Terremark Worldwide Inc.

including the fourteenth (14th) day in the month in which such Payment Date occurs.

Section 3. Principal and Interest. Notwithstanding anything to the contrary in the Loan Agreement, Section 2.5(a) is hereby deleted and replaced in its entirety with the following:

“Borrower shall pay to Agent interest on the Principal Indebtedness of the Loan from the Closing Date through the end of the Interest Accrual Period following or during which the Loan is paid in full at the interest rate provided in Section 2.5 below. Interest on the Loan shall accrue on the Principal Indebtedness and shall be payable in arrears on the ninth (9th) day of each and every month until such time as the Loan shall be repaid in full, unless, in any such case, such day is not a Business Day, in which event such interest shall be payable on the first Business Day immediately preceding such date (such date for any particular month, the “Payment Date”). The Agent or its servicer shall calculate LIBOR on each Interest Determination Date for the related Interest Accrual Period and promptly communicate to Borrower such rate for such period. The entire outstanding Principal Indebtedness of the Loan and the Note, together with all accrued but unpaid interest thereon and all other amounts due under the Loan Documents, shall be due and payable by Borrower to Lender on the Maturity Date (including, without limitation, all interest that would accrue on the outstanding Principal Indebtedness of the Loan through the end of the Interest Accrual Period in which the Maturity Date occurs (even if such period extends beyond the Maturity Date)). Interest shall be computed on the basis of a 360 day year and the actual number of days elapsed.”

Section 4. Voluntary Prepayment. Notwithstanding anything to the contrary in the Loan Agreement, Section 2.6(a) is hereby deleted and replaced in its entirety with the following:

“Borrower may voluntarily prepay the Loan in whole or in part on any Payment Date; provided, however, that, any such prepayment shall be accompanied by (1) an amount representing all accrued interest on the portion of the Loan being prepaid through and including the Payment Date together with an amount equal to the interest that would have accrued at the interest rate set forth in Section 2.5(b) on the amount of principal being prepaid through the end of the Interest Accrual Period in which such prepayment occurs (notwithstanding that such Interest Accrual Period extends beyond the date of prepayment), and (2) other amounts then due under the Loan Documents (including, without limitation, the Prepayment Fee, if any).”

Section 5. Mandatory Prepayment; Capital Events; Certain Transfers. Notwithstanding anything to the contrary in the Loan Agreement, Section 2.7(a) is hereby deleted and replaced in its entirety with the following:

“Borrower may effect a Capital Event with respect to the Mortgaged Property on any Business Day on the condition that the Capital Event Proceeds (and, if necessary, any contributions from the principals of Borrower necessary to make the payments required hereunder) are deposited in the Collection Account and applied on the date of deposit in the Collection Account to repay the Indebtedness in full (including (1) all accrued and unpaid interest calculated at the interest rate set forth in Section 2.5(b) on the amount of principal being prepaid through and including the date of prepayment together with an amount equal to the interest that would have accrued at such interest rate on the amount of principal being prepaid

through the end of the Interest Accrual Period in which such prepayment occurs, notwithstanding that such Interest Accrual Period extends beyond the date of prepayment, (2) in addition to the payments required in clause (1) above, if such prepayment is made during the period from and including the first day after a Payment Date through and including the last day of the Interest Accrual Period in which such prepayment occurs, all interest on the principal amount being prepaid which would have accrued from the first day of the Interest Accrual Period immediately following the Interest Accrual Period in which the prepayment occurs (the “Succeeding Interest Period”) through and including the end of the Succeeding Interest Period, calculated at (x) the interest rate set forth in Section 2.5(b) if such prepayment occurs on or after the Interest Determination Date for the Succeeding Interest Period or (y) the Assumed Note Rate if such prepayment occurs before the Interest Determination Date for the Succeeding Interest Period (the “Interest Shortfall”), (3) the Prepayment Fee, if any, and (4) other amounts then due under the Loan Documents). If the Interest Shortfall was calculated based upon the Assumed Note Rate, upon determination of LIBOR on the Interest Determination Date for the Succeeding Interest Period, (i) if the interest rate set forth in Section 2.5(b) for such Succeeding Interest Period is less than the Assumed Note Rate, Agent shall promptly refund to Borrower the amount of the Interest Shortfall paid, calculated at a rate equal to the difference between the Assumed Note Rate and the interest rate set forth in Section 2.5(b), or (ii) if the interest rate set forth in Section 2.5(b) is greater than the Assumed Note Rate, Borrower shall promptly (and in no event later than the ninth (9^th) day of the following month) pay Agent the amount of such additional Interest Shortfall calculated at a rate equal to the excess of the interest rate set forth in Section 2.5(b) over the Assumed Note Rate. Notwithstanding, the foregoing, Borrower may effect a Transfer (other than a Capital Event of a Mortgaged Property as provided in this Section 2.7(a) or a Permitted Transfer), provided (1) if the Loan has not been included in a Secondary Market Transaction in which Securities are issued, Borrower obtains the prior written consent of the Agent or (2) if the Loan has been included in a Secondary Market Transaction in which Securities were issued, Borrower shall have delivered to the Agent a Rating Confirmation and (3) the Borrower pays all out-of-pocket expenses incurred by the Agent in connection with the transaction.”

Section 6. Interest Rate Cap Agreement.

6.1 Borrower hereby acknowledges to Lender that on or prior to the date hereof, the interest rate cap agreement referenced in
Section 3.1(c) of the Loan Agreement has been amended in such manner so as to effectuate the amendments contemplated herein to the Payment Date and the Interest Accrual Period and further to amend the definition of “Additional Termination Event” therein.

6.2 Notwithstanding anything to the contrary, the following is hereby added as Section 5.1(cc) of the Loan Agreement:

(cc) Qualified Interest Rate Cap Provider. If the rating of a Qualified Interest Rate Cap Provider that has provided an interest rate cap which Borrower pledges to the Agent pursuant to the Collateral Assignment of Hedge falls below the rating criteria specified in the definition of a Qualified Interest Rate Cap Provider, then within ten (10) Business Days following written request from Agent, the

Borrower shall deliver to Agent a replacement interest rate cap satisfying all of the criteria set forth in Section 3.1 (as of the Closing Date).

Section 7. Omnibus Amendment. Any references to the “Loan Agreement” in the Loan Documents shall hereinafter refer to the Loan Agreement as modified by this Amendment.

Section 8. Expenses. Notwithstanding anything to the contrary in the Loan Agreement, Lender shall pay all of its and Borrower’s respective out-of-pocket costs and expenses incurred in the preparation, execution and delivery of this Amendment including, without limitation, any fees to the Interest Rate Cap Provider as a result of the amendment referred to in Section 7.

Section 9. Covenants, Representations and Warranties of Borrower.

9.1 Borrower hereby reaffirms all terms and covenants made in the Loan Documents as amended hereby.

9.2 Borrower hereby represents and warrants to Lender that (a) this Amendment constitutes the legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, and (b) the execution and delivery by Borrower of this Amendment has been duly authorized by all requisite action on the part of Borrower and will not violate any provision of the organization documents of Borrower.

9.3 Borrower hereby represents and warrants to Lender that, to of its knowledge without inquiry, as of the date hereof, no Event of Default has occurred and is continuing, and no Event of Default will occur as a result of the execution, delivery and performance by Borrower of this Amendment.

9.4 The Borrower hereby agrees that a breach of any of the representations and warranties made herein shall constitute an Event of Default under Section 7.1 of the Loan Agreement, subject to the notice and cure provisions provided therein.

Section 10. Effect Upon Loan Documents.

10.1 Except as specifically set forth herein, the Loan Documents shall remain in full force and effect and are hereby ratified and confirmed. The provisions of this Amendment shall be subject to the provisions of Section 8.24 of the Loan Agreement, which provisions are incorporated by reference as if herein set forth in full. All references to “Loan Agreement” in the Loan Documents shall mean and refer to the Loan Agreement as modified and amended hereby.

10.2 The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Lender under the Loan Documents, or any other document, instrument or agreement executed and/or delivered in connection therewith.

Section 11. Governing Law. THIS AMENDMENT SHALL BE CONSTRUED, INTERPRETED AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PRINCIPLES.

Section 12. Counterparts. This Amendment may be executed in any number of counterparts, and all such counterparts shall together constitute the same agreement.

[REST OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first above written.


LENDER: CITIGROUP GLOBAL MARKETS REALTY CORP., a New York corporation
By:	/s/ Amir Kornblum
	Name:	Amir Kornblum
	Title:	Authorized Signatory

BORROWER: TECHNOLOGY CENTER OF THE AMERICAS, LLC, a Delaware limited liability company
By:	/s/ Jose Segrera
	Name:	Jose Segrera
	Title:	Chief Financial Officer

EX-10.3 4 g03630exv10w3.htm EX-10.3 EMPLOYMENT AGREEMENT EX-10.3 Employment Agreement

Exhibit 10.3

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is made and entered into on this 8^th day of November, 2006, effective as of the date set forth in paragraph 2.1 below, and is by and between Terremark Worldwide, Inc., a Delaware corporation (the “Company”), and Adam T. Smith (hereinafter called the “Executive”).

RECITALS

A. The Executive possesses knowledge and skills which the Company believes will be of substantial benefit to its operations and success, and the Company desires to employ the Executive on the terms and conditions set forth below, on its behalf or on behalf of one or more of its subsidiaries or affiliates.

B. The Executive is willing to make his services available to the Company and its subsidiaries and affiliates on the terms and conditions set forth below.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, the parties agree as follows:

1. Employment.

1.1. Employment and Term. The Company hereby agrees to employ the Executive, and the Executive hereby agrees to serve the Company, on the terms and conditions set forth herein.

1.2. Duties of Executive. During the Term of Employment under this Agreement, the Executive shall serve as the CHIEF LEGAL OFFICER for the Company, shall diligently perform all services as may be assigned to her by the Board (provided that, such services shall not materially differ from the services currently provided by the Executive), and shall exercise such power and authority as may from time to time be delegated to her by the Board. The Executive shall devote his full time and attention to the business and affairs of the Company, render such services to the best of his ability, and use his best efforts to promote the interests of the Company. It shall not be a violation of this Agreement for the Executive to (i) serve on corporate, civic or charitable boards or committees, (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions, or (iii) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities to the Company in accordance with this Agreement.

2. Term.

2.1. Commencement of Employment. The employment of the Executive under this Agreement shall commence on October 20, 2006 (the “Commencement Date”).

2.2. Termination of Employment. The period during which the Executive shall be employed by the Company pursuant to the terms of this Agreement is sometimes referred to

in this Agreement as the “Term of Employment”. The Executive’s employment hereunder, and the Term of Employment, shall continue until terminated upon notice by either the Company or the Executive in accordance with Section 5, below.

3. Compensation.

3.1. Base Salary. The Executive shall receive a base salary at the annual rate of $185,000 (the “Base Salary”) during the Term of Employment, which such Base Salary shall be payable in installments consistent with the Company’s normal payroll schedule, subject to applicable withholding and other taxes. The Base Salary shall be reviewed, at least annually, for merit increases and may, by action and in the sole discretion of the Board, be increased at any time or from time to time.

3.2. Bonuses. During the Term of Employment, the Executive shall be eligible to receive bonuses in such amounts and at such times as the Board shall determine in its sold discretion.

4. Expense Reimbursement and Other Benefits.

4.1. Reimbursement of Expenses. Upon the submission of proper substantiation by the Executive, and subject to such rules and guidelines as the Company may from time to time adopt, the Company shall reimburse the Executive for all reasonable expenses actually paid or incurred by the Executive during the Term of Employment in the course of and pursuant to the business of the Company. The Executive shall account to the Company in writing for all expenses for which reimbursement is sought and shall supply to the Company copies of all relevant invoices, receipts or other evidence reasonably requested by the Company.

4.2. Compensation/Benefit Programs. During the term of Employment, the Executive shall be entitled to participate in all medical, dental, hospitalization, accidental death and dismemberment, disability, travel and life insurance plans, and any and all other plans as are presently and hereinafter offered by the Company to its executives, including savings, pension, profit-sharing and deferred compensation plans, subject to the general eligibility and participation provisions set forth in such plans.

4.3. Working Facilities. During the Term of Employment, the Company shall furnish the Executive with an office, administrative assistance and such other facilities and services suitable to his/her position and adequate for the performance of his/her duties hereunder.

4.4. Stock Options. During the Term of Employment, the Executive shall be eligible to be granted options (the “Stock Options”) to purchase Common Stock under (and therefore subject to all terms and conditions of) the Company’s 2000 Stock Option Plan, as amended, 2005 Executive Incentive Compensation Plan, as amended, and any successor plan thereto (the “Stock Option Plan”) and all rules of regulation of the Securities and Exchange Commission applicable to stock option plans then in effect. The number of Stock Options and terms and conditions of the Stock Options shall be determined by the Committee appointed pursuant to the Stock Option Plan, or by the Board of Directors of the Company, in its sole discretion and pursuant to the Stock Option Plan.

4.5. Other Benefits. The Executive shall be entitled to three weeks of vacation each calendar year during the Term of Employment, (subject to the general eligibility provisions set forth in Company’s personnel policy), to be taken at such times as the Executive and the Company shall mutually determine and provided that no vacation time shall interfere with the duties required to be rendered by the Executive hereunder. Any vacation time not taken by Executive during any calendar year may not be carried forward into any succeeding calendar year, except in accordance with general Company policy in effect from time to time. The Executive shall receive such additional benefits, if any, as the Board of the Company shall from time to time determine.

5. Termination.

5.1. Termination for Cause. The Company shall at all times have the right, upon written notice to the Executive, to terminate the Term of Employment, for Cause. For purposes of this Agreement, the term “Cause” shall mean (i) an action or omission of the Executive which constitutes a willful and material breach of, or failure or refusal (other than by reason of his disability) to perform his duties under, this Agreement which is not cured within fifteen (15) days after receipt by the Executive of written notice of same, (ii) fraud, embezzlement, misappropriation of funds or breach of trust in connection with his services hereunder, (iii) conviction of a felony or any other crime which involves dishonesty or a breach of trust, (iv) gross negligence in connection with the performance of the Executive’s duties hereunder, which is not cured within fifteen (15) days after receipt by the Executive of written notice of same.(v) insubordination or other refusal to adhere to Company policy or the instructions of a superior, or (vi) negligence by commission or omission that results in injury or damage to the Company. Any termination for Cause shall be made in writing to the Executive, which notice shall set forth in detail all acts or omissions upon which the Company is relying for such termination. The Executive shall have the right to address the Company’s Board of Directors regarding the acts set forth in the notice of termination. Upon any termination pursuant to this Section 5.1, the Company shall only be obligated to pay to the Executive his Base Salary to the date of termination. The Company shall have no further liability hereunder (other than for reimbursement for reasonable business expenses incurred prior to the date of termination, subject, however, to the provisions of Section 4.1).

5.2. Disability. The Company shall at all times have the right, upon written notice to the Executive, to terminate the Term of Employment, if the Executive shall become entitled to benefits under the Company’s group disability policy or any individual disability policy then in effect, or, if the Executive shall as the result of mental or physical incapacity, illness or disability, become unable to perform his obligations hereunder for a period of 90 days in any 12-month period. The Company shall have sole discretion based upon competent medical advice to determine whether the Executive continues to be disabled. Upon any termination pursuant to this Section 5.2, the Company shall (i) pay to the Executive any unpaid Base Salary through the effective date of termination specified in such notice, (ii) pay to the Executive a severance payment equal to one month of the Executive’s Base Salary at the time of the termination of the Executive’s employment with the Company. The Company shall have no further liability hereunder (other than for reimbursement for reasonable business expenses incurred prior to the date of termination, subject, however to the provisions of Section 4.1).

5.3 Death. Upon the death of the Executive during the Term of Employment, the Company shall pay to the estate of the deceased Executive any unpaid Base Salary through the Executive’s date of death. The Company shall have no further liability hereunder (other than for reimbursement for reasonable business expenses incurred prior to the date of the Executive’s death, subject, however to the provisions of Section 4.1).

5.4. Termination Without Cause. At any time the Company shall have the right to terminate the Term of Employment by written notice to the Executive. Upon any termination pursuant to this Section 5.4 (that is not a termination under any of Sections 5.1, 5.2, 5.3, 5.5 or 5.6), the Company shall (i) pay to the Executive any unpaid Base Salary through the effective date of termination specified in such notice, (ii) continue to pay the Executive’s Base Salary for a period (the “Continuation Period”) of six (6) months from the effective date of termination hereunder, (iii) continue to provide the Executive with the benefits he/she was receiving under Sections 4.2 and 4.4 hereof (the “Benefits”) through the end of the Continuation Period in the manner and at such times as the Incentive Compensation or Benefits otherwise would have been payable or provided to the Executive. In the event that the Company is unable to provide the Executive with any Benefits required hereunder by reason of the termination of the Executive’s employment pursuant to this Section 5.4, then the Company shall pay the Executive cash equal to the value of the Benefit that otherwise would have accrued for the Executive’s benefit under the plan, for the period during which such Benefits could not be provided under the plans. The Company’s good faith determination of the amount that would have been contributed or the value of any Benefits that would have accrued under any plan shall be binding and conclusive on the Executive. For this purpose, the Company may use as the value of any Benefit the cost to the Company of providing that Benefit to the Executive. Further, the vesting of the Executive’s Stock Options, if any, shall be subject to the terms of the Stock Option Plan. The Company shall have no further liability hereunder (other than for (x) reimbursement for reasonable business expenses incurred prior to the date of termination, subject, however, to the provisions of Section 4.1, and (y) payment of compensation for unused vacation days accumulated in accordance with the Company’s then general policy).

5.5. Termination by Executive.

(a) The Executive shall at all times have the right, upon sixty (60) days written notice to the Company, to terminate the Term of Employment.

(b) Upon termination of the Term of Employment pursuant to this Section 5.5 (that is not a termination under Section 5.6) by the Executive without Good Reason, the Company shall pay to the Executive any unpaid Base Salary through the effective date of termination specified in such notice. The Company shall have no further liability hereunder (other than for reimbursement for reasonable business expenses incurred prior to the date of termination, subject, however, to the provisions of Section 4.1). At the Company’s sole option, upon receipt of notice from the Executive pursuant to this Section, the Company may immediately terminate the Term of Employment, in which case, in addition to the covenants set forth above, the Company shall pay the Executive 60 days of Base Salary.

(c) Upon termination of the Term of Employment pursuant to this Section 5.5 (that is not a termination under Section 5.6) by the Executive for Good Reason, the

Company shall pay to the Executive the same amounts that would have been payable by the Company to the Executive under Section 5.4 of this Agreement if the Term of Employment had been terminated by the Company without Cause. The Company shall have no further liability hereunder.

(d) For purposes of this Agreement, “Good Reason” shall mean (i) the assignment to the Executive of any duties or responsibilities inconsistent in any respect with the Executive’s position or a similar position in the Company or one of its subsidiaries, as contemplated by Section 1.2 of this Agreement, or any other action by the Company which results in a substantial and compelling diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (ii) any failure by the Company to comply with any of the provisions of Article 3 of this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (iii) the Company’s requiring the Executive to be based at any office or location outside of the area for which Executive was originally hired to work except for travel reasonably required in the performance of the Executive’s responsibilities. For purposes of this Section 5.5(d), any good faith determination of “Good Reason” made by the Board shall be conclusive.

5.6. Change in Control of the Company.

(a) In the event that (i) a Change in Control (as defined in paragraph (b) of this Section 5.6) in the Company shall occur during the Term of Employment, and (ii) within one year after the date of the Change in Control, either (x) the Term of Employment is terminated by the Company without Cause, pursuant to Section 5.4 hereof or (y) the Executive terminates the Term of Employment for Good Reason, the Company shall (1) pay to the Executive any unpaid Base Salary through the effective date of termination, (2) pay to the Executive as a single lump sum payment, within 30 days of the termination of his employment hereunder, a lump sum payment equal to the sum of (x) two times the sum of Executive’s annual Base Salary, Incentive Compensation, and the value of the annual fringe benefits (based upon their cost to the Company) required to be provided to the Executive under Sections 4.2 and 4.4 hereof, for the year immediately preceding the year in which his employment terminates, plus (y) the value of the portion of his benefits under any savings, pension, profit sharing or deferred compensation plans that are forfeited under those plans by reason of the termination of his employment hereunder. The Company shall have no further liability hereunder (other than for (1) reimbursement for reasonable business expenses incurred prior to the date of termination, subject, however, to the provisions of Section 4.1, and (2) payment of compensation for unused vacation days that have accumulated during the calendar year in which such termination occurs).

(b) For purposes of this Agreement, the term “Change in Control” shall mean:

(i) Approval by the shareholders of the Company of (x) a reorganization, merger, consolidation or other form of corporate transaction or series of transactions, in each case, with respect to which persons who were the shareholders of the

Company immediately prior to such reorganization, merger or consolidation or other transaction do not, immediately thereafter, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidation company’s then outstanding voting securities, in substantially the same proportions as their ownership immediately prior to such reorganization, merger, consolidation or other transaction, or (y) a liquidation or dissolution of the Company or (z) the sale of all or substantially all of the assets of the Company (unless such reorganization, merger, consolidation or other corporate transaction, liquidation, dissolution or sale is subsequently abandoned);

(ii) the acquisition (other than the Company) by any person or “group”, within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act, of more than 30% of either the then outstanding shares of the Company’s Common Stock or the combined voting power of the Company’s then outstanding voting securities entitled to vote generally in the election of directors (hereinafter referred to as the ownership of a “Controlling Interest”) excluding, for this purpose, any acquisitions by (1) the Company or its Subsidiaries, (2) any person, entity or “group” that as of the Commencement Date of this Agreement owns beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of a Controlling Interest or (3) any employee benefit plan of the Company or its Subsidiaries.

(iii) The resignation of Manuel D. Medina as both Chairman and CEO of the Company, his death, or his absence from the day to day business affairs of the Company for more than 90 consecutive days due to disability or incapacity.

5.7. Resignation. Upon any notice or termination of employment pursuant to this Article 5, the Executive shall automatically and without further action be deemed to have resigned as an officer, and if he or she was then serving as a director of the Company, as a director, and if required by the Board, the Executive hereby agrees to immediately execute a resignation letter to the Board.

5.8. Survival. The provisions of this Article 5 shall survive the termination of this Agreement, as applicable.

6. Restrictive Covenants.

6.1 Non-competition. At all times while the Executive is employed by the Company and for a one year period after the termination of the Executive’s employment with the Company for any reason (other than by the Company without Cause (as defined in Section 5.1 hereof) or by the Executive for Good Reason (as defined in Section 5.5(d) hereof)), the Executive shall not, directly or indirectly, engage in or have any interest in any sole proprietorship, partnership, corporation or business or any other person or entity (whether as an employee, officer, director, partner, agent, security holder, creditor, consultant or otherwise) that directly or indirectly (or through any affiliated entity) engages in competition with the Company (based on the business in which the Company was engaged or was actively planning on being engaged as of the date of termination of the Employee’s employment and in the geographic areas in which the Company operated or was actively planning on operating as of date of termination

of the Employee’s employment); provided that such provision shall not apply to the executive’s ownership of: Common Stock of the Company or the acquisition by the Executive, solely as an investment, of securities of any issuer that is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, and that are listed or admitted for trading on any United States national securities exchange or that are quoted on the National Association of Securities Dealers Automated Quotations System, or any similar system or automated dissemination of quotations of securities prices in common use, so long as the Executive does not control, acquire a controlling interest in or become a member of a group which exercises direct or indirect control or, more than five percent of any class of capital stock of such corporation.

6.2. Nondisclosure. The Executive shall not at any time divulge, communicate, use to the detriment of the Company or for the benefit of any other person or persons, or misuse in any way, any Confidential Information (as hereinafter defined) pertaining to the business of the Company. Any Confidential Information or data now or hereafter acquired by the Executive with respect to the business of the Company (which shall include, but not be limited to, information concerning the Company’s financial condition, prospects, technology, customers, suppliers, sources of leads and methods of doing business) shall be deemed a valuable, special and unique asset of the Company that is received by the Executive in confidence and as a fiduciary, and Executive shall remain a fiduciary to the Company with respect to all of such information. For purposes of this Agreement, “Confidential Information” means information disclosed to the Executive or known by the Executive as a consequence of or through his employment by the Company (including information conceived, originated, discovered or developed by the Executive) prior to or after the date hereof, and not generally known, about the Company or its business. Notwithstanding the foregoing, nothing herein shall be deemed to restrict the Executive from disclosing Confidential Information to the extent required by law.

6.3. Nonsolicitation of Employees and Clients. At all times while the Executive is employed by the Company and for a two (2) year period after the termination of the Executive’s employment with the Company for any reason, the Executive shall not, directly or indirectly, for herself or for any other person, firm, corporation, partnership, association or other entity (a) employ or attempt to employ or enter into any contractual arrangement with any employee or former employee of the Company, unless such employee or former employee has not been employed by the Company for a period in excess of six months, and/or (b) call on or solicit any of the actual or targeted prospective clients of the Company on behalf of any person or entity in connection with any business competitive with the business of the Company, nor shall the Executive make known the names and addresses of such clients or any information relating in any manner to the Company’s trade or business relationships with such customers, other than in connection with the performance of Executive’s duties under this Agreement.

6.4. Ownership of Developments. All copyrights, patents, trade secrets, or other intellectual property rights associated with any ideas, concepts, techniques, inventions, processes, or works of authorship developed or created by Executive during the course of performing work for the Company or its clients (collectively, the “Work Product”) shall belong exclusively to the Company and shall, to the extent possible, be considered a work made by the Executive for hire for the Company within the meaning of Title 17 of the United States Code. To the extent the Work Product may not be considered work made by the Executive for hire for

the Company, the Executive agrees to assign, and automatically assign at the time of creation of the Work Product, without any requirement of further consideration, any right, title, or interest the Executive may have in such Work Product. Upon the request of the Company, the Executive shall further actions, including execution and delivery of instruments of conveyance, as may be appropriate to give full proper effect to such assignment.

6.5. Books and Records. All books, records, and accounts relating in any manner to the customers or clients of the Company, whether prepared by the Executive or otherwise coming into the Executive’s possession, shall be exclusive property of the Company and shall be returned immediately to the Company on termination of the Executive’s employment hereunder or on the Company’s request at any time.

6.6. Definition of Company. Solely for purposes of this Article 6, the term “Company” also shall include any existing or future subsidiaries of the Company that are operating during the time periods described herein and any other entities that directly or indirectly, through one or more intermediaries, control, are controlled by or are under common control with the Company during the periods described herein.

6.7. Acknowledgment by Executive. The Executive acknowledges and confirms that (a) the restrictive covenants contained in this Article 6 are reasonably necessary to protect the legitimate business interest of the Company, and (b) the restrictions contained in this Article 6 (including without limitation the length of the term of the provisions of this Article 6) are not overbroad, overlong, or unfair and are not the result of overreaching, duress or coercion of any kind. The Executive further acknowledges and confirms that this full, uninhibited and faithful observance of each of the covenants contained in this Article 6 will not cause her any undue hardship, financial or otherwise, and that enforcement of each of the covenants contained herein will not impair his ability to obtain employment commensurate with his abilities and on terms fully acceptable to her or otherwise to obtain income required for the comfortable support of her and his family and the satisfaction of the needs of his creditors. The Executive acknowledges and confirms that his special knowledge of the business of the Company is such as would cause the Company serious injury or loss if he were to use such ability and knowledge to the benefit of a competitor or were to compete with the Company in violation of the terms of this Article 6. The Executive further acknowledges that the restrictions contained in this Article 6 are intended to be, and shall be, for the benefit of and shall be enforceable by, the Company’s successors and assigns.

6.8. Reformation by Court. In the event that a court of competent jurisdiction shall determine that any provision of this Article 6 is invalid or more restrictive than permitted under the governing law of such jurisdiction, then only as to enforcement of this Article 6 within the jurisdiction of such court, such provision shall be interpreted and enforced as if it provided for the maximum restriction permitted under such governing law.

6.9. Extension of Time. If the Executive shall be in violation of any provision of this Article 6, then each time limitation set forth in this Article 6 shall be extended for a period of time equal to the period of time during which such violation or violations occur. If the Company seeks injunctive relief from such violation in any court, then the covenants set forth in

this Article 6 shall be extended for a period of time equal to the pendency of such proceeding including all appeals by the Executive.

6.10. Survival. The provisions of this Article 6 shall survive the termination of this Agreement, as applicable.

7. Injunction. It is recognized and hereby acknowledged by the parties hereto that a breach by the Executive of any of the covenants contained in Article 6 of this Agreement will cause irreparable harm and damage to the Company, the monetary amount of which may be virtually impossible to ascertain. As a result, the Executive recognizes and hereby acknowledges that the Company shall be entitled to an injunction from any court of competent jurisdiction enjoining and restraining any violation of any or all of the covenants contained in Article 6 of this Agreement by the Executive or any of his affiliates, associates, partners or agents, either directly or indirectly, and that such right to injunction shall be cumulative and in addition to whatever other remedies the Company may possess.

8. Assignment. Neither party shall have the right to assign or delegate his rights or obligations hereunder, or any portion thereof, to any other person.

9. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida.

10. Section 162(m) Limits. Notwithstanding any other provision of this Agreement to the contrary, if and to the extent that any remuneration payable by the Company to the Executive for any year would exceed the maximum amount of remuneration that the Company may deduct for that year under Section 162(m) (“Section 162(m)”) of the Internal Revenue Code of 1986, as amended (the “Code”), payment of the portion of the remuneration for that year that would not be so deductible under Section 162(m) shall, in the sole discretion of the Board, be deferred and become payable at such time or times as the Board determines that it first would be deductible by the Company under Section 162(m), with interest at the “short-term applicable rate” as such term is defined in Section 1274(d) of the Code. The limitation set forth under this Section 10 shall not apply with respect to any amounts payable to the Executive pursuant to Article 5 hereof.

11. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and, upon its effectiveness, shall supersede all prior agreements, understandings and arrangements, both oral and written, between the Executive and the Company (or any of its affiliates) with respect to such subject matter. This Agreement may not be modified in any way unless by a written instrument signed by both the Company and the Executive.

12. Notices. All notices required or permitted to be given hereunder shall be in writing and shall be personally delivered by courier, sent by registered or certified mail, return receipt requested or sent by confirmed facsimile transmission addressed as set forth herein. Notices personally delivered, sent by facsimile or sent by overnight courier shall be deemed given on the date of delivery and notices mailed in accordance with the foregoing shall be deemed given upon the earlier of receipt by the addressee, as evidenced by the return receipt thereof, or three (3) days after deposit in the U.S. mail. Notice shall be sent (i) if to the


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended September 30, 2006

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from to


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


Class		Outstanding at October 31, 2006

Common stock, $0.001 par value per share		43,779,360 shares


		Page

PART I. FINANCIAL INFORMATION			1
Item 1.	Financial Statements		1
	Condensed Consolidated Balance Sheets as of September 30, 2006 and March 31, 2006 (unaudited)		1
	Condensed Consolidated Statements of Operations for the six and three months ended September 30, 2006 and 2005 (unaudited)		2
	Condensed Consolidated Statement of Changes in Stockholders’ Equity for the six months ended September 30, 2006 (unaudited)		3
	Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2006 and 2005 (unaudited)		4
	Notes to Condensed Consolidated Financial Statements (unaudited)		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		21
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.		37
Item 4.	Controls and Procedures.		38

PART II. OTHER INFORMATION			39
Item 1.	Legal Proceedings.		39
Item 1A.	Risk Factors.		39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.		39
Item 3.	Defaults upon Senior Securities.		39
Item 4.	Submission of Matters to a Vote of Security Holders.		39
Item 5.	Other Information.		39
Item 6.	Exhibits.		39
EX-10.1 Consulting Agreement
EX-10.2 First Amendment to Loan Agreement
EX-10.3 Employment Agreement
EX-31.1 Section 302 Chief Executive Officer Certification
EX-31.2 Section 302 Chief Financial Officer Certification
EX-32.1 Section 906 Chief Executive Officer Certification
EX-32.2 Section 906 Chief Financial Officer Certification


	September 30,			March 31,
	2006			2006

	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	11,398,901		$	20,401,934
Restricted cash		2,156,731			474,073
Accounts receivable, net of allowance for doubtful accounts of $600,000 and $200,000		14,528,062			10,951,827
Current portion of capital lease receivable		2,707,053			2,507,029
Prepaid expenses and other current assets		3,450,587			2,558,942

Total current assets	$	34,241,334		$	36,893,805
Restricted cash		3,457,867			3,814,842
Property and equipment, net of accumulated depreciation of $31,342,637 and $26,331,368		130,414,114			129,893,318
Debt issuance costs, net of accumulated amortization of $3,772,863 and $2,810,403		5,990,611			6,963,232
Other assets		3,871,676			2,695,616
Capital lease receivable, net of current portion		3,237,292			4,004,449
Intangibles, net of accumulated amortization of $910,000 and $520,000		3,290,000			3,680,000
Goodwill		16,771,189			16,771,189

Total assets	$	201,274,083		$	204,716,451


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of debt and capital lease obligations	$	2,214,111		$	1,890,108
Accounts payable and other current liabilities		24,935,270			20,822,624
Interest payable		3,605,279			3,833,288
Series H redeemable convertible preferred stock		—			646,693

Total current liabilities	$	30,754,660		$	27,192,713
Mortgage payable, less current portion		45,675,385			45,795,552
Convertible debt		62,129,416			59,102,452
Derivatives embedded within convertible debt, at estimated fair value		12,742,575			24,960,750
Notes payable, less current portion		27,118,078			25,614,140
Deferred rent and other liabilities		3,314,223			3,267,481
Capital lease obligations, less current portion		1,493,939			852,311
Deferred revenue		3,796,836			4,094,735

Total liabilities	$	187,025,112		$	190,880,134

Commitments and contingencies
Stockholders’ equity:
Series I convertible preferred stock: $.001 par value, 323 and 339 shares issued and outstanding (liquidation value of approximately $8.3 million and $8.6 million)	$	1		$	1
Common stock: $.001 par value, 100,000,000 shares authorized; 44,594,561 and 44,490,352 shares issued		44,594			44,490
Common stock warrants		12,946,698			13,251,660
Common stock options		582,004			582,004
Additional paid-in capital		291,941,003			291,607,528
Accumulated deficit		(283,737,786	)		(283,823,243	)
Accumulated other comprehensive loss		(131,484	)		(317,756	)
Treasury stock: 865,202 shares		(7,220,637	)		(7,220,637	)
Notes receivable		(175,422	)		(287,730	)

Total stockholders’ equity	$	14,248,971		$	13,836,317

Total liabilities and stockholders’ equity	$	201,274,083		$	204,716,451


Large accelerated filer o	Accelerated filer x	Non-accelerated filer o


					For the Six Months Ended						For the Three Months Ended
					September 30,						September 30,

					2006			2005			2006			2005

Revenues
Data center					$	45,587,484		$	24,632,200		$	24,184,103		$	13,961,080

			Operating revenues			45,587,484			24,632,200			24,184,103			13,961,080

Expenses
	Data center operations, excluding depreciation					26,459,762			15,729,856			14,773,552			8,718,207
	General and administrative					7,661,699			7,684,085			3,595,002			3,503,439
	Sales and marketing					5,260,872			3,780,133			2,636,662			2,021,059
	Depreciation and amortization					5,395,560			3,911,615			2,695,644			2,047,154

			Operating expenses			44,777,893			31,105,689			23,700,860			16,289,859

				Income (loss) from operations		809,591			(6,473,489	)		483,243			(2,328,779	)

Other income (expenses)
	Change in fair value of derivatives embedded within convertible debt					12,218,175			9,977,675			(3,298,200	)		10,441,700
	Interest expense					(13,489,290	)		(12,301,995	)		(6,871,705	)		(6,305,142	)
	Interest income					581,594			899,434			278,513			439,261
	Gain on sale of asset					—			499,388			—			499,388
	Other, net					(34,613	)		(66,136	)		(35,274	)		(80,276	)

		Total other income (expenses)				(724,134	)		(991,634	)		(9,926,666	)		4,994,931

			Income (loss) before income taxes			85,457			(7,465,123	)		(9,443,423	)		2,666,152
	Income taxes					—			—			—			—

Net income (loss)						85,457			(7,465,123	)		(9,443,423	)		2,666,152
Preferred dividend						(325,800	)		(372,489	)		(161,700	)		(184,700	)
Earnings attributable to participating security holders						—			—			—			(396,616	)

Net income (loss) attributable to common stockholders					$	(240,343	)	$	(7,837,612	)	$	(9,605,123	)	$	2,084,836

Net income (loss) per common share:
Basic					$	(0.01	)	$	(0.18	)	$	(0.22	)	$	0.05

Diluted					$	(0.09	)	$	(0.22	)	$	(0.22	)	$	(0.09	)

Weighted average common shares outstanding — basic						43,698,606			42,369,338			43,719,659			42,890,383

Weighted average common shares outstanding — diluted						52,139,378			49,269,338			43,719,659			49,790,383


				Common Stock
				Par Value $.001															Accumulated
													Additional						Other
		Preferred		Issued				Common Stock			Common Stock		Paid-in			Accumulated			Comprehensive			Treasury			Notes
		Stock Series I		Shares		Amount		Warrants			Options		Capital			Deficit			Loss			Stock			Receivable			Total

Balance at March 31, 2006		$	1		44,490,352	$	44,490	$	13,251,660		$	582,004	$	291,607,528		$	(283,823,243	)	$	(317,756	)	$	(7,220,637	)	$	(287,730	)	$	13,836,317
Conversion of preferred stock			—		53,637		53		—			—		2,225			—			—			—			—			2,278
Exercise of stock options			—		35,072		35		—			—		194,409			—			—			—			—			194,444
Warrants issued for services			—		—		—		92,988			—		—			—			—			—			—			92,988
Accrued dividends on preferred stock			—		—		—		—			—		(325,679	)		—			—			—			—			(325,679	)
Expiration of warrants			—		—		—		(397,950	)		—		397,950			—			—			—			—			—
Stock tendered in payment of services			—		15,500		16		—			—		64,570			—			—			—			—			64,586
Repayments of loans issued to employees			—		—		—		—			—		—			—			—			—			128,320			128,320
Other comprehensive income
	Foreign currency translation adjustment		—		—		—		—			—		—			—			186,272			—			(16,012	)		170,260
	Net income		—		—		—		—			—		—			85,457			—			—			—			85,457

	Total comprehensive income		—		—		—		—			—		—			85,457			186,272			—			(16,012	)		255,717

Balance at September 30, 2006		$	1		44,594,561	$	44,594	$	12,946,698		$	582,004	$	291,941,003		$	(283,737,786	)	$	(131,484	)	$	(7,220,637	)	$	(175,422	)	$	14,248,971


						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
		Shares		Exercise Price		Contractual Term		Intrinsic Value

Outstanding at March 31, 2006			2,279,485	$	11.23
	Granted		—		—
	Exercised		29,755		5.70
	Forfeited		38,967		8.86

Outstanding at September 30, 2006			2,210,763	$	11.32		6.08	$	(12,763,820	)

Exercisable at September 30, 2006			2,210,763	$	11.32		6.08	$	(12,763,820	)


			Weighted Average
			Grant Date
	Shares		Fair Value

Outstanding at March 31, 2006		—	$	—
Granted		15,300		4.20
Restricted lapsed		—		—
Canceled		—		—

Outstanding at September 30, 2006		15,300	$	4.20


	For the Six Months Ended			For the Three Months Ended
	September 30, 2005			September 30, 2005

Net income (loss) attributable to common stockholders as reported	$	(7,837,612	)	$	2,084,836
Incremental stock-based compensation if the fair value method had been adopted		(665,261	)		(339,668	)

Pro forma net income (loss) attributable to common stockholders	$	(8,502,873	)	$	1,745,168

Basic income (loss) per common share — as reported	$	(0.18	)	$	0.05

Basic income (loss) per common share — pro forma	$	(0.20	)	$	0.04

Diluted loss per common share — as reported	$	(0.22	)	$	(0.09	)

Diluted loss per common share — pro forma	$	(0.24	)	$	(0.10	)


		September 30,
		2005

Risk-free rate		3.69% - 4.28%
Volatility		113% - 118%
Expected life		5 years
Expected dividends		0%


	For the Six Months				For the Three Months
	Ended September 30,				Ended September 30,

	2006		2005		2006		2005

Series I convertible preferred stock		1,135,233		1,289,883		1,099,348		1,254,627
Series H redeemable convertible preferred stock		22,072		29,400		17,791		29,400
Common stock warrants		2,637,136		2,702,436		2,637,136		2,702,436
Common stock options		2,210,763		1,716,121		2,210,763		1,716,121
Nonvested stock		15,300		—		15,300		—
Senior Convertible Notes		—		—		6,900,000		—
Early conversion incentive		—		—		2,123,398		—


	•	incur more debt;

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

	•	make acquisitions or investments;

	•	enter into transactions with affiliates;

	•	merge or consolidate with others;

	•	dispose of assets or use asset sale proceeds;

	•	create liens on our assets; and

	•	extend credit.


12.	Information About the Company’s Operating Segments


Item 1.	*Financial Statements*


1.	Business and Organization


2.	Summary of Significant Accounting Policies


	*Use of estimates*


		Date Center			Real Estate
For the Six Months Ended September 30,		Operations			Services		Total

2006
Revenues		$	45,587,484		$	—	$	45,587,484
Income from operations			809,591			—		809,591
Net income			85,457			—		85,457
2005
Revenues		$	24,632,200		$	—	$	24,632,200
Income (loss) from operations			(6,512,225	)		38,736		(6,473,489	)
Net income (loss)			(7,502,849	)		37,726		(7,465,123	)
Assets as of
	September 30, 2006	$	201,274,083		$	—	$	201,274,083
	March 31, 2006		204,716,451			—		204,716,451


	Data Center			Real Estate
For the Three Months Ended September 30,	Operations			Services		Total

2006
Revenues	$	24,184,103		$	—	$	24,184,103
Income from operations		483,243			—		483,243
Net income (loss)		(9,443,423	)		—		(9,443,423	)
2005
Revenues	$	13,961,080		$	—	$	13,961,080
Income (loss) from operations		(2,358,619	)		29,840		(2,328,779	)
Net income		2,637,322			28,830		2,666,152


Item 2.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations.*


	•	space to house equipment and network facilities in immediate proximity to Internet and communications networks;

	•	the platform to exchange telecommunications and Internet traffic and access to network-based services; and

	•	related professional and managed services such as our network operations center, outsourced storage, dedicated hosting and remote monitoring.


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

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

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


	•	incur more debt;

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

	•	make acquisitions or investments;

	•	enter into transactions with affiliates;

	•	merge or consolidate with others;


	•	TECOTA files for bankruptcy or a petition in bankruptcy is filed against TECOTA with TECOTA’s or Terremark’s consent;

	•	Terremark pays a cash dividend or makes any other cash distribution on its capital stock (except with respect to its outstanding preferred stock);

	•	Terremark makes any repayments of its outstanding debt other than the scheduled payments provided in the terms of the debt;

	•	Terremark pledges the collateral it has pledged to the lenders or pledges any of its existing cash balances as of December 31, 2004 as collateral for another loan; or

	•	Terremark repurchases any of its common stock.


	•	Any fraud, misappropriation or misapplication of funds;

	•	any transfers of the collateral held by the lenders in violation of the Citigroup credit agreement;

	•	failure to maintain TECOTA as a “single purpose entity;”

	•	TECOTA obtaining additional financing in violation of the terms of the Citigroup credit agreement;

	•	intentional physical waste of TECOTA’s assets that have been pledged to the lenders;

	•	breach of any representation, warranty or covenant provided by or applicable to TECOTA and Terremark which relates to environmental liability;

	•	improper application and use of security deposits received by TECOTA from tenants;

	•	forfeiture of the collateral pledged to the lenders as a result of criminal activity by TECOTA;

	•	attachment of liens on the collateral in violation of the terms of the Citigroup credit agreement;

	•	TECOTA’s contesting or interfering with any foreclosure action or other action commenced by lenders to protect their rights under the credit facility (except to the extent TECOTA is successful in these efforts);

	•	any costs incurred by the lenders to enforce their rights under the credit facility; or


	•	failure to pay assessments made against or to adequately insure the assets pledged to the lenders.


	Capital Lease		Operating				Mortgage
	Obligations		Leases		Convertible Debt		Payable		Notes Payable		Total

2007 (six months)	$	697,777	$	2,905,925	$	3,881,250	$	2,109,923	$	2,912,433	$	12,507,308
2008		1,037,621		4,655,067		7,762,500		4,219,846		4,275,269		21,950,303
2009		643,910		3,822,778		7,762,500		49,414,809		35,943,926		97,587,923
2010		331,042		3,779,541		90,131,250		—		—		94,241,833
2011		248,840		3,802,032		—		—		—		4,050,872
Thereafter		—		33,309,488		—		—		—		33,309,488

	$	2,959,190	$	52,274,831	$	109,537,500	$	55,744,578	$	43,131,628	$	263,647,727


	*We have a history of losses, expect future losses and may not achieve or sustain profitability.*


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


	We anticipate that an increasing 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.


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


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


	•	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.


	*The mortgage loan with Citigroup and our senior secured notes contain numerous restrictive covenants.*


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


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

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

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

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

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

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


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