Exhibit 10.2
SECOND LIEN SECURITY AGREEMENT
Dated November 16, 2010
From
TERREMARK WORLDWIDE, INC.,
and the other Grantors referred to herein,
as Grantors
to
U.S. BANK NATIONAL ASSOCIATION,
as Collateral Trustee
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TABLE OF CONTENTS

              Section       Page
 
           
Section 1.
  Grant of Security     5  
Section 2.
  Security for Obligations     10  
Section 3.
  Grantors Remain Liable     10  
Section 4.
  Delivery and Control of Security Collateral     10  
Section 5.
  Maintaining the Account Collateral     11  
Section 6.
  Release of Amounts     12  
Section 7.
  Maintaining Electronic Chattel Paper, Transferable Records and
Letter-of-Credit Rights and Giving Notice of Commercial Tort Claims     13  
Section 8.
  Representations and Warranties     13  
Section 9.
  Further Assurances     17  
Section 10.
  As to Equipment and Inventory     18  
Section 11.
  Insurance     19  
Section 12.
  Post-Closing Changes; Bailees; Collections on Assigned Agreements, Receivables
and Related Contracts     20  
Section 13.
  As to Intellectual Property Collateral     21  
Section 14.
  Voting Rights; Dividends; Etc.     22  
Section 15.
  As to the Assigned Agreements     23  
Section 16.
  Payments Under the Assigned Agreements     24  
Section 17.
  As to Letter-of-Credit Rights     24  
Section 18.
  Transfers and Other Liens; Additional Shares     24  
Section 19.
  Collateral Trustee Appointed Attorney-in-Fact     24  
Section 20.
  Collateral Trustee May Perform     25  
Section 21.
  The Collateral Trustee’s Duties     25  
Section 22.
  Remedies     26  
Section 23.
  Indemnity and Expenses     27  
Section 24.
  Amendments; Waivers; Additional Grantors; Etc.     28  

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              Section       Page
 
           
Section 25.
  Notices, Etc.     28  
Section 26.
  Continuing Security Interest; Assignments and Transfer under the Junior Lien
Documents     28  
Section 27.
  Release; Termination     29  
Section 28.
  Execution in Counterparts     29  
Section 29.
  The Mortgages     29  
Section 30.
  Governing Law     30  
Section 31.
  Collateral Trust Agreement     30  

Schedules

         
 
       
Schedule I
  -   Location, Chief Executive Office, Place Where Agreements Are Maintained,
Type of Organization, Jurisdiction of Organization And Organizational
Identification Number
Schedule II
  -   Pledged Interests and Pledged Debt
Schedule III
  -   Assigned Agreements
Schedule IV
  -   Locations of Equipment and Inventory
Schedule V
  -   Changes in Name, Location, Etc.
Schedule VI
  -   Patents, Trademarks and Trade Names, Copyrights and IP Agreements
Schedule VII
  -   Account Collateral
Schedule VIII
  -   Commercial Tort Claims
Schedule IX
  -   Letters of Credit

Exhibits

         
 
       
Exhibit A
  -   Form of Second Lien Security Agreement Supplement
Exhibit B
  -   Form of Account Control Agreement (Deposit Account/Securities Account)
Exhibit C
  -   Form of Second Lien Intellectual Property Security Agreement
Exhibit D
  -   Form of Second Lien Intellectual Property Security Agreement Supplement

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SECOND LIEN SECURITY AGREEMENT
          SECOND LIEN SECURITY AGREEMENT dated November 16, 2010 (this
“Agreement”) made by Terremark Worldwide, Inc., a Delaware corporation (the
“Company”), the other Persons listed on the signature pages hereof and the
Additional Grantors (as defined in Section 24) (the Company and the Persons so
listed and the Additional Grantors being, collectively, the “Grantors”), to U.S.
Bank National Association, (“US Bank”), as collateral trustee (in such capacity,
together with any successor collateral trustee appointed pursuant to the
Collateral Trust Agreement (as hereinafter defined), the “Collateral Trustee”)
for the Junior Lien Representatives and the holders of Junior Lien Obligations
(each as defined in the Collateral Trust Agreement and collectively, together
with the Collateral Trustee, the “Secured Parties”).
          PRELIMINARY STATEMENTS:
          (1) The Company and the other Grantors have entered into an Indenture
dated as of November 16, 2010 (as amended, amended and restated, supplemented
and otherwise modified from time to time, the “Second Lien Indenture”) with The
Bank of New York Mellon Trust Company, N.A., as trustee (the “Second Lien
Trustee”) for the holders of the Company’s Second Lien Secured Notes due 2013
(including any additional notes that may be issued under the Second Lien
Indenture from time to time and any exchange notes issued in respect of such
notes and additional notes, the “Second Lien Notes”). The Grantors (other than
the Company) have guaranteed the obligations of the Company in respect of the
Second Lien Notes pursuant to a note guarantee set forth in the Second Lien
Indenture.
          (2) The Company and the other Grantors may enter into other Junior
Lien Documents in respect of additional Junior Lien Obligations to be incurred
in the future.
          (3) In order to induce the Trustee to enter into the Second Lien
Indenture and the Junior Lien Representatives and the other holders of the
Junior Lien Obligations to enter into the other Junior Lien Documents, the
Grantors have agreed to grant, pursuant to the terms of this Agreement, a
continuing second priority security interest in and to the Collateral to the
Collateral Trustee for the ratable benefit of the Secured Parties to secure the
Junior Lien Obligations.
          (4) Each Grantor is the owner of the shares of stock or other Equity
Interests (the “Initial Pledged Interests”) set forth opposite such Grantor’s
name on and as otherwise described in Part I of Schedule II hereto and issued by
the Persons named therein and of the indebtedness (the “Initial Pledged Debt”)
set forth opposite such Grantor’s name on and as otherwise described in Part II
of Schedule II hereto and issued by the obligors named therein.
          (5) The Grantors have opened deposit accounts (the “Deposit Accounts”)
with banks, in the name of the applicable Grantor and subject to the terms of
this Agreement, as described in Schedule VII hereto.
          (6) The Company is the beneficiary under certain letters of credit as
described in Schedule IX.
          (7) It is a condition precedent to the entry into the Junior Lien
Documents by the Junior Lien Representatives and the other holders of Junior
Lien Obligations that the Grantors shall have granted to the Collateral Trustee
for the ratable benefit of the Secured Parties the second priority security
interest in the Collateral granted under this Agreement.
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          (8) The Collateral Trustee has agreed, pursuant to the terms of the
Collateral Trust Agreement, dated June 24, 2009, by and among the Company, the
other Grantors party thereto, the Collateral Trustee, The Bank of New York
Mellon Trust Company, N.A., as Trustee, and the other parties thereto, as
supplemented by a Collateral Trust Joinder, dated the date thereof, between the
Second Lien Trustee and the Collateral Trustee (as amended, amended and
restated, supplemented and otherwise modified from time to time, the “Collateral
Trust Agreement”) to accept the grant of a second priority security interest
under this Agreement as security for the Junior Lien Obligations (referred to
herein as “Secured Obligations”).
          (9) Each Grantor will derive substantial direct and indirect benefit
from the transactions contemplated by the Second Lien Indenture and the other
Junior Lien Documents.
          (10) Capitalized terms used herein and not otherwise defined in this
Agreement are used in this Agreement as defined in the Second Lien Indenture or
the Collateral Trust Agreement, as applicable. Further, unless otherwise defined
in this Agreement, the Second Lien Indenture or the Collateral Trust Agreement,
terms defined in Article 8 or 9 of the UCC (as defined below) and/or in the
Federal Book Entry Regulations (as defined below) are used in this Agreement as
such terms are defined in such Article 8 or 9 and/or the Federal Book Entry
Regulations. “UCC” means the Uniform Commercial Code as in effect, from time to
time, in the State of New York; provided that, if perfection or the effect of
perfection or non-perfection or the priority of any security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, “UCC” means the Uniform
Commercial Code as in effect from time to time in such other jurisdiction for
purposes of the provisions hereof relating to such perfection, effect of
perfection or non-perfection or priority. The term “Federal Book Entry
Regulations” means (a) the federal regulations contained in Subpart B
(“Treasury/Reserve Automated Debt Entry System (TRADES)”) governing book-entry
securities consisting of U.S. Treasury bills, notes and bonds and Subpart D
(“Additional Provisions”) of 31 C.F.R. Part 357, 31 C.F.R. § 357.2, § 357.10
through § 357.15 and § 357.40 through § 357.45 and (b) to the extent
substantially similar to the federal regulations referred to in clause (a) above
(as in effect from time to time), the federal regulations governing other
book-entry securities.
          NOW, THEREFORE, in consideration of the premises and in order to
induce the parties to enter into the Junior Lien Documents from time to time,
each Grantor hereby agrees with the Collateral Trustee for the ratable benefit
of the Secured Parties as follows:
          Section 1. Grant of Security. Each Grantor hereby grants to the
Collateral Trustee, for the ratable benefit of the Secured Parties, a second
priority security interest in such Grantor’s right, title and interest in and to
the following, in each case, as to each type of property described below,
whether now owned or hereafter acquired by such Grantor, wherever located, and
whether now or hereafter existing or arising (collectively, the “Collateral”):
          (a) all equipment in all of its forms, including, without limitation,
all machinery, tools, motor vehicles, vessels, aircraft, furniture and fixtures,
and all parts thereof and all accessions thereto, including, without limitation,
computer programs and supporting information that constitute equipment within
the meaning of the UCC and all software that is embedded in and is part of such
equipment (any and all such property being the “Equipment”);
          (b) all inventory in all of its forms, including, without limitation,
(i) all raw materials, work in process, finished goods and materials used or
consumed in the manufacture, production, preparation or shipping thereof,
(ii) goods in which such Grantor has an interest in mass or a joint or other
interest or right of any kind (including, without limitation, goods in which
such Grantor has an interest or right as consignee) and (iii) goods that are
returned to or repossessed or stopped in transit by
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such Grantor), and all accessions thereto and products thereof and documents
therefor, including, without limitation, computer programs and supporting
information that constitute inventory within the meaning of the UCC and all
software that is embedded in and is part of such inventory (any and all such
property being the “Inventory”);
          (c) all accounts, chattel paper (including, without limitation,
tangible chattel paper and electronic chattel paper), instruments (including,
without limitation, promissory notes), deposit accounts, letter-of-credit
rights, general intangibles (including, without limitation, payment intangibles)
and other obligations of any kind, whether or not arising out of or in
connection with the sale or lease of goods or the rendering of services and
whether or not earned by performance, and all rights now or hereafter existing
in and to all supporting obligations and in and to all security agreements,
mortgages, Liens, leases, letters of credit and other contracts securing or
otherwise relating to the foregoing property (any and all of such accounts,
chattel paper, instruments, deposit accounts, letter-of-credit rights, general
intangibles and other obligations, to the extent not referred to in clause (d),
(e), (f) or (g) below, being the “Receivables”, and any and all such supporting
obligations, security agreements, mortgages, Liens, leases, letters of credit
and other contracts being the “Related Contracts”);
          (d) the following (the “Security Collateral”):
     (i) the Initial Pledged Interests and the certificates, if any,
representing the Initial Pledged Interests, and all dividends, distributions,
return of capital, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Initial Pledged Interests and all warrants, rights or options
issued thereon or with respect thereto;
     (ii) the Initial Pledged Debt and the instruments, if any, evidencing the
Initial Pledged Debt, and all interest, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Initial Pledged Debt;
     (iii) all additional shares of stock and other Equity Interests from time
to time acquired by such Grantor in any manner (such shares and other Equity
Interests, together with the Initial Pledged Interests, being the “Pledged
Interests”), and the certificates, if any, representing such additional shares
or other Equity Interests, and all dividends, distributions, return of capital,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such shares
or other Equity Interests and all warrants, rights or options issued thereon or
with respect thereto;
     (iv) all additional indebtedness from time to time owed to such Grantor
(such indebtedness, together with the Initial Pledged Debt, being the “Pledged
Debt”) and the instruments, if any, evidencing such indebtedness, and all
interest, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such indebtedness; and
     (v) all other investment property (including, without limitation, all (A)
securities, whether certificated or uncertificated, (B) security entitlements,
(C) securities accounts, (D) commodity contracts and (E) commodity accounts) in
which such Grantor has now, or acquires from time to time hereafter, any right,
title or interest in any manner, and the certificates or instruments, if any,
representing or evidencing such investment property, and all dividends,
distributions, return of capital, interest, distributions, value,
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cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
investment property and all warrants, rights or options issued thereon or with
respect thereto;
          (e) each of the agreements listed on Schedule III hereto, each IP
Agreement (as hereinafter defined) and each Hedging Obligation to which such
Grantor is now or may hereafter become a party, in each case as such agreements
may be amended, amended and restated, supplemented or otherwise modified from
time to time (collectively, the “Assigned Agreements”), including, without
limitation, (i) all rights of such Grantor to receive moneys due and to become
due under or pursuant to the Assigned Agreements, (ii) all rights of such
Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty
with respect to the Assigned Agreements, (iii) claims of such Grantor for
damages arising out of or for breach of or default under the Assigned Agreements
and (iv) the right of such Grantor to terminate the Assigned Agreements, to
perform thereunder and to compel performance and otherwise exercise all remedies
thereunder (all such Collateral being the “Agreement Collateral”);
          (f) the following (collectively, the “Account Collateral”):
     (i) the Deposit Accounts, any cash collateral account referred to in
Section 12 hereof (a “Cash Collateral Account”) and all funds and financial
assets from time to time credited thereto (including, without limitation, all
Cash Equivalents), all interest, dividends, distributions, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of such funds and financial assets,
and all certificates and instruments, if any, from time to time representing or
evidencing the Deposit Accounts or any such Cash Collateral Account;
     (ii) all promissory notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time delivered to or otherwise
possessed by the Collateral Trustee for or on behalf of such Grantor, including,
without limitation, those delivered or possessed in substitution for or in
addition to any or all of the then existing Account Collateral; and
     (iii) all interest, dividends, distributions, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the then existing Account
Collateral;
          (g) the following (collectively, the “Intellectual Property
Collateral”):
     (i) all patents, patent applications, utility models and statutory
invention registrations, all inventions claimed or disclosed therein and all
improvements thereto (“Patents”);
     (ii) all trademarks, service marks, domain names, trade dress, logos,
designs, slogans, trade names, business names, corporate names and other source
identifiers, whether registered or unregistered, together, in each case, with
the goodwill symbolized thereby (“Trademarks”);
     (iii) all copyrights, including, without limitation, copyrights in Computer
Software (as hereinafter defined), internet web sites and the content thereof,
whether registered or unregistered (“Copyrights”);
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     (iv) all computer software, programs and databases (including, without
limitation, source code, object code and all related applications and data
files), firmware and documentation and materials relating thereto, together with
any and all maintenance rights, service rights, programming rights, hosting
rights, test rights, improvement rights, renewal rights and indemnification
rights and any substitutions, replacements, improvements, error corrections,
updates and new versions of any of the foregoing (“Computer Software”);
     (v) all confidential and proprietary information, including, without
limitation, know-how, trade secrets, manufacturing and production processes and
techniques, inventions, research and development information, databases and
data, including, without limitation, technical data, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information (collectively, “Trade Secrets”), and
all other intellectual, industrial and intangible property of any type,
including, without limitation, industrial designs and mask works;
     (vi) all registrations and applications for registration for any of the
foregoing (provided that no security interest shall be granted in United States
intent-to-use trademark applications to the extent that, and solely during the
period in which, the grant of a security interest therein would impair the
validity or enforceability of such intent-to-use trademark applications under
applicable federal law), including, without limitation, those registrations and
applications for registration set forth in Schedule VI hereto (as such
Schedule VI may be supplemented from time to time by supplements to this
Agreement, each such supplement being substantially in the form of Exhibit D
hereto (a “Second Lien IP Security Agreement Supplement”) executed by such
Grantor to the Collateral Trustee from time to time), together with all
reissues, divisions, continuations, continuations-in-part, extensions, renewals
and reexaminations thereof;
     (vii) all tangible embodiments of the foregoing, all rights in the
foregoing provided by international treaties or conventions, all rights
corresponding thereto throughout the world and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto;
     (viii) all agreements, permits, consents, orders and franchises relating to
the license, development, use or disclosure of any of the foregoing to which
such Grantor, now or hereafter, is a party or a beneficiary, including, without
limitation, the agreements set forth in Schedule VI hereto (“IP Agreements”);
and
     (ix) any and all claims for damages and injunctive relief for past, present
and future infringement, dilution, misappropriation, violation, misuse or breach
with respect to any of the foregoing, with the right, but not the obligation, to
sue for and collect, or otherwise recover, such damages;
          (h) all commercial tort claims described in Schedule VIII hereto
(collectively the “Commercial Tort Claims Collateral”);
          (i) all books and records (including, without limitation, customer
lists, credit files, printouts and other computer output materials and records)
of such Grantor pertaining to any of the Collateral; and
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          (j) all proceeds of, collateral for, income, royalties and other
payments now or hereafter due and payable with respect to, and supporting
obligations relating to, any and all of the Collateral (including, without
limitation, proceeds, collateral and supporting obligations that constitute
property of the types described in clauses (a) through (i) of this Section 1 and
this clause (j)) and, to the extent not otherwise included, all (A) payments
under insurance (whether or not the Collateral Trustee is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral, (B) tort
claims, including, without limitation, all commercial tort claims and (C) cash;
provided, however, that (i) any pledge pursuant to the provisions of this
Section 1 of the capital stock or other Equity Interests in any Subsidiary that
is not a Domestic Subsidiary, where such Subsidiary is a “controlled foreign
corporation” under Section 957 of the U.S. Internal Revenue Code and the pledge
of any greater percentage would result in material adverse tax consequences to
the Company, shall be limited to 65% of such capital stock or other Equity
Interests (or such greater percentage as shall not result in such material
adverse tax consequences), (ii) there shall be no pledge of the capital stock or
other Equity Interests in Terremark Federal Group, Inc., a Delaware corporation,
or Technology Center of the Americas, LLC, a Delaware limited liability company,
(iii) notwithstanding anything to the contrary contained in clause (g) above,
Intellectual Property Collateral shall not include intellectual property in
relation to which any applicable law or regulation, or any agreement with a
domain name registrar or any other Person entered into by the Grantor in the
ordinary course of business and existing on the date hereof, prohibits the
creation of a security interest therein or would otherwise invalidate such
Grantor’s right, title or interest therein; (iv) the security interest granted
herein shall not extend to and the term “Collateral” shall not include any
lease, license, contract, property rights or agreements to which any Grantor is
a party or any of its rights (including property rights with respect to the
equipment) or interests thereunder if and for so long as the grant of such
security interest shall constitute or result in (x) the abandonment,
invalidation or unenforceability of any right, title or interest of any debtor
therein or (y) in a breach or termination pursuant to the terms of, or a default
under any such lease, license, contract or agreement (other than to the extent
that any such term would be rendered ineffective pursuant to Sections 9-406,
9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of
any relevant jurisdiction or any other applicable law (including the Bankruptcy
Code) or principles of equity); provided, however, that such security interest
shall attach immediately at such time as the condition causing such abandonment,
invalidation or unenforceability shall be remedied and to the extent severable,
shall attach immediately to any portion of such lease, license, contract, or
agreement that does not result in any of the consequences specified in (x) or
(y) above; (v) the Collateral shall not include any interests of the Company or
any Grantor in any contract, license, permit, authorization or franchise with
government authorities relating to the Permitted Business (as defined in the
Second Lien Indenture); provided that the security interest granted under this
Agreement shall attach to any contract, license, permit, authorization or
franchise relating to the Permitted Business, to which the applicable
governmental authority has consented to the grant of a security interest under
the Security Documents; and (vi) after-acquired property designated as an
“Excluded Asset” pursuant to the Second Lien Indenture (the items described in
the foregoing clauses (ii) through (vi) collectively, the “Excluded Assets”).
Notwithstanding the immediately preceding sentence, if at any time such property
or asset ceases to be an Excluded Asset, then the right to receive, and any
interest in, all proceeds of, or monies or other consideration received from or
attributable to the sale, transfer, assignment or other disposition of such
assets shall not constitute Excluded Assets. Notwithstanding the foregoing, the
Collateral shall include (and Excluded Assets shall be deemed to exclude)
(x) the right to receive all proceeds derived from the sale, assignment,
transfer or transfer of control of Excluded Assets (unless such right
independently constitutes Excluded Assets) and (y) proceeds of Excluded Assets
(unless such proceeds independently constitute Excluded Assets).
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          Section 2. Security for Obligations. This Agreement secures, in the
case of each Grantor, the payment of all Secured Obligations of such Grantor now
or hereafter existing under the Junior Lien Documents, whether direct or
indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, fees, premiums, penalties, indemnifications, contract
causes of action, costs, expenses or otherwise. Without limiting the generality
of the foregoing, this Agreement secures, as to each Grantor, the payment of all
amounts that constitute part of the Secured Obligations and would be owed by
such Grantor to any Secured Party under the Junior Lien Documents but for the
fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving any Grantor.
          Section 3. Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in such Grantor’s Collateral to the extent set forth therein
to perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Collateral Trustee
of any of the rights hereunder shall not release any Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral and (c) no Secured Party shall have any obligation or liability under
the contracts and agreements included in the Collateral by reason of this
Agreement or any other Junior Lien Document, nor shall any Secured Party be
obligated to perform any of the obligations or duties of any Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
          Section 4. Delivery and Control of Security Collateral. Subject to the
terms of the Collateral Trust Agreement:
          (a) All certificates or instruments representing or evidencing
Security Collateral shall be delivered to and held by or on behalf of the
Collateral Trustee pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Collateral Trustee. With respect to the delivery of Security Documents covering
the pledge of a Grantor’s Equity Interest in any Subsidiary that is not a
Domestic Subsidiary, such Grantor shall, within 120 days after the date hereof,
use reasonable best efforts to prepare, execute and deliver such Security
Documents evidencing the pledge of such Equity Interest to the Collateral
Trustee, such Security Documents to be in form and substance satisfactory to the
Collateral Trustee. Upon the occurrence and during the continuance of any event
or condition which, under the terms of any Junior Lien Document, causes or
permits the holders of any Junior Lien Obligations to cause such Junior Lien
Obligations to become immediately due and payable (with the giving of notice or
passage of time or both) (a “Junior Lien Event of Default”), the Collateral
Trustee shall have the right, subject to the terms of the Collateral Trust
Agreement, (i) at any time to exchange certificates or instruments representing
or evidencing Security Collateral for certificates or instruments of smaller or
larger denominations and (ii) at any time in its discretion and without notice
to any Grantor, to transfer to or to register in the name of the Collateral
Trustee or any of its nominees any or all of the Security Collateral, subject
only to the revocable rights specified in Section 14(a).
          (b) With respect to any Security Collateral in which any Grantor has
any right, title or interest and that constitutes an uncertificated security,
such Grantor will cause the issuer thereof (or, if the issuer thereof is not a
Subsidiary of such Grantor, will use commercially reasonable efforts to cause
the issuer thereof) either (i) to register the Collateral Trustee as the
registered owner of such security or (ii) to agree in an authenticated record
with such Grantor and the Collateral Trustee that such issuer will comply with
instructions with respect to such security originated by the Collateral Trustee
without further consent of such Grantor, such authenticated record to be in form
and substance satisfactory to the Collateral Trustee. With respect to any
Security Collateral in which any Grantor has any right, title or interest and
that is not an uncertificated security, upon the request of the Collateral
Trustee upon the
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occurrence and during the continuance of a Junior Lien Event of Default such
Grantor will notify each such issuer of Pledged Interests pledged by such
Grantor that such Pledged Interests is subject to the security interest granted
hereunder.
          (c) With respect to any Security Collateral in which any Grantor has
any right, title or interest and that constitutes a security entitlement in
which the Collateral Trustee is not the entitlement holder, such Grantor will
cause the securities intermediary with respect to such security entitlement
either (i) to identify in its records the Collateral Trustee as the entitlement
holder of such security entitlement against such securities intermediary or
(ii) no later than 120 days after the date hereof (or such later date as may be
specified by the Collateral Trustee in its sole discretion), to agree in an
authenticated record with such Grantor and the Collateral Trustee that such
securities intermediary will comply with entitlement orders (that is,
notifications communicated to such securities intermediary directing transfer or
redemption of the financial asset to which such Grantor has a security
entitlement) originated by the Collateral Trustee without further consent of
such Grantor, such authenticated record to be in substantially the form of
Exhibit B hereto or otherwise in form and substance reasonably satisfactory to
the Collateral Trustee.
          (d) No Grantor will change or add any securities intermediary that
maintains any securities account in which any of the Collateral is credited or
carried, or change or add any such securities account, without first complying
with the above provisions of this Section 4 in order to perfect the security
interest granted hereunder in such Collateral.
          (e) Upon delivery of a written request of the Collateral Trustee upon
the occurrence and during the continuance of a Junior Lien Event of Default and
subject to the terms of the Collateral Trust Agreement, such Grantor will notify
each such issuer of Pledged Debt that such Pledged Debt pledged by such Grantor
is subject to the security interest granted hereunder.
          Section 5. Maintaining the Account Collateral. Subject to the terms of
the Collateral Trust Agreement and so long as any Secured Obligation, and if
applicable, any Hedging Obligation (as defined in any Junior Lien Document)
secured by the Collateral or commitment to advance funds to a Grantor which if
advanced would constitute Secured Obligations shall be in effect:
          (a) No later than 120 days after the date hereof, as such date may be
extended on the terms permitted by the Second Lien Indenture or Collateral Trust
Agreement, at all times thereafter, each Grantor will maintain all Account
Collateral only with the Collateral Trustee or with a bank (the “Pledged Account
Bank”) that has agreed, in a record authenticated by the Grantor, the Collateral
Trustee and the Pledged Account Bank, to (A) comply with instructions originated
by the Collateral Trustee directing the disposition of funds in the Account
Collateral without the further consent of the Grantor following the occurrence
of a Junior Lien Event of Default and (B) waive or subordinate in favor of the
Collateral Trustee all claims of the Pledged Account Bank (including, without
limitation, claims by way of a security interest, lien or right of setoff or
right of recoupment) to the Account Collateral, which authenticated record shall
be substantially in the form of Exhibit B hereto, or shall otherwise be in form
and substance reasonably satisfactory to the Collateral Trustee (an “Account
Control Agreement”); provided that, with respect to any newly created Account
Collateral, each Grantor will be required to comply with the foregoing
requirements with respect to such newly created Account Collateral no later than
sixty (60) days after the creation of such Account Collateral; provided further,
that no Account Control Agreement shall be required in respect of deposit,
checking or securities accounts the individual balance of which does not exceed
$2,500,000 and does not exceed, when aggregated with the balance of all other
such deposit, checking and securities accounts for which no corresponding
Account Control Agreement is in effect, $10,000,000.
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          (b) Each Grantor agrees that it will not add any bank that maintains a
deposit account for such Grantor or open any new deposit account with any then
existing Pledged Account Bank unless, (A) the Collateral Trustee shall have
received at least 10 days’ prior written notice of such additional bank or such
new deposit account and (B) the Collateral Trustee shall have received, in the
case of a bank or Pledged Account Bank that is not the Collateral Trustee, an
Account Control Agreement authenticated by such new bank and such Grantor, or a
supplement to an existing Account Control Agreement with such then existing
Pledged Account Bank, covering such new deposit account (and, upon the receipt
by the Collateral Trustee of such Account Control Agreement or supplement,
Schedule VII hereto shall be automatically amended to include such Deposit
Account). Upon a Grantor’s termination of any bank as a Pledged Account Bank or
termination of any Account Collateral, such Grantor shall promptly give notice
of such termination to the Collateral Trustee and deliver to the Collateral
Trustee and the Trustee a certificate of an acceptable officer of such Grantor
detailing the Account Collateral to be terminated and certifying that such
termination is permitted under the Secured Debt Documents (and, upon such
termination, Schedule VII hereto shall be automatically amended to delete such
Pledged Account Bank and Deposit Account); provided, however, that, unless the
Collateral Trustee has given its express consent, no Grantor may (1) terminate
any bank as a Pledged Account Bank with respect to any Cash Collateral Account,
(2) terminate any Cash Collateral Account, or (3) terminate any bank as a
Pledged Account Bank if a Junior Lien Event of Default has occurred and is
continuing.
          (c) Upon any termination by a Grantor of any Deposit Account by such
Grantor, or any Pledged Account Bank with respect thereto, such Grantor will
immediately (i) transfer all funds and property held in such terminated Deposit
Account to another Deposit Account listed in Schedule VII or to a Cash
Collateral Account and (ii) notify all Persons obligated at any time to make any
payment to such Grantor for any reason that were making payments to such Deposit
Account to make all future payments to another Deposit Account listed in
Schedule VII hereto or to a Cash Collateral Account, in each case so that the
Collateral Trustee shall have a continuously perfected security interest in such
Account Collateral, funds and property. Each Grantor agrees to terminate any or
all Account Control Agreements upon request by the Collateral Trustee.
          (d) The Collateral Trustee shall have sole right to direct the
disposition of funds with respect to any Cash Collateral Account; and it shall
be a term and condition of any Cash Collateral Account, notwithstanding any term
or condition to the contrary in any other agreement relating to any Cash
Collateral Account, that no amount (including, without limitation, interest on
Cash Equivalents credited thereto) will, except on the Collateral Trustee’s
instructions, be paid or released to or for the account of, or withdrawn by or
for the account of, the Company or any other Person from any Cash Collateral
Account.
          (e) Subject to the terms of the Collateral Trust Agreement, if a
Junior Lien Event of Default shall have occurred and be continuing, the
Collateral Trustee may, at any time and without notice to, or consent from, the
Grantor, (i) transfer, or direct the transfer of, funds from the Account
Collateral to satisfy the Grantor’s obligations under the Junior Lien Documents
and (ii) transfer, or direct the transfer of, funds from the Deposit Accounts to
a Cash Collateral Account.
          Section 6. Release of Amounts. Subject to the terms of the Collateral
Trust Agreement and so long as no Junior Lien Event of Default shall have
occurred and be continuing, the Collateral Trustee will pay and release, or
direct the applicable Pledged Account Bank to pay and release, to the Company or
at its order or, at the request of the Company, to the Second Lien Trustee to be
applied to the Secured Obligations of the Company under the Junior Lien
Documents, such amount, if any, as is then on deposit in any Cash Collateral
Account to the extent permitted to be released under the terms of the Collateral
Trust Agreement or the Junior Lien Documents.
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          Section 7. Maintaining Electronic Chattel Paper, Transferable Records
and Letter-of-Credit Rights and Giving Notice of Commercial Tort Claims. Subject
to the terms of the Collateral Trust Agreement and so long as any Secured
Obligation shall remain unpaid or unsatisfied, if applicable, any letter of
credit or Hedging Obligation secured by the Collateral or commitment to advance
funds to a Grantor which if advanced would constitute Secured Obligations shall
be in effect shall be in effect:
          (a) Each Grantor will maintain all (i) electronic chattel paper so
that the Collateral Trustee has control of the electronic chattel paper in the
manner specified in Section 9-105 of the UCC and (ii) all transferable records
so that the Collateral Trustee has control of the transferable records in the
manner specified in Section 16 of the Uniform Electronic Transactions Act, as in
effect in the jurisdiction governing such transferable record (“UETA”); and
          (b) Each Grantor will promptly give notice to the Collateral Trustee
of any material commercial tort claim that such Grantor has from time to time
that may arise in the future and will promptly execute or otherwise authenticate
a supplement to this Agreement, and otherwise take all necessary action, to
subject such commercial tort claim to the second priority security interest
created under this Agreement.
          Section 8. Representations and Warranties. Each Grantor represents and
warrants as of the date hereof and on the date of incurrence of any new Series
of Junior Lien Debt as follows:
          (a) Such Grantor’s exact legal name, as defined in Section 9-503(a) of
the UCC, is correctly set forth in Schedule I hereto. Within the past 5 years,
such Grantor has only the trade names listed on Schedule VI hereto. Such Grantor
is located (within the meaning of Section 9-307 of the UCC) and has its chief
executive office in the state or jurisdiction set forth in Schedule I hereto.
The information set forth in Schedule I hereto with respect to such Grantor is
true and accurate in all respects. Such Grantor has not within the last 5 years
changed its legal name, as defined in Section 9-503(a) of the UCC, location
(within the meaning of Section 9-307 of the UCC), chief executive office, place
where it maintains its agreements, type of organization, jurisdiction of
organization or organizational identification number from those set forth in
Schedule I hereto except as disclosed in Schedule V hereto.
          (b) All of the Equipment and Inventory of such Grantor, other than
Equipment and Inventory out for repair, in transit, on consignment or in the
possession of lessees in the ordinary course of business, are located at the
places specified therefor in Schedule IV hereto, as such Schedule IV may be
amended from time to time pursuant to Section 10(a). All Security Collateral
consisting of certificated securities and instruments with an individual face
value in excess of $200,000 have been delivered to the Collateral Trustee;
provided that, Security Collateral that is not required to be delivered to the
Collateral Trustee pursuant to the foregoing shall not exceed an aggregate face
value of $1,000,000. All originals of all chattel paper that evidence
Receivables individually or in the aggregate in an amount in excess of $200,000
have been delivered to the Collateral Trustee, in each case to the extent that
the delivery thereof to the Collateral Trustee is required under Section 4. None
of the Receivables or Agreement Collateral is evidenced by a promissory note or
other instrument that has not been delivered to the Collateral Trustee as
required hereunder.
          (c) Such Grantor is the legal and beneficial owner of the Collateral
of such Grantor free and clear of any Lien, claim, option, or right of others,
other than Liens permitted under any Parity Lien Document or any Junior Lien
Document. No Grantor has authorized the filing of any effective financing
statement or other instrument similar in effect covering all or any part of such
Collateral or listing such Grantor or, to such Grantor’s knowledge, any trade
name of such Grantor, as debtor in any recording office and, to the best
knowledge of such Grantor, no such financing statement (whether or not
authorized by such Grantor) is on file in any recording office, except such as
may have been filed in favor
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of the Collateral Trustee relating to the Parity Lien Documents or Junior Lien
Documents or as may have been filed in connection with a Lien, claim, option or
right of others that is not prohibited under a Parity Lien Document or a Junior
Lien Document.
          (d) Such Grantor has exclusive possession and control of the Equipment
and Inventory other than Equipment and Inventory out for repair, in transit, on
consignment or in the possession of lessees in the ordinary course of business,
or stored at any leased premises or warehouse. All leased premises or warehouses
storing Equipment and Inventory are so indicated by an asterisk on Schedule IV
hereto, as such Schedule IV may be amended from time to time pursuant to
Section 10(a). In the case of Equipment and Inventory located on leased premises
or in warehouses, no lessor or warehouseman of any premises or warehouse upon or
in which such Equipment or Inventory is located has (i) issued any warehouse
receipt or other receipt in the nature of a warehouse receipt in respect of any
Equipment or Inventory, (ii) issued any document for any of such Grantor’s
Equipment or Inventory, (iii) to the Grantor’s knowledge, received notification
of any Secured Party’s interest (other than the security interest granted
hereunder or under the Parity Lien Documents) in such Grantor’s Equipment or
Inventory or (iv) any Lien, claim or charge (based on contract, statute or
otherwise) on such Equipment and Inventory, other than Liens created or
permitted under the Parity Lien Documents or the Junior Lien Documents.
          (e) The Pledged Interests pledged by such Grantor hereunder have been
duly authorized and validly issued and, in the case of Pledged Interests issued
by a corporation, are fully paid and non-assessable. With respect to any Pledged
Interests that are uncertificated securities, such Grantor has caused (or, in
the case of any issuer that is not a Subsidiary of such Grantor, has used
commercially reasonable efforts to cause) the issuer thereof either (i) to
register the Collateral Trustee as the registered owner of such securities or
(ii) to agree in an authenticated record with such Grantor and the Collateral
Trustee that such issuer will comply with instructions with respect to such
securities originated by the Collateral Trustee without further consent of such
Grantor. If such Grantor is an issuer of Pledged Interests, such Grantor
confirms that it has received notice of such security interest. The Pledged Debt
pledged by such Grantor hereunder has been duly authorized, authenticated or
issued and delivered, is the legal, valid and binding obligation of each issuer
thereof, is evidenced by one or more promissory notes (which notes with an
individual face value in excess of $200,000 have been delivered to the
Collateral Trustee) and is not in default; provided that, notes that are not
required to be delivered to the Collateral Trustee pursuant to the foregoing
shall not exceed an aggregate face value of $1,000,000.
          (f) The Initial Pledged Interests pledged by such Grantor constitute
the percentage of the issued and outstanding Equity Interests of the issuers
thereof indicated on Schedule II hereto. The Initial Pledged Debt constitutes
all of the outstanding indebtedness owed to such Grantor by the issuers thereof
and is outstanding in the principal amount indicated on Schedule II hereto.
          (g) All of the investment property owned by such Grantor is listed on
Schedule II hereto.
          (h) Such Grantor has no deposit accounts, other than the Account
Collateral listed on Schedule VII hereto, as such Schedule VII may be amended
from time to time pursuant to Section 5(b), and legal, binding and enforceable
Account Control Agreements are in effect for each deposit account that
constitutes Account Collateral (other than Account Collateral consisting of
deposit accounts maintained with the Collateral Trustee), except to the extent
such Account Control Agreements are not required by Section 5(a) to be in effect
as of the date hereof or for which none are required.
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          (i) Such Grantor is not a beneficiary or assignee under any letter of
credit, other than the letters of credit described in Schedule IX hereto, as
such Schedule IX may be amended from time to time.
          (j) All filings and other actions (including, without limitation,
(A) actions necessary to obtain control of Collateral as provided in
Sections 9-104, 9-105 and 9-107 of the UCC and Section 16 of UETA and
(B) actions necessary to perfect the Collateral Trustee’s security interest with
respect to Collateral evidenced by a certificate of ownership to the extent such
actions are required by the terms of this Agreement, but excluding such filings
and actions that are permitted to be completed after the date hereof pursuant to
Sections 4(a), 4(c) and 5(a)) necessary to perfect the security interest in the
Collateral of such Grantor created under this Agreement, subject to the terms of
the Collateral Trust Agreement, have been (or contemporaneously herewith will
be) duly made or taken and are (or, upon filing or taking of such other actions,
will be) in full force and effect, and this Agreement creates in favor of the
Collateral Trustee for the benefit of the Secured Parties a valid and, together
with such filings and other actions, perfected second priority security interest
in the Collateral of such Grantor, subject to Liens permitted under the Parity
Lien Documents or the Junior Lien Documents, securing the payment of the Secured
Obligations.
          (k) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other third
party is required for (i) the grant by such Grantor of the security interest
granted hereunder or for the execution, delivery or performance of this
Agreement by such Grantor, (ii) the perfection or maintenance of the second
priority security interest created hereunder (including the second priority
nature of such security interest, subject to Liens permitted under the Parity
Lien Documents or the Junior Lien Documents to be prior to such security
interest), except for the filing of financing and continuation statements under
the UCC, which financing statements have been (or contemporaneously herewith
will be) duly filed and are (or, upon filing, will be) in full force and effect,
the recordation of the Second Lien Intellectual Property Security Agreements
referred to in Section 13(f) with the U.S. Patent and Trademark Office and the
U.S. Copyright Office, which Agreements have been (or contemporaneously herewith
will be) duly submitted for recordation and are (or, upon such submission, will
be) in full force and effect, and the actions described in Section 4 with
respect to Security Collateral and Sections 5 and 7, which actions to the extent
required hereby have been (or contemporaneously herewith will be) taken and are
(or, upon the taking of such actions, will be) in full force and effect, or
(iii) the exercise by the Collateral Trustee of its voting or other rights
provided for in this Agreement or the remedies in respect of the Collateral
pursuant to this Agreement, except as may be required in connection with the
disposition of any portion of the Security Collateral by laws affecting the
offering and sale of securities generally.
          (l) The Inventory that has been produced or distributed by such
Grantor has been produced in compliance in all material respects with the
requirements of all applicable laws, including, without limitation, the Fair
Labor Standards Act.
          (m) As to itself and its Intellectual Property Collateral:
     (i) Except as described on Schedule VI or as would not reasonably be
expected to have a Material Adverse Effect, to each Grantor’s knowledge, the
operation of such Grantor’s business as currently conducted and such Grantor’s
use of the Intellectual Property Collateral in connection therewith do not
infringe, misappropriate, or dilute the intellectual property rights of any
third party.
     (ii) Except as described on Schedule VI, (A) such Grantor is the exclusive
owner of all right, title and interest in and to the Intellectual Property
Collateral owned by
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such Grantor and material to such Grantor’s business, (B) with respect to all
Intellectual Property Collateral licensed from third parties, to such Grantor’s
knowledge, such Grantor has the right to use all such Intellectual Property
Collateral subject only to the terms of the IP Agreements and applicable law or
regulation, and (C) with respect to all other Intellectual Property Collateral,
such Grantor has the right to use all such Intellectual Property Collateral
subject only to the terms of the IP Agreements and applicable law or regulation
and except with respect to third party patents with respect to which such
Grantor has no knowledge.
     (iii) The Intellectual Property Collateral set forth on Schedule VI hereto
includes all of the patents, patent applications, domain names, trademark
registrations and applications, copyright registrations and applications owned
by such Grantor and material IP Agreements to which such Grantor is a party.
     (iv) Except as would not reasonably be expected to have a Material Adverse
Effect, the patents, copyrights registrations and trademark registrations
forming part of the Intellectual Property Collateral are subsisting and have not
been adjudged invalid or unenforceable in whole or part. Except as would not
reasonably be expected to have a Material Adverse Effect, such Grantor is not
aware of any uses of any item of owned and registered Intellectual Property
Collateral that could reasonably be expected to lead to such item becoming
invalid or unenforceable except as described on Schedule VI.
     (v) Except as set forth on Schedule VI, such Grantor has made or performed
all filings, recordings and other acts and has paid all required fees and taxes
necessary to maintain and protect its interest in each registration owned by
such Grantor for a material item of owned and registered Intellectual Property
Collateral in full force and effect. Such Grantor has used proper statutory
notice in connection with its use of each such material patent, registered
trademark and copyright forming part of the Intellectual Property Collateral.
     (vi) Except as described on Schedule VI, no claim, action, suit,
investigation, litigation or proceeding is pending or, to such Grantor’s
knowledge, has been asserted or threatened against such Grantor (A) based upon
or challenging or seeking to deny or restrict the Grantor’s rights in or use of
any of the Intellectual Property Collateral, (B) alleging that the Grantor’s
rights in or use of the Intellectual Property Collateral or that any services
provided by, processes used by, or products manufactured or sold by, such
Grantor infringe, misappropriate, dilute, misuse or otherwise violate any
patent, trademark, copyright or any other proprietary right of any third party,
or (C) alleging that the Intellectual Property Collateral is being licensed or
sublicensed in material violation or contravention of the terms of any license
or other agreement to which such Grantor is a party; provided that any claim,
action, suit, investigation or proceeding that has been initiated but with
respect to which such Grantor has not been served with process or otherwise has
not received notice thereof shall be deemed to be threatened and not pending.
Except as described on Schedule VI, to such Grantor’s knowledge no Person is
engaging in any activity that infringes, misappropriates, dilutes, misuses or
otherwise violates the Intellectual Property Collateral or the Grantor’s rights
in or use thereof. Except as set forth on Schedule VI hereto or as permitted
under the Parity Lien Documents or the Junior Lien Documents, such Grantor has
not granted any license, release, covenant not to sue, non-assertion assurance,
or other right to any Person with respect to any part of the material
Intellectual Property Collateral. Except as would not reasonably be expected to
have a Material Adverse Effect, the consummation of the
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transactions contemplated by the Junior Lien Documents will not result in the
termination or impairment of any of the Intellectual Property Collateral.
     (vii) With respect to each material IP Agreement (and assuming the due
authorization of and execution by any third parties thereto): (A) such IP
Agreement is valid and binding and in full force and effect; (B) such IP
Agreement will not cease to be valid and binding and in full force and effect on
terms identical to those currently in effect as a result of the rights and
interest granted herein, nor will the grant of such rights and interest
constitute a breach or default under such IP Agreement or otherwise give any
party thereto a right to terminate such IP Agreement; (C) such Grantor has not
received any notice of termination or cancellation under such IP Agreement;
(D) such Grantor has not received any notice of a breach or default under such
IP Agreement, which breach or default has not been cured and (E) neither such
Grantor nor, to such Grantor’s knowledge, any other party to such IP Agreement
is in breach or default thereof in any material respect, and no event has
occurred that, with notice or lapse of time or both, would constitute such a
breach or default by such Grantor or, to Grantor’s knowledge, by any other party
thereto or permit termination, modification or acceleration under such IP
Agreement by any other party thereto or, to such Grantor’s knowledge, by such
Grantor.
     (viii) To such Grantor’s knowledge, (A) none of the material Trade Secrets
of such Grantor has been used, divulged or disclosed without authorization or
legal compulsion or has been misappropriated to the detriment of such Grantor
for the benefit of any other Person other than such Grantor or another Grantor;
(B) no employee, independent contractor or agent of such Grantor has
misappropriated any material Trade Secrets of any other Person in the course of
the performance of his or her duties as an employee, independent contractor or
agent of such Grantor; and (C) no employee, independent contractor or agent of
such Grantor is in material default or breach of any term of any employment
agreement, non-disclosure agreement, assignment of inventions agreement or
similar agreement or contract with such Grantor relating in any way to the
protection, ownership, development, use or transfer of such Grantor’s
Intellectual Property Collateral.
     (ix) Except as described on Schedule VI: (A) no Intellectual Property
Collateral owned by such Grantor, (B) to such Grantor’s knowledge, no
Intellectual Property Collateral licensed from third parties, and (C) no other
Intellectual Property Collateral is, in each case, subject to any outstanding
consent, settlement, decree, order, injunction, judgment or ruling restricting
the use of any material Intellectual Property Collateral or, except with respect
to Intellectual Property Collateral that is required to be registered or
patented to be valid and enforceable and is not registered or patented, that
would impair the validity or enforceability of such Intellectual Property
Collateral.
          (n) The Grantor has no material commercial tort claims (as defined in
Section 9-102(13) of the UCC) other than those listed in Schedule VIII hereto.
          Section 9. Further Assurances. Subject to the terms of the Collateral
Trust Agreement:
          (a) Each Grantor agrees that from time to time, at the expense of such
Grantor, such Grantor will promptly execute and deliver, or otherwise
authenticate, all further instruments and documents, and take all further action
that may be necessary, and all further commercially reasonable action that may
be desirable or that the Collateral Trustee may reasonably request, in order to
perfect and protect any pledge or security interest granted or purported to be
granted by such Grantor hereunder or to
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enable the Collateral Trustee to exercise and enforce its rights and remedies
hereunder with respect to any Collateral of such Grantor. Without limiting the
generality of the foregoing, each Grantor will promptly with respect to
Collateral of such Grantor, and subject to the terms of the Collateral Trust
Agreement: (i) if a Junior Lien Event of Default shall have occurred and be
continuing or if requested by the Collateral Trustee, mark conspicuously each
document included in Inventory, with an individual face value in excess of
$200,000 (the aggregate amount of such Inventory not to exceed $1,000,000), each
chattel paper included in Receivables and, at the request of the Collateral
Trustee, each of its records pertaining to such Collateral with a legend, in
form and substance satisfactory to the Collateral Trustee, indicating that such
document, chattel paper, Related Contract, Assigned Agreement or Collateral is
subject to the security interest granted hereby; (ii) if any such Collateral
shall be evidenced by a promissory note or other instrument or chattel paper
individually or in the aggregate in an amount in excess of $200,000, deliver and
pledge to the Collateral Trustee hereunder such note or instrument or chattel
paper duly indorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance reasonably satisfactory to the Collateral
Trustee; (iii) authorize and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, or as the Collateral Trustee may reasonably request, in order to
perfect and preserve the security interest granted or purported to be granted by
such Grantor hereunder; (iv) deliver and pledge to the Collateral Trustee for
benefit of the Secured Parties certificates representing Security Collateral
that constitutes certificated securities, accompanied by undated stock or bond
powers executed in blank; (v) take all commercially reasonable action necessary
to ensure that the Collateral Trustee has control of Collateral consisting of
deposit accounts (other than those accounts specifically excluded pursuant to
Section 5(a), electronic chattel paper, investment property, letter-of-credit
rights and transferable records as provided in Sections 9-104, 9-105, 9-106 and
9-107 of the UCC and in Section 16 of UETA; (vi) at the request of the
Collateral Trustee, take all commercially reasonable action to ensure that the
Collateral Trustee’s security interest is noted on any certificate of ownership
related to any Collateral evidenced by a certificate of ownership; and
(vii) deliver to the Collateral Trustee evidence that all other action that the
Collateral Trustee may reasonably deem necessary and all further commercially
reasonable action that the Collateral Trustee may deem desirable in order to
perfect and protect the security interest created by such Grantor under this
Agreement has been taken.
          (b) Each Grantor hereby authorizes the Collateral Trustee to, but the
Collateral Trustee will not be responsible to, file one or more financing or
continuation statements, and amendments thereto, including, without limitation,
one or more financing statements indicating that such financing statements cover
all assets or all personal property (or words of similar effect) of such
Grantor, in each case without the signature of such Grantor, and regardless of
whether any particular asset described in such financing statements falls within
the scope of the UCC or the granting clause of this Agreement. A photocopy or
other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law. Each Grantor ratifies its authorization for the
Collateral Trustee to have filed such financing statements, continuation
statements or amendments filed prior to the date hereof.
          (c) Each Grantor will furnish to the Collateral Trustee from time to
time statements and schedules further identifying and describing the Collateral
of such Grantor and such other reports in connection with such Collateral as the
Collateral Trustee may reasonably request, all in reasonable detail and similar
in nature and scope to other statements and schedules required under or
constituting a part of this Agreement.
          Section 10. As to Equipment and Inventory. (a) Each Grantor will keep
the material Equipment and Inventory of such Grantor (other than Inventory sold
in the ordinary course of business or pursuant to the terms of the Parity Lien
Documents and the Junior Lien Documents, or Equipment in transit in the ordinary
course of business consistent with past practices) at the places therefor
specified in
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Section 8(b) or, upon 15 days’ prior written notice to the Collateral Trustee,
at such other places designated by the Grantor in such notice. Upon the giving
of such notice, Schedule IV shall be automatically amended to add any new
locations specified in the notice.
          (b) Each Grantor will cause the Equipment of such Grantor to be
maintained and preserved in the same condition, repair and working order,
ordinary wear and tear excepted, and will forthwith, or in the case of any loss
or damage to any of such Equipment as soon as practicable after the occurrence
thereof, make or cause to be made all necessary repairs, replacements and other
improvements in connection therewith that are necessary or desirable to such
end. Each Grantor will promptly furnish to the Collateral Trustee a statement
respecting any loss or damage exceeding $2,000,000 to any of the Equipment or
Inventory of such Grantor.
          (c) In producing its Inventory, each Grantor will comply with all
requirements of applicable law, including, without limitation, the Fair Labor
Standards Act.
          Section 11. Insurance. (a) Each Grantor will, at its own expense,
maintain insurance with respect to the Equipment and Inventory of such Grantor
in such amounts, against such risks, in such form and with such insurers, as are
required with respect to the Company and its Subsidiaries by the Junior Lien
Documents. Each policy of each Grantor for liability insurance shall provide for
all losses to be paid on behalf of the Collateral Trustee and such Grantor as
their interests may appear, and each policy for property damage insurance shall
provide for all losses (except for losses of less than $200,000 per occurrence)
to be paid directly to the Collateral Trustee. Each such policy shall in
addition (i) name such Grantor and the Collateral Trustee as insured parties
thereunder (without any representation or warranty by or obligation upon the
Collateral Trustee) as their interests may appear, (ii) contain the agreement by
the insurer that any loss thereunder shall be payable to the Collateral Trustee
notwithstanding any action, inaction or breach of representation or warranty by
such Grantor, (iii) provide that there shall be no recourse against the
Collateral Trustee for payment of premiums or other amounts with respect thereto
and (iv) provide that at least 30 days’ prior written notice of cancellation or
of lapse shall be given to the Collateral Trustee by the insurer. Each Grantor
will, if so requested by the Collateral Trustee, deliver to the Collateral
Trustee original or duplicate policies of such insurance and, as often as the
Collateral Trustee may reasonably request, a report of a reputable insurance
broker with respect to such insurance.
          (b) Reimbursement under any liability insurance maintained by any
Grantor pursuant to this Section 11 may be paid directly to the Person who shall
have incurred liability covered by such insurance. In case of any loss involving
damage to Equipment or Inventory when subsection (c) of this Section 11 is not
applicable, the applicable Grantor will make or cause to be made the necessary
repairs to or replacements of such Equipment or Inventory, and any proceeds of
insurance properly received by or released to such Grantor shall be used by such
Grantor, except as otherwise required hereunder or by the Junior Lien Documents,
to pay or as reimbursement for the costs of such repairs or replacements.
          (c) So long as no Junior Lien Event of Default shall have occurred and
be continuing and subject to the terms of the Collateral Trust Agreement, all
insurance payments received by the Collateral Trustee in connection with any
loss, damage or destruction of any Inventory or Equipment will be released by
the Collateral Trustee to the applicable Grantor for the repair, replacement or
restoration thereof, subject to such terms and conditions with respect to the
release thereof as the Collateral Trustee may reasonably require; provided,
however, that in connection with any request for release, the Collateral Trustee
shall have received a certificate of an acceptable officer of the Company
detailing the items to be released and certifying that such release is permitted
under the terms of the Secured Debt Documents. Upon the occurrence and during
the continuance of any Junior Lien Event of Default and subject to the terms of
the Collateral Trust Agreement, all insurance payments in respect of Equipment
or Inventory shall be paid to the Collateral Trustee and shall, in the
Collateral Trustee’s sole discretion, (i) be released
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to the applicable Grantor to be applied as set forth in the first sentence of
this subsection (c) or (ii) be held as additional Collateral hereunder or
applied as specified in Section 22(b).
          Section 12. Post-Closing Changes; Bailees; Collections on Assigned
Agreements, Receivables and Related Contracts. (a) No Grantor will change its
name (as defined in Section 9-503 of the UCC), type of organization,
jurisdiction of organization, organizational identification number or location
(as defined in Section 9-307 of the UCC) from those set forth in Section 8(a) of
this Agreement without first giving at least 10 Business Days’ prior written
notice to the Collateral Trustee and taking all action required by law and/or
upon the reasonable request of the Collateral Trustee (which request it will not
be required to provide) for the purpose of perfecting or protecting the security
interest granted by this Agreement. Each Grantor agrees that it will give the
Collateral Trustee notice of any change in the location of the Equipment and
Inventory (other than Equipment or Inventory out for repair, in transit or on
consignment in the ordinary course of business) or the place where it keeps the
copies of the Assigned Agreements and Related Contracts to which such Grantor is
a party and all originals of all chattel paper that evidence Receivables of such
Grantor from the locations therefor specified in Sections 8(a) and 8(b) within
10 Business Days after such change. No Grantor will authenticate a security
agreement (determined as provided in Section 9-203(d) of the UCC) for
obligations in excess of $200,000 without giving the Collateral Trustee 10
Business Days’ prior written notice thereof and taking all action reasonably
required by the Collateral Trustee to ensure that the perfection and second
priority nature of the Collateral Trustee’s security interest in the Collateral
granted hereunder (subject to Liens permitted under the Parity Lien Documents or
the Junior Lien Documents) will be maintained. Each Grantor will hold and
preserve its records relating to the Collateral, including, without limitation,
the Assigned Agreements and Related Contracts. If the Grantor does not have an
organizational identification number and later obtains one, it will forthwith
notify the Collateral Trustee of such organizational identification number.
          (b) If any Collateral of any Grantor is at any time in the possession
or control of a warehouseman, bailee or agent, or if the Collateral Trustee so
requests, such Grantor will notify such warehouseman, bailee or agent of the
security interest created hereunder.
          (c) Except as otherwise provided in this subsection (c), each Grantor
will continue to have the right to collect, at its own expense, all amounts due
or to become due such Grantor under the Assigned Agreements, Receivables and
Related Contracts. Subject to the terms of the Collateral Trust Agreement and in
connection with such collections, such Grantor may take (and, during a Junior
Lien Event of Default at the Collateral Trustee’s direction, will take) such
action as such Grantor or, during a Default, the Collateral Trustee may deem
necessary or advisable to enforce collection of the Assigned Agreements,
Receivables and Related Contracts; provided, however, that the Collateral
Trustee shall have the right at any time, upon the occurrence and during the
continuance of a Junior Lien Event of Default and subject to the terms of the
Collateral Trust Agreement and upon written notice to such Grantor of its
intention to do so, to notify each person obligated under any Assigned
Agreements, Receivables and Related Contracts (each, an “Obligor”) of the
assignment of such Assigned Agreements, Receivables and Related Contracts to the
Collateral Trustee and to direct such Obligors to make payment of all amounts
due or to become due to such Grantor thereunder directly to the Collateral
Trustee and, upon such notification and at the expense of such Grantor, to
enforce collection of any such Assigned Agreements, Receivables and Related
Contracts, to adjust, settle or compromise the amount or payment thereof, in the
same manner and to the same extent as such Grantor might have done, and to
otherwise exercise all rights with respect to such Assigned Agreements,
Receivables and Related Contracts, including, without limitation, those set
forth in Section 9-607 of the UCC. Subject to the terms of the Collateral Trust
Agreement, after receipt by any Grantor of the notice from the Collateral
Trustee referred to in the proviso to the preceding sentence, (i) all amounts
and proceeds (including, without limitation, instruments) received by such
Grantor in respect of the Assigned Agreements, Receivables and Related
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Contracts of such Grantor shall be received in trust for the benefit of the
Collateral Trustee hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Collateral Trustee in the same
form as so received (with any necessary indorsement) to be deposited in a cash
collateral account maintained with the Collateral Trustee or such other cash
collateral account as may be acceptable to the Collateral Trustee in its sole
discretion (which cash collateral account shall be under the sole dominion and
control of the Collateral Trustee) and either (A) released to such Grantor, or
at its order, on the terms set forth in Section 6 so long as no Junior Lien
Event of Default shall have occurred and be continuing or (B) if any Junior Lien
Event of Default shall have occurred and be continuing, applied as provided in
Section 22(b) and (ii) such Grantor will not adjust, settle or compromise the
amount or payment of any Receivable or amount due on any Assigned Agreement or
Related Contract, release wholly or partly any Obligor thereof, or allow any
credit or discount thereon. No Grantor will permit or consent to the
subordination of its right to payment under any of the Assigned Agreements,
Receivables and Related Contracts to any other indebtedness or obligations of
the Obligor thereof.
          Section 13. As to Intellectual Property Collateral. (a) With respect
to each item of its material Intellectual Property Collateral, each Grantor
agrees to take, at its expense, all commercially reasonable steps, including,
without limitation, in the U.S. Patent and Trademark Office, the U.S. Copyright
Office and any other governmental authority, to (i) maintain its registrations
for such Intellectual Property Collateral that is or becomes registered in full
force and effect, and (ii) pursue the prosecution and maintenance of each such
material patent, trademark, or copyright registration or application now pending
in the United States and in each other appropriate jurisdiction relating to such
material Intellectual Property Collateral as determined in such Grantor’s
reasonable business judgment, now or hereafter included in such Intellectual
Property Collateral of such Grantor, including, without limitation, the payment
of required fees and taxes, the filing of responses to office actions issued by
the U.S. Patent and Trademark Office, the U.S. Copyright Office or other
governmental authorities, the filing of applications for renewal or extension,
the filing of affidavits under Sections 8 and 15 of the U.S. Trademark Act, the
filing of divisional, continuation, continuation-in-part, reissue and renewal
applications or extensions, the payment of maintenance fees and, if deemed
advisable by such Grantor, the participation in interference, reexamination,
opposition, cancellation, infringement and misappropriation proceedings. No
Grantor shall, without providing to the Collateral Trustee a certificate of an
acceptable officer of such Grantor detailing the material Intellectual Property
to be discontinued or abandoned and certifying that such action is permitted
under the Secured Debt Documents and without the written consent of the
Collateral Trustee, discontinue use of or otherwise abandon any material
Intellectual Property Collateral, or abandon any right to file an application
for patent, trademark, or copyright, unless such Grantor shall have previously
determined that such use or the pursuit or maintenance of such Intellectual
Property Collateral is no longer necessary or advisable in the conduct of such
Grantor’s business and that the loss thereof would not be reasonably likely to
have a Material Adverse Effect, in which case, such Grantor will give prompt
notice of any such abandonment to the Collateral Trustee.
          (b) Each Grantor agrees promptly to notify the Collateral Trustee if
such Grantor becomes aware (i) that any item of material Intellectual Property
Collateral may have become abandoned, placed in the public domain, invalid or
unenforceable, or of any adverse determination or development regarding such
Grantor’s ownership of any material Intellectual Property Collateral or its
right to register the same or to keep and maintain and enforce the same, or
(ii) of any adverse determination or the institution of any proceeding
(including, without limitation, the institution of any proceeding in the U.S.
Patent and Trademark Office or any court) regarding any item of material
Intellectual Property Collateral.
          (c) In the event that any Grantor becomes aware that any item of
material Intellectual Property Collateral is being infringed or misappropriated
by a third party, such Grantor shall promptly notify the Collateral Trustee and
shall take such actions, at its expense, as such Grantor (and, if
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a Default shall have occurred and be continuing, the Collateral Trustee) deems
reasonable and appropriate under the circumstances to protect or enforce such
Intellectual Property Collateral, including, without limitation, if deemed
advisable by such Grantor, suing for infringement or misappropriation and
seeking an injunction against continued infringement or misappropriation.
          (d) Each Grantor shall use commercially reasonable efforts to use
proper statutory notice in connection with its use of each item of its material
registered Intellectual Property Collateral. Subject to Section 13(a), no
Grantor shall do or permit any act or knowingly omit to do any act whereby any
of its owned and registered Intellectual Property Collateral may lapse or become
invalid or unenforceable or placed in the public domain, unless such Grantor
shall have previously determined that such use or the pursuit or maintenance of
such Intellectual Property Collateral is no longer necessary or advisable in the
conduct of such Grantor’s business.
          (e) Each Grantor shall take all steps which it (or, if a Default shall
have occurred and be continuing, the Collateral Trustee) deems reasonable and
appropriate under the circumstances to preserve and protect each item of its
material Intellectual Property Collateral, including, without limitation,
maintaining the quality of any and all products or services used or provided in
connection with any of the Trademarks.
          (f) With respect to its Intellectual Property Collateral, each Grantor
agrees to execute or otherwise authenticate an agreement (or multiple
agreements, as such Grantor reasonably requests to preserve the confidentiality
of any unpublished patent applications), in substantially the form set forth in
Exhibit C hereto (a “Second Lien Intellectual Property Security Agreement”), for
recording the security interest granted hereunder to the Collateral Trustee in
such Intellectual Property Collateral with the U.S. Patent and Trademark Office,
the U.S. Copyright Office and any other governmental authorities necessary to
perfect the security interest hereunder in such Intellectual Property
Collateral.
          (g) Each Grantor agrees that should it obtain an ownership interest in
any item of the type set forth in Section 1(g) that is not on the date hereof a
part of the Intellectual Property Collateral (“After-Acquired Intellectual
Property”) (i) the provisions of this Agreement shall automatically apply
thereto, and (ii) any such After-Acquired Intellectual Property and, in the case
of trademarks, the goodwill symbolized thereby, shall automatically become part
of the Intellectual Property Collateral subject to the terms and conditions of
this Agreement with respect thereto. At the end of each fiscal quarter of the
Company, each Grantor shall give prompt written notice to the Collateral Trustee
identifying the registered or applied for registration of After-Acquired
Intellectual Property, and such Grantor shall execute and deliver to the
Collateral Trustee with such written notice, or otherwise authenticate, a Second
Lien IP Security Agreement Supplement covering such registered or applied for
After-Acquired Intellectual Property, which Second Lien IP Security Agreement
Supplement the Collateral Trustee may record with the U.S. Patent and Trademark
Office, the U.S. Copyright Office and any other governmental authorities
necessary to perfect the security interest hereunder in such registered or
applied for After-Acquired Intellectual Property.
          Section 14. Voting Rights; Dividends; Etc. (a) So long as no Junior
Lien Event of Default shall have occurred and be continuing:
     (i) Each Grantor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Security Collateral of such Grantor or any
part thereof for any purpose.
     (ii) Each Grantor shall be entitled to receive and retain any and all
dividends, interest and other distributions paid in respect of the Security
Collateral of such Grantor if and to the extent that the payment thereof is not
otherwise prohibited by the terms of the Junior Lien
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Documents; provided, however, that any and all other dividends, interest and
other distributions paid or payable shall be, subject to the terms of the
Collateral Trust Agreement, forthwith delivered to the Collateral Trustee to
hold as, Security Collateral and shall, if received by such Grantor, be received
in trust for the benefit of the Collateral Trustee, be segregated from the other
property or funds of such Grantor and be forthwith delivered to the Collateral
Trustee as Security Collateral in the same form as so received (with any
necessary indorsement).
     (iii) The Collateral Trustee will execute and deliver (or cause to be
executed and delivered) to each Grantor all such instruments as such Grantor may
reasonably request for the purpose of enabling such Grantor to exercise the
voting and other rights that it is entitled to exercise pursuant to paragraph
(i) above and to receive the dividends or interest payments that it is
authorized to receive and retain pursuant to paragraph (ii) above.
          (b) Upon the occurrence and during the continuance of a Junior Lien
Event of Default:
     (i) All rights of each Grantor (A) to exercise or refrain from exercising
the voting and other consensual rights that it would otherwise be entitled to
exercise pursuant to Section 14(a)(i) shall, upon notice to such Grantor by the
Collateral Trustee, cease and (B) to receive the dividends, interest and other
distributions that it would otherwise be authorized to receive and retain
pursuant to Section 14(a)(ii) shall automatically cease, and all such rights
shall thereupon become vested in the Collateral Trustee, subject to the terms of
the Collateral Trust Agreement, which shall thereupon have the sole right to
exercise or refrain from exercising such voting and other consensual rights and
to receive and hold as Security Collateral such dividends, interest and other
distributions.
     (ii) Subject to the terms of the Collateral Trust Agreement, all dividends,
interest and other distributions that are received by any Grantor contrary to
the provisions of paragraph (i) of this Section 14(b) shall be received in trust
for the benefit of the Collateral Trustee, shall be segregated from other funds
of such Grantor and shall be forthwith paid over to the Collateral Trustee as
Security Collateral in the same form as so received (with any necessary
indorsement).
     (iii) Subject to the terms of the Collateral Trust Agreement, the
Collateral Trustee shall be authorized to send to each Securities Intermediary
as defined in and under any securities Account Control Agreement a Notice of
Exclusive Control as defined in and under such Securities Account Control
Agreement.
          Section 15. As to the Assigned Agreements. (a) Each Grantor will at
its expense furnish to the Collateral Trustee promptly upon receipt thereof
copies of all material notices, requests and other documents received by such
Grantor under or pursuant to the Assigned Agreements to which it is a party, and
from time to time (i) furnish to the Collateral Trustee such information and
reports regarding the Assigned Agreements and such other Collateral of such
Grantor as the Collateral Trustee may reasonably request and (ii) upon
reasonable request of the Collateral Trustee, make to each other party to any
Assigned Agreement to which it is a party such demands and requests for
information and reports or for action as such Grantor is entitled to make
thereunder.
          (b) Each Grantor hereby consents on its behalf and on behalf of its
Subsidiaries to the pledge to the Collateral Trustee for benefit of the Secured
Parties of each Assigned Agreement to which it is a party by any other Grantor
hereunder.
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          Section 16. Payments Under the Assigned Agreements. (a) In addition to
the other provisions of this Agreement, upon the occurrence of a Junior Lien
Event of Default and subject to the terms of the Collateral Trust Agreement,
each Grantor agrees that, at the request of the Collateral Trustee, it shall
instruct each other party to each Assigned Agreement to which it is a party that
all payments due or to become due under or in connection with such Assigned
Agreement will be made directly to a Cash Collateral Account.
          (b) Subject to the terms of the Collateral Trust Agreement, all moneys
received or collected pursuant to subsection (a) above shall be applied as
provided in Section 22(b).
          Section 17. As to Letter-of-Credit Rights. (a) Each Grantor, by
granting a security interest in its Receivables consisting of letter-of-credit
rights to the Collateral Trustee, intends to (and hereby does) assign to the
Collateral Trustee its rights (including its contingent rights) to the proceeds
of all Related Contracts consisting of letters of credit of which it is or
hereafter becomes a beneficiary or assignee. Each Grantor will promptly use
commercially reasonable efforts to cause the issuer of each letter of credit and
each nominated person (if any) with respect thereto to consent to such
assignment of the proceeds thereof pursuant to a consent in form and substance
reasonably satisfactory to the Collateral Trustee and deliver written evidence
of such consent to the Collateral Trustee.
          (b) Subject to the terms of the Collateral Trust Agreement, upon the
occurrence of a Junior Lien Event of Default, each Grantor will, promptly upon
request by the Collateral Trustee, (i) notify (and such Grantor hereby
authorizes the Collateral Trustee to notify) the issuer and each nominated
person with respect to each of the Related Contracts consisting of letters of
credit that the proceeds thereof have been assigned to the Collateral Trustee
hereunder and any payments due or to become due in respect thereof are to be
made directly to the Collateral Trustee or its designee and (ii) arrange for the
Collateral Trustee to become the transferee beneficiary of letter of credit.
          Section 18. Transfers and Other Liens; Additional Shares. (a) Each
Grantor agrees that it will not (i) sell, assign or otherwise dispose of, or
grant any option with respect to, any of the Collateral, other than sales,
assignments and other dispositions of Collateral, and options relating to
Collateral, permitted under the terms of the Parity Lien Documents and Junior
Lien Documents, or (ii) create or suffer to exist any Lien upon or with respect
to any of the Collateral of such Grantor except for the pledge, assignment and
security interest created under this Agreement and Liens permitted under the
Parity Lien Documents and Junior Lien Documents.
          (b) Each Grantor agrees that it will (i) cause each Subsidiary that is
an issuer of the Pledged Interests pledged by such Grantor not to issue any
Equity Interests or other securities in addition to or in substitution for the
Pledged Interests issued by such issuer, except to such Grantor, and (ii) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all additional Equity Interests or other securities.
          Section 19. Collateral Trustee Appointed Attorney-in-Fact. (a) Subject
to the terms of the Collateral Trust Agreement, each Grantor hereby irrevocably
appoints the Collateral Trustee such Grantor’s attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of such Grantor
or otherwise, from time to time, upon the occurrence and during the continuance
of a Junior Lien Event of Default, in the Collateral Trustee’s discretion, to
take any action and to execute any instrument that the Collateral Trustee may
deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation:
     (i) to obtain and adjust insurance required to be paid to the Collateral
Trustee pursuant to the Junior Lien Documents,
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     (ii) to ask for, demand, collect, sue for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral,
     (iii) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (i) or (ii) above, and
     (iv) to file any claims or take any action or institute any proceedings
that the Collateral Trustee may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce compliance with the terms and
conditions of any Assigned Agreement or the rights of the Collateral Trustee
with respect to any of the Collateral.
          (b) Each Grantor hereby acknowledges, consents and agrees that the
power of attorney granted pursuant to this Section 19 is irrevocable and coupled
with an interest and shall be effective until all Secured Obligations have been
paid in full in cash.
          Section 20. Collateral Trustee May Perform. If any Grantor fails to
perform any agreement contained herein, the Collateral Trustee may, but without
any obligation to do so and without notice and subject to the terms of the
Collateral Trust Agreement, itself perform, or cause performance of, such
agreement, and the expenses of the Collateral Trustee incurred in connection
therewith shall be payable by such Grantor under the Junior Lien Documents.
          Section 21. The Collateral Trustee’s Duties. (a) The powers conferred
on the Collateral Trustee hereunder are solely to protect the Secured Parties’
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession and
the accounting for moneys actually received by it hereunder, the Collateral
Trustee shall have no duty as to any Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Collateral, whether or not any Secured Party has
or is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. The Collateral Trustee shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which it accords its own property.
          (b) Anything contained herein to the contrary notwithstanding, the
Collateral Trustee may from time to time, when the Collateral Trustee deems it
to be necessary, with prior notice to the Grantors unless a Junior Lien Event of
Default has occurred and is continuing, appoint one or more subagents (each a
“Subagent”) for the Collateral Trustee hereunder with respect to all or any part
of the Collateral. In the event that the Collateral Trustee so appoints any
Subagent with respect to any Collateral, (i) the assignment and pledge of such
Collateral and the security interest granted in such Collateral by each Grantor
hereunder shall be deemed for purposes of this Agreement to have been made to
such Subagent, in addition to the Collateral Trustee, for the ratable benefit of
the Secured Parties, as security for the Secured Obligations of such Grantor,
(ii) such Subagent shall automatically be vested, in addition to the Collateral
Trustee, with all rights, powers, privileges, protections, exemptions from
liability, interests and remedies of the Collateral Trustee hereunder with
respect to such Collateral, and (iii) the term “Collateral Trustee,” when used
herein in relation to any rights, powers, privileges, interests and remedies of
the Collateral Trustee with respect to such Collateral, shall include such
Subagent; provided, however, that no such Subagent shall be authorized to take
any action with respect to any such Collateral unless and except to the extent
expressly authorized in writing by the Collateral Trustee.
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          (c) The Collateral Trustee shall not be deemed to have actual,
constructive, direct or indirect knowledge or notice of the occurrence of any
Secured Debt Default unless and until directed by an Act of Required Debtholders
stating that a Secured Debt Default has occurred. The Collateral Trustee shall
have no obligation whatsoever either prior to or after such Act of Required
Debtholders to inquire whether a Secured Debt Default has in fact occurred and
shall be entitled to rely conclusively, and shall be fully protected in so
relying, on any such Act of Required Debtholders.
          (d) The Collateral Trustee shall be under no obligation or duty to
take any action under this Agreement or any of the Junior Lien Documents or
otherwise if taking such action (i) would subject the Collateral Trustee to a
tax in any jurisdiction where it is not then subject to a tax or (ii) would
require the Collateral Trustee to qualify to do business in any jurisdiction
where it is not then so qualified.
          Section 22. Remedies. Subject to the terms of the Collateral Trust
Agreement, if any Junior Lien Event of Default shall have occurred and be
continuing:
          (a) The Collateral Trustee may exercise in respect of the Collateral,
in addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon default
under the UCC (whether or not the UCC applies to the affected Collateral) and
also may: (i) require each Grantor to, and each Grantor hereby agrees that it
will at its expense and upon request of the Collateral Trustee forthwith,
assemble all or part of the Collateral as directed by the Collateral Trustee and
make it available to the Collateral Trustee at a place and time to be designated
by the Collateral Trustee that is reasonably convenient to both parties;
(ii) without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the
Collateral Trustee’s offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Collateral Trustee may deem
commercially reasonable; (iii) occupy any premises owned or leased by any of the
Grantors where the Collateral or any part thereof is assembled or located for a
reasonable period in order to effectuate its rights and remedies hereunder or
under law, without obligation to such Grantor in respect of such occupation; and
(iv) exercise any and all rights and remedies of any of the Grantors under or in
connection with the Collateral, or otherwise in respect of the Collateral,
including, without limitation, (A) any and all rights of such Grantor to demand
or otherwise require payment of any amount under, or performance of any
provision of, the Assigned Agreements, the Receivables, the Related Contracts
and the other Collateral, (B) withdraw, or cause or direct the withdrawal, of
all funds with respect to the Account Collateral and (C) exercise all other
rights and remedies with respect to the Assigned Agreements, the Receivables,
the Related Contracts and the other Collateral, including, without limitation,
those set forth in Section 9-607 of the UCC. Each Grantor agrees that, to the
extent notice of sale shall be required by law, at least ten business days’
notice to such Grantor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Collateral Trustee shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Collateral
Trustee may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
          (b) Any cash held by or on behalf of the Collateral Trustee and all
cash proceeds received by or on behalf of the Collateral Trustee in respect of
any sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Collateral Trustee, be held by the
Collateral Trustee as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Collateral Trustee pursuant
to Section 23) in whole or in part by the Collateral Trustee for the ratable
benefit of the Secured Parties against, all or any part of the Secured
Obligations, in a manner set forth in Section 3.4 of the Collateral Trust
Agreement. Any surplus of such cash or cash proceeds held by or on behalf of the
Collateral Trustee and remaining after payment in full of all of the
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Secured Obligations shall be paid over to the applicable Grantor or to
whomsoever may be lawfully entitled to receive such surplus.
          (c) All payments received by any Grantor under or in connection with
any Assigned Agreement or otherwise in respect of the Collateral shall be
received in trust for the benefit of the Collateral Trustee, shall be segregated
from other funds of such Grantor and shall be forthwith paid over to the
Collateral Trustee in the same form as so received (with any necessary
indorsement).
          (d) The Collateral Trustee may, without notice to any Grantor except
as required by law and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Secured Obligations against any funds
held with respect to the Account Collateral or in any other deposit account.
          (e) In the event of any sale or other disposition of any of the
Intellectual Property Collateral of any Grantor, the goodwill symbolized by any
Trademarks subject to such sale or other disposition shall be included therein,
and such Grantor shall supply to the Collateral Trustee or its designee such
Grantor’s know-how and expertise relating to such Intellectual Property
Collateral, and documents and things relating to any Intellectual Property
Collateral subject to such sale or other disposition, and such Grantor’s
customer lists and other records and documents relating to such Intellectual
Property Collateral and to the manufacture, distribution, advertising and sale
of products and services of such Grantor that relate to such Intellectual
Property Collateral.
          (f) If the Collateral Trustee shall determine to exercise its right to
sell all or any of the Security Collateral of any Grantor pursuant to this
Section 22, each Grantor agrees that, upon request of the Collateral Trustee,
such Grantor will, at its own expense, do or cause to be done all such other
acts and things as may be necessary to make such sale of such Security
Collateral or any part thereof valid and binding and in compliance with
applicable law.
          (g) The Collateral Trustee is authorized, in connection with any sale
of the Security Collateral pursuant to this Section 22, to deliver or otherwise
disclose to any prospective purchaser of the Security Collateral any information
in its possession relating to such Security Collateral.
          Section 23. Indemnity and Expenses. (a) Each Grantor agrees to
indemnify, defend and save each Secured Party and each of its Affiliates and
their respective officers, directors, employees, agents and advisors (each, an
“Indemnified Party”) from, and hold harmless each Indemnified Party against, and
shall pay on written demand, any and all claims, damages, losses, liabilities
and expenses (including, without limitation, the reasonable fees, charges and
disbursements of counsel for any Indemnified Party) incurred by or asserted
against any Indemnified Party, in each case arising out of or in connection with
or resulting from this Agreement (including, without limitation, enforcement of
this Agreement), except to the extent such claim, damage, loss, liability or
expense is found in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party’s gross negligence or
willful misconduct.
          (b) Each Grantor will upon demand pay to the Collateral Trustee the
amount of any and all reasonable expenses, including, without limitation, the
reasonable fees and expenses of its counsel and of any experts and agents, that
the Collateral Trustee may incur in connection with (i) the preparation,
execution, delivery, administration, modification and amendment of, or any
consent or waiver under this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from or other realization upon, any of
the Collateral of such Grantor and (iii) the enforcement of this Agreement or
the exercise, enforcement or protection of the rights of the Collateral Trustee
or the other Secured Parties hereunder.
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          Section 24. Amendments; Waivers; Additional Grantors; Etc. (a) No
amendment or waiver of any provision of this Agreement, and no consent to any
departure by any Grantor herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Collateral Trustee and, with respect
to any amendment, such Grantor, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No failure on the part of the Collateral Trustee or any other Secured
Party to exercise, and no delay in exercising any right hereunder, shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right.
          (b) Upon the execution and delivery, or authentication, by any Person
of a security agreement supplement in substantially the form of Exhibit A hereto
(each, a “Second Lien Security Agreement Supplement”), (i) such Person shall be
referred to as an “Additional Grantor” and shall be and become a Grantor
hereunder, and each reference in this Agreement and the other Junior Lien
Documents to “Grantor” shall also mean and be a reference to such Additional
Grantor, and each reference in this Agreement and the other Junior Lien
Documents to “Collateral” shall also mean and be a reference to the Collateral
of such Additional Grantor, and (ii) the supplemental schedules I - IX attached
to each Second Lien Security Agreement Supplement shall be incorporated into and
become a part of and supplement Schedules I — IX, respectively, hereto, and the
Collateral Trustee may attach such supplemental schedules to such Schedules; and
each reference to such Schedules shall mean and be a reference to such Schedules
as supplemented pursuant to each Second Lien Security Agreement Supplement.
          Section 25. Notices, Etc. All notices and other communications
provided for hereunder shall be either (i) in writing (including telegraphic,
telecopier or telex communication) and mailed, telegraphed, telecopied, telexed
or otherwise delivered or (ii) by electronic mail (if electronic mail addresses
are designated as provided below) confirmed immediately in writing, in the case
of the Company or the Collateral Trustee, addressed to it at its address
specified in the Collateral Trust Agreement and, in the case of each Grantor
other than the Company, addressed to it at its address set forth opposite such
Grantor’s name on the signature pages hereto or on the signature page to the
Security Agreement Supplement pursuant to which it became a party hereto; or, as
to any party, at such other address as shall be designated by such party in a
written notice to the other parties. All such notices and other communications
shall, when mailed, telegraphed, telecopied, telexed, sent by electronic mail or
otherwise, be effective when deposited in the mails, delivered to the telegraph
company, telecopied, confirmed by telex answerback, sent by electronic mail and
confirmed in writing, or otherwise delivered (or confirmed by a signed receipt),
respectively, addressed as aforesaid; except that notices and other
communications to the Collateral Trustee shall not be effective until received
by the Collateral Trustee. Delivery by telecopier of an executed counterpart of
any amendment or waiver of any provision of this Agreement or of any Security
Agreement Supplement or Schedule hereto shall be effective as delivery of an
original executed counterpart thereof.
          Section 26. Continuing Security Interest; Assignments and Transfer
under the Junior Lien Documents . This Agreement shall create a continuing
security interest in the Collateral and shall (a) remain in full force and
effect until the Discharge of Junior Lien Obligations has occurred, (b) be
binding upon each Grantor, its successors and assigns and (c) inure, together
with the rights and remedies of the Collateral Trustee hereunder, to the benefit
of the Secured Parties and their respective successors and permitted assigns.
Without limiting the generality of the foregoing clause (c), any Secured Party
may assign or otherwise transfer all or any portion of its rights and
obligations hereunder to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such Secured
Party herein or otherwise, in each case as provided in the Junior Lien
Documents.
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          Section 27. Release; Termination. (a) Upon any sale, lease, transfer
or other disposition of any item of Collateral of any Grantor in accordance with
the terms of the Junior Lien Documents and the Collateral Trust Agreement, the
Collateral Trustee will, at such Grantor’s expense, execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence the
release of such item of Collateral from the assignment and security interest
granted hereby; provided, however, that (i) at the time of such request and such
release no Default shall have occurred and be continuing, (ii) such Grantor
shall have delivered to the Collateral Trustee, at least ten Business Days prior
to the date of the proposed release, a written request for release describing
the item of Collateral and the terms of the sale, lease, transfer or other
disposition in reasonable detail, including, without limitation, the price
thereof and any expenses in connection therewith, together with a form of
release for execution by the Collateral Trustee and a certificate of such
Grantor and, if reasonably requested by the Collateral Trustee, an opinion of
counsel to the effect that the transaction is in compliance with the Junior Lien
Documents and as to such other matters as the Collateral Trustee may request and
(iii) the proceeds of any such sale, lease, transfer or other disposition
required to be applied, or any payment to be made in connection therewith, in
accordance the Junior Lien Documents shall, to the extent so required, be paid
or made to, or in accordance with the instructions of, the Collateral Trustee
when and as required under the Collateral Trust Agreement and the Junior Lien
Documents.
          (b) Upon the occurrence of the conditions set forth in the Collateral
Trust Agreement, the security interest granted hereby shall automatically
terminate hereunder and of record and all rights to the Collateral shall revert
to Grantors. Upon any such termination the Collateral Trustee shall, at
Grantors’ expense, execute and deliver to Grantors or otherwise authorize the
filing of such documents as Grantors shall reasonably request, including
financing statement amendments to evidence such termination. To the extent a
release is expressly permitted pursuant to Section 4.1 of the Collateral Trust
Agreement, the Liens granted herein shall be deemed to be automatically released
and such property shall automatically revert to the applicable Grantor with no
further action on the part of any Person. The Collateral Trustee shall, at
Grantor’s expense, execute and deliver or otherwise authorize the filing of such
documents as Grantors shall reasonably request, in form and substance reasonably
satisfactory to the Collateral Trustee, including financing statement amendments
to evidence such release.
          The Collateral Trustee shall release all or any portion of the
Collateral solely on the terms and subject to the condition set forth in
Section 4.1 of the Collateral Trust Agreement.
          Section 28. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier (or other electronic transmission) shall be effective as
delivery of an original executed counterpart of this Agreement.
          Section 29. The Mortgages. In the event that any of the Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of any
Mortgage and the terms of such Mortgage are inconsistent with the terms of this
Agreement, then with respect to such Collateral, the terms of such Mortgage
shall be controlling in the case of fixtures and real estate leases, letting and
licenses of, and contracts and agreements relating to the lease of, real
property, and the terms of this Agreement shall be controlling in the case of
all other Collateral.
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          Section 30. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to its conflict of law principles that would cause the law of another
jurisdiction to apply (other than Sections 5-1401 and 5-1402 of the New York
General Obligations Law).
          Section 31. Collateral Trust Agreement. Notwithstanding anything
herein to the contrary, the lien and security interest granted to the Collateral
Trustee pursuant to this Agreement and the exercise of any right or remedy by
the Collateral Trustee are subject to the provisions of the Collateral Trust
Agreement. In the event of any conflict or inconsistency between the terms of
the Collateral Trust Agreement and this Agreement, the terms of the Collateral
Trust Agreement shall govern and control.
[Remainder of page left blank]
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          IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

            TERREMARK WORLDWIDE, INC.

TERREMARK NORTH AMERICA, INC.

TERREMARK EUROPE, INC.

TERRENAP DATA CENTERS, INC.

PARK WEST TELECOMMUNICATIONS INVESTORS, INC.

TECOTA SERVICES CORP.

TECHNOLOGY CENTER OF THE AMERICAS, LLC

TERREMARK FINANCIAL SERVICES, INC.

TERREMARK FORTUNE HOUSE #1, INC.

TERREMARK LATIN AMERICA, INC.

TERREMARK MANAGEMENT SERVICES, INC.

TERREMARK REALTY, INC.

TERREMARK TECHNOLOGY CONTRACTORS, INC.

TERREMARK TRADEMARK HOLDINGS, INC.

TERRENAP SERVICES, INC.

SPECTRUM TELECOMMUNICATIONS CORP.

NAP OF THE CAPITAL REGION, LLC
      By:   /s/ Jose A. Segrera         Name:   Jose A. Segrera        Title:  
Chief Financial Officer     

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            NAP OF THE CAPITAL REGION II, LLC

NAP WEST, LLC

NAP WEST II LLC

TERREMARK PERU LLC
      By:   /s/ Jose A. Segrera         Name:   Jose A. Segrera        Title:  
Treasurer        TERREMARK DATAVAULTING LLC
      By   its sole member:         Terremark North America, Inc.           
By:   /s/ Jose A. Segrera         Name:   Jose A. Segrera        Title:   Chief
Financial Officer        TERREMARK FEDERAL GROUP, INC.
      By:   /s/ Nelson Fonseca         Name:   Nelson Fonseca        Title:  
Chief Financial Officer     

Address for notices for each Grantor:
2 S. Biscayne Blvd.
Suite 2800
Miami, FL 33131

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          ACCEPTED AND AGREED:

U.S. BANK NATIONAL ASSOCIATION
as Collateral Trustee
      By:   /s/ Thomas S. Maple III         Name:   Thomas S. Maple III       
Title:   Vice President     

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Exhibit A to the
Second Lien Security Agreement
FORM OF SECOND LIEN SECURITY AGREEMENT SUPPLEMENT
     [Date of Second Lien Security Agreement Supplement]
U.S. Bank National Association,
   as the Collateral Trustee for the
   Secured Parties referred to in the
Collateral Trust Agreement referred to below
60 Livingston Avenue
EP-MN WS3C
St. Paul, MN 55107-2292
Attn: Corporate Trust Administration
TERREMARK WORLDWIDE, INC.
Ladies and Gentlemen:
          Reference is made to (i) the Indenture dated as of November 16, 2010
(the “Second Lien Indenture”), among Terremark Worldwide, Inc., a Delaware
corporation, the Guarantors (as defined therein), and The Bank of New York
Mellon Trust Company, N.A., as trustee (the “Second Lien Trustee”), (ii) the
Second Lien Security Agreement dated November 16, 2010 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the “Second Lien
Security Agreement”) made by the Grantors from time to time party thereto in
favor of U.S. Bank National Association, (“US Bank”), as collateral trustee (in
such capacity, and together with any successor collateral trustee appointed
pursuant to the Collateral Trust Agreement, the “Collateral Trustee”), for the
Secured Parties and (iii) the Collateral Trust Agreement among the Company, the
other Grantors, the Collateral Trustee, the Second Lien Trustee and the other
parties party thereto (as amended, amended and restated, supplemented or
otherwise modified from time to time, the “Collateral Trust Agreement”). Terms
defined in the Second Lien Indenture, Collateral Trust Agreement or the Second
Lien Security Agreement and not otherwise defined herein are used herein as
defined in the Second Lien Indenture, Collateral Trust Agreement or the Second
Lien Security Agreement, as the context may require.
          SECTION 1. Grant of Security. The undersigned hereby grants to the
Collateral Trustee, for the ratable benefit of the Secured Parties, a second
priority security interest in all of its right, title and interest in and to all
of the Collateral of the undersigned, whether now owned or hereafter acquired by
the undersigned, wherever located and whether now or hereafter existing or
arising, including, without limitation, the property and assets of the
undersigned set forth on the attached supplemental schedules to the Schedules to
the Second Lien Security Agreement.
          SECTION 2. Security for Obligations. The grant of a security interest
in, the Collateral by the undersigned under this Second Lien Security Agreement
Supplement and the Second Lien Security Agreement secures the payment of all
Secured Obligations of the undersigned now or hereafter existing under or in
respect of the Junior Lien Documents, whether direct or indirect, absolute or
contingent, and whether for principal, reimbursement obligations, interest,
premiums, penalties, fees, indemnifications, contract causes of action, costs,
expenses or otherwise.
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          SECTION 3. Supplements to Security Agreement Schedules. The
undersigned has attached hereto supplemental Schedules I through IX to Schedules
I through IX, respectively, to the Second Lien Security Agreement, and the
undersigned hereby certifies, as of the date first above written, that such
supplemental schedules have been prepared by the undersigned in substantially
the form of the equivalent Schedules to the Second Lien Security Agreement and
are complete and correct.
          SECTION 4. Representations and Warranties. The undersigned hereby
makes each representation and warranty set forth in Section 8 of the Second Lien
Security Agreement (as supplemented by the attached supplemental schedules) to
the same extent as each other Grantor.
          SECTION 5. Obligations Under the Second Lien Security Agreement. The
undersigned hereby agrees, as of the date first above written, to be bound as a
Grantor by all of the terms and provisions of the Second Lien Security Agreement
to the same extent as each of the other Grantors. The undersigned further
agrees, as of the date first above written, that each reference in the Second
Lien Security Agreement to an “Additional Grantor” or a “Grantor” shall also
mean and be a reference to the undersigned.
          SECTION 6. Governing Law. This Second Lien Security Agreement
Supplement shall be governed by, and construed in accordance with, the laws of
the State of New York without regard to its conflict of law principles that
would cause the law of another jurisdiction to apply (other than Sections 5-1401
and 5-1402 of the New York General Obligations Law).

            Very truly yours,

[NAME OF ADDITIONAL GRANTOR]
      By           Title:              Address for notices:                     
             

          ACCEPTED AND AGREED:

U.S. BANK NATIONAL ASSOCIATION
as Collateral Trustee
      By:           Name:           Title:        

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Exhibit B to the
Second Lien Security Agreement
FORM OF ACCOUNT CONTROL AGREEMENT
           ACCOUNT CONTROL AGREEMENT (this “Agreement”) dated as of [ 
                    ,                 ], among                            ,
a                            (the “Grantor”), [                      ], as
Collateral Trustee (the “Secured Party”), and                     ,
a                       (“                        ”), as depository bank (the
“Account Holder”).
PRELIMINARY STATEMENTS:
          (1) The Grantor has granted the Secured Party a security interest (the
“Security Interest”) in the following accounts maintained by the Account Holder
for the Grantor (each, an “Account” and collectively, the “Accounts”):
          [Insert account numbers and other identifying information.]
          (2) Terms defined in Article 8 or 9 of the Uniform Commercial Code in
effect in the State of New York (“N.Y. Uniform Commercial Code”) are used in
this Agreement as such terms are defined in such Article 8 or 9.
          NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto hereby agree as follows:
          SECTION 1. The Accounts. Each of the Grantor and Account Holder
represents and warrants to, and agrees with, the Secured Party that:
     (a) The Account Holder maintains each Account for the Grantor, and all
property (including, without limitation, all funds and financial assets) held by
the Account Holder for the account of the Grantor is, and will continue to be,
credited to an Account in accordance with instructions given by the Grantor
(unless otherwise provided herein).
     (b) To the extent that funds are credited to any Account, such Account is a
deposit account. The Account Holder is the bank with which each Account that is
a deposit account is maintained. The Grantor is (i) the Account Holder’s
customer with respect to the Accounts and (ii) the entitlement holder with
respect to financial assets credited from time to time to any Account.
     (c) Notwithstanding any other agreement to the contrary, the Account
Holder’s jurisdiction with respect to each Account for purposes of the N.Y.
Uniform Commercial Code is, and will continue to be for so long as the Security
Interest shall be in effect, the State of New York.
     (d) The Grantor and Account Holder do not know of any claim to or interest
in any Account or any property (including, without limitation, funds and
financial assets) credited to any Account, except for claims and interests of
the parties referred to in this Agreement.
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          SECTION 2. Control by Secured Party. Upon receipt of a notice from the
Secured Party that the Secured Party will exercise exclusive control over any
Account (a “Notice of Exclusive Control” with respect to such Account) and prior
to a notice from the Secured Party that such Notice of Exclusive Control is
terminated, the Account Holder will comply with (i) all instructions directing
disposition of the funds in any and all of the Accounts, (ii) all notifications
and entitlement orders that the Account Holder receives directing it to transfer
or redeem any financial asset in any and all of the Accounts, and (iii) all
other directions concerning any and all of the Accounts, including, without
limitation, directions to distribute to the Secured Party proceeds of any such
transfer or redemption or interest or dividends on property (including, without
limitation, funds and financial assets) in any and all of the Accounts (any such
instruction, notification or direction referred to in clause (i), (ii) or
(iii) above being an “Account Direction”), in each case of clauses (i), (ii) and
(iii) above originated by the Secured Party without further consent by the
Grantor or any other Person.
          SECTION 3. Grantor’s Rights in Accounts.
          (a) Except as otherwise provided in this Section 3, the Account Holder
will comply with Account Directions and other directions concerning each Account
originated by the Grantor without further consent by the Secured Party.
          (b) Upon receipt of a Notice of Exclusive Control and prior to a
notice from the Secured Party that such Notice of Exclusive Control is
terminated, the Account Holder will comply only with Account Directions
originated by the Secured Party and will cease:
     (i) complying with Account Directions or other directions concerning such
Account originated by the Grantor and
     (ii) distributing to the Grantor interest and dividends on property
(including, without limitation, funds and financial assets) in such Account.
          SECTION 4. Priority of Secured Party’s Security Interest. (a) The
Account Holder (i) subordinates to the Security Interest and in favor of the
Secured Party any security interest, lien, or right of recoupment or setoff that
the Account Holder may have, now or in the future, against any Account or
property (including, without limitation, any funds and financial assets)
credited to any Account, and (ii) agrees that it will not exercise any right in
respect of any such security interest or lien or any such right of recoupment or
setoff until the Security Interest is terminated, except that the Account Holder
(A) will retain its prior security interest and lien on property credited to any
Account, (B) may exercise any right in respect of such security interest or
lien, and (C) may exercise any right of recoupment or setoff against any
Account, in the case of clauses (A), (B) and (C) above, to secure or to satisfy,
and only to secure or to satisfy, payment (1) for such property, (2) for its
customary fees and expenses for the routine maintenance and operation of such
Account, and (3) if such Account is a deposit account, for the face amount of
any items that have been credited to such Account but are subsequently returned
unpaid because of uncollected or insufficient funds.
          (b) The Account Holder will not enter into any other agreement with
any Person relating to Account Directions or other directions with respect to
any Account.
          SECTION 5. Statements, Confirmations, and Notices of Adverse Claims.
(a) Upon request by the Secured Party, the Account Holder will send copies of
all statements and confirmations for each Account simultaneously to the Secured
Party and the Grantor.
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          (b) When the Account Holder knows of any claim or interest in any
Account or any property (including, without limitation, funds and financial
assets) credited to any Account other than the claims and interests of the
parties referred to in this Agreement, the Account Holder will promptly notify
the Secured Party and the Grantor of such claim or interest.
          SECTION 6. The Account Holder’s Responsibility. (a) Except for
permitting a withdrawal, delivery, or payment in violation of Section 3, the
Account Holder will not be liable to the Secured Party for complying with
Account Directions or other directions concerning any Account from the Grantor
that are received by the Account Holder before the Account Holder receives and
has a reasonable opportunity to act on a Notice of Exclusive Control.
          (b) The Account Holder will not be liable to the Grantor or the
Secured Party for complying with a Notice of Exclusive Control or with an
Account Direction or other direction concerning any Account originated by the
Secured Party, even if the Grantor notifies the Account Holder that the Secured
Party is not legally entitled to issue the Notice of Exclusive Control or
Account Direction or such other direction unless the Account Holder takes the
action after it is served with an injunction, restraining order, or other legal
process enjoining it from doing so, issued by a court of competent jurisdiction,
and had a reasonable opportunity to act on the injunction, restraining order or
other legal process.
          (c) This Agreement does not create any obligation of the Account
Holder except for those expressly set forth in this Agreement and in Article 4
of the N.Y. Uniform Commercial Code. In particular, the Account Holder need not
investigate whether the Secured Party is entitled under the Secured Party’s
agreements with the Grantor to give an Account Direction or other direction
concerning any Account or a Notice of Exclusive Control. The Account Holder may
rely on notices and communications it believes given by the appropriate party.
          SECTION 7. Indemnity. The Grantor will indemnify the Account Holder,
its officers, directors, employees and agents against claims, liabilities and
reasonable out-of-pocket expenses arising out of this Agreement (including,
without limitation, reasonable attorney’s fees and disbursements), except to the
extent the claims, liabilities or expenses are caused by the Account Holder’s
gross negligence or willful misconduct as found by a court of competent
jurisdiction in a final judgment.
          SECTION 8. Termination; Survival. (a) The Secured Party may terminate
this Agreement by notice to the Account Holder and the Grantor. If the Secured
Party notifies the Account Holder that the Security Interest has terminated,
this Agreement will immediately terminate.
          (b) The Account Holder may terminate this Agreement on 60 days’ prior
notice to the Secured Party and the Grantor, provided that before such
termination the Account Holder and the Grantor shall make arrangements to
transfer the property (including, without limitation, all funds and financial
assets) credited to each Account to another Account Holder that shall have
executed, together with the Grantor, a control agreement in favor of the Secured
Party in respect of such property in substantially the form of this Agreement or
otherwise in form and substance satisfactory to the Secured Party.
          (c) Sections 6 and 7 will survive termination of this Agreement.
          SECTION 9. Governing Law. This Agreement and each Account will be
governed by the law of the State of New York without regard to its conflict of
law principles that would cause the law of another jurisdiction to apply (other
than Sections 5-1401 and 5-1402 of the New York General
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Obligations Law). The Account Holder and the Grantor may not change the law
governing any Account without the Secured Party’s express prior written
agreement.
          SECTION 10. Entire Agreement. This Agreement is the entire agreement,
and supersedes any prior agreements, and contemporaneous oral agreements, of the
parties concerning its subject matter.
          SECTION 11. Amendments. No amendment of, or waiver of a right under,
this Agreement will be binding unless it is in writing and signed by the party
to be charged.
          SECTION 12. Financial Assets. The Account Holder agrees with the
Secured Party and the Grantor that, to the fullest extent permitted by
applicable law, all property (other than funds) credited from time to time to
any Account will be treated as financial assets under Article 8 of the N.Y.
Uniform Commercial Code.
          SECTION 13. Notices. Any notice or other communication to a party
under this Agreement shall be in writing (except that Account Directions may be
given orally), shall be sent to the party’s address set forth under its name
below or to such other address as the party may notify the other parties and
shall be effective on receipt.
          SECTION 14. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Grantor, the Secured Party and the Account
Holder, and thereafter shall be binding upon and inure to the benefit of the
Grantor, the Secured Party and the Account Holder and their respective
successors and assigns.
          SECTION 15. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of an original executed counterpart of
this Agreement.
          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.

            [NAME OF GRANTOR]
      By           Name:           Title:           Address:                

[                     ], as
Collateral Trustee
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                  By           Name:           Title:           Address:        
          [NAME OF ACCOUNT HOLDER]
      By           Name:           Title:           Address:              

Terremark — Form of Account Control Agreement

 

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EXHIBIT A
[Statements of the various Accounts showing the property credited to each
Account]

 

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Exhibit C to the
Second Lien Security Agreement
FORM OF SECOND LIEN INTELLECTUAL PROPERTY SECURITY AGREEMENT
          SECOND LIEN INTELLECTUAL PROPERTY SECURITY AGREEMENT (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
“Second Lien IP Security Agreement”) dated November 16, 2010, is made by the
Persons listed on the signature pages hereof (collectively, the “Grantors”) in
favor of U.S. Bank National Association, (“US Bank”), as collateral trustee (the
“Collateral Trustee”) for the Secured Parties (as defined in the Second Lien
Indenture referred to below).
          WHEREAS, Terremark Worldwide, Inc., a Delaware corporation (the
“Company”) and the Grantors have entered into an Indenture dated as of
November 16, 2010 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Second Lien Indenture”), with The Bank of New
York Mellon Trust Company, N.A., as trustee, (the “Second Lien Trustee”) and the
Guarantors party thereto.
          WHEREAS, the Company and the Grantors have entered into a Collateral
Trust Agreement with the Collateral Trustee, the Second Lien Trustee and the
other parties party thereto (the “Collateral Trust Agreement”). Terms defined in
the Second Lien Indenture or the Collateral Trust Agreement and not otherwise
defined herein are used herein as defined in the Second Lien Indenture or
Collateral Trust Agreement, as the context may require.
          WHEREAS, as a condition precedent to the entry into the Junior Lien
Documents by the Junior Lien Representatives and the other holders of Junior
Lien Obligations, each Grantor has executed and delivered that certain Second
Lien Security Agreement dated November 16, 2010, made by the Grantors to the
Collateral Trustee (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Second Lien Security Agreement”).
          WHEREAS, under the terms of the Second Lien Security Agreement, the
Grantors have granted to the Collateral Trustee, for the ratable benefit of the
Secured Parties, a second priority security interest in, among other property,
certain intellectual property of the Grantors, and have agreed as a condition
thereof to execute this Second Lien IP Security Agreement for recording with the
U.S. Patent and Trademark Office, the United States Copyright Office and other
governmental authorities.
          NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor agrees as follows:
          SECTION 1. Grant of Security. Each Grantor hereby grants to the
Collateral Trustee for the ratable benefit of the Secured Parties a second
priority security interest in all of such Grantor’s right, title and interest in
and to the following (the “Collateral”):
     (i) the patents and patent applications set forth in Schedule A hereto (the
“Patents”);
     (ii) the trademark and service mark registrations and applications set
forth in Schedule B hereto (provided that no security interest shall be granted
in United States intent-to-use trademark applications to the extent that, and
solely during the period in which, the grant of a security interest therein
would impair the validity or enforceability
Terremark — Form of Second Lien IP Security Agreement

 

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of such intent-to-use trademark applications under applicable federal law),
together with the goodwill symbolized thereby (the “Trademarks”);
     (iii) all copyrights, whether registered or unregistered, now owned or
hereafter acquired by such Grantor, including, without limitation, the copyright
registrations and applications and exclusive copyright licenses set forth in
Schedule C hereto (the “Copyrights”);
     (iv) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the foregoing, all rights in
the foregoing provided by international treaties or conventions, all rights
corresponding thereto throughout the world and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto;
     (v) any and all claims for damages and injunctive relief for past, present
and future infringement, dilution, misappropriation, violation, misuse or breach
with respect to any of the foregoing, with the right, but not the obligation, to
sue for and collect, or otherwise recover, such damages; and
     (vi) any and all proceeds of, collateral for, income, royalties and other
payments now or hereafter due and payable with respect to, and supporting
obligations relating to, any and all of the Collateral of or arising from any of
the foregoing.
          SECTION 2. Security for Obligations. The grant of a security interest
in the Collateral by each Grantor under this Second Lien IP Security Agreement
secures the payment of all Secured Obligations of such Grantor now or hereafter
existing under or in respect of the Junior Lien Documents, whether direct or
indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, premiums, penalties, fees, indemnifications, contract
causes of action, costs, expenses or otherwise. Without limiting the generality
of the foregoing, this Second Lien IP Security Agreement secures, as to each
Grantor, the payment of all amounts that constitute part of the Secured
Obligations and that would be owed by such Grantor to any Secured Party under
the Junior Lien Documents but for the fact that such Secured Obligations are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving a Grantor.
          SECTION 3. Recordation. Each Grantor authorizes and requests that the
Register of Copyrights, the Commissioner for Patents and the Commissioner for
Trademarks and any other applicable government officer record this Second Lien
IP Security Agreement.
          SECTION 4. Execution in Counterparts. This Second Lien IP Security
Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
          SECTION 5. Grants, Rights and Remedies. This Second Lien IP Security
Agreement has been entered into in conjunction with the provisions of the Second
Lien Security Agreement. Each Grantor does hereby acknowledge and confirm that
the grant of the security interest hereunder to, and the rights and remedies of,
the Collateral Trustee with respect to the Collateral are more fully set forth
in the Second Lien Security Agreement, the terms and provisions of which are
incorporated herein by reference as if fully set forth herein.
          SECTION 6. Governing Law. This Second Lien IP Security Agreement shall
be governed by, and construed in accordance with, the laws of the State of New
York without regard to its
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conflict of law principles that would cause the law of another jurisdiction to
apply (other than Sections 5-1401 and 5-1402 of the New York General Obligations
Law).
Terremark — Form of Second Lien IP Security Agreement

 

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          IN WITNESS WHEREOF, each Grantor has caused this Second Lien IP
Security Agreement to be duly executed and delivered by its officer thereunto
duly authorized as of the date first above written.

            TERREMARK WORLDWIDE, INC.
      By           Name:           Title:                 Address for Notices:  
                          [SUBSIDIARY].
      By           Name:           Title:                 Address for Notices:  
                     

Terremark — Form of Second Lien IP Security Agreement

 

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Exhibit D to the
Second Lien Security Agreement
FORM OF SECOND LIEN INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT
          SECOND LIEN INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT
(“Second Lien IP Security Agreement Supplement”) dated [____________, ____], is
made by the Person listed on the signature page hereof (the “Grantor”) in favor
of U.S. Bank National Association, (“US Bank”), as collateral trustee (the
“Collateral Trustee”) for the Secured Parties (as defined in the Second Lien
Indenture referred to below).
          WHEREAS, Terremark Worldwide, Inc., a Delaware corporation, has
entered into an Indenture dated as of November 16, 2010 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the “Second Lien
Indenture”), with The Bank of New York Mellon Trust Company, N.A., as trustee,
(the “Second Lien Trustee”) and the Guarantors party thereto.
          WHEREAS, the Company and the Grantors have entered into a Collateral
Trust Agreement with the Collateral Trustee, the Second Lien Trustee and the
other parties party thereto (the “Collateral Trust Agreement”). Terms defined in
the Second Lien Indenture or the Collateral Trust Agreement and not otherwise
defined herein are used herein as defined in the Second Lien Indenture or
Collateral Trust Agreement, as the context may require.
          WHEREAS, pursuant to the Second Lien Indenture and the Collateral
Trust Agreement, the Grantor and certain other Persons have executed and
delivered that certain Second Lien Security Agreement dated November 16, 2010
made by the Grantor and such other Persons to the Collateral Trustee (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the “Second Lien Security Agreement”) and that certain Second Lien
Intellectual Property Security Agreement dated November 16, 2010 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
“Second Lien IP Security Agreement”).
          WHEREAS, under the terms of the Second Lien Security Agreement, the
Grantor has granted to the Collateral Trustee, for the ratable benefit of the
Secured Parties, a second priority security interest in the Additional
Collateral (as defined in Section 1 below) of the Grantor and has agreed as a
condition thereof to execute this Second Lien IP Security Agreement Supplement
for recording with the U.S. Patent and Trademark Office, the United States
Copyright Office and other governmental authorities.
          NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Grantor agrees as follows:
          SECTION 1. Grant of Security. Each Grantor hereby grants to the
Collateral Trustee, for the ratable benefit of the Secured Parties, a second
priority security interest in all of such Grantor’s right, title and interest in
and to the following (the “Additional Collateral”):
     (i) the patents and patent applications set forth in Schedule A hereto (the
“Patents”);
Terremark — Form of Second Lien IP Security Agreement Supplement

 

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     (ii) the trademark and service mark registrations and applications set
forth in Schedule B hereto (provided that no security interest shall be granted
in United States intent-to-use trademark applications to the extent that, and
solely during the period in which, the grant of a security interest therein
would impair the validity or enforceability of such intent-to-use trademark
applications under applicable federal law), together with the goodwill
symbolized thereby (the “Trademarks”);
     (iii) the copyright registrations and applications and exclusive copyright
licenses set forth in Schedule C hereto (the “Copyrights”);
     (iv) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the foregoing, all rights in
the foregoing provided by international treaties or conventions, all rights
corresponding thereto throughout the world and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto;
     (v) all any and all claims for damages and injunctive relief for past,
present and future infringement, dilution, misappropriation, violation, misuse
or breach with respect to any of the foregoing, with the right, but not the
obligation, to sue for and collect, or otherwise recover, such damages; and
     (vi) any and all proceeds of, collateral for, income, royalties and other
payments now or hereafter due and payable with respect to, and supporting
obligations relating to, any and all of the foregoing or arising from any of the
foregoing.
          SECTION 2. Supplement to Security Agreement. Schedule VI to the Second
Lien Security Agreement is, effective as of the date hereof, hereby supplemented
to add to such Schedule the Additional Collateral.
          SECTION 3. Security for Obligations. The grant of a security interest
in the Additional Collateral by the Grantor under this Second Lien IP Security
Agreement Supplement secures the payment of all Secured Obligations of the
Grantor now or hereafter existing under or in respect of the Junior Lien
Documents, whether direct or indirect, absolute or contingent, and whether for
principal, reimbursement obligations, interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or otherwise.
          SECTION 4. Recordation. The Grantor authorizes and requests that the
Register of Copyrights, the Commissioner for Patents and the Commissioner for
Trademarks and any other applicable government officer to record this Second
Lien IP Security Agreement Supplement.
          SECTION 5. Grants, Rights and Remedies. This Second Lien IP Security
Agreement Supplement has been entered into in conjunction with the provisions of
the Second Lien Security Agreement. The Grantor does hereby acknowledge and
confirm that the grant of the security interest hereunder to, and the rights and
remedies of, the Collateral Trustee with respect to the Additional Collateral
are more fully set forth in the Second Lien Security Agreement, the terms and
provisions of which are incorporated herein by reference as if fully set forth
herein.
          SECTION 6. Governing Law. This Second Lien IP Security Agreement
Supplement shall be governed by, and construed in accordance with, the laws of
the State of New York without regard
Terremark — Form of Second Lien IP Security Agreement Supplement

 

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to its conflict of law principles that would cause the law of another
jurisdiction to apply (other than Sections 5-1401 and 5-1402 of the New York
General Obligations Law).
          IN WITNESS WHEREOF, the Grantor has caused this Second Lien IP
Security Agreement Supplement to be duly executed and delivered by its officer
thereunto duly authorized as of the date first above written.

            [NAME OF GRANTOR]
      By           Name:           Title:             Address for Notices:      
               

Terremark — Form of Second Lien IP Security Agreement Supplement