect our access to liquidity needed for our business. Any disruption could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged. Such measures could include deferring capital expenditures and reducing or eliminating discretionary uses of cash.

Besides our cash on hand and any financing activities we may purse, customer collections are our primary source of cash. While we believe we have a strong customer base and have experienced strong collections in the past, if the current market conditions continue to deteriorate we may experience increased churn in our customer base, including reductions in their commitments to us, which could also have a material adverse effect on our liquidity, results of operation and financial position.

If the ongoing economic recession continues or worsens or if markets continue to be disrupted, there may be lower demand for our services and increased incidence of customers’ inability to pay their accounts. Further, bankruptcies or similar events by customers may cause us to incur bad debt expense at levels higher than historically experienced. These events would adversely impact our results of operations, cash flows and financial position.

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 $1.85 per share to $7.67 per share during the 52-week trading period ending March 31, 2009). 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, 2009, there were approximately 59.7 million shares of our common stock outstanding and approximately 14.2 million shares of our common stock reserved for issuance pursuant to our 9% Senior Convertible Notes, 6.625% Senior 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;

	•	491,400 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;

	•	2,209,887 shares of our common stock issuable upon exercise of options;

	•	1,489,630 shares of our nonvested stock; and

	•	2,030,328 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, 2009, we had 59,740,750 common shares outstanding. While our common shares trade on the NASDAQ, our stock is thinly traded (approximately 0.3%, or 205,353 shares, of our stock traded on an average daily basis during the year ended March 31, 2009) 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.

PART III


ITEM 10.	*DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.*

Our executive officers and directors and their ages as of March 31, 2009, are as follows:


Name	Age		Principal Position

Manuel D. Medina		56	Chairman of the Board, President and Chief Executive Officer
Joseph R. Wright, Jr.		70	Vice Chairman of the Board
Guillermo Amore		70	Director
Timothy Elwes		73	Director
Antonio S. Fernandez		69	Director
Arthur L. Money		69	Director
Marvin S. Rosen		68	Director
Miguel J. Rosenfeld		59	Director
Rodolfo A. Ruiz		60	Director
Jamie Dos Santos		47	Chief Executive Officer Terremark Federal Group
Jose A. Segrera		38	Chief Financial Officer
Marvin Wheeler		55	Chief Operations Officer
Adam T. Smith		37	Chief Legal Officer

Manuel D. Medina, 56, has served as Chairman of the Board, President and Chief Executive Officer since April 2000, the date that we merged with AmTec, as well as in those positions with Terremark since its founding in 1982. In addition, Mr. Medina is a managing partner of Communication Investors Group, one of our investors. Before founding Terremark as an independent financial and real estate consulting company, Mr. Medina, a certified public accountant, worked with Price Waterhouse after earning a Bachelor of Science degree in Accounting from Florida Atlantic University in 1974.

Joseph R. Wright, Jr., 70, has served as our Vice Chairman of the Board since April 2000. On January 1, 2009, he became Chief Executive Officer of Scientific Games, of which he has been a member of the board since 2004 and on which he serves as Vice Chairman. Prior to his tenure as Chief Executive Officer of Scientific Games, Mr. Wright served as Chairman of Intelsat, the world’s leading provider of satellite/fiber services with a global fleet of 53 satellites servicing over 200 countries from July 2006 to April 2008 and, prior to this position, from August 2001 to July 2006, served as Chief Executive Officer 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 information technology, Internet and software technologies to government and commercial customers, which was sold to 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 Executive Vice President, 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, Performance Measurement Advisory Council of the Office of Management and Budget (The White House), the Network Reliability and Interoperability Council of the Federal Communications Commission, the Media Security and Reliability Council of the Federal Communications Commission, the Council on Foreign Relations, the Committee for the Responsible Federal Budget and the New York Economic Club.

Guillermo Amore, 70, 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 42 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.

Timothy Elwes, 73, 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 an independent financial services consultant.

Antonio S. Fernandez, 69, was elected to our Board of 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 Bachelors in Business Administration.

Arthur L. Money, 69, 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.

Marvin S. Rosen, 68, 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. Since 2004, Mr. Rosen has been a Managing Partner at Diamond Edge Capital Partners, L.L.C. 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 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.

Miguel J. Rosenfeld, 59, 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, 60, 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 1979 to 2003, Mr. Ruiz held a series of senior management positions within the Bacardi organization, inclusive of having served as President and Chief Executive Officer of Bacardi Global Brands, President and Chief Executive Officer 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, 47, has served as our CEO of Terremark Federal Group since July 2005. Ms. Dos Santos is responsible for the planning, development and execution of our federal government sales, marketing and operations strategy. Ms. Dos Santos manages all aspects of our federal government relationships, including with the Department of Defense, Civilian Agencies and the federal systems integrators. From March 2003 to July 2005, Ms. Dos Santos served as our Chief Marketing Officer, in which capacity she was responsible for the development of strategic marketing initiatives and commercial sales strategies that contributed to the company’s sustained growth. From April 2001 to March 2003, Ms. Dos Santos served as our Senior Vice President Global Sales. Prior to joining Terremark, Ms. Dos Santos enjoyed a career of 25 years with several global companies including BellSouth, Bellcore and SAIC. Ms. Dos Santos sits on the AFCEA Intelligence Committee and serves on the AFCEA Board of Directors as a Class Director, Class of 2011. She also sits on the Information Technology Sector Coordinating Council for the US protection of Critical Information Infrastructure. She is a top 100 executive with the Executive Leadership Council and Vice President of the South Florida AFCEA chapter. Ms. Dos Santos’ educational background includes eight years in the Bellcore Training Center, the University of Florida and Harvard Business School for Continuing Education.

Jose A. Segrera, 38, 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, 55, 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, 37, 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.

CORPORATE GOVERNANCE

Our business and affairs are managed under the direction of our board of directors, except with respect to those matters reserved to our stockholders. Our board of directors establishes our overall corporate policies, reviews the performance of our senior management in executing our business strategy and managing our day-to-day operations, acts as an advisor to our senior management and reviews our long-term strategic plans. Our board’s mission is to further the long-term interests of our stockholders. Members of our board of directors are kept informed of our business through discussions with our management, primarily at meetings of the board of directors and its committees, and through reports and analyses presented to them. Additionally, in the performance of their

respective duties, the board and each of its three standing committees — audit, compensation and nominating and corporate governance — has the authority to retain, at our expense, outside counsel, consultants or other advisors.

Our directors hold office until the expiration of their respective terms or until their successors have been duly elected and qualified. Our officers are elected annually by our board of directors and serve at the discretion of the board.

Code of Business Conduct and Ethics

We maintain a Code of Business Conduct and Ethics that is applicable to all employees and directors. Additionally, we maintain a Code of Ethics that is applicable to our Chief Executive Officer and Senior Financial Officers. These codes require continued observance of high ethical standards, including, but not limited to, honesty, integrity and compliance with the law. The Code of Ethics for our Chief Executive Officer and Senior Financial Officers is publicly available on our website at www.terremark.com under “Investor Relations”. Additionally, amendments to or waivers from our Code of Ethics are also available on our website at the foregoing address. Violations under either code of conduct must be reported to the Audit Committee. Each of the foregoing codes of ethics and conduct may be obtained in printed form and without charge by writing to the Vice President of Investor Relations at Terremark Worldwide, Inc., 2 South Biscayne Blvd., Suite 2800, Miami, Florida 33131. The reference to our website address does not constitute incorporation by reference of the information contained on the website and should not be considered part of this report.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires that our directors, executive officers and persons who beneficially own more than 10 percent of our outstanding common stock (together, “Reporting Persons”) file with the Securities and Exchange Commission (the “SEC”) initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Under the rules and regulations promulgated by the SEC under the Exchange Act, the Reporting Persons are required to furnish to us copies of all Section 16(a) forms they file.

To management’s knowledge, based solely upon management’s review of the copies of those reports furnished to us by the Reporting Persons and representations by such persons that no other reports were required, during the fiscal year ended March 31, 2009, the Reporting Persons satisfied all of their respective Section 16(a) filing requirements.

Communications Between Stockholders and the Board

Stockholders or other interested parties wishing to communicate with our board of directors should submit any communications in writing to the Board of Directors at Terremark Worldwide, Inc., 2 South Biscayne Blvd., Suite 2800, Miami, Florida 33131. If a stockholder would like the letter to be forwarded directly to the Chairman of the Board or to one of the Chairmen of the board’s three standing committees (Audit, Nominating and Corporate Governance or Compensation), he or she should so indicate. If no specific direction is indicated, the Secretary will review the letter and forward it to the appropriate member of our board of directors.

Stockholder Recommendation of Nominees to Our Board of Directors.

Any of our stockholders wishing to recommend one or more nominees for election to the board of directors may send such recommendation to Mr. Joseph R. Wright, Jr., Chairman of the Nominating and Corporate Governance Committee, at our address set forth above. For our fiscal year ended March 31, 2009, there have been no material changes to the procedures by which our stockholders may recommend nominees to our board of directors.

Audit Committee

Our board of directors has a standing audit committee established in accordance with section 3(a)(58)(A) of the Exchange Act. Our Audit Committee consists of Antonio S. Fernandez, Miguel J. Rosenfeld and Rodolfo A. Ruiz.

The board of directors has determined that each of Messrs. Fernandez and Ruiz is an “audit committee financial expert” within the meaning of Item 407(d)(5)(ii) of Regulation S-K. All members of our Audit Committee are, and will continue to be, “independent” under the listing standards of the NASDAQ Global Market.


ITEM 11.	*EXECUTIVE COMPENSATION.*

Compensation Discussion and Analysis

The following Compensation Discussion and Analysis describes the material elements of compensation for our executive officers identified in the Summary Compensation Table (“Named Executive Officers”). As more fully described below, the Compensation Committee of our Board of Directors (the “Committee”) makes all decisions for the total direct compensation — that is, the base salary, incentive compensation awards and equity incentive awards — of our executive officers, including the Named Executive Officers.

Our Human Resources, Finance and Legal Department employees handle the general day-to-day design and administration of savings, health, welfare and paid time-off plans and policies applicable to salaried U.S.-based employees. The Committee (or Board) is responsible for certain fundamental changes outside the day-to-day requirements necessary to maintain these plans and policies with regard to our Named Executive Officers.

Compensation Program Objectives and Rewards

Our compensation philosophy is based on the premise of attracting, retaining and motivating exceptional leaders, setting high goals, working toward the common objectives of meeting the expectations of customers and stockholders, and rewarding outstanding performance. Following this philosophy, in determining executive compensation, we consider all relevant factors, such as the competition for talent, our desire to link pay with performance, the use of equity to align executive interests with those of our stockholders, individual contributions, teamwork and performance, each executive’s total compensation package, and internal pay equity. We strive to accomplish these objectives by compensating all executives with total compensation packages consisting of a combination of competitive base salary, incentive compensation and equity. When referring to our executive compensation program, we are referring to the compensation program for our Named Executive Officers.

The primary purpose of the compensation and benefits described below is to attract, retain and motivate highly talented individuals who will engage in the behaviors necessary to enable us to succeed in our mission while upholding our values in a highly competitive marketplace. Different elements are designed to engender different behaviors, and the actual incentive amounts awarded to each Named Executive Officer are subject to the annual review of the Committee. The following is a brief description of the key elements of our executive compensation structure.


	•	Base salary and benefits are designed to attract and retain employees over time.

	•	Incentive compensation awards are designed to focus employees on the business objectives for a particular year.

	•	Equity incentive awards, such as stock options and nonvested stock, focus executives’ efforts on the behaviors within the recipients’ control that they believe are designed to ensure our long-term success as reflected in increases to our stock prices over a period of several years, growth in our profitability and other elements.

	•	Severance and change in control plans are designed to facilitate our ability to attract and retain executives as we compete for talented employees in a marketplace where such protections are commonly offered. The separation benefits described below provide benefits to ease an employee’s transition due to an unexpected employment termination by us due to on-going changes in our employment needs. The change in control separation benefits described below encourages our employees to remain focused on our business in the event of rumored or actual fundamental corporate changes.

Benchmarking

When making compensation decisions, the Committee compares each element of compensation paid to our Named Executive Officers against a report showing comparable compensation metrics from a group that includes both publicly-traded and privately-held companies. The Committee believes that while such peer group benchmarks are a point of reference for measurement, they are not necessarily a determining factor in setting executive compensation as each executive officer’s compensation relative to the benchmark varies based on scope of responsibility and time in the position. In determining base salary and incentive compensation, the Committee generally uses a level equal to the second quartile as compared to the peer group.

Our peer group is composed of the following companies, which we refer to as the “Peer Companies”:


Digital River, Inc. Equinix, Inc. Internap Network Services Corporation NaviSite, Inc. Online Resources Corporation		SonicWALL, Inc. Syntel, Inc. Switch & Data Facilities Company, Inc. Tier Technologies, Inc.

The Elements of Terremark’s Compensation Program

Base Salary

Executive officer base salaries are based on job responsibilities and individual contribution. The Committee reviews the base salaries of our executive officers, including our Named Executive Officers, considering factors such as corporate progress toward achieving objectives (without reference to any specific performance-related targets) and individual performance experience and expertise. All of our Named Executive Officers have employment agreements with us that set their initial base salaries, and these agreements generally renew on an annual basis. Additional factors reviewed by the Committee in determining appropriate base salary levels and raises include subjective factors related to corporate and individual performance. For the year ended March 31, 2009, all executive officer base salary decisions were approved by the Committee.

The Committee determines base salaries for the Named Executive Officers at the beginning of each fiscal year, and the Committee proposes new base salary amounts, if appropriate, based on its:


	•	evaluation of individual performance and expected future contributions;

	•	review of survey data to ensure competitive compensation against the external market generally defined as the Peer Companies, where generally base salaries were in the second quartile as compared to the Peer Companies; and

	•	comparison of the base salaries of the executive officers who report directly to the Chief Executive Officer to ensure internal equity.

Base salary is the only element of compensation that is used in determining the amount of contributions permitted under our 401(k) Plan.

Incentive Compensation Awards

Amounts shown as Non-Equity Incentive Plan Compensation in the Summary Compensation Table are driven by the following performance goals:


	•	Revenues; and

	•	Earnings before interest, taxes, depreciation and amortization, as adjusted (“EBITDA, as adjusted”)

We believe that evaluating our ongoing operating results may be difficult if limited to reviewing only financial measures under generally accepted accounting principles (“GAAP”). Accordingly, we use non-GAAP financial measures, such as EBITDA, as adjusted. By using these non-GAAP financial measures, we exclude certain items that we believe are not indicative of our current or future operating performance. These items are depreciation,

amortization, integration expenses, litigation settlement and share-based payments, including share-settled liabilities.

During fiscal year 2009, the Committee approved certain performance goals and target bonus amounts for our Named Executive Officers, excluding Jamie Dos Santos, whose incentive compensation of $329,055 for the year ended March 31, 2009 was based on certain commission arrangements she has with us. We pay incentive compensation awards in cash, stock or a combination thereof at the sole discretion of the Committee. Under the terms of this incentive compensation program, each Named Executive Officer has been assigned the same annual performance target. We have determined each Named Executive Officer’s annual bonus based upon our performance as compared to the benchmark goals (the “Performance Targets”) that were approved by the Committee, and bonus amounts are prorated to the extent our performance falls between the Performance Target levels indicated in the below chart. For the year ended March 31, 2009, the Performance Targets were as follows:


	Actual Results vs Applicable Performance Target*
				0%
Performance Measure	Weighted			(No Bonus)		50% to 100%		100%

Revenues		25	%	Less than $	250.0	$	250.0	$	255.0
EBITDA, as adjusted		75	%	Less than $	56.0	$	56.0	$	58.0


*		Amounts in millions.

The following table presents information regarding the target bonus and the actual bonus paid to each of our Named Executive Officers for the year ended March 31, 2009:


								Target Goals Based
								on Actual Results (%)						Target Adjusted
	Annual Base		Target			Target					EBITDA			for Actual
Named Executive Officer	Salary($)		(%)			($)		Revenues			as Adjusted			Results ($)

Manuel D. Medina		425,000		100	%		425,000		14.0	%		75.0	%		378,250
Jose A. Segrera		275,000		40	%		110,000		5.6	%		30.0	%		97,900
Jamie Dos Santos		250,000		—			—		—			—			—
Marvin Wheeler		275,000		40	%		110,000		5.6	%		30.0	%		97,900
Adam T. Smith		250,000		40	%		100,000		5.6	%		30.0	%		89,000

As shown on the schedule above, the Committee determined that we achieved between 50% and 100% of our Performance Target for revenues and over 100% of our Performance Target for EBITDA, as adjusted. On May 22, 2009, the Committee determined that the earned incentive compensation awards would be paid in shares of our common stock, calculated using the closing price of our common stock on such date, which was $4.47 per share. The Committee believes that the incentive awards paid to the Named Executive Officers for the year ended March 31, 2009, in aggregate, are consistent with their level of accomplishment and appropriately reflected our performance.

Equity Incentive Awards

We believe that the grant of significant annual equity awards further links the interests of senior management and our stockholders. Therefore, we believe that the grant of stock options and the awarding of nonvested stock are important components of annual compensation. Our executive officers, including each of the Named Executive Officers, are eligible to receive awards under the Terremark Worldwide, Inc. 2005 Executive Incentive Compensation Plan (the “Plan”). The Committee considers several factors in determining whether awards are granted to an executive officer under the Plan. In addition to the factors referenced above regarding an executive officer’s overall compensation, factors include the executive’s position, his or her performance and responsibilities, the amount of options or other awards, if any, currently held by the officer, and their vesting schedule.

Stock options provide the potential for financial gain if our common stock appreciates between the date the option is granted and the date on which the option is exercised. The Committee sets the per share exercise price of stock option grants at the fair market value of a share of our common stock on the grant date. We believe that our long-term performance determines the value of stock options because realizing a financial gain on the exercise of a

stock option award depends entirely on whether our stock price appreciates over time. Therefore, we believe option grants encourage executives and other employees to focus on behaviors and initiatives that should lead to an increase in the price of our common stock, which benefits all of our stockholders. Stock options grants generally become exercisable in equal installments on the first, second and third anniversaries of the grant date and expire ten years from the grant date.

For the Named Executive Officers, we award nonvested, or restricted, stock, which vests over time. Unlike a stock option, restricted stock need not increase in value over time in order for the recipient to obtain a financial benefit, but such awards may decrease in value if our stock price declines. Additionally, because restricted stock awards are subject to vesting requirements, the award recipient must remain employed with us for the entirety of the vesting period, generally one to three years, in order to realize the full value of the shares. Because restricted stock generally has a greater value on the date of grant than does the same number of stock options, we generally issue fewer shares of restricted stock as compared to an option grant, which reduces potential dilution for our stockholders.

No Backdating or Spring Loading: Our policy prohibits backdating options or granting options retroactively. In addition, we do not plan to coordinate grants of options so that they are made before our announcement of favorable information or after our announcement of unfavorable information. Our options are granted at fair market value on a fixed date or event (such as an employee’s hire date) with all required approvals obtained on or prior to the grant date. All grants to executive officers require the approval of the Committee. Our general practice is to grant restricted stock on the annual grant award date and on an employee’s hire date, although there are occasions when grants have been made on other dates.

Stock Ownership Guidelines

We grant share-based incentives in order to align the interests of our employees with those of our stockholders. Stock option awards and unvested restricted stock grants are not transferable during the executive’s life, except for certain gifts to family members (or trusts, partnerships, etc. that benefit family members).

Benefits

The Named Executive Officers participate in a variety of retirement, health and welfare and vacation benefits designed to enable us to attract and retain our Named Executive Officers in a competitive marketplace. Health and welfare and vacation benefits help ensure that we have a productive, healthy and focused workforce. Savings plans help employees, especially long-service employees, save and prepare financially for retirement.

Our qualified 401(k) Plan allows all full-time employees to contribute up to 15 percent of their base salary, up to the limits imposed by the Internal Revenue Code. Our 401(k) plan provides for discretionary matching of employee contributions. For the first seven months of the year ended March 31, 2009, we provided a 50 percent match on the first 6 percent of employee contributions, which vests over two years. Participants choose to invest their account balances from an array of investment options as selected by plan fiduciaries from time to time, plus an employer stock fund. The 401(k) Plan is designed to provide for distributions in a lump sum after termination of service. However, loans — and in-service distributions under certain circumstances such as a hardship, attainment of age 591/2 or a disability — are permitted.

Perquisites

Perquisites that we provide to our Named Executive Officers have a business purpose or are otherwise provided for our convenience. We do not provide perquisites to our Named Executive Officers that impart only direct or indirect personal benefits, unless such perquisities are generally available on a non-discriminatory basis to all of our employees. An item is not a perquisite if it is integrally and directly related to the performance of the Named Executive Officer’s duties.

Separation and Change in Control Arrangements

The Named Executive Officers, in accordance with the terms of their respective employment agreements, are eligible for the benefits and payments if their employment terminates in a separation or if there is a change in control, as described under Potential Payments on Termination or Change in Control beginning on page 37. We generally define separation as a termination of employment either by the employee for good reason or by us without cause or, in the case Manuel D. Medina, our Chief Executive Officer, within the context of a change in control, termination of employment by us without cause or by Mr. Medina for any reason. The different treatment in Mr. Medina’s case is a result of his unique status as the founder and sole Chief Executive, President and Chairman in our history and the likelihood that Mr. Medina would not receive a comparable role in any company resulting from a change in control transaction.

Separation Benefits.

Individual employment agreements provide severance payments and other benefits in an amount we believe is appropriate, taking into account the time it is expected to take a separated employee to find another job. The payments and other benefits are provided because we consider a separation to be a Company-initiated termination of employment that under different circumstances would not have occurred and which is beyond the control of a separated employee. Separation benefits are intended to ease the consequences to an employee of an unexpected termination of employment. We benefit by requiring a general release from separated employees. In addition, we generally include non-compete and non-solicitation provisions in individual separation agreements.

We consider it likely that it will take more time for higher-level employees to find new employment, and therefore executive officers generally are paid severance for a longer period. Additional payments may be permitted in some circumstances as a result of negotiations with executive officers, especially where we desire particular nondisparagement, cooperation with litigation, noncompetition and nonsolicitation terms which have the potential to significantly hinder the executive’s ability to procure alternative employment. See Individual Agreements under the Potential Payments on Termination or Change in Control beginning on page 37 for additional information.

Change in Control. Individual employment agreements generally provide for compensation and benefits if there is a change in control. These agreements recognize the importance to us and our stockholders of avoiding the distraction and loss of key management personnel that may occur in connection with rumored or actual fundamental corporate changes. A properly designed change in control agreement protects stockholder interests by enhancing employee focus during rumored or actual change in control activity through:


	•	incentives to remain with us despite uncertainties while a transaction is under consideration or pending;

	•	assurance of severance and benefits for terminated employees; and

	•	access to equity components of total compensation after a change in control.

Stock option awards and nonvested restricted stock generally vest upon a change in control. The remainder of benefits generally become payable upon a change in control followed by the termination of an executive’s employment. We were guided by three principles when we adopted the so-called “single” trigger treatment for equity vehicles, which provides for vesting upon a change of control regardless of whether a particular employee loses his or her job:


	•	Be consistent with current market practice among peers.

	•	Keep employees relatively whole for a reasonable period but avoid creating a “windfall.”


	•	Single trigger vesting ensures that ongoing employees are treated the same as terminated employees with respect to outstanding equity grants.

	•	Single trigger vesting provides employees with the same opportunities as stockholders, who are free to sell their equity at the time of the change in control event and thereby realize the value created at the time of the deal.


	•	The Company that made the original equity grant will no longer exist following a change in control, or may continue to exist under new management and/or stockholder control, and employees should not be required to have the fate of their outstanding equity tied to the future success of an entirely different company or the same company under the control of new persons.

	•	Single trigger vesting on performance-contingent equity, in particular, is appropriate given the difficulty of replicating the underlying performance goals.


	•	Support the compelling business need to retain key employees during uncertain times.


	•	A single trigger on equity vesting can be a powerful retention device during change in control discussions, especially for more senior executive officers where equity represents a significant portion of their total pay package.

	•	A double trigger on equity provides no certainty of what will happen when the transaction closes.

Compensation Committee Interlocks and Insider Participation

For the year ended March 31, 2009, our Compensation Committee was composed of Messrs. Rosenfeld, Fernandez and Ruiz. No member of our Compensation Committee was an officer, employee or former officer of ours or any of our subsidiaries or had any relationship that would be considered a compensation committee interlock and would require disclosure in this Amendment No. 1 on Form 10-K/A.

Compensation Committee Report

The Committee, composed of independent directors, reviewed and discussed the above Compensation Discussion and Analysis (“CD&A”) with our management. Based on the review and discussion, the Compensation Committee recommended to our Board of Directors that the CD&A be included in this Amendment No. 1 on Form 10-K/A.

Miguel J. Rosenfeld

(Chairperson)

Antonio S. Fernandez Rodolfo A. Ruiz

The following table summarizes the compensation of the Named Executive Officers for the fiscal year ended March 31, 2009. The Named Executive Officers are our Chief Executive Officer, Chief Financial Officer and our three other most highly compensated executive officers ranked by their total compensation in the table below.

Summary Compensation Table
for Fiscal Year Ended March 31,
2009


													Change in
													Pension
													Value and
													Nonqualified
											Non-Equity		Deferred
							Stock		Option		Incentive Plan		Compensation		All Other
	Fiscal		Salary		Bonus		Awards		Awards		Compensation		Earnings		Compensation		Total
Name and Principal Position	Year		($)(1)		($)		($)(2)		($)(3)		($)(4)		($)		($)(5)		($)

Manuel D. Medina		2009		425,000		—		382,699		242,539		378,250		—		13,675		1,442,163
Chairman and Chief Executive Officer
Jose A. Segrera		2009		269,615		—		175,010		121,270		97,900		—		19,333		683,128
Executive Vice President and Chief Financial Officer
Jamie Dos Santos		2009		579,055		—		17,081		—		—		—		21,885		618,021
President, Terremark Federal Group
Marvin Wheeler		2009		269,615		—		155,030		121,270		97,900		—		24,504		668,319
Chief Operations Officer
Adam T. Smith		2009		246,154		—		103,972		80,846		89,000		—		23,035		543,007
Chief Legal Officer


(1)		Amount for Ms. Dos Santos includes sales commissions of $329,055.

(2)		Represents the compensation costs of nonvested stock for financial reporting purposes in accordance with FAS 123(R), rather than an amount paid to or realized by the Named Executive Officer. See Note 15. “Share-Based Compensation” to our consolidated financial statements set forth in our Form 10-K for the year ended March 31, 2009 for the assumptions made in determining FAS 123(R) values. The FAS 123(R) value as of the grant date for nonvested stock is recognized ratably over the applicable vesting period. There can be no assurance that the FAS 123(R) amounts will ever be realized.

(3)		Represents the compensation costs of stock options for financial reporting purposes for the year under FAS 123(R), rather than an amount paid to or realized by the Named Executive Officer. See Note 15. “Share-Based Compensation” to our consolidated financial statements set forth in our Form 10-K for the year ended March 31, 2009 for the assumptions made in determining FAS 123(R) values. The FAS 123(R) value as of the grant date for options is recognized ratably over the applicable vesting period. There can be no assurance that the FAS 123(R) amounts will ever be realized.

(4)		These amounts relate to the compensation cost of the incentive compensation awards earned but not paid during the year ended March 31, 2009. The awards are payable in cash or nonvested stock at the discretion of the Committee. On May 22, 2009, the Committee determined that the earned incentive compensation awards will be paid in shares of our common stock.

(5)		See All Other Compensation chart below for amounts, which include insurance and our match on employee contributions to our 401(k) plan.

All Other Compensation for the Fiscal Year Ended March 31, 2009


			401(K) Plan
			Company
Named Executive Officer	Insurance(1)($)		Match ($)		Total($)

Manuel D. Medina		8,752		4,923		13,675
Jose A. Segrera		19,333		—		19,333
Jamie Dos Santos		19,968		1,917		21,885
Marvin Wheeler		21,227		3,277		24,504
Adam T. Smith		19,016		4,019		23,035


(1)		Insurance amounts include payments for medical, dental, vision, life and long-term disability.

The following table provides information on the grants of plan-based awards for the fiscal year ended March, 31 2009 to each of our Named Executive Officers. There can be no assurance that the grant date fair value of nonvested stock awards will ever be realized. The amount of these awards that was earned and expensed in the year ended March 31, 2009 is shown in the Summary Compensation Table on page 34.

Grants of Plan-Based Awards
For the Fiscal Year Ended
March 31, 2009


											All
											Other
											Stock
									Estimated		Awards:									Grant
									Future		Number			All Other						Date
									Payouts		of			Option		Exercise				Fair
			Estimated Future						Under		Shares			Awards:		or Base				Value
			Payouts Under						Equity		of			Number of		Price of		Closing		of Stock
			Non-Equity Incentive						Incentive		Stock			Securities		Option		Price on		and
			Plan Awards (1)						Plan		or			Underlying		Awards		Grant		Option
	Grant		Threshold		Target		Maximum		Target		Units (#)			Options (#)		($)		Date		Awards ($)
Name(a)	Date(b)		($)(c)		($)(d)		($)(e)		(#)(f)		(g)			(h)		(i)		($)(j)		(k)(4)

Manuel D. Medina		—		340,000		425,000		510,000		—		—			—		—		—		—
		5/16/2008		—		—		—		—		75,000	(2)		—		—		5.92		444,000
		5/16/2008		—		—		—		—		7,500	(3)		—		—		5.92		44,400
Jose A. Segrera		—		82,500		110,000		137,500		—		—			—		—		—		—
		5/16/2008		—		—		—		—		50,000	(2)		—		—		5.92		296,000
Jamie Dos Santos		5/16/2008		—		—		—		—		10,000	(2)		—		—		5.92		59,200
Marvin Wheeler		—		82,500		110,000		137,500		—		—			—		—		—		—
		5/16/2008		—		—		—		—		50,000	(2)		—		—		5.92		296,000
Adam T. Smith		—		75,000		100,000		125,000		—		—			—		—		—		—
		5/16/2008		—		—		—		—		50,000	(2)		—		—		5.92		296,000


(1)		These amounts relate to the incentive compensation awards for the fiscal year ended March 31, 2009. The awards are earned by us reaching certain performance targets which are based on revenues and EBITDA, as adjusted. The awards are payable in cash or stock at the discretion of the Committee. On May 22, 2009, the Committee determined that the earned incentive compensation awards will be paid in stock.

(2)		These nonvested stock awards will vest over three years in three equal installments on the anniversary of their grant date.

(3)		The stock award vested on May 16, 2009.

(4)		Represents the fair value of the nonvested stock award in accordance with FAS 123(R), rather than an amount paid to or realized by the Named Executive Officer. The FAS 123(R) value as of the grant date for nonvested stock is recognized ratably over the applicable vesting period for financial reporting purposes. There can be no assurance that the FAS 123(R) amounts will ever be realized. The fair value of these awards is based on the closing price of our common stock on the grant date multiplied by the number of shares granted.

The following table shows the number of shares covered by exercisable and unexercisable options and nonvested stock held by our Named Executive Officers on March 31, 2009.

Outstanding Equity Awards
at Fiscal Year End
March 31, 2009


	Option Awards										Stock Awards

																		Equity
																Equity		Incentive
																Incentive		Plan
																Plan		Awards:
														Market		Awards:		Market or
														Value		Number of		Payout of
					Equity						Number			of		Unearned		Unearned
					Incentive						of			Shares or		Shares,		Shares,
					Plan						Shares			Units of		Units		Units
	Number of		Number of		Awards:						or			Stock		or Other		or Other
	Securities		Securities		Number of						Units			that		Rights		Rights
	Underlying		Underlying		Securities						that			have		that		that
	Unexercised		Options		Underlying		Option				have			not		have		have
	Options (#)		(#)		Unexercised		Exercise		Option		not			Vested		not		not
	Exercisable		Unexercisable		Unearned		Price		Expiration		Vested			($)(h)		Vested		Vested
Name(a)	(b)(1)		(c)(2)		Options(#)(d)		($)(e)(3)		Date(f)		(#)(g)			(7)		(#)(i)		($)(j)

Manuel D. Medina		10,000		—		—		31.88		9/21/2010		—			—		—		—
		10,000		—		—		6.70		10/18/2011		—			—		—		—
		11,500		—		—		6.00		10/18/2014		—			—		—		—
		10,000		—		—		6.30		1/21/2015		—			—		—		—
		100,000		50,000		—		5.57		11/27/2016		—			—		—		—
		—		—		—		—		—		25,000	(4)		67,250		—		—
		—		—		—		—		—		75,000	(5)		201,750		—		—
		—		—		—		—		—		7,500	(6)		20,175		—		—
Jose A. Segrera		10,000		—		—		33.13		8/31/2010		—			—		—		—
		5,000		—		—		15.00		1/15/2011		—			—		—		—
		20,000		—		—		6.70		10/18/2011		—			—		—		—
		10,000		—		—		5.10		4/1/2012		—			—		—		—
		10,000		—		—		3.30		3/31/2013		—			—		—		—
		10,000		—		—		6.50		7/9/2014		—			—		—		—
		10,000		—		—		6.74		7/14/2015		—			—		—		—
		50,000		25,000		—		5.57		11/27/2016		—			—		—		—
		—		—		—		—		—		12,500	(4)		33,625		—		—
		—		—		—		—		—		50,000	(5)		134,500		—		—
Jamie Dos Santos		15,000		—		—		15.00		3/7/2011		—			—		—		—
		20,000		—		—		6.70		10/18/2011		—			—		—		—
		27,500		—		—		5.10		4/1/2012		—			—		—		—
		20,000		—		—		3.30		4/1/2013		—			—		—		—
		10,000		—		—		6.50		7/9/2014		—			—		—		—
		10,000		—		—		6.74		7/14/2015		—			—		—		—
		—		—		—		—		—		10,000	(5)		26,900		—		—
Marvin Wheeler		5,000		—		—		14.00		3/13/2011		—			—		—		—
		500		—		—		7.80		8/17/2011		—			—		—		—
		10,000		—		—		6.70		10/18/2011		—			—		—		—
		10,000		—		—		5.10		4/1/2012		—			—		—		—
		20,000		—		—		3.30		3/31/2013		—			—		—		—
		10,000		—		—		6.50		7/9/2014		—			—		—		—
		10,000		—		—		6.74		7/14/2015		—			—		—		—
		50,000		25,000		—		5.57		11/27/2016		—			—		—		—
		—		—		—		—		—		12,500	(4)		33,625		—		—
		—		—		—		—		—		50,000	(5)		134,500		—		—
Adam T. Smith		5,000		—		—		7.80		2/2/2014		—			—		—		—
		3,000		—		—		6.74		7/14/2015		—			—		—		—
		33,333		16,667		—		5.57		11/27/2016		—			—		—		—
		—		—		—		—		—		3,334	(4)		8,968		—		—
		—		—		—		—		—		50,000	(5)		134,500		—		—


(1)		Options granted generally vest over three years and become exercisable on the first, second and third anniversary of their grant and expire on the date shown in column (f), which is the day of the tenth anniversary of their grant.

(2)		Options granted on November 27, 2006 expire on the date shown in column (f), which is the tenth anniversary of their grant with the remaining options vest on November 27, 2009.

(3)		Option exercise prices are based on the closing price of our common stock on the applicable grant date.

(4)		These stock awards will vest on November 27, 2009.

(5)		These nonvested stock awards were granted on May 16, 2008. The awards vest over three years in three equal installments on the anniversary of their grant date.

(6)		This stock award vested on May 16, 2009.

(7)		The market value of these nonvested stock grants is calculated using the closing price of our common stock on March 31, 2009, which was $2.69 per share.

Option Exercises and Stock Vested in the Fiscal Year Ended March 31, 2009

The table below presents information regarding the number and realized value of stock options exercised and stock awards that vested during the fiscal year ended March 31, 2009 for each of our Named Executive Officers.


	Option Awards				Stock Awards
	Number of				Number of
	Shares				Shares
	Acquired on		Value Realized		Acquired on		Value Realized
Name(a)	Exercise(b)		on Exercise ($)(c)		Vesting(b)		on Vesting ($) (c)(1)

Manuel D. Medina		—		—		30,000		112,250
Jose A. Segrera		—		—		12,500		45,375
Jamie Dos Santos		—		—		—		—
Marvin Wheeler		—		—		12,500		45,375
Adam T. Smith		—		—		3,333		12,099


(1)		The value realized on the vesting of stock awards is based on the closing price of our common stock on the vesting date multiplied by the number of shares acquired.

Potential Payments on Termination or Change in Control

The section below describes the payments that may be made to Named Executive Officers upon separation as defined below, pursuant to individual agreements or in connection with a change in control.

Separation

We provide separation pay and benefits to our Named Executive Officers pursuant to individual employment agreements. To be eligible for all of the benefits described below, a general release of claims against the Company, in the form determined by us, is required, as well as nondisparagement, cooperation with litigation and, in some cases, noncompetition and nonsolicitation agreements. These individual agreements may affect the amount paid or benefits provided following termination of employment under certain conditions as described below.

Manuel D. Medina: Mr. Medina, our Chairman, Chief Executive Officer and President, entered into a three-year employment agreement, effective as of January 1, 2008, that automatically renews for successive one-year terms until either party gives written notice of its intention not to renew. Under the agreement, Mr. Medina receives an initial annual base salary of $425,000, subject to increase. Additionally, upon satisfying certain metrics set forth by the Compensation Committee, Mr. Medina is entitled to receive an annual bonus ranging from 80% to 120% of his base salary. Pursuant to the terms of his agreement, Mr. Medina is prohibited from competing with the Company during the one year period immediately following the termination of his employment, unless we terminate Mr. Medina’s employment without cause or he terminates his employment for “good reason” as specified in the

employment agreement. If the Company terminates Mr. Medina’s employment without cause, or if Mr. Medina terminates his employment for good reason, then he is entitled to receive an amount equal to three times the sum of (A) his annual base salary as in effect immediately prior to the termination date and (B) his target bonus for the bonus period in which termination occurs. Additionally, Mr. Medina would be entitled to payment of all benefits accrued through the date of termination, his termination year bonus, vesting of all unvested equity awards and the continuation of certain other benefits for a one-year period commencing immediately following termination.

Jose A. Segrera: Mr. Segrera, our Executive Vice President and Chief Financial Officer, entered into a three-year agreement, effective June 13, 2008, that automatically renews for successive one-year terms until either party gives written notice of its intention not to renew. Under the agreement, Mr. Segrera receives an initial annual base salary of $275,000, subject to increase. Additionally, upon satisfying certain metrics set forth by the Committee, Mr. Segrera is entitled to receive an annual bonus ranging from 30% to 50% of his base salary. Pursuant to the terms of the agreement, Mr. Segrera is prohibited from competing with us during the one year period immediately following the termination of his employment, unless we terminate such employment without cause or Mr. Segrera terminates his employment for “good reason”. If we terminate Mr. Segrera’s employment without cause or he terminates his employment for good reason, then he 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 all benefits accrued through the date of termination, the termination year bonus and the continuation of certain other benefits for a one-year period commencing immediately following termination.

Jamie Dos Santos: Ms. Dos Santos, Chief Executive Officer of our wholly-owned subsidiary, Terremark Federal Group, entered into three year employment agreement, effective July 18, 2008 that automatically renews for successive one-year terms unless either party delivers written notice of its intention not to renew. Under the employment agreement, Ms. Dos Santos receives an initial annual base salary of $250,000, subject to increase, and certain payments made pursuant to sales commission arrangements she has in effect with the Company. Pursuant to the agreement, Ms. Dos Santos is prohibited from competing with us during the one-year period immediately following the termination of her employment, unless we terminate such employment without cause or Ms. Dos Santos terminates her employment for “good reason”. If we terminate Ms. Dos Santos’ employment without cause, or if Ms. Dos Santos terminates her employment for good reason, then she is entitled to receive an amount equal to two times 140% of her annual base salary as in effect immediately prior to the termination date. Additionally, she would be entitled to payment of all benefits accrued through the date of termination and the continuation of certain other benefits for a one-year period commencing immediately following termination.

Marvin Wheeler: Mr. Wheeler, our Chief Operations Officer, entered into a three-year employment agreement, effective June 13, 2008 that automatically renews for successive one-year terms until either party gives written notice of its intention not to renew. Under the agreement, Mr. Wheeler receives an initial annual base salary of $275,000, subject to increase. Additionally, upon satisfying certain metrics set forth by the Committee, Mr. Wheeler is entitled to receive an annual bonus ranging from 30% to 50% of his base salary. Pursuant to the terms of the agreement, Mr. Wheeler is prohibited from competing with us during the one year period immediately following the termination of his employment, unless we terminate such employment without cause or Mr. Wheeler terminates his employment for “good reason”. If we terminate Mr. Wheeler’s employment without cause or he terminates his employment for good reason, then he 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 all benefits accrued through the date of termination, the termination year bonus and the continuation of certain other benefits for a one-year period commencing immediately following termination.

Adam T. Smith: Mr. Smith, our Chief Legal Officer, entered into a three-year employment agreement, effective June 13, 2008 that automatically renews for successive one-year terms until either party gives written notice of its intention not to renew. Under the agreement, Mr. Smith receives an initial annual base salary of $250,000, subject to increase. Additionally, upon satisfying certain metrics set forth by the Committee, Mr. Smith is entitled to receive an annual bonus ranging from 30% to 50% of his base salary. Pursuant to the terms of the agreement, Mr. Smith is prohibited from competing with us during the one year period immediately following the termination of his employment, unless we terminate such employment without cause or Mr. Smith terminates his

employment for “good reason”. If we terminate Mr. Smith’s employment without cause or Mr. Smith terminates his employment for good reason, then he 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 all benefits accrued through the date of termination, the termination year bonus and the continuation of certain other benefits for a one-year period commencing immediately following termination.

Under the employment agreements, a termination for “good reason” by the Named Executive Officers generally includes any of the following actions by us without the executive’s written consent:


	•	the assignment of the Named Executive Officer to duties inconsistent in any material respect with the Named Executive Officer’s position, or, in the case of Mr. Medina, the withdrawal of any authority granted to him under his employment agreement;

	•	any failure by us to compensate the Named Executive Officer as required under the employment agreement;

	•	our requirement that the Named Executive Officer be based at any office or location outside of Miami, Florida, except for travel reasonably required in the performance of the Named Executive Officer’s responsibilities; or

	•	the Named Executive Officer is requested by us to engage in conduct that is reasonably likely to result in a violation of law.

Under the employment agreements, a termination by us for cause generally includes:


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

	•	willful misconduct or gross negligence by the Named Executive Officer resulting, in either case, in material economic harm to us;

	•	a willful continued failure by the Named Executive Officer to carry out the reasonable and lawful directions of the Board or, in the case of any Named Executive Officer other than Mr. Medina, the Chief Executive Officer of the Company;

	•	fraud, embezzlement, theft or dishonesty of a material nature by the Named Executive Officer against us, or a willful material violation by the Named Executive Officer of a policy or procedure of the Company, resulting, in any case, in material economic harm to us; or

	•	a willful material breach by the Named Executive Officer of the employment agreement.

An act or failure to act shall not be “willful” if (i) done by the Named Executive Officer in good faith or (ii) the Named Executive Officer reasonably believed that such action or inaction was in our best interests, and “cause” shall not include any act or failure to act as described above (except for the conviction or plea of nolo contendere to a felony) unless we shall have provided notice of the act or failure to act to the Named Executive Officer, and such person fails to cure such act or failure to act within 10 business days of receiving such notice.

Change in Control

With respect to our Named Executive Officers, the following severance benefits would be provided upon qualifying terminations of employment in connection with or within six months preceding or two years following a change in control:


	•	Cash severance pay equal to two times the sum of his/her annual base salary and incentive compensation as in effect immediately prior to the termination date and his target bonus for the bonus period in which termination occurs, except for Mr. Medina the multiple for whom equals three times such payments and Ms. Dos Santos who receives two times 140% of her base salary.

	•	The value of any annual fringe benefits.

	•	Vesting of all equity awards that had not previously vested.

Any of the following generally constitutes a “change in control”:


	•	Approval by our stockholders of a reorganization, merger, consolidation or other form of corporate transaction or series of transactions involving the Company.

	•	During any two consecutive years, our incumbent directors cease to constitute the majority unless replacement directors were nominated by such incumbent directors.

	•	The acquisition by any person or group of more than 30% of either the then outstanding shares of our common stock or the combined voting power of our then outstanding voting securities entitled to vote generally in the election of directors.

	•	Approval by our stockholders of our complete liquidation or dissolution.

The following describes the treatment of outstanding stock options and nonvested stock upon a change of control per our different stock plans except for certain options issued prior to the 2000 Stock Option Plan:

2005 Executive Compensation Plan and 2000 Directors Plan


	•	Upon a change in control, all outstanding stock options and nonvested stock will become fully vested.

2000 Stock Option Plan


	•	To the extent not previously exercised each option shall terminate immediately.

	•	The Committee in its sole discretion may cancel any option that remains unexercised on the effective date of the transaction. The Committee shall give written notice in order that optionees may have a reasonable period of time prior to the closing date of the change in control within which to exercise any exercisable options.

In accordance with Item 402 of Regulation S-K, the table below was prepared as though a change in control occurred and the Named Executive Officers’ employment was terminated on March 31, 2009, using the closing price of our common stock as of that date. The amounts presented in the table are estimates and do not necessarily reflect the actual value of the payments and other benefits that would be received by the Named Executive Officers upon a change of control, which would only be known at the time that employment actually terminates. We believe the remaining assumptions listed below, which are necessary to produce these estimates, are reasonable individually and in the aggregate. The table below illustrates the foregoing analysis as applied to the change of control obligations contained in the employment agreements with our Named Executive Officers.

General Assumptions


	•	Change in control date was March 31, 2009.

	•	All executives were terminated on change in control date.

Equity-based Assumptions


	•	Stock options and nonvested stock vested on March 31, 2009.

	•	Stock options that become vested due to the change in control are valued at the difference between the actual exercise price and the fair market value of the underlying stock. The following inputs were used:


	•	actual exercise price of each option; and

	•	closing price of stock on March 31, 2009 which was $2.69 per share.

Change in Control Payment and Benefit
Estimates as of March 31, 2009


			Accelerated Vesting of
			Equity Value
	Severance		Stock		Nonvested
Named Executive Officer	Pay($)(1)(2)		Options($)(3)		Stock($)		Total($)

Manuel D. Medina		2,975,000		—		289,175		3,264,175
Jose A. Segrera		880,000		—		168,125		1,048,125
Jamie Dos Santos		700,000		—		26,900		726,900
Marvin Wheeler		880,000		—		168,125		1,048,125
Adam T. Smith		800,000		—		143,468		943,468


(1)		The annual base salaries and incentive compensation used in the computation were based on the Named Executive Officer’s employment agreement in effect at the date of the filing.

(2)		In calculating the incentive compensation in the year the change in control occurs for the severance pay amount, we assumed that we would pay the incentive compensation for a full year. The actual incentive compensation payout amount would be a pro-rated amount through the end of the termination date in the given fiscal year.

(3)		Our Named Executive Officers have stock options with exercise prices ranging from $3.30 to $31.88, which are greater than the fair market value of the common stock on the assumed change in control date. Therefore, the stock options are not “in the money,” and we would not have to make any additional payments nor would the Named Executive Officers receive any benefit.

Director Compensation

We maintain a policy of compensating our directors using stock option and nonvested stock grants and, in the case of service on some committees of our Board, payments of cash consideration. Upon their election as a member of our Board, each director received options to purchase 10,000 shares of our common stock. Our employee directors receive the same compensation as our non-employee directors. As described more fully below, this chart summarizes the annual cash compensation for our Board for the year ended March 31, 2009.

Director Compensation for the Fiscal Year Ended
March 31, 2009


	Fees
	Earned						Non-Equity
	or Paid		Stock		Option		Incentive Plan		All Other
	in Cash		Awards($)		Awards($)		Compensation		Compensation
Name(a)	($)(b)		(c)(1)		(d)		($)(e)		($)(f)			Total($)

Joseph R. Wright Jr.		9,000		58,755		—		—		100,000	(2)		167,755
Guillermo Amore		—		58,755		—		—		240,000	(3)		298,755
Timothy Elwes		—		58,755		—		—		—			58,755
Antonio S. Fernandez		61,000		58,755		—		—		—			119,755
Arthur L. Money		—		58,755		—		—		60,000	(4)		118,755
Marvin S. Rosen		—		58,755		—		—		—			58,755
Miguel J. Rosenfeld		59,000		58,755		—		—		—			117,755
Rodolfo A. Ruiz		28,000		58,755		—		—		—			86,755


(1)		Represents the compensation costs of nonvested stock for financial reporting purposes in accordance with FAS 123(R), rather than an amount paid to or realized by the Director. See Note 15. “Share-Based Compensation” to our consolidated financial statements set forth in our Form 10-K for the year ended March 31, 2009 for the assumptions made in determining FAS 123(R) values. The FAS 123(R) value as of the grant date for nonvested stock is recognized ratably over the applicable vesting period. There can be no assurance that the FAS 123(R) amounts will ever be realized.


		On May 16, 2008, the Committee approved the grant of 7,500 shares of nonvested stock to each director which vested on May 16, 2009.

		As of March 31, 2009, the aggregate number of stock option awards outstanding was: Mr. Wright — 41,500 shares; Mr. Amore — 41,500 shares; Mr. Elwes — 41,500 shares; Mr. Fernandez — 31,500 shares; Mr. Money — 31,500; Mr. Rosen — 44,750 shares; Mr. Rosenfeld — 41,550 shares; and Mr. Ruiz — 31,500 shares.

(2)		On September 21, 2001, we entered into a consulting agreement with Mr. Wright. 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 annual compensation of $100,000, payable monthly.

(3)		In November 2006, we entered into a consulting agreement with Mr. Amore. The agreement, effective October 2006, provides for annual compensation of $240,000, payable monthly. In conjunction with this agreement, our Board of Directors approved the issuance of 50,000 shares of nonvested stock with a vesting period of one year.

(4)		On June 13, 2006, we entered into an employment letter agreement with Mr. Money where he agreed to serve as our Director of Government, Military and Homeland Security Affairs. The employment letter expired by its terms on January 31, 2007 but 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. The agreement provides for annual compensation of $60,000, payable monthly, and a grant of 15,000 shares of nonvested stock. The compensation cost of this award was recognized for the year ended March 31, 2006. Mr. Money is not considered an officer of Terremark, and the employment letter expressly provides that he is not granted the ability to bind us to any agreement with a third party or to incur any obligation or liability on our behalf.

Directors are compensated for their service as a director as shown below:

Schedule of Director Fees
March 31, 2009


Compensation Item	Amount ($)

Annual Retainers
Audit Committee Chair		12,000
Compensation Committee Chair		8,000
Nominating and Corporate Governance Committee Chair		8,000
Audit Committee Members		9,000
Compensation Committee Members		6,000
Nominating and Corporate Governance Committee Members		6,000
Per meeting fees		1,000

All annual retainers are paid in quarterly installments.

Other. We reimburse all directors for travel and other necessary business expenses incurred in the performance of their services we extend coverage to them under our travel accident and directors’ and officers’ indemnity insurance policies.


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

The following table sets forth, as of July 28, 2009, the beneficial ownership of each of our directors and executive officers and each person known to us to beneficially own more than 5% of the outstanding shares of our common stock or Series I convertible preferred stock, and our executive officers and directors as a group. Percentages are based upon 65,363,215 shares of our common stock and 312 shares of our Series I convertible

preferred stock outstanding as of July 28, 2009. The 312 shares of our Series I convertible preferred stock are convertible into 1,041,333 shares of our common stock.

Beneficial ownership is determined in accordance with the rules of the SEC. Ownership information for those persons who beneficially own 5% or more of our shares of common stock is based upon filings by such persons with the SEC in accordance with the rules promulgated under Sections 13 and 16 of the Exchange Act and other information obtained from such persons. Unless otherwise indicated, we believe that each beneficial owner set forth in the table has sole voting and investment power with respect to all shares of common stock and Series I Preferred Stock shown as beneficially owned by them and has the same address as Terremark. Our address is 2 S. Biscayne Blvd., Suite 2800, Miami, Florida 33131.


	Amount and Nature of
Name of Beneficial Owner	Beneficial Ownership			Percent of Class (%)

Common Stock:
Cyrte Investments GP I BV		10,074,845	(1)		15.4	%
Sun Equity Assets Limited		5,402,234	(2)		8.3	%
Ashford Capital Management, Inc.		4,495,954	(3)		6.9	%
Manuel D. Medina		4,216,372	(4)		6.5	%
VMware Bermuda Limited		4,000,000	(5)		6.1	%
Joseph R. Wright, Jr.		371,568	(6)			*
Guillermo Amore		357,788	(7)			*
Timothy Elwes		316,500	(8)			*
Jose A. Segrera		278,341	(9)			*
Marvin Wheeler		277,960	(10)			*
Miguel J. Rosenfeld		167,426	(11)			*
Adam T. Smith		138,040	(12)			*
Antonio S. Fernandez		132,657	(13)			*
Jamie Dos Santos		112,500	(14)			*
Arthur L. Money		84,000	(15)			*
Marvin S. Rosen		81,750	(16)			*
Rodolfo A. Ruiz		79,000	(15)			*
Series I Preferred Stock:
CRG, LLC		100	(17)		32.0	%
L.S. Sarofim 2008 GRAT		66	(18)		21.1	%
Guazapa Properties, Inc.		48	(19)		15.4	%
Promosiones Bursatiles, S.A.		28	(20)		9.0	%
Palmetto, S.A.		20	(21)		6.4	%


*		Less than 1%.


(1)		Based solely on information contained in Amendment No. 8 to Schedule 13D and Form 4 filed by the holder with the SEC on October 9, 2007 and February 20, 2009. Each of Stichting Administratiekantoor Talpa Beheer, Talpa Beheer BV, Talpa Capital Holding BV, Cyrte Investments BV, Cyrte Fund I CV and Johannes Hendrikus Hubert de Mol may be deemed to be beneficial owners, as well as share the power to vote and dispose, of the shares directly owned by Cyrte Investments GP by virtue of the fact that: Stichting owns all of the outstanding capital stock of Talpa; Mr. de Mol is the sole director (bestuurder) of Talpa, an entity which has a 55% ownership interest in Talpa Capital Holding and is a limited partner of Cyrte Fund; Talpa Capital Holding has a 75% ownership interest in Cyrte Investments; Cyrte Investments is the manager of the investment portfolio held by Cyrte Fund and owns all of the outstanding capital stock of Cyrte Investments GP; and Cyrte Investments GP is the general partner of Cyrte Fund. Each of Stichting, Talpa, Talpa Capital Holding, Cyrte Investments, Cyrte Fund and Mr. de Mol disclaims beneficial ownership of such shares for all


		other purposes. The address of the beneficial owner is Flevolaan 41A, 411 KC Naarden P.O. Box 5081 The Netherlands.

(2)		Based solely on information contained in Form 4 filed by Francis Lee, the controlling shareholder of Sun Equity Assets Limited, with the SEC on April 9, 2007. The address of the beneficial owner is P.O. Box N-65, Charlotte House, Nassau C5.

(3)		Based solely on information contained in Schedule 13G, as amended, filed with the SEC on February 17, 2009, Ashford Capital Management, Inc. is a registered investment advisor, and the reported shares of our common stock are held in separate individual client accounts, two separate limited partnerships and six commingled fund.

(4)		Includes 211,500 shares of our common stock issuable upon exercise of options and 75,000 shares of nonvested stock. Includes 225,523 shares of our common stock which are held of record by Communications Investors Group, an entity in which Mr. Medina is a partner and holds a 50% interest. Also includes 500,000 shares of our common stock which are held of record by MD Medina Investments, LLC, an entity in which Mr. Medina is a partner and holds a controlling interest.

(5)		VMware Bermuda Limited’s address is c/o VMware, Inc., 3401 Hillview Ave., Palo Alto CA 94304.

(6)		Includes 61,500 shares of our common stock issuable upon exercise of options. Does not include 10,000 shares held in trust for the benefit of Mr. Wright’s grandchildren and 1,000 shares held by his sister with respect to which Mr. Wright disclaims beneficial ownership.

(7)		Includes 61,500 shares issuable upon exercise of options, 17,500 shares owned by Mr. Amore’s sibling, over which Mr. Amore has investment control. Does not include (i) 159,393 shares and (ii) 26,667 shares which may be acquired upon the conversion of shares of series I preferred convertible stock, all of which are owned by Margui Family Partners, Ltd. with respect to Mr. Amore disclaims beneficial ownership except to the extent of his pecuniary interest therein.

(8)		Includes 61,500 shares of our common stock issuable upon exercise of options

(9)		Includes 150,000 shares of our common stock issuable upon exercise of options and 45,833 shares of nonvested stock.

(10)		Includes 140,500 shares of our common stock issuable upon exercise of options, 45,833 shares of nonvested stock and 5,000 shares owned by Mr. Wheeler’s sister. Mr. Wheeler disclaims beneficial ownership of the shares held by his sister except to the extent of any pecuniary interest therein.

(11)		Includes 61,550 shares of common stock issuable upon exercise of options and 48,412 shares held indirectly by Mr. Rosenfeld. Does not include 68,244 shares held by Mr. Rosenfeld’s children, with respect to which Mr. Rosenfeld disclaims beneficial ownership.

(12)		Includes 58,000 shares of our common stock issuable upon exercise of options and 36,667 shares of nonvested stock.

(13)		Includes 51,500 shares of our common stock issuable upon exercise of options, 6,667 shares which may be acquired upon conversion of our series I preferred convertible stock and 1,400 shares issuable upon exercise of warrants.

(14)		Includes 102,500 shares of our common stock issuable upon exercise of options and 6,666 shares of nonvested stock.

(15)		Includes 51,500 shares of our common stock issuable upon exercise of options.

(16)		Includes 64,250 shares of our common stock issuable upon exercise of options.

(17)		Represents 100 shares of series I convertible preferred stock which are convertible into, and have voting rights equivalent to 333,333 shares of our common stock. Christian Altaba is the natural person with voting and investment control over the shares.

(18)		Represents 66 shares of series I convertible preferred stock which are convertible into, and have voting rights equivalent to 220,000 shares of our common stock. Heinrich Adolf Hans Herweg is the natural person with voting and investment control over the shares.


(19)		Represents 48 shares of series I convertible preferred stock which are convertible into, and have voting rights equivalent to 160,000 shares of our common stock. Heinrich Adolf Hans Herweg is the natural person with voting and investment control over the shares.

(20)		Represents 28 shares of series I convertible preferred stock which are convertible into, and have voting rights equivalent to 93,333 shares of our common stock. Roberto Solis Monsato is the natural person with voting and investment control over the shares.

(21)		Represents 20 shares of series I convertible preferred stock which are convertible into, and have voting rights equivalent to 66,667 shares of our common stock. Antonio De Roquerey is the natural person with voting and investment control over the shares.

Shareholders Agreement

Under the terms of a Shareholders Agreement, dated as of May 15, 2000, Vistagreen Holdings (Bahamas), Ltd., predecessor-in-interest to Sun Equity Assets Limited, Moraine Investments, Inc., predecessor-in-interest to Sun Equity Assets Limited, and Paradise Stream (Bahamas) Limited, on the one hand, and TCO Company Limited, Manuel D. Medina, Willy Bermello and ATTU Services, Inc., the shareholders party to the Agreement on the other hand, have agreed to vote in favor of the election of two nominees, as designated by Vistagreen, will be elected to the executive committee of our board of directors. Vistagreen did not exercise its nominating rights during the fiscal year ended March 31, 2009. We do not currently have an executive committee.

Equity Compensation Plan Information

The following table sets forth information as of March 31, 2009 with respect to compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance.

Number of

Weighted

Number of

Securities to

Average

Securities

be Issued

Exercise

Available for

Upon Exercise

Price of

Future Issuance

of Outstanding

Outstanding

Under Equity

Options,

Options, Nonvested

Compensation Plans

Nonvested Stock,

Stock,

(Excluding Securities

Warrants

Warrants and

Reflected in

Plan Category

and Rights

Rights

Column (a))

(a)

(b)

(c)

Equity compensation plans approved by security holders(1)

5,729,845

7.02

2,791,367

Equity compensation plans not approved by security holders

—


(1)		Includes options to purchase shares of our common stock and other rights under the following stockholder-approved plans: the 1996 Plan, the 2000 Directors Plan, the 2000 Stock Option Plan and the 2005 Executive Compensation Plan.


ITEM 13.	*Certain Relationships and Related Transactions, and Director Independence.*

Review and Approval of Related Person Transactions

The Audit Committee, in accordance with its charter, conducts an appropriate review of and oversees all related party transactions on a continuing basis and reviews potential conflict of interest situations where appropriate. This obligation is buttressed by the Company’s Code of Ethics for the CEO and Senior Financial Officers, which mandates that the CEO and each senior financial officer shall promptly bring to the attention of the Audit Committee any information he or she may have concerning any violation of the Code of Ethics or the Company’s Code of Business Conduct, including any actual or apparent conflicts of interest between personal and professional relationships, involving any management or other employees who have a significant role in the Company’s financial reporting disclosures or internal controls.

Additionally, the Company’s general Code of Conduct and Ethics, which applies to all of the Company’s employees, expressly provides that service to the Company should never be subordinated to personal gain and advantage and provides the following non-exhaustive list of conflicts to which the Company’s Board of Directors, or relevant committee thereof, and management will apply a higher level of scrutiny:


	•	any significant ownership interest in any supplier or customer;

	•	any consulting or employment relationship with any customer, supplier, or competitor;

	•	any outside business activity that detracts from an individual’s ability to devote appropriate time and attention to his or her responsibilities to the Company;

	•	the receipt of non-nominal gifts or excessive entertainment from any organization with which the Company has current or prospective business dealings;

	•	being in the position of supervising, reviewing, or having any influence on the job evaluation, pay, or benefit of any family member; and

	•	selling anything to the Company or buying anything from the Company, except on the same terms and conditions as comparable directors, officers, or employees are permitted to so purchase or sell.

The Audit Committee has not adopted formal standards to apply when it approves or ratifies related party transactions. However, traditionally, as reflected in the minutes of its meetings, the Audit Committee has followed the standard that all related party transactions must be fair and reasonable to the Company and on terms comparable to those reasonably expected to be agreed to with independent third parties for the same goods and/or services at the time they are approved or ratified by the Audit Committee.

Related Person Relationships and Transactions

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 our bylaws and the laws of State 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 L. Money, a member of our Board of Directors. Under the terms of this letter agreement, Mr. Money agrees to serve as Director of Government, Military and Homeland Security Affairs. The original term of the employment letter expired on January 31, 2007; however, the employment letter continues in effect unless and until terminated by us or him upon 48 hours written notice for cause or upon 90 days written notice without cause. Pursuant to the employment letter, we issued to Mr. Money 15,000 shares of our common stock under our 2005 Executive Incentive Compensation Plan, and Mr. Money additionally receives compensation in an amount equal to $5,000 per month. Notwithstanding his title, the employment letter explicitly provides that Mr. Money is not an officer of Terremark and is not vested with the authority to bind Terremark to any agreement with a third party or to incur any obligation or liability on behalf of Terremark.

We entered into an agreement with Joseph R. Wright, Jr., a member of our board of directors, commencing September 21, 2001, engaging him as an independent consultant. The original term of the agreement was 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.

In 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. Fusion’s Chief Executive Officer, Marvin S. 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 Mr. Wright, formerly served on Fusion’s board of directors. For the years ended March 31, 2009 and March 31, 2008, we did not purchase any services from Fusion. For the year ended March 31, 2007, we purchased approximately $0.5 million in services from Fusion.

On May 29, 2009, in a private transaction, we sold to a wholly-owned subsidiary of VMware, Inc. four million shares of our common stock at a purchase price of $5.00 per share, for a total purchase price equal to $20 million. In connection with this transaction, we have agreed to register such shares for resale on or prior to the 30th day following the closing date, subject to our ability to elect up to two, five business day extensions. We believe the investment will significantly expand our brand value and standing in the marketplace and will drive revenue growth in the future. As part of the VMware vCloud Initiative, the two companies have worked together to provide leading-edge utility and cloud computing services to the enterprise and federal markets and continue to jointly cooperate to create and launch cloud infrastructure services.

Director Independence

Our Nominating and Corporate Governance Committee has affirmatively determined that Messrs. Elwes, Fernandez, Wright, Rosenfeld and Ruiz are “independent” as defined by NASDAQ Stock Market Rule 5605(a)(2). Additionally, each of Messrs. Fernandez, Rosenfeld and Ruiz, who comprise our Audit Committee, are “independent” as defined by the more stringent standard contained in NASDAQ Stock Market Rule 5605(c)(2).


ITEM 14.	*PRINCIPAL ACCOUNTANT FEES AND SERVICES.*

For the fiscal years ended March 31, 2009 and 2008, KPMG LLP (“KPMG”) served as our independent registered certified public accounting firm.

Audit Fees and Audit-Related Fees

Set forth in the table below are the fees billed for services by KPMG for our fiscal years ended March 31 2009 and 2008 (in millions):


	2009		2008

Audit Fees	$	1.3	$	1.6
Audit-Related Fees		0.4		0.1

	$	1.7	$	1.7

Audit fees primarily represent amounts for services related to the audit of our consolidated financial statements and internal control over financial reporting and reviews of financial statements included in our Forms 10-Q. Audit-related fees represent amounts for services related to preparation of comfort and related letters, consents provided in connection with our registration statements and procedures performed in connection with our acquisitions.

Tax Fees

There were no fees billed by KPMG for tax services for the years ended March 31, 2009 or 2008.

All Other Fees

There were no fees billed by KPMG for other services for the years ended March 31, 2009 or 2008.

Audit Committee Approval

Our audit committee has a policy in place that requires its review and pre-approval of all audit and permissible non-audit services provided by our independent auditors. The services requiring pre-approval by the audit


PART I
	ITEM 1.	BUSINESS	3
	ITEM 1A.	RISK FACTORS	14

PART III
	ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	24
	ITEM 11.	EXECUTIVE COMPENSATION	28
	ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	42
	ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	45
	ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	47

PART IV
SIGNATURES			49
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
EX-31.1
EX-31.2
EX-32.1
EX-32.2