10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended June 30, 2006

OR

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

For the Transition Period from              to             

Commission File Number: 0-29375

    SAVVIS, Inc.    

(Exact Name of Registrant as Specified in its Charter)

Delaware	43-1809960
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

1 SAVVIS Parkway

      Town & Country, Missouri 63017      

(Address of Principal Executive Offices) (Zip Code)

        (314) 628-7000        

(Registrant’s Telephone Number, Including Area Code)

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

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

Large Accelerated Filer  ¨    Accelerated Filer  x    Non-Accelerated Filer  ¨

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common stock, $0.01 Par Value – 50,865,863 shares as of July 26, 2006

The Exhibit Index begins on page 39.

SAVVIS, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements.	3
	Condensed Consolidated Balance Sheets as of June 30, 2006 (unaudited) and December 31, 2005.	3
	Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2006 and 2005.	4
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2006 and 2005.	5
	Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Deficit for the period December 31, 2005 to June 30, 2006.	6
	Notes to Unaudited Condensed Consolidated Financial Statements.	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	30
Item 4.	Controls and Procedures.	30
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings.	30
Item 1A.	Risk Factors.	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	37
Item 3.	Defaults Upon Senior Securities.	37
Item 4.	Submission of Matters to a Vote of Security Holders.	37
Item 5.	Other Information.	38
Item 6.	Exhibits.	39
SIGNATURES		41

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

SAVVIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share amounts)

	June 30, 2006			December 31, 2005
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	86,127		$	61,166
Trade accounts receivable, less allowance for credits and uncollectibles of $11,250 and $9,995 as of June 30, 2006 and December 31, 2005, respectively		46,550			51,601
Prepaid expenses		12,078			7,166
Other current assets		12,498			8,960
Total Current Assets		157,253			128,893
Property and equipment, net		284,017			261,225
Intangible assets, net		6,040			8,531
Other non-current assets		13,533			10,997
Total Assets	$	460,843		$	409,646
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Payables and other trade accruals	$	46,016		$	46,398
Current portion of capital and financing method lease obligations		2,866			596
Other accrued liabilities		77,383			78,697
Total Current Liabilities		126,265			125,691
Long-term debt		274,324			275,259
Capital and financing method lease obligations, net of current portion		112,277			59,890
Other accrued liabilities		85,280			80,815
Total Liabilities		598,146			541,655
Stockholders’ Deficit:
Series A Convertible Preferred stock at accreted value; $0.01 par value, 210,000 shares authorized as of June 30, 2006 and December 31, 2005; 203,070 shares issued; and 202,490 shares outstanding as of December 31, 2005		—			305,173
Common stock; $0.01 par value, 1,500,000,000 shares authorized; 50,827,023 and 12,089,852 shares issued and outstanding as of June 30, 2006 and December 31, 2005, respectively		508			1,813
Additional paid-in capital		678,347			353,836
Accumulated deficit		(814,073	)		(790,534	)
Accumulated other comprehensive loss		(2,085	)		(2,297	)
Total Stockholders’ Deficit		(137,303	)		(132,009	)
Total Liabilities and Stockholders’ Deficit	$	460,843		$	409,646

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

3

SAVVIS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except share and per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2006			2005			2006			2005
Revenue	$	189,597		$	167,200		$	369,552		$	329,372
Operating Expenses:
Cost of revenue(1)		117,102			108,668			230,071			217,755
Sales, general, and administrative expenses(2)		46,825			39,295			90,179			76,820
Depreciation, amortization, and accretion		19,636			18,715			39,563			37,534
Restructuring charges, net		—			3,340			—			3,340
Integration costs		—			684			—			2,745
Total Operating Expenses		183,563			170,702			359,813			338,194
Income (Loss) from Operations		6,034			(3,502	)		9,739			(8,822	)
Net interest expense and other		17,125			17,833			33,278			33,395
Net Loss		(11,091	)		(21,335	)		(23,539	)		(42,217	)
Accreted and deemed dividends on Series A Convertible Preferred stock(3)		251,621			10,276			262,810			20,267
Net Loss Attributable to Common Stockholders	$	(262,712	)	$	(31,611	)	$	(286,349	)	$	(62,484	)
Basic and Diluted Loss Per Common Share	$	(19.50	)	$	(2.63	)	$	(22.34	)	$	(5.19	)
Weighted Average Common Shares Outstanding(4)		13,471,458			12,039,612			12,815,619			12,034,737

(1) Excludes depreciation, amortization, and accretion, which is reported separately, and includes $0.2 million and $0.4 million of non-cash equity-based compensation for the three and six months ended June 30, 2006, respectively, and less than $0.1 million for the three and six months ended June 30, 2005.

(2) Sales, general, and administrative expenses includes $2.6 million and $4.2 million of non-cash equity-based compensation for the three and six months ended June 30, 2006, respectively, and $0.1 million and $0.2 million for the three and six months ended June 30, 2005, respectively.

(3) Includes $240.1 million of deemed dividends for the three and six months ended June 30, 2006 incurred in connection with the exchange of Series A Convertible Preferred stock for common stock on June 30, 2006.

(4) Includes 37,417,347 shares of common stock issued in exchange for Series A Convertible Preferred stock, which did not have a significant impact on basic and diluted weighted average common shares outstanding presented herein as the exchange occurred at the end of the second quarter. All common share information included herein reflects the 1-for-15 reverse stock split that occurred on June 6, 2006. As the effects of including the incremental shares associated with options, warrants, unvested restricted stock and restricted stock units, and Series A Convertible Preferred stock are antidilutive, they are not included in diluted weighted average common shares outstanding. Diluted common shares on an as converted basis were 53,594,196 and 38,166,001 as of June 30, 2006 and 2005, respectively.

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

4

SAVVIS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

	Six Months Ended June 30,
	2006			2005
Operating Activities:
Net loss	$	(23,539	)	$	(42,217	)
Reconciliation of net loss to net cash provided by operating activities:
Depreciation, amortization, and accretion		39,563			37,534
Non-cash portion of restructuring charges		—			(2,365	)
Non-cash equity-based compensation		4,611			268
Accrued interest		25,701			23,266
Write-off of deferred financing costs		—			2,666
Net changes in operating assets and liabilities:
Trade accounts receivable		4,075			(1,376	)
Prepaid expenses and other current assets		(5,491	)		(2,856	)
Other non-current assets		(3,291	)		(1,042	)
Payables and other trade accruals		(505	)		1,462
Deferred revenue		7,861			(1,093	)
Other accrued liabilities		(8,846	)		(4,103	)
Net cash provided by operating activities		40,139			10,144
Investing Activities:
Payments for capital expenditures		(36,943	)		(27,969	)
Payment for purchase of data center buildings		(13,817	)		—
Other investing activities		110			(600	)
Net cash used in investing activities		(50,650	)		(28,569	)
Financing Activities:
Proceeds from borrowings on revolving credit facility		—			58,000
Proceeds from financing method lease		50,600			—
Proceeds from stock option exercises		14,295			425
Principal payments under revolving credit facility		(26,000	)		—
Payments under capital lease obligations		(1,859	)		(53,792	)
Other financing activities		(1,285	)		(3,968	)
Net cash provided by financing activities		35,751			665
Effect of exchange rate changes on cash and cash equivalents		(279	)		(595	)
Net increase (decrease) in cash and cash equivalents		24,961			(18,355	)
Cash and cash equivalents, beginning of period		61,166			55,369
Cash and cash equivalents, end of period	$	86,127		$	37,014
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	7,667		$	7,742
Non-cash Investing and Financing Activities:
Accreted and deemed dividends on Series A Convertible Preferred stock (see Note 10)	$	262,810		$	20,267
Assets and obligations acquired under capital leases (see Note 6)	$	6,389		$	—

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

5

SAVVIS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(dollars in thousands)

	Number of Shares Outstanding			Series A Convertible Preferred Stock			Common Stock			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Deficit
	Series A Convertible Preferred Stock		Common Stock
Balance at December 31, 2005	202,490		12,089,852	$	305,173		$	1,813		$	353,836		$	(790,534	)	$	(2,297	)	$	(132,009	)
Net loss	—		—		—			—			—			(23,539	)		—			(23,539	)
Foreign currency translation
Adjustments	—		—		—			—			—			—			212			212
Comprehensive loss	—		—		—			—			—			—			—			(23,327	)
Deemed dividends on, beneficial conversion feature of and conversion of Series A Convertible Preferred Stock to common stock, net	(202,490	)	37,417,347		(305,173	)		(1,481	)		305,780			—			—			(874	)
Issuance of common stock upon exercise of stock options	—		1,136,276		—			149			14,146			—			—			14,295
Issuance of common stock upon exercise of warrants	—		173,548		—			26			(26	)		—			—			—
Issuance of restricted stock	—		10,000		—			1			(1	)		—			—			—
Recognition of deferred compensation costs	—		—		—			—			3,916			—			—			3,916
Recognition of stock option modification costs	—		—		—			—			696			—			—			696
Balance at June 30, 2006	—		50,827,023	$	—		$	508		$	678,347		$	(814,073	)	$	(2,085	)	$	(137,303	)

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

6

SAVVIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular dollars in thousands, except share and per share amounts)

NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

SAVVIS, Inc. (the Company) is a global information technology (IT) services company delivering integrated hosting, network, digital content services, industry solutions, security, and professional services to businesses around the world and to various segments of the U.S. federal government.

As further described in Note 10, on June 6, 2006, the Company completed a 1-for-15 reverse stock split of its common stock. In connection with the reverse stock split, each fifteen shares of the Company’s issued and outstanding common stock was combined into one share of common stock. All exercise and conversion prices and the number of shares of common stock, preferred stock, warrants, stock options and other equity awards presented herein for current and prior periods have been adjusted to reflect the reverse stock split. Also further described in Note 10, on June 30, 2006, the Company exchanged all of the outstanding shares of its Series A Convertible Preferred Stock for 37.4 million shares of its common stock and recorded a $240.1 million deemed dividend which increased net loss attributable to common stockholders during the three and six months ended June 30, 2006.

These unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, under the rules and regulations of the U.S. Securities and Exchange Commission (the SEC), and on a basis substantially consistent with the audited consolidated financial statements of the Company as of and for the year ended December 31, 2005. Such audited financial statements are included in the Company’s Current Report on Form 8-K filed with the SEC on July 25, 2006. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes included in the July 25, 2006 8-K.

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. In the opinion of management, such financial statements include all adjustments, which consist of only normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. All intercompany balances and transactions have been eliminated in consolidation. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from such estimates and assumptions. Estimates used in the Company’s condensed consolidated financial statements include, among others, accruals for commercial disputes and billing errors by vendors, allowance for credits and uncollectibles, valuation of the Subordinated Notes and warrants, valuation of the fair value of certain liabilities assumed in the acquisition of Cable & Wireless USA, Inc. and Cable & Wireless Internet Services, Inc., together with the assets of certain of their affiliates (collectively, CWA), and the valuation of long-lived assets. In addition, certain amounts from prior years have been reclassified to conform to the current year presentation.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition and Allowance for Credits and Uncollectibles

The Company derives the majority of its revenue from recurring revenue streams, consisting primarily of managed IP VPN, hosting, digital content services, and other network services, which is recognized as services are provided. Revenue is recognized only when the related service has been provided, there is persuasive evidence of an arrangement, the fee is fixed or determinable and collection is reasonably assured. Installation fees, although generally billed upon installation, are deferred and recognized ratably over the estimated average life of a customer contract.

The Company occasionally guarantees certain service levels in its individual customer contracts. To the extent that such service levels are not achieved, the Company estimates the amount of credits to be issued, based on historical credits provided and known disputes, and records a reduction to revenue, with a corresponding increase in the allowance for credits and uncollectibles.

The Company assesses collectibility based on a number of factors, including customer payment history and creditworthiness. The Company generally does not request collateral from its customers although in certain cases it may obtain a security deposit. When evaluating revenue recognition and the adequacy of allowances, the Company maintains an allowance for uncollectibles and specifically analyzes accounts receivable, current economic conditions and trends, historical bad debt write-offs, customer concentrations, customer creditworthiness, and changes in customer payment terms. Delinquent account balances are written-off after management has determined that the likelihood of collection is not probable.

7

Cost of Revenue

Invoices from communications service providers may exceed amounts the Company believes it owes. The Company’s practice is to identify these variances and engage in discussions with the vendors to resolve disputes. Accruals are maintained for the best estimate of the amount that will ultimately be paid. Variations in the Company’s estimate and ultimate settlement of vendor billings may have a material impact on the Company’s consolidated financial position, results of operations, or cash flows. Other operational expenses include rental costs, utilities, costs for hosting space, as well as salaries and related benefits for engineering, service delivery and provisioning, customer service, and operations personnel. Maintenance and operations costs for indefeasible rights of use (IRUs) are also reflected in cost of revenue.

Share-Based Payments

As of June 30, 2006, the Company had two share-based compensation plans – the Amended and Restated 2003 Incentive Compensation Plan (the 2003 Plan) and the 1999 Stock Option Plan, as amended (the 1999 Plan), collectively referred to herein as the Plans. The Plans provide for the grant of stock options, stock appreciation rights, restricted stock, unrestricted stock, stock units, dividend equivalent rights and cash awards. Any of these awards may be granted as incentives to reward and encourage individual contributions to the Company. As of June 30, 2006, the Plans had 9.1 million shares authorized for grants of options or other share-based instruments. On July 6, 2006, the compensation committee of the Board of Directors increased such number to 12.1 million shares, subject to stockholder approval of such increase. Stock options generally expire 10 years from the date of the grant and vest over four years. Restricted stock awards granted to non-employee directors have graded vesting over three years. Restricted stock units granted to certain employees have included performance features and graded vesting expected over periods up to four years. Restricted preferred units granted to certain executives have graded vesting over four years.

The Company recognizes compensation expense over the vesting period for share-based awards. The Company recognized total non-cash stock-based compensation costs of $2.8 million and $4.6 million for awards during the three and six months ended June 30, 2006, respectively, and $0.1 million and $0.3 million for the three and six months ended June 30, 2005, respectively (see Note 10). The majority of these amounts were reflected in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations, with the remainder included in cost of revenue. As of June 30, 2006, the Company had $50.2 million of unrecognized compensation cost related to unvested stock-based compensation that is expected to be ultimately recognized, which includes 1.1 million restricted stock units, approximately 0.1 million shares of restricted common stock, 0.5 million stock options that have a weighted average exercise price of $18.47 per share, and restricted preferred units for 1.3 million common shares that have a weighted average exercise price of $8.51 per common share. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 3.3 years.

Prior to January 1, 2006, the Company accounted for share-based awards under those plans using the recognition and measurement provisions of Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations, as permitted by Statement of Financial Accounting Standards (SFAS) 123, “Accounting for Stock-Based Compensation.” As such, the Company only recognized compensation cost for share-based awards to the extent such awards were issued with an exercise price below the fair market value of the Company’s common stock on the date of grant. Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS 123(R), “Share-Based Payment,” using the modified-prospective transition method. Under such method, compensation cost recognized in the accompanying condensed consolidated statement of operations for the three and six months ended June 30, 2006 includes a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123, and b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123(R). Results for prior periods have not been restated for the adoption of SFAS 123(R).

As a result of adopting SFAS 123(R) on January 1, 2006, the Company’s net loss for the three and six months ended June 30, 2006 was $0.5 million and $0.6 million higher, respectively, and basic and diluted loss per common share was $0.04 and $0.05 higher, respectively, than if the Company had continued to account for share-based awards under APB 25 and follow the disclosure provisions only of SFAS 123. Prior to and after the adoption of SFAS 123(R), the Company has not realized the tax benefits of deductions resulting from the exercise of share-based awards due to the Company’s history of net operating losses.

8

The following table presents the effect on net loss and net loss per common share for the three and six months ended June 30, 2005 as if the Company had applied the fair value recognition provisions of SFAS 123 to stock options granted under the Company’s share-based compensation plans. For purposes of this pro forma disclosure, the value of the options is estimated using the Black-Scholes option pricing model and amortized to expense on a straight-line basis over the options’ vesting periods.

	Three Months Ended June 30, 2005			Six Months Ended June 30, 2005
Net loss attributable to common stockholders, as reported	$	(31,611	)	$	(62,484	)
Adjusted for:
Stock-based compensation expense		145			268
Pro forma stock-based compensation expense		(1,732	)		(3,422	)
Pro forma net loss attributable to common stockholders	$	(33,198	)	$	(65,638	)
Basic and diluted net loss per common share:
As reported	$	(2.63	)	$	(5.19	)
Pro forma	$	(2.76	)	$	(5.45	)

The assumptions utilized in the determination of fair value for stock options and restricted preferred units in 2006 and 2005, as applicable, based on current and historical experience, were as follows: expected volatility of 99.3% and 107.3%; risk-free interest rates of 5.1% and 3.8%; dividend yield of 0%; contractual option lives of 10 years; and expected option lives of 3.3 years and 4.0 years, respectively.

In addition, in December 2005, prior to the adoption of SFAS 123(R), the compensation committee of the Board of Directors approved the acceleration of vesting of certain unvested and “out-of-the-money” stock options with exercise prices equal to or greater than $11.25 per share previously awarded to employees, including certain executive officers and non-employee directors, under the Plans. The acceleration of vesting was effective for stock options outstanding as of December 13, 2005. Options to purchase approximately 1.4 million shares of common stock, including approximately 0.4 million options held by executive officers and approximately 0.1 million options held by non-employee directors, were subject to the acceleration, which resulted in 92% of the Company’s outstanding options being vested. The purpose of the acceleration was to enable the Company to minimize the amount of compensation expense recognized in association with these options in its consolidated statements of operations upon adoption of SFAS 123(R). Management believes that the aggregate future expense that was eliminated as a result of the acceleration of the vesting of these options was approximately $11.2 million. Management also believed that because the options that were accelerated had exercise prices in excess of the market value of the Company’s common stock on the date of acceleration, the options had limited economic value and were not fully achieving their original objective of incentive compensation and employee retention.

Income Taxes

Income taxes are accounted for using the asset and liability method, which provides for the establishment of deferred tax assets and liabilities for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and for income tax purposes, applying the enacted statutory tax rates in effect for the years in which differences are expected to reverse. Valuation allowances are established when it is more likely than not the deferred tax assets will not be realized. The Company has provided a full valuation allowance on tax loss carryforwards and other potential tax benefits according to SFAS 109, “Accounting for Income Taxes,” because the future realization of the tax benefit is uncertain. As a result, to the extent that those benefits are realized in future periods, they will favorably impact net income. At June 30, 2006, the Company had approximately $536 million in net operating loss carryforwards scheduled to expire between 2009 and 2024, of which approximately $253 million is subject to the Section 382 limitation of the Internal Revenue Code, which limits the amount of net operating losses that the Company may deduct for income tax purposes.

9

NOTE 3—PROPERTY AND EQUIPMENT

Communications and data center equipment, office equipment, and other equipment are recorded at cost and depreciated using the straight-line method over estimated useful lives, which range from three to fifteen years. Facilities and leasehold improvements are amortized over the shorter of their estimated useful lives or the remaining lease terms, which range from two to fifteen years. The following table presents property and equipment, by major category, as of June 30, 2006 and December 31, 2005:

	June 30, 2006			December 31, 2005
Communications and data center equipment	$	449,014		$	408,300
Facilities and leasehold improvements		166,005			157,171
Office equipment and other		54,546			48,706
		669,565			614,177
Less accumulated depreciation and amortization		(385,548	)		(352,952	)
Property and equipment, net	$	284,017		$	261,225

In the first half of 2006, the Company entered into three master capital lease agreements for the purchase of $6.2 million of communications, data center and other computer equipment. On June 29, 2006, the Company purchased two buildings and an adjoining annex previously leased and used for one of its data centers for $13.8 million. On June 30, 2006, the Company relinquished title to the buildings, and the Company-owned leasehold improvements contained therein, for $50.6 million and subsequently entered into a fifteen year agreement to lease back such assets. The transaction was recorded as a financing method lease (see Note 6) and, as a result, the buildings and related leasehold improvements will remain in the Company’s records through June 2021, the end of the lease term.

Depreciation expense was $15.9 million and $32.0 million for the three and six months ended June 30, 2006, respectively, and $13.2 million and $26.3 million for the three and six months ended June 30, 2005, respectively.

The cost of equipment and facilities held under capital lease was $130.4 million and $124.0 million as of June 30, 2006 and

December 31, 2005, respectively. Accumulated amortization of such assets held under capital lease was $80.2 million and $77.7 million as of June 30, 2006 and December 31, 2005, respectively. Amortization expense for equipment and facilities held under capital lease was $0.9 million and $1.9 million for the three and six months ended June 30, 2006, respectively, and $2.0 million and $4.3 million for the three and six months ended June 30, 2005, respectively.

NOTE 4—INTANGIBLE ASSETS

The Company accounts for identified intangible assets acquired in accordance with SFAS 142, “Goodwill and Other Intangible Assets,” and SFAS 141, “Business Combinations.” The Company’s intangible assets were acquired and, as such, were valued at estimated fair value. Identifiable intangible assets primarily include customer relationships, trademarks, patents, and peering agreements. Useful lives of these specifically identified intangible assets are: five years for trademarks; eleven to fifteen years for patents; three to four years for customer relationships; and seven years for peering agreements.

The following table presents intangible assets as of June 30, 2006 and December 31, 2005:

	Weighted Average Amortization Period (in years)	Useful Lives (in years)	June 30, 2006			December 31, 2005
Customer relationships	3.4	3-4	$	13,160		$	13,160
Other intangible assets	6.7	5-15		5,550			5,550
Subtotal	4.4			18,710			18,710
Less: accumulated amortization
Customer relationships				(10,656	)		(8,638	)
Other intangible assets				(2,014	)		(1,541	)
Total accumulated amortization				(12,670	)		(10,179	)
Intangible assets, net			$	6,040		$	8,531

Amortization expense for intangible assets was $1.2 million and $2.5 million for the three and six months ended June 30, 2006, respectively, and $1.2 million and $2.5 million for the three and six months ended June 30, 2005, respectively.

10

NOTE 5—LONG-TERM DEBT

The following table presents long-term debt as of June 30, 2006 and December 31, 2005:

	June 30, 2006			December 31, 2005
Proceeds from issuance of the Subordinated Notes	$	200,000		$	200,000
Adjustment for the valuation of warrants issued for Series B Preferred (original issue discount)		(65,872	)		(65,872	)
Adjusted value of the Subordinated Notes		134,128			134,128
Accrued interest on the Subordinated Notes		79,624			60,867
Accretion of the original issue discount		28,572			22,264
Balance of the Subordinated Notes		242,324			217,259
Revolving Credit Facility		32,000			58,000
Total long-term debt	$	274,324		$	275,259

Revolving Credit Facility

On June 10, 2005, the Company and certain of its subsidiaries entered into a credit agreement with Wells Fargo Foothill, Inc., as arranger and administrative agent, and certain other lenders to provide the Company with an $85.0 million revolving credit facility (the Revolving Facility), which, as amended on June 30, 2006, includes a $20.0 million letter of credit facility. The Revolving Facility may be used for working capital and other general corporate purposes. The Revolving Facility matures, and all outstanding borrowings and unpaid interest are due, on December 9, 2008. In addition, all outstanding borrowings are subject to mandatory prepayment upon certain events, including the availability of less than $7.0 million in borrowing capacity and qualified cash balances, as defined by the Revolving Facility agreement. As of June 30, 2006, the $85.0 million Revolving Facility included outstanding principal of $32.0 million, outstanding letters of credit of $9.6 million (see Note 9), and unused availability of $43.4 million. The Company paid down $16.0 million in the first quarter of 2006, $10.0 million in the second quarter of 2006 and on July 3, 2006, the Company paid down the remaining outstanding principal of $32.0 million plus $0.3 million of related accrued interest. After such payments were made, as of July 3, 2006, unused availability under the Revolving Facility, giving effect to outstanding letters of credit of $9.6 million, was $75.4 million. The Company may terminate the Revolving Facility prior to maturity, provided that the Company pays a premium of 0.5% of the revolver amount if terminated prior to June 10, 2007 but no premium if terminated thereafter.

The Revolving Facility contains affirmative covenants, negative covenants, and financial covenants. The negative covenants place restrictions on, among other things, levels of investments, indebtedness, and dividend payments that the Company may make or incur. The financial covenants, which apply only if the Company maintains qualified cash and availability of less than $35.0 million, require the maintenance of certain financial measures at defined levels. Under the Revolving Facility, borrowings bear interest determined by a base LIBOR rate of one to six months plus an additional 2.75% to 3.25%, determined by certain financial measures, with a minimum interest rate at all times of 5.25%. As of June 30, 2006, the Revolving Facility carries an interest rate of 7.67% based on the six-month LIBOR set in March 2006. As of June 30, 2006, the six-month LIBOR was 5.61% and the additional interest spread above LIBOR was 2.75%, lowered from 3.00% during the first quarter of 2006, due to the Company’s achievement of certain financial measures. Interest is payable at varying dates, as outlined in the Revolving Facility agreement, generally every one to three months. Unused commitments on the Revolving Facility are subject to a 0.5% annual commitment fee. The Revolving Facility is secured by substantially all of the Company’s domestic properties and assets. The carrying amount of the Company’s obligations under the Revolving Facility approximates fair value because the interest rates are based on floating interest rates identified by reference to market rates.

Subordinated Notes

In February 2004, the Company issued $200.0 million of Subordinated Notes. The proceeds were used to fund the CWA asset acquisition and related operational, working capital, and capital expenditure requirements. Debt issuance costs associated with the Subordinated Notes were $2.0 million, consisting of fees to the purchasers of the Subordinated Notes, and were capitalized in other non-current assets in the accompanying condensed consolidated balance sheets and are being amortized to interest expense using the effective interest method until maturity. The Subordinated Notes accrued interest based on a 365-day year at a rate of 12.5% per annum until February 3, 2005 and 15% per annum thereafter, payable semi-annually on June 30 and December 31 through the issuance of additional Subordinated Notes equal to the accrued interest payable at the time of settlement. Prior to January 29, 2008, the Company may redeem the Subordinated Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest, plus a make-whole premium. The make-whole premium is equal to all remaining interest to be paid on the

11

Subordinated Notes from the date of the redemption notice through January 30, 2008, discounted semi-annually at a rate equal to the treasury rate plus 0.5%, plus 1% of the principal amount of the Subordinated Notes. After January 30, 2008, the Company may redeem the Subordinated Notes, in whole but not in part, at a redemption price equal to 101% of the principal amount plus all accrued and unpaid interest. Upon a change of control, the holders of the Subordinated Notes have the right to require the Company to redeem any or all of the Subordinated Notes at a cash price equal to 100% of the principal amount of the Subordinated Notes, plus all accrued and unpaid interest as of the effective date of such change of control. The Subordinated Notes mature in a single installment on January 30, 2009. The outstanding principal and interest-to-date on the Subordinated Notes, excluding the original issue discount, was $276.3 million and $257.1 million as of June 30, 2006 and December 31, 2005, respectively.

Warrants exercisable for Series B Convertible Preferred Stock (the Series B Preferred) were issued with the Subordinated Notes and exercised shortly thereafter. The $200.0 million in proceeds from issuance were allocated between the Subordinated Notes and the warrants for Series B Preferred, based on their relative fair values, resulting in an original issue discount of $65.9 million. The allocated value of the Subordinated Notes at date of issuance, plus accrued interest on the face value and accreted interest on the original issue discount, are reflected as long-term debt in the accompanying condensed consolidated balance sheets. The fair value of the Series B Preferred was determined with the assistance of an independent third-party valuation firm, and the allocated fair value is reflected in additional paid-in capital in stockholders’ deficit in the accompanying consolidated balance sheets. The purchasers of the Subordinated Notes exercised the warrants and the Series B Preferred were converted into common stock in December 2004. The Series B Preferred were retired by the Company’s Board of Directors in December 2005.

Debt Covenants

The provisions of the Company’s Revolving Facility and Subordinated Notes contain a number of covenants including, but not limited to, restricting or limiting the Company’s ability to incur more debt, pay dividends and repurchase stock (subject to financial measures and other conditions). The ability to comply with these provisions may be affected by events beyond the Company’s control. The breach of any of these covenants could result in a default under the Company’s debt agreements and could trigger acceleration of repayment. As of and during the three and six months ended June 30, 2006 and the year ended December 31, 2005, the Company was in compliance with all covenants under the Revolving Facility and Subordinated Notes, as applicable.

Future Principal Payments

As of June 30, 2006, aggregate future principal payments of long-term debt were zero in each of the years 2006 and 2007 and were $32.0 million in 2008 and $401.9 million in 2009, consisting of $200.0 million in principal and $201.9 million of accrued non-cash interest, with no payments due thereafter. The weighted average interest rate applicable to the Company’s outstanding borrowings under the Revolving Facility and Subordinated Notes was 14.24% and 13.53% as of June 30, 2006 and December 31, 2005, respectively.

NOTE 6—CAPITAL AND FINANCING METHOD LEASE OBLIGATIONS

The following table presents future minimum lease payments due under capital leases as of June 30, 2006:

	Capital Lease Obligations
Remainder of 2006	$	7,148
2007		12,950
2008		12,571
2009		11,764
2010		11,643
Thereafter		109,015
Total capital lease obligations		165,091
Less amount representing interest		(99,690	)
Less current portion		(2,866	)
Capital lease obligations, net of current portion	$	62,535

12

Financing Method Lease Obligation

On June 29, 2006, a wholly-owned subsidiary of the Company purchased a facility it previously leased for use as a data center for $13.8 million. Following the purchase, on June 30, 2006, the Company relinquished title to the facility and certain Company-owned equipment located at the facility, having an aggregate net book value of $19.9 million, for $50.6 million. The Company’s net proceeds from these transactions, before expenses, were $36.8 million.

Concurrent with the closing of these transactions, the Company entered into a triple-net lease agreement to lease back the facility and equipment (the Lease) for fifteen years at an initial annual base rent of $4.3 million and annual escalation of 2.5%. The Lease agreement provides the Company with the option to renew the Lease up to three times for a period of five years each. The Company will be required to pay all of the costs associated with the operation of the facilities, including costs such as insurance, taxes and maintenance. The Lease imposes certain obligations on the Company and grants certain rights to the landlord in the event the Company defaults on the Lease. The Lease contains other customary representations, warranties, obligations, conditions, indemnification provisions and termination provisions associated with leases of this nature.

As a result of the renewal provisions in the Lease agreement that are indicative of continuing involvement by the Company, the Lease qualifies as a financing method lease rather than a sale under sale-leaseback accounting for real estate. Accordingly, the Company recorded a financing method lease obligation of $50.6 million, equal to the proceeds received. The related assets and financing method lease obligation will be reflected in the Company’s accompanying condensed consolidated balance sheet until completion of the lease term in June 2021, when they will be removed from the Company’s records, and any remaining obligation will be recognized as a gain on sale of the facility and equipment. Future minimum lease payments due under the financing method lease obligation, as of June 30, 2006, were $1.8 million during the remainder of 2006, $4.4 million in 2007, $4.5 million in 2008, $4.6 million in 2009, $4.8 million in 2010 and $57.8 million thereafter, all of which represent interest using the effective interest method.

NOTE 7—OPERATING LEASE OBLIGATIONS

The following table presents future minimum lease payments under operating leases as of June 30, 2006:

Remainder of 2006	$	28,460
2007		55,128
2008		53,599
2009		49,720
2010		41,739
Thereafter		134,334
Total future minimum lease payments	$	362,980

13

NOTE 8—OTHER ACCRUED LIABILITIES

The following table presents the components of other accrued liabilities as of June 30, 2006 and December 31, 2005:

	June 30, 2006		December 31, 2005
Current other accrued liabilities:
Wages, employee benefits, and related taxes	$	17,726	$	23,190
Deferred revenue		18,852		15,775
Taxes payable		7,115		6,036
Acquired contractual obligations in excess of fair value and other		7,039		7,872
Accrued outside services		15,401		14,372
Other current liabilities		11,250		11,452
Total current other accrued liabilities	$	77,383	$	78,697
Non-current other accrued liabilities:
Deferred revenue	$	17,272	$	12,309
Acquired contractual obligations in excess of fair value and other		26,800		27,965
Asset retirement obligations		23,167		21,965
Other non-current liabilities		18,041		18,576
Total non-current other accrued liabilities	$	85,280	$	80,815

NOTE 9—COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS

The Company’s customer contracts generally span multiple periods, which result in the Company entering into arrangements with various suppliers of communications services that require the Company to maintain minimum spending levels, some of which increase over time, to secure favorable pricing terms. The Company’s remaining aggregate minimum spending levels, allocated ratably over the terms of such contracts, are $40.1 million, $37.8 million, $7.5 million, and $89.5 million in years 2006, 2007, 2008, and thereafter, respectively. Should the Company not meet the minimum spending levels in any given term, decreasing termination liabilities representing a percentage of the remaining contracted amount may become immediately due and payable. Furthermore, certain of these termination liabilities are subject to reduction should the Company experience the loss of a major customer or suffer a loss of revenue from a general economic downturn. Before considering the effects of any potential reductions for the business downturn provisions, if the Company had terminated all of these agreements as of June 30, 2006, the maximum liability would have been $174.9 million.

The Company is subject to various legal proceedings and other actions in the normal course of business. While the results of such proceedings and actions cannot be predicted, management believes, based on facts known to management today, that the ultimate outcome of such proceedings and actions will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

The Company has employment agreements with key executive officers that contain provisions with regard to base salary, bonus, stock-based compensation, and other employee benefits. These agreements also provide for severance benefits in the event of employment termination or a change in control of the Company.

In the normal course of business, the Company is a party to certain guarantees and financial instruments with off-balance sheet risk, such as letters of credit, indemnifications and operating leases, which are not reflected in its consolidated balance sheets. The agreements associated with such guarantees and financial instruments mature at various dates through July 2017 and may be renewed as circumstances warrant. As of June 30, 2006, the Company had $9.6 million in letters of credit pledged as collateral to support various property and equipment leases and utilities. In addition, certain of the operating leases assumed by the Company in the CWA asset acquisition were collateralized by Cable & Wireless plc with letters of credit and guarantees. Such collateral remained in place following the acquisition, and the Company agreed to reimburse Cable & Wireless plc for any payments made under the collateral. Such collateral totals $2.1 million and will be replaced by the Company on or before July 2007. The Company’s financial instruments are valued based on the amount of exposure under the instruments and the likelihood of performance being required. In management’s past experience, no claims have been made against these financial instruments nor does it expect the exposure to material losses resulting therefrom to be anything other than remote. As a result, the Company determined such financial instruments do not have significant value and has not recorded any related amounts in its condensed consolidated financial statements.

14

NOTE 10—STOCKHOLDERS’ EQUITY

The following table presents diluted common shares, on an as-converted basis, as of June 30, 2006 and December 31, 2005:

	June 30, 2006	December 31, 2005
Total common shares outstanding	50,827,023	12,089,852
Series A Preferred on an as-converted basis	—	27,394,581
Warrants and options outstanding and unvested restricted stock units	2,767,173	1,259,921
Diluted common shares, on an as-converted basis	53,594,196	40,744,354

Reverse Stock Split

On May 10, 2006, the Board of Directors of the Company declared a 1-for-15 reverse stock split of the Company’s common stock. The record date for the reverse stock split was June 5, 2006, and on June 6, 2006, the reverse stock split was completed. Stockholders received cash in lieu of any fraction of a share that they would have otherwise been entitled to receive as a result of the reverse stock split. In connection with the reverse stock split, each fifteen shares of the Company’s issued and outstanding common stock was combined into one share of common stock. In addition, all exercise and conversion prices and the number of shares of common stock, preferred stock, warrants, stock options and other equity awards presented herein for current and prior periods have been adjusted to reflect the reverse stock split.

Preferred Stock

On May 10, 2006, the Company entered into an Exchange and Recapitalization Agreement (the Exchange Agreement) with the holders of its Series A Convertible Preferred Stock (the Series A Preferred) pursuant to which the holders agreed to exchange (the Exchange) their shares of Series A Preferred for an aggregate of 37.4 million shares of the Company’s common stock, including 8.4 million common shares in addition to the shares of common stock the Series A Preferred was then convertible into in accordance with their terms. On June 30, 2006, pursuant to the Exchange Agreement, all such common shares were issued to the holders of the Series A Preferred, in exchange for all shares of Series A Preferred. In connection with the Exchange, the Company recognized a deemed dividend on the Series A Preferred of $240.1 million, representing the difference between the fair market value of the shares issued in the Exchange and those convertible pursuant to the original conversion terms. The deemed dividend is included in the computation of net loss attributable to common stockholders in the accompanying condensed consolidated statement of operations for the three and six months ended June 30, 2006. Following the Exchange, as of June 30, 2006, the Company had 50.8 million shares of common stock outstanding.

Investment funds related to Welsh, Carson, Anderson & Stowe (WCAS) held approximately 68% of the outstanding Series A Preferred. Three members of the Company’s board of directors are general partners of certain WCAS funds, represent WCAS on the Company’s board of directors and owned shares of Series A Preferred and participated in the Exchange. Constellation Venture Capital II, L.P., Constellation Venture Capital Offshore II, L.P., The BSC Employee Fund IV, L.P. and CVC II Partners, L.L.C. (together, Constellation), who on June 30, 2006, had one representative on the Company’s Board of Directors, held approximately 10% of the outstanding Series A Preferred, and MLT, LLC (formerly Moneyline Telerate Holdings, Inc.), who currently has one representative on the Company’s Board of Directors, held approximately 20% of the outstanding Series A Preferred. Constellation’s representative on the Company’s board of directors resigned effective July 14, 2006. Two of the Company’s executive officers hold restricted preferred units (RPUs) that entitled them to receive upon vesting of each restricted preferred unit RPU that number of shares of common stock that a holder of Series A Preferred would be entitled to receive. Accordingly, their RPUs were adjusted to give them the same benefits they would have received had they held Series A Preferred and participated in the Exchange.

The Exchange was approved by a special committee of the Board of Directors of the Company comprised of independent directors. The Exchange was also approved by the stockholders of the Company acting by written consent. WCAS, Constellation and MLT, who collectively hold more than a majority of the Company’s outstanding voting power, executed the written consent.

Holders of the Series A Preferred representing approximately 99% of the shares received in the Exchange have agreed not to sell any of such shares, except in certain circumstances or with the approval of the special committee, until November 1, 2006.

Restricted Preferred Units

On May 8, 2006, the compensation committee of the Board of Directors awarded 6,770 RPUs to certain executives of the Company, giving the holders the right to receive upon vesting that number of shares of common stock as one share of the Company’s Series A

15

Preferred would be convertible into had such shares of Series A Preferred been outstanding since March 18, 2002, less an exercise value of $1,561 per RPU. Based on the terms of the Exchange previously described, the RPUs were adjusted to give the holders the same benefits they would have received had they participated in the Exchange, resulting in the holders obtaining the right to receive upon vesting 1.3 million shares of common stock. Compensation expense associated with the RPUs was measured on the date of grant using the Black-Scholes option pricing model and was determined to be $30.7 million and will be recognized over the four year vesting period. Vesting is subject to continued employment and occurs at a rate of 25% on each anniversary of the grant date until fully vested. Compensation expense associated with RPUs was $1.2 million during the three and six months ended June 30, 2006.

Restricted Stock Units

In August 2005, the compensation committee of the Board of Directors awarded 1.3 million restricted stock units (RSUs) to executives and employees under the 2003 Plan, of which 0.6 million were subsequently forfeited upon employment terminations in 2005 and the first half of 2006. In March 2006 and May 2006, the compensation committee awarded 0.3 million and 0.1 million RSUs to executives, respectively. The Company received no cash consideration for such awards, and the awards resulted in deferred compensation of $4.9 million and $13.1 million in 2006 and 2005, respectively, which represents the fair value of the RSUs on the date of grant less any unamortized value upon forfeiture of such grants. The vesting of the RSUs is subject to continued employment and the Company’s achievement of financial performance targets over a period of up to four years. RSUs represent common stock but do not give the recipient any actual ownership interest in the Company’s common stock, other than the right to receive cash dividends, until vested and the shares of common stock underlying the RSUs are delivered. Deferred compensation is being amortized on a straight-line basis and recognized as non-cash equity-based compensation over the requisite service period. Compensation expense associated with RSUs was $1.4 million and $2.3 million during the three and six months ended June 30, 2006, respectively. If the Company believes it is probable that it will achieve its performance targets, non-cash equity-based compensation will be accelerated to ensure that the amount of non-cash equity-based compensation recorded is reflective of the accelerated vesting of RSUs.

Stock Options

Compensation expense associated with stock options was $1.4 million and $2.3 million during the three and six months ended June 30, 2006, respectively, including $0.7 million associated with the modification of a term of an executive’s stock option agreement in March 2006. Compensation expense associated with stock options was $0.1 million and $0.3 million during the three and six months ended June 30, 2005, respectively.

On July 6, 2006, the compensation committee of the Board of Directors authorized an increase in the number of common shares available for grants of options or other share-based instruments by 3.0 million, subject to stockholder approval of such increase, and concurrently approved the grant of 2.9 million stock options with an exercise price of $30.01 per share under the 2003 Plan. Total compensation expense, using the Black-Scholes option pricing model, is estimated to be $60 million and will be recognized over the vesting period. The options vest 50% on the second anniversary of the grant date and then monthly thereafter through the fourth anniversary of the grant date.

Warrants

In connection with its recapitalization in 2002, the Company issued warrants to Nortel Networks, Inc. (Nortel) to purchase approximately 0.4 million shares of the Company’s common stock for $11.25 per share. In March 2006, Nortel exercised its warrants and received approximately 0.2 million shares of the Company’s common stock.

The following table presents information associated with the Company’s stock-based compensation awards for the six months ended June 30, 2006 (in thousands):

	Six Months Ended June 30, 2006
	Restricted Stock Units		Restricted Stock		Options		Common Shares for RPUs	Warrants
Outstanding at beginning of period	951		10		3,470		—	873
Granted	407		10		292		1,263	—
Delivered/Exercised	—		(3	)	(1,145	)	—	(429	)
Forfeited	(224	)	—		(89	)	—	—
Outstanding at end of period	1,134		17		2,528		1,263	444

16

NOTE 11—INDUSTRY SEGMENT AND GEOGRAPHIC REPORTING

SFAS No. 131, “Disclosure about Segments of an Enterprise and Related Information,” prescribes standards for reporting information about operating segments in annual financial statements and in interim financial reports. Operating segments are defined as components of an enterprise about which separate financial information is available that is regularly evaluated by the chief operating decision maker or decision making group, to determine how resources should be allocated and to assess operating performance.

The Company provides various products and service offerings to its customers through a single sales force. A high percentage of customers purchase a variety of services and as a result, management assesses financial information, makes business decisions and manages the business as one segment. Although the Company operates in one segment, its operations are managed on the basis of three geographic regions: Americas, Europe and Asia. Management evaluates the performance of such regions and allocates resources to them based primarily on revenue. The Company has evaluated the criteria for aggregation of its geographic regions under SFAS 131 and believes it meets each of the respective criteria set forth therein. Each geographic region provides all of the Company’s services to businesses in various industries. In addition, the geographic regions utilize similar means for delivering the Company’s services; have similarity in the types of customers receiving the products and services; distribute the Company’s services over a unified network; and operate within a generally consistent regulatory environment. In light of these factors, management has determined that the Company has one reportable segment.

Selected financial information for the Company’s geographic regions as of and for the three and six months ended June 30, 2006 and 2005 is presented below. For the three months ended June 30, 2006 and 2005, revenue earned in the U.S. represented approximately 84% and 82% of total revenue, respectively, and for the six months ended June 30, 2006 and 2005, the comparable percentage of U.S. revenue to total revenue was 83% and 83%, respectively.

	Three Months Ended June 30,				Six Months Ended June 30,
	2006		2005		2006		2005
Revenue:
Americas	$	158,774	$	137,174	$	307,580	$	271,994
Europe		20,205		18,218		40,815		35,617
Asia		10,618		11,808		21,157		21,761
Total revenue	$	189,597	$	167,200	$	369,552	$	329,372
Property and equipment, net (end of period):
Americas					$	272,434	$	244,317
Europe						9,686		7,227
Asia						1,897		1,656
Total property and equipment, net					$	284,017	$	253,200

17

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion in conjunction with our accompanying unaudited condensed consolidated financial statements and notes thereto, and our audited consolidated financial statements, notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations as of and for the year ended December 31, 2005, included in our Annual Report on Form 10-K for such period as filed with the U.S. Securities and Exchange Commission. The results shown herein are not necessarily indicative of the results to be expected in any future periods. This discussion contains forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) based on current expectations which involve risks and uncertainties. Actual results and the timing of events could differ materially from the forward-looking statements as a result of a number of factors. For a discussion of the material factors that could cause actual results to differ materially from the forward-looking statements, you should read “Risk Factors” included in this Form 10-Q.

EXECUTIVE SUMMARY

SAVVIS, Inc. is a global information technology (IT) services company delivering integrated hosting, network, digital content services, industry solutions, security, and professional services to businesses around the world and various segments of the U.S. federal government. Our unique solutions model combines advanced virtualization technology, a utility services approach, and automated software management and provisioning systems to deliver access to a suite of IT services that offer high availability, business agility and a superior cost of ownership model. Our solutions enable customers to focus on their core business while we ensure the performance of their IT infrastructure. We have over 5,000 customers across all industries with a particular emphasis in the financial services, media and entertainment, retail, and the U.S. federal government sectors.

Recent Events

The following significant events occurred in the second quarter of 2006:

• we completed a 1-for-15 reverse stock split of our common stock on June 6, 2006;

• we exchanged all of the outstanding shares of our Series A Convertible Preferred Stock for 37.4 million shares of common stock on June 30, 2006 and recorded a $240.1 million deemed dividend which increased net loss attributable to common stockholders during the three and six months ended June 30, 2006; and

• we purchased a facility we previously leased for use as a data center for $13.8 million and subsequently relinquished title to the facility and certain equipment we owned located at the facility, having an aggregate net book value of $19.9 million, for $50.6 million. Our net proceeds from these transactions, before expenses, were $36.8 million.

Services

We provide various products and service offerings to our customers through a single sales force. A high percentage of customers purchase a variety of services and as a result, management assesses financial information, makes business decisions and manages the business as one segment. Although we operate in one segment, our operations are managed on the basis of three geographic regions: Americas, Europe and Asia. The following briefly describes our services by revenue category:

Managed IP VPN

Managed IP VPN includes revenue primarily from our IP VPN. This service is a fully managed, end-to-end service that includes all hardware, management systems, and operations to transport video and data applications. This service has built-in security, fully-meshed connectivity, and the ability to assign individual service levels to different applications so each application receives the performance levels it requires and reduces unused capacity.

Hosting

Hosting revenue includes revenue from our managed hosting solutions. Hosting includes the facilities, networks, servers, storage, and operations to run business applications. Customers can take advantage of our flexible service model which allows them to decide the right combination of our service for their applications from basic colocation to managed hosting to utility computing.

Digital Content Services

Revenue from digital content services, or media services, includes our WAM!NET services, digital media services and Content Delivery Network (CDN) services. These services provide a managed infrastructure tied to workflow applications that enhance the creation, production and distribution of digital content and streaming media. These services help customers manage, share, store and distribute their digital content inside their organization and throughout supply chains outside of their organization.

18

Other Network Services

Other network services include Internet access and private line services to enterprises and wholesale carrier customers. These services can be purchased individually or in combination. The network portfolio emphasizes high performance and availability, end-to-end management and monitoring, security, fully-meshed connectivity between customer sites for improved reliability and efficiency, and cost effectiveness.

Our customers’ varied and individual needs often require that our portfolio of services be combined and integrated in order to best suit their needs. To address these needs, we also offer the following services:

Industry Solutions

Industry solutions integrate powerful applications with our global infrastructure to deliver services that enhance industry-specific workflows and improve enterprise productivity. These services support the financial services, media and entertainment and retail markets and the U.S. federal government. Cross-industry solutions for email and collaboration are also available.

Professional Services

Professional services are provided through a group of industry experts and skilled practitioners that allow our customers to get the maximum value out of our services. We offer assistance and consultation in security, web-based applications, business recovery, program management, infrastructure, and migration.

Business Trends

Our financial results continue to be affected by competition in our industry. We expect competitive factors in our industry to continue to affect the prices for our services and our results of operations. Price pressures vary by product and service. Prices for certain telecommunications services that we offer have decreased over the past several years. While we expect to continue to see decreases for these telecommunication services, there has been stabilization and some increases in pricing of other services that we offer. For example, pricing for colocation services has increased and is expected to continue to increase in certain markets where there is a shortage of high grade data center space. Due to the disparity in pricing of our products and services, we continue to evaluate our operating structure and focus. We believe that by re-evaluating and restructuring our products and services, we can reduce costs and provide more sophisticated forms of value-added services to our customers.

In evaluating our financial results and the performance of our business, our management reviews our revenues, gross profit, gross margin, and income (loss) from operations. In addition, management evaluates these indicators on a quarterly and annual basis in order to have a complete understanding of business trends. The following table presents a quarterly overview of these indicators for the periods indicated (dollars in thousands):

	Three Months Ended
	June 30, 2006			March 31, 2006			December 31, 2005			September 30, 2005			June 30, 2005
Revenue	$	189,597		$	179,955		$	171,513		$	166,127		$	167,200
Gross profit (1)		72,495			67,201			60,736			59,110			58,532
Gross margin (2)		38	%		37	%		35	%		36	%		35	%
Income (loss) from operations		6,034			3,704			2,836			2,310			(3,502	)

(1) Gross profit represents total revenue less cost of revenue, which excludes depreciation, amortization, and accretion. Gross profit in 2005 has been adjusted to reflect a portion of non-cash stock-based compensation that was previously reported separately from cost of revenue.

(2) Represents gross profit, as defined above, as a percentage of revenue.

Revenue

Prior to our acquisition of Cable & Wireless USA, Inc. and Cable & Wireless Internet Services, Inc., together with the acquisition of assets of certain of their affiliates (CWA), in March 2004, we were heavily dependent on our largest customer, Reuters Limited (Reuters), which comprised 54% of total revenue in 2003. Most of our remaining revenue was generated from our managed IP VPN

19

services. However, after we acquired CWA, our revenue profile changed significantly. Reuters revenue comprised only 16% of total revenue for the three and six months ended June 30, 2005, respectively, and only 12% for the three and six months ended June 30, 2006. Moreover, the acquisition increased our revenue from hosting services, which represented 49% of total revenue for the three months ended June 30, 2006 and 48% of total revenue for the six months ended June 30, 2006, compared to 43% of total revenue for the three and six months ended June 30, 2005.

Our revenue grew by 12% during the six months ended June 30, 2006 compared to the six months ended June 30, 2005, and 13% during the three months ended June 30, 2006 compared to the three months ended June 30, 2005. This was due primarily to increases in revenue from managed IP VPN of $6.6 million and hosting of $21.9 million, partially offset by a decline in other network services of $1.9 million and Reuters of $4.0 million.

In May 2005, we signed a new three-year contract with Reuters to continue providing network delivery of Reuters’ market data services worldwide and to create the opportunity for us to provide to Reuters a broad array of additional services. As a result of the new agreement, we reduced pricing for certain Reuters services and eliminated existing contractual minimum amounts. In addition, in the first quarter of 2005, Reuters also announced it signed a long-term agreement for the provision of network services with a competing telecommunications provider. Accordingly, we expect revenue from Reuters to continue to decline in 2006 compared to 2005.

We plan to offset this decrease by increasing our revenue through a number of initiatives, including improving the productivity of our direct sales force by increasing sales force automation and providing more sales support in terms of engineering and product expertise, given our product breadth and extensive customer base, exploring opportunities to sell additional services to existing customers, and capitalizing on the current imbalance in the supply and demand ratio for colocation services by continuing to achieve improved customer pricing.

Gross Profit

We use gross profit and gross margin to evaluate our business. Gross profit, defined as revenue less cost of revenue, but excluding depreciation, amortization, and accretion, was $72.5 million for the three months ended June 30, 2006, an increase of $14.0 million, or 24%, from $58.5 million for the three months ended June 30, 2005. Gross profit was $139.5 million for the six months ended June 30, 2006, an increase of $27.9 million, or 25.0%, from $111.6 million for the six months ended June 30, 2005. The improvement of gross profit throughout 2004, 2005, and 2006 reflects our continued efforts to rationalize network operations, reduce our fixed network costs, and reduce the service costs of our hosting data centers as a result of the synergies from our acquisition of CWA. As a result, gross margin, defined as gross profit as a percentage of revenue, was 38% for the three months ended June 30, 2006 compared to 35% for the three months ended June 30, 2005, and 38% for the six months ended June 30, 2006 compared to 34% for the six months ended June 30, 2005.

Income (Loss) from Operations

Income from operations for the three months ended June 30, 2006 was $6.0 million, an improvement of $9.5 million, or 272%, compared to a loss from operations of $3.5 million for the three months ended June 30, 2005. The improvement was primarily due to the increase in revenue of $22.4 million and the absence of $4.0 million of restructuring and integration costs, partially offset by increases in cost of revenue of $8.4 million; sales, general, and administrative expenses of $7.5 million; and depreciation, amortization, and accretion of $0.9 million. Income from operations for the six months ended June 30, 2006 was $9.7 million, an improvement of $18.6 million, or 210%, as compared to a loss from operations of $8.8 million for the six months ended June 30, 2005. This improvement was primarily driven by an increase in revenue of $40.2 million and the absence of $6.1 million of restructuring and integration costs, partially offset by increases in cost of revenue of $12.3 million; sales, general, and administrative expenses of $13.4 million; and depreciation, amortization, and accretion of $2.0 million.

SIGNIFICANT TRANSACTIONS

Revolving Facility Payment

On July 3, 2006, we fully paid the outstanding balance on our Revolving Facility of $32.0 million plus $0.3 million of related accrued interest. After such payment was made, unused availability under the $85.0 million Revolving Facility, giving effect to outstanding letters of credit of $9.6 million, was $75.4 million.

Financing Method Lease Obligation

On June 29, 2006, our wholly-owned subsidiary purchased a facility we previously leased for use as a data center for $13.8 million. Following the purchase, on June 30, 2006, we relinquished title to the facility and certain equipment we owned located at the facility, having an aggregate net book value of $19.9 million, for $50.6 million. Our net proceeds from these transactions, before expenses, were $36.8 million.

20

Concurrent with the closing of these transactions, we entered into a triple-net lease agreement to lease back the facility and equipment (the Lease) for fifteen years at an initial annual base rent of $4.3 million and annual escalation of 2.5%. The Lease agreement provides us with the option to renew the Lease up to three times for a period of five years each. We will be required to pay all of the costs associated with the operation of the facilities, including costs such as insurance, taxes and maintenance. The Lease imposes certain obligations on us and grants certain rights to the landlord in the event we default on the Lease. The Lease contains other customary representations, warranties, obligations, conditions, indemnification provisions and termination provisions associated with leases of this nature.

As a result of the renewal provisions in the Lease agreement that are indicative of continuing involvement by us, the Lease qualifies as a financing method lease rather than a sale under sale-leaseback accounting for real estate. Accordingly, we recorded a financing method lease obligation of $50.6 million, equal to the proceeds received. The related assets and financing method lease obligation will be reflected in our condensed consolidated balance sheet until completion of the lease term in June 2021, when they will be removed from our records, and any remaining obligation will be recognized as a gain on sale of the facility and equipment. Future minimum lease payments due under the financing method lease obligation, as of June 30, 2006, were $1.8 million during the remainder of 2006, $4.4 million in 2007, $4.5 million in 2008, $4.6 million in 2009, $4.8 million in 2010 and $57.8 million thereafter, all of which represent interest using the effective interest method.

Equity Transactions

Reverse Stock Split

On May 10, 2006, our Board of Directors declared a 1-for-15 reverse stock split of our common stock. The record date for the reverse stock split was June 5, 2006, and on June 6, 2006, the reverse stock split was completed. Stockholders received cash in lieu of any fraction of a share that they would have otherwise been entitled to receive as a result of the reverse stock split. In connection with the reverse stock split, each fifteen shares of our issued and outstanding common stock was combined into one share of our common stock. In addition, all exercise and conversion prices and the number of shares of our common stock, preferred stock, warrants, stock options and other equity awards presented herein for current and prior periods have been adjusted to reflect the reverse stock split.

Preferred Stock

On May 10, 2006, we entered into an Exchange and Recapitalization Agreement (the Exchange Agreement) with the holders of our Series A Convertible Preferred Stock (the Series A Preferred) pursuant to which the holders agreed to exchange (the Exchange) their shares of Series A Preferred for an aggregate of 37.4 million shares of our common stock, including 8.4 million common shares in addition to the shares of common stock the Series A Preferred was then convertible into in accordance with their terms. On June 30, 2006, pursuant to the Exchange Agreement, all such common shares were issued to the holders of the Series A Preferred, in exchange for all shares of Series A Preferred. In connection with the Exchange, we recognized a deemed dividend on the Series A Preferred of $240.1 million, representing the difference between the fair market value of the shares issued in the Exchange and those convertible pursuant to the original conversion terms. The deemed dividend is included in the computation of net loss attributable to common stockholders in our condensed consolidated statement of operations for the three and six months ended June 30, 2006. Following the Exchange, as of June 30, 2006, we had 50.8 million shares of common stock outstanding.

Investment funds related to Welsh, Carson, Anderson & Stowe (WCAS) held approximately 68% of the outstanding Series A Preferred. Three members of our board of directors are general partners of certain WCAS funds, represent WCAS on our board of directors and owned shares of Series A Preferred and participated in the Exchange. Constellation Venture Capital II, L.P., Constellation Venture Capital Offshore II, L.P., The BSC Employee Fund IV, L.P. and CVC II Partners, L.L.C. (together, Constellation), who on June 30, 2006, had one representative on our Board of Directors, held approximately 10% of the outstanding Series A Preferred, and MLT, LLC (formerly Moneyline Telerate Holdings, Inc.), who currently has one representative on our Board of Directors, held approximately 20% of the outstanding Series A Preferred. Constellation’s representative on our board of directors resigned effective July 14, 2006. Two of our executive officers hold restricted preferred units (RPUs) that entitled them to receive upon vesting of each restricted preferred unit RPU that number of shares of common stock that a holder of Series A Preferred would be entitled to receive. Accordingly, their RPUs were adjusted to give them the same benefits they would have received had they held Series A Preferred and participated in the Exchange.

The Exchange was approved by a special committee of our Board of Directors comprised of independent directors. The Exchange was also approved by our stockholders acting by written consent. WCAS, Constellation and MLT, who collectively hold more than a majority of our outstanding voting power, executed the written consent.

Holders of the Series A Preferred representing approximately 99% of the shares received in the Exchange have agreed not to sell any of such shares, except in certain circumstances or with the approval of the special committee, until November 1, 2006.

21

Restricted Preferred Units

On May 8, 2006, the compensation committee of our Board of Directors awarded 6,770 RPUs to certain of our executives, giving the holders the right to receive upon vesting that number of shares of common stock as one share of our Series A Preferred would be convertible into had such shares of Series A Preferred been outstanding since March 18, 2002, less an exercise value of $1,561 per RPU. Based on the terms of the Exchange previously described, the RPUs were adjusted to give the holders the same benefits they would have received had they participated in the Exchange, resulting in the holders obtaining the right to receive upon vesting 1.3 million shares of common stock. Compensation expense associated with the RPUs was measured on the date of grant using the Black-Scholes option pricing model and was determined to be $30.7 million and will be recognized over the four year vesting period. Vesting is subject to continued employment and occurs at a rate of 25% on each anniversary of the grant date until fully vested. Compensation expense associated with RPUs was $1.2 million during the three and six months ended June 30, 2006.

Share-Based Compensation Awards

On July 6, 2006, the compensation committee of the Board of Directors authorized an increase in the number of common shares available for grants of options or other share-based instruments by 3.0 million, subject to stockholder approval of such increase, and concurrently approved the grant of 2.9 million stock options with an exercise price of $30.01 per share under the 2003 Plan. Total compensation expense, using the Black-Scholes option pricing model, is estimated to be $60 million and will be recognized over the vesting period. The options vest 50% on the second anniversary of the grant date and then monthly thereafter through the fourth anniversary of the grant date.

Restricted Stock Units

In August 2005, the compensation committee of the Board of Directors awarded 1.3 million restricted stock units (RSUs) to executives and employees under the Amended and Restated 2003 Incentive Compensation Plan (the 2003 Plan), of which 0.6 million were subsequently forfeited upon employment terminations in 2005 and the first half of 2006. In March 2006 and May 2006, the compensation committee awarded 0.3 million and 0.1 million RSUs to executives, respectively. We received no cash consideration for such awards, and the awards resulted in deferred compensation of $4.9 million in 2006 and $13.1 million in 2005 which represents the fair value of the RSUs on the date of grant less any unamortized value upon forfeiture of such grants. The vesting of the RSUs is subject to continued employment and our achievement of financial performance targets over a period of up to four years. RSUs represent common stock but do not give the recipient any actual ownership interest in our common stock, other than the right to receive cash dividends, until vested and the shares of common stock underlying the RSUs are delivered. Deferred compensation is being amortized on a straight-line basis and recognized as non-cash equity-based compensation over the requisite service period. Compensation expense associated with RSUs was $1.4 million and $2.3 million during the three and six months ended June 30, 2006, respectively. If we believe it is probable that it will achieve its performance targets, non-cash equity-based compensation will be accelerated to ensure that the amount of non-cash equity-based compensation recorded is reflective of the accelerated vesting of RSUs.

RESULTS OF OPERATIONS

The historical financial information included in this Form 10-Q is not intended to represent the future results of operations, financial position or cash flows that may be achieved.

Three Months Ended June 30, 2006 Compared to the Three Months Ended June 30, 2005

Executive Summary of Results of Operations

Revenue increased $22.4 million, or 13%, for the three months ended June 30, 2006, compared to the three months ended June 30, 2005, as a result of a 24% increase in managed IP VPN and a 31% improvement in hosting, partially offset by a 15% decline in Reuters revenue and smaller declines in digital content services and other network services. Income from operations improved $9.5 million, or 272%, for the three months ended June 30, 2006 compared to the three months ended June 30, 2005, as a result of the increase in revenue and the absence of $4.0 million in restructuring and integration costs in 2006. These factors were partially offset by increases in cost of revenue of $8.4 million, or 8%; sales, general, and administrative expenses of $7.5 million, or 19%; and depreciation, amortization, and accretion of $0.9 million, or 5%. For the three months ended June 30, 2006 and 2005, cost of revenue and sales, general, and administrative expenses include non-cash equity-based compensation expense, in accordance with U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 107, which was previously reported as a separate line in 2005. Net loss improved $10.2 million, or 48%, for the three months ended June 30, 2006 compared to the three months ended June 30, 2005, as a result of the factors previously described.

22

Revenue. The following table presents diversified revenue by major category and revenue from our largest customer (dollars in thousands):

	Three Months Ended June 30,
	2006		2005		Dollar Change			Percent Change
Diversified Revenue:
Managed IP VPN	$	34,148	$	27,465	$	6,683		24	%
Hosting		93,582		71,682		21,900		31	%
Digital Content Services		11,187		11,387		(200	)	(2	)%
Other Network Services		28,262		30,217		(1,955	)	(6	)%
Total Diversified Revenue		167,179		140,751		26,428		19	%
Reuters		22,418		26,449		(4,031	)	(15	)%
Total Revenue	$	189,597	$	167,200	$	22,397		13	%

Revenue was $189.6 million for the three months ended June 30, 2006, an increase of $22.4 million, or 13%, from $167.2 million for the three months ended June 30, 2005. Diversified managed IP VPN revenue was $34.1 million for the three months ended June 30, 2006, an increase of $6.7 million, or 24%, from $27.5 million for the three months ended June 30, 2005. This increase was mainly attributed to new sales activity and growth in existing services. Diversified hosting revenue was $93.6 million for the three months ended June 30, 2006, an increase of $21.9 million, or 31%, from $71.7 million for the three months ended June 30, 2005. The increase was due primarily to growth in existing services, particularly in our infrastructure and managed utility service offerings, stabilized pricing, and lower customer churn. Digital content services revenue, which includes CDN and WAM!NET revenue, was $11.2 million for the three months ended June 30, 2006, a decrease of $0.2 million, or 2%, from $11.4 million for the three months ended June 30, 2005. The decrease was due primarily to usage volatility and reduced pricing for CDN services during the three months ended June 30, 2006 compared to the three months ended June 30, 2005. Other network services includes internet access revenue and private line services and was $28.3 million for the three months ended June 30, 2006, a decrease of $2.0 million, or 6%, from $30.2 million for the three months ended June 30, 2005. The decrease was due primarily to pricing pressures in unmanaged bandwidth for such services from 2005.

Reuters revenue was $22.4 million for the three months ended June 30, 2006, a decrease of $4.0 million, or 15%, from $26.4 million for the three months ended June 30, 2005. The decline was due primarily to pricing reductions and the elimination of minimum revenue commitments from Reuters. We expect Reuters revenue in 2006 to be lower than 2005 as a result of revised competitive pricing and the elimination of minimum revenue commitments based on the terms of the 2005 agreement with Reuters previously described elsewhere herein.

Cost of Revenue. Cost of revenue, which excludes depreciation, amortization, and accretion, which is reported separately, was $117.1 million for the three months ended June 30, 2006, an increase of $8.4 million, or 8%, from $108.7 million for the three months ended June 30, 2005. The increase was due primarily to an increase in personnel and related costs and higher utilities costs, partially offset by continued realization of various cost-savings initiatives. Gross profit, defined as total revenue less cost of revenue, was $72.5 million for the three months ended June 30, 2006, an increase of $14.0 million, or 24%, from $58.5 million for the three months ended June 30, 2005. Gross profit as a percentage of revenue, or gross margin, increased to 38% for the three months ended June 30, 2006 compared to 35% for the three months ended June 30, 2005, primarily resulting from strong revenue growth with a disproportionate increase in costs to generate such revenue, primarily due to cost-savings initiatives.

Sales, General, and Administrative Expenses. Sales, general, and administrative expenses include all costs associated with the selling of our services and administrative functions such as finance, legal and human resources. Such expenses were $46.8 million for the three months ended June 30, 2006, an increase of $7.5 million, or 19%, from $39.3 million for the three months ended June 30, 2005. Sales, general, and administrative expenses as a percentage of revenue were 25% for the three months ended June 30, 2006 compared to 24% for the three months ended June 30, 2005. This was due primarily to an increase in personnel and related costs, higher commissions, and the addition of $2.5 million in non-cash stock-based compensation expense in 2006 compared to 2005, partially offset by the realization of various cost-savings initiatives.

Depreciation, Amortization, and Accretion. Depreciation, amortization, and accretion includes depreciation of property and equipment, amortization of intangible assets, and accretion of the discounted present value of certain liabilities and long-term fixed price contracts assumed in the CWA acquisition. Depreciation, amortization, and accretion was $19.6 million for the three months ended June 30, 2006, an increase of $0.9 million, or 5%, from $18.7 million for the three months ended June 30, 2005.

23

Restructuring Charges, Net. Restructuring charges, net represent the termination of a naming rights agreement for use of our name on a sports and entertainment arena and the termination of an operating lease relating to unutilized space for which a restructuring liability had previously been established for the net present value of future minimum lease payments and were $3.3 million for the three months ended June 30, 2005. We have not incurred any restructuring costs in 2006.

Integration Costs. Integration costs represented incremental costs to the combined organization after the CWA asset acquisition in March 2004, including consulting services, payroll costs and stay bonuses, and PoP consolidation and network restructuring. We did not incur any integration costs associated with the CWA acquisition in 2006 as integration activities have been completed. Integration costs were $0.7 million for the three months ended June 30, 2005.

Net Interest Expense and Other. Net interest expense and other primarily represents interest on our Series A Subordinated Notes (the Subordinated Notes), capital and financing method lease obligations, and revolving credit facility (the Revolving Facility), as well as amortization of the original issue discount on the Subordinated Notes and amortization of debt issuance costs. Net interest expense and other was $17.1 million for the three months ended June 30, 2006, a decrease of $0.7 million, or 4%, from $17.8 million for the three months ended June 30, 2005. The decrease was primarily due to a lower interest rate and outstanding balance in 2006 on the Revolving Facility compared with the GECC capital lease, which was repaid in June 2005, partially offset by higher compounding of payable-in-kind interest on the Subordinated Notes. Management expects payments for cash interest expense to be approximately $7 million for the remainder of 2006 under our current financing arrangements.

Net Loss. Net loss for the three months ended June 30, 2006 was $11.1 million, an improvement of $10.2 million, or 48%, from $21.3 million for the three months ended June 30, 2005, primarily driven by the factors previously described.

Six Months Ended June 30, 2006 Compared to the Six Months Ended June 30, 2005

Executive Summary of Results of Operations

Revenue increased $40.2 million, or 12%, for the six months ended June 30, 2006 compared to the six months ended June 30, 2005, primarily as a result of increases in managed IP VPN and hosting services, partially offset by declines in other network services and Reuters revenue. Income from operations improved $18.6 million, or 210%, for the six months ended June 30, 2006, compared to a loss from operations of $8.8 million for the six months ended June 30, 2005, primarily as a result of the increase in revenue, as well as the absence of $2.7 million in integration costs and $3.3 million in restructuring charges in 2005 which were not incurred in 2006. This improvement was partially offset by increases in sales, general, and administrative expenses of $13.4 million and depreciation, amortization, and accretion of $2.0 million. Net loss improved $18.7 million, or 44%, for the six months ended June 30, 2006 compared to the six months ended June 30, 2005, as a result of the factors previously described.

Revenue. The following table presents diversified revenue by major category and revenue from our largest customer (dollars in thousands):

	Six Months Ended June 30,
	2006		2005		Dollar Change			Percent Change
Diversified Revenue:
Managed IP VPN	$	66,499	$	53,828	$	12,671		24	%
Hosting		179,149		140,466		38,683		28	%
Digital Content Services		21,803		20,947		856		4	%
Other Network Services		56,873		61,953		(5,080	)	(8	)%
Total Diversified Revenue		324,324		277,194		47,130		17	%
Reuters		45,228		52,178		(6,950	)	(13	)%
Total Revenue	$	369,552	$	329,372	$	40,180		12	%

Revenue was $369.6 million for the six months ended June 30, 2006, an increase of $40.2 million, or 12%, from $329.4 million for the six months ended June 30, 2005. Diversified managed IP VPN revenue was $66.5 million for the six months ended June 30, 2006, an increase of $12.7 million, or 24%, from $53.8 million for the six months ended June 30, 2005. This increase was mainly attributed to new sales activity and growth in existing services. Diversified hosting revenue was $179.1 million for the six months ended June 30, 2006, an increase of $38.7 million, or 28%, from $140.5 million for the six months ended June 30, 2005, due primarily to growth in existing services, particularly in our infrastructure and managed utility service offerings, stabilized pricing, and lower customer churn. Digital content services revenue was $21.8 million for the six months ended June 30, 2006, an increase of $0.9 million, or 4%, from $20.9 million for the six months ended June 30, 2005. The increase was due primarily to usage increases, partially offset by reduced

24

pricing for CDN services during the six months ended June 30, 2006 compared to the six months ended June 30, 2005. Other network services revenue was $56.9 million for the six months ended June 30, 2006, a decrease of $5.1 million, or 8%, from $62.0 million for the six months ended June 30, 2005. The decrease was due primarily to unmanaged bandwidth pricing pressures for such services from 2005.

Reuters revenue was $45.2 million for the six months ended June 30, 2006, a decrease of $7.0 million, or 13%, from $52.2 million for the six months ended June 30, 2005. The decline was due primarily to pricing reductions and the elimination of minimum revenue commitments from Reuters. We expect Reuters revenue in 2006 to be lower than 2005 as a result of revised competitive pricing and the elimination of minimum revenue commitments based on the terms of the 2005 agreement with Reuters described elsewhere herein.

Cost of Revenue. Cost of revenue, which excludes depreciation, amortization, and accretion, which is reported separately, was $230.1 million for the six months ended June 30, 2006, an increase of $12.3 million, or 6%, from $217.8 million for the six months ended June 30, 2005. The increase was primarily related to the increase in personnel and related costs and higher utilities costs, partially offset by the continued realization of various cost-savings initiatives. Gross profit, defined as total revenue less cost of revenue, was $139.5 million for the six months ended June 30, 2006, an increase of $27.9 million, or 25%, from $111.6 million for the six months ended June 30, 2005. Gross profit as a percentage of revenue, or gross margin, increased to 38% for the six months ended June 30, 2006, compared to 34% for the six months ended June 30, 2005, primarily resulting from strong revenue growth with a disproportionate increase in costs to generate such revenue, primarily due to cost-savings initiatives.

Sales, General, and Administrative Expenses. Sales, general, and administrative expenses were $90.2 million for the six months ended June 30, 2006, an increase of $13.4 million, or 17%, from $76.8 million for the six months ended June 30, 2005. Sales, general, and administrative expenses as a percentage of revenue were 24% for the six months ended June 30, 2006 compared to 23% for the six months ended June 30, 2005. This was due primarily to an increase in personnel and related costs, higher commissions, and the addition of $4.0 million in non-cash stock-based compensation expense in 2006 compared to 2005, partially offset by the realization of various cost-savings initiatives.

Depreciation, Amortization, and Accretion. Depreciation, amortization, and accretion includes depreciation of property and equipment, amortization of intangible assets, and accretion of the discounted present value of certain liabilities and long-term fixed price contracts assumed in the CWA acquisition. Depreciation, amortization, and accretion was $39.6 million for the six months ended June 30, 2006, an increase of $2.0 million, or 5%, from $37.5 million for the six months ended June 30, 2005.

Restructuring Charges, Net. Restructuring charges, net represent the termination of a naming rights agreement for use of our name on a sports and entertainment arena and the termination of an operating lease relating to unutilized space for which a restructuring liability had previously been established for the net present value of future minimum lease payments and were $3.3 million for the six months ended June 30, 2005. We have not incurred any restructuring costs in 2006.

Integration Costs. Integration costs represented incremental costs to the combined organization after the CWA asset acquisition in March 2004, including consulting services, payroll costs and stay bonuses, and PoP consolidation and network restructuring. We did not incur any integration costs associated with the CWA acquisition in 2006 as integration activities have been completed. Integration costs were $2.7 million for the six months ended June 30, 2005.

Net Interest Expense and Other. Net interest expense and other primarily represents interest on the Subordinated Notes, capital and financing method lease obligations, and the Revolving Facility as well as amortization of the original issue discount on the Subordinated Notes and amortization of debt issuance costs. Net interest expense and other was $33.3 million for the six months ended June 30, 2006, a decrease of $0.1 million, or less than 1%, from $33.4 million for the six months ended June 30, 2005. The decrease was primarily due to a lower interest rate and outstanding balance in 2006 on the Revolving Facility compared with the GECC capital lease, which was repaid in June 2005, partially offset by higher compounding of payable-in-kind interest on the Subordinated Notes. Management expects payments for cash interest expense to be approximately $7 million for the remainder of 2006 under our current financing arrangements.

Net Loss. Net loss for the six months ended June 30, 2006 was $23.5 million, an improvement of $18.7 million, or 44%, from $42.2 million for the six months ended June 30, 2005, primarily driven by the factors previously described.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2006, our cash and cash equivalents balance was $86.1 million. We had $40.1 million in net cash provided by operating activities during the six months ended June 30, 2006, an increase of $30.0 million from net cash provided by operating activities of $10.1 million for the six months ended June 30, 2005. This change was primarily due to improvements in our results of operations, driven by higher revenue growth that outpaced the growth in costs. Net cash used in investing activities for the six months ended June 30, 2006 was $50.7 million, an increase of $22.1 million from net cash used in investing activities of $28.6 million for the six months ended June 30, 2005. This change was primarily related to an increase in capital expenditures of $9.0 million and the purchase of

25

buildings previously leased for use in one of our data centers for $13.8 million. The increase in capital expenditures supports the growth in new and existing revenue streams. Net cash provided by financing activities for the six months ended June 30, 2006 was $35.8 million, an increase of $35.1 million from net cash provided by financing activities of $0.7 million for the six months ended June 30, 2005. This increase primarily relates to proceeds received in our financing method lease previously described of $50.6 million and cash received for the exercise of stock options of $14.3 million, partially offset by the $26.0 million pay down on the Revolving Facility.

Historically, we have not been cash flow positive. For example, cash flows from operations were negative for much of 2004 due to the significant acquisition and integration costs paid during that year. However, management does not consider the cash flows from 2004 to be representative of expected future cash flows as we ended the fourth quarter of that year with positive cash flows from operations and continued that trend in 2005 and 2006. In 2006, we expect cash flows from operations to be positive. The achievement of this goal is reflected in the quarterly trend analysis that follows, which presents cash flows from operations for the five consecutive quarters through June 30, 2006. Due to the dynamic nature of our industry and unforeseen circumstances, if we are unable to fully fund cash requirements through operations, we may need to obtain additional financing through a combination of equity and debt financings, renegotiation of terms on our existing debt, and sales of assets and services. If any such activities are required, there can be no assurance that we would be successful in completing any of these activities on terms that would be favorable to us. As of June 30, 2006, our unused availability under the Revolving Facility was $43.4 million, which is reflective of $9.6 million of letters of credit outstanding and $32.0 million of outstanding principal. On July 3, 2006, we paid down the remaining principal of $32.0 million plus $0.3 million of related accrued interest. After such payments were made, as of July 3, 2006, unused availability under the Revolving Facility, giving effect to outstanding letters of credit of $9.6 million, was $75.4 million.

The following table presents a quarterly overview of key components of our cash flows (dollars in thousands):

	Three Months Ended
	June 30, 2006			March 31, 2006			December 31, 2005			September 30, 2005			June 30, 2005
Net cash provided by operating activities	$	21,274		$	18,865		$	31,268		$	21,445		$	164
Net cash used to pay acquisition, integration, and restructuring costs (1)		—			—			(242	)		(594	)		(10,773	)
Net cash used in investing activities (2)		(34,255	)		(16,395	)		(20,104	)		(7,826	)		(13,614	)
Net cash provided by (used in) financing activities (3)		49,679			(13,928	)		(408	)		315			711
Net increase (decrease) in cash and cash equivalents		36,533			(11,572	)		10,376			13,776			(13,252	)

(1) Such costs are components of net cash provided by operating activities.

(2) Includes payment of $13.8 million for the purchase of data center buildings.

(3) Includes payments on the Revolving Facility of $10.0 million during the three months ended June 30, 2006 and $16.0 million during the three months ended March 31, 2006; and proceeds of $50.6 million received in connection with a financing method lease obligation.

Revolving Credit Facility

On June 10, 2005, we and certain of our subsidiaries entered into a credit agreement with Wells Fargo Foothill, Inc., as arranger and administrative agent, and certain other lenders to provide us with an $85.0 million Revolving Facility, which, as amended on June 30, 2006, includes a $20.0 million letter of credit facility. The Revolving Facility may be used for working capital and other general corporate purposes. The Revolving Facility matures, and all outstanding borrowings and unpaid interest are due, on December 9, 2008. In addition, all outstanding borrowings are subject to mandatory prepayment upon certain events, including the availability of less than $7.0 million in borrowing capacity and qualified cash balances, as defined by the Revolving Facility agreement. As of June 30, 2006, the $85.0 million Revolving Facility included outstanding principal of $32.0 million, outstanding letters of credit of $9.6 million, and unused availability of $43.4 million. We paid down $16.0 million in the first quarter of 2006, $10.0 million in the second quarter of 2006 and on July 3, 2006, we paid down the remaining outstanding principal of $32.0 million plus $0.3 million of related accrued interest. After such payments were made, as of July 3, 2006, unused availability under the Revolving Facility, giving effect to outstanding letters of credit of $9.6 million, was $75.4 million. We may terminate the Revolving Facility prior to maturity, provided we pay a premium of 0.5% of the revolver amount if terminated prior to June 10, 2007 but no premium if terminated thereafter.

The Revolving Facility contains affirmative covenants, negative covenants, and financial covenants. The negative covenants place restrictions on, among other things, levels of investments, indebtedness, and dividend payments that we may make or incur. The

26

financial covenants, which apply only if we maintain qualified cash and availability of less than $35.0 million, require the maintenance of certain financial measures at defined levels. Under the Revolving Facility, borrowings bear interest determined by a base LIBOR rate of one to six months plus an additional 2.75% to 3.25%, determined by certain financial measures, with a minimum interest rate at all times of 5.25%. As of June 30, 2006, the Revolving Facility carries an interest rate of 7.67% based on the six-month LIBOR set in March 2006. As of June 30, 2006, the six-month LIBOR was 5.61%, and the additional interest spread above LIBOR was 2.75%, lowered from 3.00% during the first quarter of 2006, due to our achievement of certain financial measures. Interest is payable at varying dates, as outlined in the Revolving Facility agreement, generally every one to six months. Unused commitments on the Revolving Facility are subject to a 0.5% annual commitment fee. The Revolving Facility is secured by substantially all of our domestic properties and assets. The carrying amount of our obligations under the Revolving Facility approximates fair value because the interest rates are based on floating interest rates identified by reference to market rates.

Subordinated Notes

In February 2004, we issued $200.0 million of the Subordinated Notes. The proceeds were used to fund the CWA asset acquisition and related operational, working capital, and capital expenditure requirements. Debt issuance costs associated with the Subordinated Notes were $2.0 million, consisting of fees to the purchasers of the Subordinated Notes, and were capitalized in other non-current assets in our condensed consolidated balance sheets and are being amortized to interest expense using the effective interest method until maturity. The Subordinated Notes accrued interest based on a 365-day year at a rate of 12.5% per annum until February 3, 2005 and 15% per annum thereafter, payable semi-annually on June 30 and December 31 through the issuance of additional Subordinated Notes equal to the accrued interest payable at the time of settlement. Prior to January 29, 2008, we may redeem the Subordinated Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest, plus a make-whole premium. The make-whole premium is equal to all remaining interest to be paid on the Subordinated Notes from the date of the redemption notice through January 30, 2008, discounted semi-annually at a rate equal to the treasury rate plus 0.5%, plus 1% of the principal amount of the Subordinated Notes. After January 30, 2008, we may redeem the Subordinated Notes, in whole but not in part, at a redemption price equal to 101% of the principal amount plus all accrued and unpaid interest. Upon a change of control, the holders of the Subordinated Notes have the right to require us to redeem any or all of the Subordinated Notes at a cash price equal to 100% of the principal amount of the Subordinated Notes, plus all accrued and unpaid interest as of the effective date of such change of control. The Subordinated Notes mature in a single installment on January 30, 2009. The outstanding principal and interest-to-date on the Subordinated Notes, excluding the original issue discount, was $276.3 million as of June 30, 2006 and $257.1 million as of December 31, 2005.

Warrants exercisable for Series B Convertible Preferred Stock (the Series B Preferred) were issued with the Subordinated Notes and exercised shortly thereafter. The $200.0 million in proceeds from issuance were allocated between the Subordinated Notes and the warrants for Series B Preferred, based on their relative fair values, resulting in an original issue discount of $65.9 million. The allocated value of the Subordinated Notes at date of issuance, plus accrued interest on the face value and accreted interest on the original issue discount, are reflected as long-term debt in our condensed consolidated balance sheets. The fair value of the Series B Preferred was determined with the assistance of an independent third-party valuation firm, and the allocated fair value is reflected in additional paid-in capital in stockholders’ deficit in our consolidated balance sheets. The purchasers of the Subordinated Notes exercised the warrants and the Series B Preferred were converted into common stock in December 2004. The Series B Preferred were retired by our Board of Directors in December 2005.

Debt Covenants

The provisions of our Revolving Facility and Subordinated Notes contain a number of covenants including, but not limited to, restricting or limiting our ability to incur more debt, pay dividends and repurchase stock (subject to financial measures and other conditions). The ability to comply with these provisions may be affected by events beyond our control. The breach of any of these covenants could result in a default under our debt agreements and could trigger acceleration of repayment. As of and during the three and six months ended June 30, 2006 and the year ended December 31, 2005, we were in compliance with all covenants under the Revolving Facility and Subordinated Notes, as applicable.

Future Principal Payments

As of June 30, 2006, aggregate future principal payments of long-term debt were zero in 2006 and 2007, $32.0 million in 2008, and $401.9 million in 2009, consisting of $200.0 million in principal and $201.9 million of accrued non-cash interest, with no payments due thereafter. The weighted average interest rate applicable to our outstanding borrowings under the Revolving Facility and Subordinated Notes was 14.24% as of June 30, 2006 and 13.53% as of December 31, 2005.

Commitments and Contingencies

Our customer contracts generally span multiple periods, which result in us entering into arrangements with various suppliers of communications services that require us to maintain minimum spending levels, some of which increase over time, to secure favorable pricing terms. Our remaining aggregate minimum spending levels, allocated ratably over the terms of such contracts, are $40.1 million

27

in year 2006; $37.8 million in year 2007; $7.5 million in year 2008; and $89.5 million thereafter. Should we not meet the minimum spending levels in any given term, decreasing termination liabilities representing a percentage of the remaining contracted amount may become immediately due and payable. Furthermore, certain of these termination liabilities are subject to reduction should we experience the loss of a major customer or suffer a loss of revenue from a general economic downturn. Before considering the effects of any potential reductions for the business downturn provisions, if we had terminated all of these agreements as of June 30, 2006, the maximum liability would have been $174.9 million.

We are subject to various legal proceedings and other actions in the normal course of business. While the results of such proceedings and actions cannot be predicted, management believes, based on facts known to management today, that the ultimate outcome of such proceedings and actions will not have a material adverse effect on our financial position, results of operations, or cash flows.

We have employment agreements with key executive officers that contain provisions with regard to base salary, bonus, stock-based compensation, and other employee benefits. These agreements also provide for severance benefits in the event of employment termination or a change in control.

Off-Balance Sheet Arrangements

In the normal course of business, we are a party to certain guarantees and financial instruments with off-balance sheet risk, such as letters of credit, indemnifications and operating leases, which are not reflected in our consolidated balance sheets. The agreements associated with such guarantees and financial instruments mature at various dates through July 2017 and may be renewed as circumstances warrant. As of June 30, 2006, we had $9.6 million in letters of credit pledged as collateral to support various property and equipment leases and utilities. In addition, certain of the operating leases assumed by us in the CWA asset acquisition were collateralized by Cable & Wireless plc with letters of credit and guarantees. Such collateral remained in place following the acquisition and we agreed to reimburse Cable & Wireless plc for any payments made under the collateral. Such collateral totals $2.1 million and will be replaced by us on or before July 2007. Our financial instruments are valued based on the amount of exposure under the instruments and the likelihood of performance being required. In our past experience, no claims have been made against these financial instruments nor do we expect the exposure to material losses resulting therefrom to be anything other than remote. As a result, we determined such financial instruments did not have significant value and have not recorded any related amounts in our condensed consolidated financial statements.

The following table presents our undiscounted contractual cash obligations as of June 30, 2006 (dollars in thousands):

	Payments Due by Period
	Total		Less Than 1 Year		2 – 3 Years		4 – 5 Years		After 5 Years
Long-term debt (1)	$	433,893	$	—	$	32,000	$	401,893	$	—
Asset retirement obligations		46,859		428		4,480		17,665		24,286
Operating leases		362,980		28,460		108,727		91,459		134,334
Capital lease obligations (2)		165,168		7,148		25,521		23,407		109,092
Financing method lease obligation (3)		77,969		1,819		8,948		9,402		57,800
Unconditional purchase obligations		182,852		43,652		47,485		14,300		77,415
Total contractual cash obligations	$	1,269,721	$	81,507	$	227,161	$	558,126	$	402,927

(1) Includes interest accrued of $201.9 million over the remaining life of the long-term debt.

(2) Includes interest payments of $99.7 million over the remaining life of the obligation.

(3) Represents interest payments over the remaining life of the obligation and a deferred gain of $50.6 million that will be recognized at the end of the lease term in June 2021 in accordance with sale-leaseback accounting rules for real estate.

CRITICAL ACCOUNTING POLICIES

Share-Based Payments

As of June 30, 2006, we had two share-based compensation plans – the 2003 Plan and the 1999 Stock Option Plan, as amended (the 1999 Plan), collectively referred to herein as the Plans. The Plans provide for the grant of stock options, stock appreciation rights, restricted stock, unrestricted stock, stock units, dividend equivalent rights and cash awards. Any of these awards may be granted as incentives to reward and encourage individual contributions to our company. As of June 30, 2006, the Plans had 9.1 million shares authorized for grants of options or other share-based instruments. On July 6, 2006, the compensation committee of the Board of Directors increased such number to 12.1 million shares, subject to stockholder approval of such increase. Stock options generally expire 10 years from the date of the grant and vest over four years. Restricted stock awards granted to non-employee directors have graded vesting over three years. Restricted stock units granted to certain employees have included performance features and graded vesting expected over periods up to four years. Restricted preferred units granted to certain executives have graded vesting over four years.

28

We recognize compensation expense over the vesting period for share-based awards. We recognized total non-cash stock-based compensation costs of $2.8 million and $4.6 million for unvested awards during the three and six months ended June 30, 2006, respectively, and $0.1 million and $0.3 million for the three and six months ended June 30, 2005, respectively. The majority of these amounts were reflected in selling, general and administrative expenses in our condensed consolidated statements of operations, with the remainder included in cost of revenue. As of June 30, 2006, we had $50.2 million of unrecognized compensation cost related to unvested stock-based compensation that is expected to be ultimately recognized, which includes 1.1 million restricted stock units, approximately 0.1 million shares of restricted common stock, 0.5 million stock options that have a weighted average exercise price of $18.47 per share, and restricted preferred units for 1.3 million common shares that have a weighted average exercise price of $8.51 per common share. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 3.3 years.

Prior to January 1, 2006, we accounted for share-based awards under those plans using the recognition and measurement provisions of Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations, as permitted by Statement of Financial Accounting Standards (SFAS) 123, “Accounting for Stock-Based Compensation.” As such, we only recognized compensation cost for share-based awards to the extent such awards were issued with an exercise price below the fair market value of our common stock on the date of grant. Effective January 1, 2006, we adopted the fair value recognition provisions of SFAS 123(R), “Share-Based Payment,” using the modified-prospective transition method. Under such method, compensation cost recognized in the accompanying condensed consolidated statement of operations for the three and six months ended June 30, 2006 includes a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123, and b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123(R). Results for prior periods have not been restated for the adoption of SFAS 123(R).

As a result of adopting SFAS 123(R) on January 1, 2006, our net loss for the three and six months ended June 30, 2006 was $0.5 million and $0.6 million higher, respectively, and basic and diluted loss per common share was $0.04 and $0.05 higher, respectively, than if we had continued to account for share-based awards under APB 25 and follow the disclosure provisions only of SFAS 123. Prior to and after the adoption of SFAS 123(R), we have not realized the tax benefits of deductions resulting from the exercise of share-based awards due to our history of net operating losses.

In addition, in December 2005, prior to the adoption of SFAS 123(R), the compensation committee of our Board of Directors approved the acceleration of vesting of certain unvested and “out-of-the-money” stock options with exercise prices equal to or greater than $11.25 per share previously awarded to employees, including certain executive officers and non-employee directors, under the Plans. The acceleration of vesting was effective for stock options outstanding as of December 13, 2005. Options to purchase approximately 1.4 million shares of common stock, including approximately 0.4 million options held by executive officers and approximately 0.1 million options held by non-employee directors, were subject to the acceleration, which resulted in 92% of our outstanding options being vested. The purpose of the acceleration was to enable us to minimize the amount of compensation expense recognized in association with these options in our consolidated statements of operations upon adoption of SFAS 123(R). We believe that the aggregate future expense that was eliminated as a result of the acceleration of the vesting of these options was approximately $11.2 million. We also believed that because the options that were accelerated had exercise prices in excess of the market value of our common stock on the date of acceleration, the options had limited economic value and were not fully achieving their original objective of incentive compensation and employee retention.

Other Critical Accounting Policies

While all of the significant accounting policies described in the notes to the condensed consolidated financial statements contained elsewhere herein are important, some of these policies may be viewed as being critical. Such policies are those that are most important to the portrayal of our financial condition and require our most difficult, subjective or complex estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates and assumptions on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ from these estimates and assumptions. For further information regarding the application of these and other accounting policies, see Note 2 of Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report and Part II, Item 7 of the 2005 Form 10-K.

29

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Interest Rate Risk

We are subject to market risks arising from changes in interest rates that affect our variable rate debt. As of June 30, 2006, we had $32.0 million outstanding under our Revolving Facility. Amounts borrowed under the Revolving Facility bear interest at LIBOR rates plus an applicable margin. Interest expense on amounts borrowed fluctuates as LIBOR rates fluctuate. The interest rate on our variable rate debt as of June 30, 2006, was 7.67%. A hypothetical increase in the interest rate on our variable rate by 1% would increase annual interest expense by approximately $0.3 million. The change in interest rates is based on hypothetical movements and is not necessarily indicative of the actual results that may occur. Future earnings or losses will be affected by actual fluctuations in interest rates.

There have been no other material changes in our assessment of market risk sensitivity since our presentation of “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the year ended December 31, 2005.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in our periodic filings with the U.S. Securities and Exchange Commission.

Changes in Internal Control over Financial Reporting

There has been no change in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended) during the quarter ended June 30, 2006, that materially affected or is reasonably likely to materially affect the internal controls over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We are subject to various legal proceedings and actions in the normal course of business. While the results of such proceedings and actions cannot be predicted, management believes, based on facts known to management today, that the ultimate outcome of such proceedings and actions will not have a material adverse effect on our financial position, results of operations, or cash flows.

ITEM 1A. RISK FACTORS.

You should carefully consider the risks described below before making an investment decision. The trading price of our common stock could decline due to any of these risks, in which case you could lose all or part of your investment. You should also refer to the other information in this filing, including our condensed consolidated financial statements and related notes. The risks and uncertainties described below are those that we currently believe may materially affect our Company. Additional risks and uncertainties that we are unaware of or that we currently deem immaterial also may become important factors that affect our Company.

Risks Related to Our Business

A material reduction in revenue from our largest customer, who represented 15% of our revenues in 2005 and 12% of our revenues in the first six months of 2006, could harm our financial results to the extent not offset by cost reductions or new customers.

Together, Reuters and Telerate, which was acquired by Reuters in 2005, accounted for $100.5 million, or 15%, of our revenue in 2005 compared to $122.0 million, or 20%, of our revenue in 2004, and $45.2 million, or 12%, of our revenue for the first six months of 2006 compared to $52.2 million, or 16%, of our revenue in the first six months of 2005. This reduction was primarily due to reduced pricing for certain of our services and the elimination of minimum revenue commitments based on the terms of a new three-year Master Services Agreement with Reuters that we entered into in May 2005. Under the new agreement, Reuters no longer has any obligation to purchase a minimum amount of our services. In addition, Reuters, which now owns Telerate, may reduce the services that we provide under our contract with Telerate. Accordingly, there are no assurances that Reuters will continue to buy services from our company. Furthermore, given Reuters’ acquisition of Telerate, we anticipate that Reuters will continue to drive synergies in its operations,

30

including the costs it pays to purchase products and services, which may result in a decline in the level of services it purchases from us. The loss of this customer or a significant group of our other customers, or a considerable reduction in the amount of our services that Reuters purchases or a significant group of our customers purchase, could materially reduce our revenues which, to the extent not offset by cost reductions or new customer additions, could materially reduce our cash flows and financial position. This may limit our ability to raise capital or fund our operations, working capital needs and capital expenditures in the future.

We have a history of net losses and we expect to continue to incur net losses.

We incurred a net loss of $23.5 million for the six months ended June 30, 2006, $69.1 million in fiscal year 2005, and $148.8 million in fiscal year 2004. We had positive cash flows from operating activities of $40.1 million for the six months ended June 30, 2006, $62.9 million in fiscal year 2005, and negative cash flows from operations of $26.8 million in fiscal year 2004. We may also have fluctuations in revenues, expenses and losses due to a number of factors including the following:

• demand for and market acceptance of our network, hosting, media services, industry solutions, and professional services;

• increasing sales, marketing and other operating expenses;

• our ability to retain key employees that maintain relationships with our customers;

• the duration of the sales cycle for our services;

• the announcement or introduction of new or enhanced services by our competitors;

• acquisitions we may make;

• changes in the prices we pay for utilities, local access connections, Internet connectivity and longhaul backbone connections; and

• the timing and magnitude of capital expenditures, including costs relating to the expansion of operations, and of the replacement or upgrade of our hosting infrastructure.

Accordingly, our results of operations for any period may not be comparable to the results of operations for any other period and should not be relied upon as indications of future performance.

We have experienced revenue losses from reductions in services by customers, price reductions on services and customer turnover in the past and may continue to do so in the future. If we continue to experience such revenue loss without a corresponding growth in new customers or services, our revenues would decrease.

Revenue loss occurs for several reasons, such as individual site reductions in customer networks, price reductions, voluntary termination by customers who choose to switch to a competing service and termination for nonpayment of bills or abuse of the network. While our experience in fiscal year 2005 and the six months ended June 30, 2006, has been of market pricing stabilizing in some of the services we offer and in some cases increasing, we have experienced revenue loss in the past and, as our customer base grows, these revenue losses may recur. If, in the future, we were to lose a large number of customers without signing contracts with new customers, our revenues would decrease.

Our brand is not as well known as some of our competitors. Failure to develop brand recognition could hurt our ability to compete effectively.

We need to strengthen our brand awareness to realize our strategic and financial objectives. Many of our competitors have well-established brands associated with the provision of data networking, Internet access, hosting services, and digital content services, and significantly larger budgets for brand promotion than we do. The promotion and enhancement of our brand also will depend in part on our success in continuing to provide high quality services. We cannot guarantee that we will be able to maintain or achieve these levels of quality.

Our failure to meet performance standards under our agreements could result in our customers terminating their relationship with us or our customers being entitled to receive financial compensation which could lead to reduced revenues.

Our agreements with our customers contain various guarantees regarding our performance and our levels of service. If we fail to provide the levels of service or performance required by our agreements, our customers may be able to receive service credits for their accounts and other financial compensation, as well as terminate their relationship with us. In addition, any inability to meet our service level commitments or other performance standards could reduce the confidence of our customers and could consequently impair our ability to obtain and retain customers, which would adversely affect both our ability to generate revenues and our operating results.

31

We depend on a number of third party providers, and the loss of or problems with one or more of these providers may impede our growth or cause us to lose customers.

We are dependent on third party providers to supply services. For example, we lease equipment from equipment providers and we lease bandwidth capacity from telecommunications network providers in the quantities and quality we require. While we have entered into various agreements for equipment and carrier line capacity, any failure to obtain additional equipment or capacity, if required, would impede the growth of our business and cause our financial results to suffer. In addition, our customers that use the equipment we lease or the services of these telecommunication providers may in the future experience difficulties due to failures unrelated to our systems. If, for any reason, these providers fail to provide the required services to our customers or suffer other failures, we may incur financial losses and our customers may lose confidence in our company, and we may not be able to retain these customers.

If we are unable to provide satisfactory and high quality customer services, customer satisfaction and demand for our services will suffer.

We believe that building strong relationships with our customers, as well as future growth in our sales, depends on our ability to provide our customers with customer support, training, consulting and maintenance when necessary. We have an in-house technical infrastructure group, customer service group and field solutions group that are responsible for the delivery of services to our customers. If we are unable to provide customers with satisfactory and quality customer support, training, consulting, maintenance and other services, we could face customer dissatisfaction, damage to our reputation, decreased overall demand for our services and loss of revenue.

Our significant indebtedness could limit our ability to operate our business successfully.

We are highly leveraged. As of June 30, 2006, the total principal amount of our debt, including capital and financing method lease obligations, was $389.5 million. We expect our interest expense to be approximately $67 million and $74 million in 2006 and 2007, respectively, under our current financing. In February 2004, we issued $200.0 million in Series A Subordinated Notes that accrued interest at the rate of 12.5% per annum until February 3, 2005, and thereafter at 15% per annum in order to finance our acquisition of the assets of Cable & Wireless USA, Inc. and Cable & Wireless Internet Services, Inc., or collectively CWA, and to provide ongoing funding to its operations and capital expenditures. Interest on the notes accrues on a non-cash basis and is payable semi-annually in additional Series A Subordinated Notes. The notes are due on January 30, 2009. Our senior credit facility and capital lease obligations require monthly and quarterly cash payments for interest. Our senior credit facility matures in 2008 and our capital and financing lease obligations have maturities ranging from three to fifteen years. Our level of indebtedness increases the possibility that we may not generate cash sufficient to pay, when due, the outstanding amount of our indebtedness. If we do not have sufficient cash available to repay our debt obligations when they mature, we will have to refinance such obligations, and there can be no assurance that we will be successful in such refinancing or that the terms of any refinancing will be acceptable to us. The amount of our debt also means that we will need to dedicate a substantial portion of our cash flow from operations to the payment of our indebtedness, reducing the funds available for operations, working capital, capital expenditures, acquisitions, and general corporate or other purposes. Through fiscal 2008, a substantial portion of our debt and interest costs are non-cash pay but payment will become due beginning in 2009 and will total approximately $401.9 million. Our cash debt service obligation for our existing debt as of June 30, 2006, is approximately $14 million and $15 million in 2006 and 2007, respectively.

We may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs.

If we do not have sufficient cash flow from our operations, we may need to raise additional funds through equity or debt financings in order to meet our operating and capital needs. We may not be able to secure additional debt or equity financing on favorable terms, or at all, at the time when we need such funding. If we are unable to raise additional funds, we may not be able to pursue our growth strategy and our business could suffer. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution in their percentage ownership of our company, and any new equity securities we issue could have rights, preferences and privileges senior to those of holders of our common stock. In addition, any debt financing that we may secure in the future could have restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. In addition, if we decide to raise funds through debt or convertible debt financings, we may be unable to meet our interest or principal payments.

32

We may make acquisitions or enter into joint ventures or strategic alliances, each of which is accompanied by inherent risks.

If appropriate opportunities present themselves, we may make acquisitions or investments or enter into joint ventures or strategic alliances with other companies. Risks commonly encountered in such transactions include:

• the difficulty of assimilating the operations and personnel of the combined companies;

• the risk that we may not be able to integrate the acquired services, products or technologies with our current services, products and technologies;

• the potential disruption of our ongoing business;

• the diversion of management attention from our existing business;

• the inability to retain key technical and managerial personnel;

• the inability of management to maximize our financial and strategic position through the successful integration of acquired businesses;

• difficulty in maintaining controls, procedures and policies;

• the impairment of relationships with employees, suppliers and customers as a result of any integration;

• losses of acquired base of customers and accompanying revenue; and

• the assumption of leased facilities, or other long-term commitments that could have a material adverse impact on our profitability and cash flow.

As a result of these potential problems and risks, businesses that we may acquire or invest in may not produce the revenue, earnings, or business synergies that we anticipated. In addition, we cannot assure you that any potential transaction will be successfully identified and completed or that, if completed, the acquired businesses or investment will generate sufficient revenue to offset the associated costs or other potential harmful effects on our business.

Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could harm our operating results.

Section 404 requires that we annually furnish an internal controls report of our management’s assessment of the effectiveness of our internal controls over financial reporting, and our auditors are required to attest to, and report on, our assessment. In addition, effective internal controls are necessary for us to provide reliable and accurate financial reports and effectively prevent fraud. Although we received an unqualified opinion regarding the effectiveness of our internal controls over financial reporting as of December 31, 2005, in the course of our ongoing evaluation of our internal controls over financing reporting, we have identified certain areas which we would like to improve and are in the process of evaluating and designing enhanced processes and controls to address these areas identified during our evaluation, none of which we believe constitutes or will constitute a material change. However, we cannot be certain that our efforts will be effective or sufficient for us, or our independent registered public accounting firm, to issue unqualified reports in the future, especially as our business continues to grow and evolve. Any failure to implement required new or improved controls, or difficulties encountered in their implementation or operation, could harm our operating results or cause management to be unable to report that our internal controls over financial reporting are effective.

We may be liable for the material that content providers distribute over our network.

The law relating to the liability of private network operators for information carried on or disseminated through their networks is still unsettled. We may become subject to legal claims relating to the content disseminated on our network. For example, lawsuits may be brought against us claiming that material on our network on which one of our customers relied was inaccurate. Claims could also involve matters such as defamation, invasion of privacy and copyright infringement. In addition, there are other issues such as online gambling where the legal issues remain unclear. Content providers operating private networks have been sued in the past, sometimes successfully, based on the content of material. If we need to take costly measures to reduce our exposure to these risks, or are required to defend ourselves against such claims, our financial results could be negatively affected.

Failures in our products or services, including our network and colocation services, could disrupt our ability to provide services, increase our capital costs, result in a loss of customers or otherwise negatively affect our business.

Our ability to implement our business plan successfully depends upon our ability to provide high quality, reliable services. Interruptions in our ability to provide our services to our customers or failures in our products or services, through the occurrence of a natural disaster or other unanticipated problem, could adversely affect our business and reputation. For example, problems at one or more of our data center facilities could result in service interruptions or failures or could cause significant equipment damage. In addition, our network could be subject to unauthorized access, computer viruses, and other disruptive problems caused by customers, employees, or others. Unauthorized access, computer viruses or other disruptive problems could lead to interruptions, delays or cessation of service to our customers. Unauthorized access could also potentially jeopardize the security of confidential information of our customers or our

33

customers’ end-users, which might expose us to liability from customers and the government agencies that regulate us as well as also deter potential customers from purchasing our services. Any internal or external breach in our network could severely harm our business and result in costly litigation and potential liability for us. Although we attempt to limit these risks contractually, there can be no assurance that we will limit the risk and not incur financial penalties. To the extent our customers demand that we accept unlimited liability and to the extent there is a competitive trend to accept it, such a trend could affect our ability to retain these limitations in our contracts at the risk of losing the business. In addition, we may be unable to implement disaster recovery or security measures in a timely manner or, if and when implemented, these measures may not be sufficient or could be circumvented through the reoccurrence of a natural disaster or other unanticipated problem, or as a result of accidental or intentional actions. Resolving network failures or alleviating security problems may also require interruptions, delays or cessation of service to our customers. Accordingly, failures in our products and services, including problems at our data centers, network interruptions or breaches of security on our network may result in significant liability, a loss of customers and damage to our reputation.

Increased energy costs and power outages may adversely affect our operating results.

Our data centers are susceptible to regional costs of power and electrical power outages. We attempt to limit exposure to system downtime by using backup generators and power supplies. However, we may not be able to limit our exposure entirely even with these protections in place. In addition, we may not always be able to pass on the increased costs of energy on to our customers, which could harm our business.

Our failure to successfully implement our growth strategy could harm our business.

Our growth strategy depends on our ability to identify, hire, train and retain IT professionals, technical engineers, operations employees, sales and senior management personnel who maintain relationships with our customers and who can provide the technical, strategic and marketing skills required for our company to grow. There is a shortage of qualified personnel in these fields, and we compete with other companies for the limited pool of these personnel. Furthermore, our growth strategy includes expanding our colocation business. Increasing our colocation business depends on our ability to either raise prices to existing customers or lease or acquire facilities in the desired markets where there is a demand for these services on commercially reasonable terms. There is no assurance that we will be able to recruit or retain qualified personnel or that we will be able to lease or acquire facilities in growth markets on commercially reasonable terms, and this failure to implement our growth strategy could cause our operations and financial results to be negatively impacted.

We may not be able to protect our intellectual property rights.

We rely upon a combination of internal and external nondisclosure safeguards including confidentiality agreements as well as trade secret laws to protect our proprietary rights. We cannot however assure you that the steps taken by us in this regard will be adequate to deter misappropriation of proprietary information or that we will be able to detect unauthorized use and take appropriate steps to enforce our intellectual property rights. We also are subject to the risk of litigation alleging infringement of third-party intellectual property rights. Any such claims could require us to spend significant sums in litigation, pay damages, develop non-infringing intellectual property, or acquire licenses to the intellectual property that is the subject of the alleged infringement.

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

For the six months ended June 30, 2006, 17% of our total revenue was generated in countries outside of the United States. Some risks inherent in conducting business internationally include:

• unexpected changes in regulatory, tax and political environments;

• longer payment cycles and problems collecting accounts receivables;

• fluctuations in currency exchange rates;

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

• challenges in staffing and managing foreign operations; and

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

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

34

Risks Related to Our Industry

The markets for our network, hosting, digital content services, industry solutions, and professional services are highly competitive, and we may not be able to compete effectively.

The markets for our network, hosting, digital content services, industry solutions, and professional services are extremely competitive, and there are few significant barriers to entry. We expect that competition will intensify in the future, and we may not have the financial resources, technical expertise, sales and marketing abilities or support capabilities to compete successfully in these markets. Many of our current and potential competitors have longer operating histories, greater name recognition, access to larger customer bases and greater market presence, engineering and marketing capabilities and financial, technological and personnel resources than we do. As a result, as compared to us, our competitors may:

• develop and expand their networking infrastructures and service offerings more efficiently or more quickly;

• adapt more rapidly to new or emerging technologies and changes in customer requirements;

• take advantage of acquisitions and other opportunities more effectively;

• develop products and services that are superior to ours or have greater market acceptance;

• adopt more aggressive pricing policies and devote greater resources to the promotion, marketing, sale, research and development of their products and services;

• make more attractive offers to our existing and potential employees;

• establish cooperative relationships with each other or with third parties; and

• more effectively take advantage of existing relationships with customers or exploit a more widely recognized brand name to market and sell their services.

Our failure to achieve desired price levels could impact our ability to achieve profitability or positive cash flow.

We have experienced and expect to continue to experience pricing pressure for some of the services that we offer. Prices for voice, wireless, and Internet services have decreased in recent years, and we expect significant price declines in the future. In addition, by bundling their services and reducing the overall cost of their services, telecommunications companies that compete with us may be able to provide customers with reduced communications costs in connection with their data networking, Internet access or hosting services, thereby significantly increasing pricing pressure on us. We may not be able to offset the effects of any such price reductions even with an increase in the number of our customers, higher revenues from enhanced services, cost reductions or otherwise. In addition, we believe that the data networking and VPNs and Internet access and hosting industries are likely to continue to encounter consolidation which could result in greater efficiencies in the future. Increased price competition or consolidation in these markets could result in erosion of our revenues and operating margins and could prevent us from becoming profitable. Furthermore, in recent months, these larger consolidated telecommunication providers have indicated that they want to start charging companies delivering services over the Internet for access to connected customers. If these providers are able to charge Internet companies for this, our costs will increase, and this could impact our ability to be profitable.

Consolidation in the telecommunications industry may impede our ability to compete effectively.

Recently, several telecommunication companies completed mergers with other telecommunication companies, including the mergers of SBC Communications Inc. with AT&T Corp. and Verizon Communications, Inc. with MCI, Inc. This consolidation in the telecommunications industry results in fewer companies competing in this market, changing the nature of the market and possibly causing us to pay higher prices for the services that we receive from these companies, which may impede our ability to compete effectively.

Our operations could be adversely affected if we are unable to maintain peering arrangements with Internet Service Providers on favorable terms.

We enter into peering agreements with Internet Service Providers that allow us to access the Internet and exchange traffic with these providers. Previously, many providers agreed to exchange traffic without charging each other. Recently, however, many providers that previously offered peering have reduced peering relationships or are seeking to impose charges for transit. For example, several network operators with large numbers of individual users claim that they should be able to charge network operators and businesses that send traffic to those users. Increases in costs associated with Internet and exchange traffic could have an adverse effect on our business. If we are not able to maintain our peering relationships on favorable terms, we may not be able to provide our customers with affordable services, which would adversely affect our results from operations.

35

New technologies could displace our services or render them obsolete.

New technologies or industry standards have the potential to replace or provide lower cost alternatives to our Internet access services, data networking and hosting services. The adoption of such new technologies or industry standards could render our technology and services obsolete or unmarketable or require us to incur significant capital expenditures to expand and upgrade our technology to meet new standards. We cannot guarantee that we will be able to identify new service opportunities successfully, or if identified, be able to develop and bring new products and services to market in a timely and cost-effective manner. In addition, we cannot guarantee that services or technologies developed by others will not render our current and future services non-competitive or obsolete or that our current and future services will achieve or sustain market acceptance or be able to address effectively the compatibility and interoperability issues raised by technological changes or new industry standards. If we fail to anticipate the emergence of, or obtain access to a new technology or industry standard, we may incur increased costs if we seek to use those technologies and standards, or our competitors that use such technologies and standards may use them more cost-effectively than we do.

The data networking and Internet access industries are highly regulated in many of the countries in which we currently operate or plan to provide services, which could restrict our ability to conduct business in the United States and internationally.

We are subject to varying degrees of regulation in each of the jurisdictions in which we provide services. Local laws and regulations, and their interpretation and enforcement, differ significantly among those jurisdictions. Future regulatory, judicial and legislative changes may have a material adverse effect on our ability to deliver services within various jurisdictions. For example, the European Union will enact a data retention scheme that will include certain IP data that could have an impact on our operations in Europe. Moreover, national regulatory frameworks that are consistent with the policies and requirements of the World Trade Organization have only recently been, or are still being, put in place in many countries. Accordingly, many countries are still in the early stages of providing for and adapting to a liberalized telecommunications market. As a result, in these markets we may encounter more protracted and difficult procedures to obtain licenses and negotiate interconnection agreements.

Within the United States, the U.S. government continues to evaluate the data networking and Internet access industries. The Federal Communications Commission, or FCC, has a number of on-going proceedings that could impact our ability to provide services. For example, the FCC has determined that the Communications Assistance for Law Enforcement Act applies to broadband access providers. Such regulations and policies may complicate our efforts to provide services in the future. Our operations are dependent on licenses and authorizations from governmental authorities in most of the foreign jurisdictions in which we operate or plan to operate and, with respect to a limited number of our services, in the United States. These licenses and authorizations generally will contain clauses pursuant to which we may be fined or our license may be revoked on short notice. Consequently, we may not be able to obtain or retain the licenses necessary for our operations.

Risks Related to Our Common Stock

We are controlled by parties whose interests may not be aligned with yours.

Investment partnerships sponsored by Welsh, Carson, Anderson & Stowe (Welsh Carson) own approximately 56% of our outstanding voting stock as of June 30, 2006, and hold approximately $166.1 million of our Series A Subordinated Notes as of June 30, 2006. In addition, these investment partnerships currently have the right to appoint half of the members of our Board of Directors pursuant to an Investors Rights Agreement among us and certain of our stockholders. Furthermore, the Series A Subordinated Notes contain provisions relating to a change of control of our company. These factors, among others, could result in decisions concerning our operations or financial structure that may present conflicts of interest between Welsh Carson and its affiliates and our other common stockholders.

Sales of a significant amount of our common stock in the public market could reduce our stock price and impair our ability to raise funds in new stock offerings.

We have approximately 50.8 million shares of common stock outstanding as of June 30, 2006. In addition, as of June 30, 2006, we have approximately 0.4 million shares of common stock issuable pursuant to the exercise of outstanding warrants. The holders of 42.1 million shares of our common stock and warrants are also entitled to certain registration rights. Sales of substantial amounts of shares of our common stock in the public market, or the perception that those sales will occur, could cause the market price of our common stock to decline. Those sales also might make it more difficult for us to sell equity and equity-related securities in the future at a time and at a price that we consider appropriate.

Our stock price is subject to significant volatility.

Since June 2005 until the present, the price per share of our common stock has ranged from a high of $32.59 per share to a low of $7.80 per share. Our stock price has been and may continue to be subject to significant volatility due to sales of our securities by significant shareholders and the other risks and uncertainties described in this report. The price of our common stock may also fluctuate due to conditions in the technology industry or in the financial markets generally.

36

Our certificate of incorporation, bylaws and Delaware law contain provisions that could discourage a takeover.

Our certificate of incorporation and Delaware law contain provisions which may make it more difficult for a third party to acquire us, including provisions that give the Board of Directors the power to issue shares of preferred stock. We have also chosen to be subject to Section 203 of the Delaware General Corporation Law, which, subject to certain exceptions, prevents a stockholder of more than 15% of a company’s voting stock from entering into business combinations set forth under Section 203 with that company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On June 6, 2006, we implemented a one-for-fifteen reverse split of our outstanding common stock by filing an amendment to our amended and restated certificate of incorporation. In lieu of issuing fractional shares of common stock in the reverse stock split, we caused the transfer agent for our common stock to aggregate the fractional shares and sell in the open market 497 shares of common stock for a total offering price of approximately $11,789. The sale was consummated in June 2006 in accordance with the exemption provided by Rule 236 promulgated under the Securities Act of 1933, as amended. The net proceeds of the sale are being remitted to the stockholders who would otherwise have been entitled to receive fractional shares in the reverse stock split. We did not receive any of the proceeds from the sale.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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

At our annual meeting of shareholders held on April 25, 2006, the following matters were voted on:

1. Election of eleven directors to the Board of Directors

	For	Withheld
John D. Clark	31,140,093	289,021
John M. Finlayson	31,087,693	341,421
Clifford H. Friedman	31,139,553	289,561
Clyde A. Heintzelman	31,089,646	339,468
Philip J. Koen	31,092,425	336,690
Thomas E. McInerney	31,039,814	389,300
James E. Ousley	31,270,612	158,502
James P. Pellow	31,368,449	60,665
Jeffrey H. Von Deylen	31,039,601	389,513
David A. Walsh	31,366,906	62,208
Patrick J. Welsh	31,038,074	391,040

2. Authorize our Board of Directors, in their discretion, to amend our certificate of incorporation to effect a 1-for-15 reverse stock split.

For	Against	Abstain	Broker Non-Votes
31,126,615	285,983	16,516	0

3. Authorize our Board of Directors, in their discretion, to amend our certificate of incorporation to effect a 1-for-20 reverse stock split.

For	Against	Abstain	Broker Non-Votes
31,110,020	302,994	16,101	0

37

4. Approve our Amended and Restated 2003 Incentive Compensation Plan.

For	Against	Abstain	Broker Non-Votes
26,444,022	548,430	18,038	4,418,624

5. Ratify the appointment of Ernst & Young, LLP as our independent registered public accounting firm for the year ending December 31, 2006.

For	Against	Abstain
31,406,381	11,823	10,911

On May 10, 2006, the holders of shares of our capital stock representing a majority of our then outstanding voting power by written consent without a meeting authorized the issuance of 37,417,347 shares of common stock in exchange for all of the issued and outstanding shares of our Series A Preferred Stock. This stockholder written consent was signed by the holders of 3,936,598 of the 12,957,599 outstanding shares of our common stock as of May 10, 2006 (Record Date), and by the holders of 194,202 of the 202,490 outstanding shares of our Series A Convertible Preferred Stock as of the Record Date, representing an aggregate of 31,315,633 votes.

ITEM 5. OTHER INFORMATION.

On July 27, 2006, we filed a Certificate of Elimination with the Secretary of State of the State of Delaware effecting an elimination of the Certificate of Designations relating to our Series A Convertible Preferred Stock, a copy of which is attached hereto as Exhibit 4.8 and incorporated herein by reference.

38

ITEM 6. EXHIBITS.

The following exhibits are either provided with this Form 10-Q or are incorporated herein by reference.

Exhibit Index Number	Exhibit Description	Filed with the Form 10-Q	Incorporated by Reference
			Form	Filing Date with the SEC	Exhibit Number
3.1	Amended and Restated Certificate of Incorporation of the Registrant		S-1	November 12, 1999	3.1
3.2	Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant		S-1/A	January 31, 2000	3.2
3.3	Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant		10-Q	August 14, 2002	3.3
3.4	Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant		10-Q	August 13, 2004	3.4
3.5	Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant		10-Q	August 5, 2005	3.5
3.6	Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Registrant		8-K	June 7, 2006	3.1
3.7	Amended and Restated Bylaws of the Registrant		10-Q	May 15, 2003	3.4
4.1	Form of Common Stock Certificate		S-1/A	January 31, 2000	4.1
4.2	Certificate of Designations relating to the Registrant’s Series A Convertible Preferred Stock		8-K	March 27, 2002	4.2
4.3+	Warrant, dated June 28, 2002, to purchase the Registrant’s common stock issued to Constellation Venture Capital II, L.P.		8-K	July 8, 2002	4.7
4.4+	Warrant, dated June 28, 2002, to purchase the Registrant’s common stock issued to Constellation Venture Capital Offshore II, L.P.		8-K	July 8, 2002	4.8
4.5+	Warrant, dated June 28, 2002, to purchase the Registrant’s common stock issued to The BSC Employee Fund IV, L.P.		8-K	July 8, 2002	4.9
4.6+	Warrant, dated, June 28, 2002, to purchase the Registrant’s common stock issued to CVC II Partners, L.L.C.		8-K	July 8, 2002	4.10
4.7	Form of Series A Subordinated Note		8-K	February 25, 2004	4.12
4.8	Certificate of Elimination relating to the Registrant’s Series A Convertible Preferred Stock	X
10.1	Exchange and Recapitalization Agreement, dated as of May 10, 2006, among the Registrant and the holders of its Series A Convertible Preferred Stock.		8-K	May 15, 2006	10.1
10.2	Amendment No. 2, dated as of May 10, 2006, to the Investors Rights Agreement, among the Registrant, Welsh, Carson, Andersen & Stowe VIII, L.P., and the other investors named therein.		8-K	July 5, 2006	10.1
10.3*	Amendment to Employment Agreement dated as of May 31, 2006, between Jonathan C. Crane and Registrant.	X
10.4	Consent and Amendment No. 2 to Credit Agreement dated June 30, 2006, between SAVVIS Communications Corporation (“SAVVIS”), the Registrant, Wells Fargo Foothill and the other lenders party to the Credit Agreement.	X
10.5++	Amended and Restated Lease Agreement dated June 30, 2006, between SAVVIS and Digital Centreport, L.P.	X
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X

+ Confidential treatment has been granted for this exhibit. The copy filed as an exhibit omits the information subject to the request for confidential treatment.

39

++ A request for confidential treatment has been submitted with respect to this exhibit. The copy filed as an exhibit omits the information subject to the request for confidential treatment.

* Compensation plans or arrangements.

40

SIGNATURES

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

	SAVVIS, Inc.
Date: July 31, 2006	By:	/s/ Philip J. Koen
		Philip J. Koen
		Chief Executive Officer
		(principal executive officer)
Date: July 31, 2006	By:	/s/ Jeffrey H. Von Deylen
		Jeffrey H. Von Deylen
		Chief Financial Officer
		(principal financial officer and
		principal accounting officer)

41

EX-4.8

Exhibit 4.8

CERTIFICATE OF ELIMINATION OF

SERIES A CONVERTIBLE PREFERRED STOCK

OF SAVVIS, INC.

(Pursuant to Section 151(g) of the General

Corporation Law of the State of Delaware)

SAVVIS, Inc., a corporation duly organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), certifies as follows:

FIRST: That, pursuant to Section 151 of the General Corporation Law of the State of Delaware (the “GCL”) and authority granted in the Amended and Restated Certificate of Incorporation of the Corporation, as theretofore amended, the Board of Directors of the Corporation, by resolution duly adopted, authorized the issuance of a series of 210,000 shares of Series A Convertible Preferred Stock (the “Preferred Stock”), and established the voting powers, designations, preferences, and relative, participating, and other rights, and the qualifications, limitations, and restrictions thereof, and, on March 18, 2002, a Certificate of Designations with respect to such Preferred Stock was filed in the Office of the Secretary of State of the State of Delaware (the “Certificate of Designations”).

SECOND: That no shares of the Preferred Stock are outstanding, and no shares thereof will be issued subject to the Certificate of Designations.

THIRD: Pursuant to the provisions of Section 151(g) of the GCL, the Board of Directors of the Corporation adopted the following resolutions:

RESOLVED, that none of the authorized shares of Series A Convertible Preferred Stock of the Corporation (the “Preferred Stock”) are outstanding and no shares of such series hereafter will be issued; and

RESOLVED FURTHER, that any officer of the Corporation is authorized and directed to execute a Certificate of Elimination as provided by Section 151(g) of the General Corporation Law of the State of Delaware (the “GCL”) in accordance with Section 103 of the GCL, substantially in the form attached as Exhibit A, with such changes therein as the officer executing the same may approve and as are permitted by the GCL to be made by such officer, such approval to be conclusively evidenced by such officer’s execution of such Certificate of Elimination, and to file the same forthwith in the Office of the Secretary of State of the State of Delaware, and when such Certificate of Elimination becomes effective, all references to the Preferred Stock in the Amended and Restated Certificate of Incorporation of the Corporation, as heretofore amended, shall be eliminated and the shares that were designated to such series shall resume the status of authorized and unissued shares of Preferred Stock of the Corporation, without designation as to series.

FOURTH: Pursuant to the provisions of Section 151(g) of the GCL, all references to the Preferred Stock in the Amended and Restated Certificate of Incorporation of the Corporation, as heretofore amended, hereby are eliminated, and the shares that were designated to such series hereby are returned to the status of authorized but unissued shares of the Preferred Stock of the Corporation, without designation as to series.

IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed by Jeffrey H. VonDeylen, its Chief Financial Officer, this 27^th day of July, 2006.

SAVVIS, INC.
By:	/s/ Jeffrey H. VonDeylen
Title:	Chief Financial Officer

2

EX-10.3

Exhibit 10.3

FIRST AMENDMENT

THIS FIRST AMENDMENT dated as of May 30, 2006 (this “First Amendment”) to the Employment Agreement dated as of March 29, 2006 (the “Agreement”) by and between SAVVIS, Inc., a Delaware corporation with its principal place of business at St. Louis, Missouri (the “Company”), and Jonathan C. Crane, of Hanover, New Hampshire (the “Executive”), effective as of the 30^th day of May, 2006 (the “Effective Date”).

WHEREAS, the Company and the Executive jointly desire to amend certain provisions of the Agreement in the manner provided for in this First Amendment;

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the premises contained herein, the Company and the Executive hereby agree as follows:

1. Amendment of Section 3 (Capacity and Performance) of the Agreement.

(a) Section 3(a) of the Agreement is hereby amended by deleting “Chairman” and substituting in lieu thereof “President.”

(b) Section 3(c) is hereby amended by deleting the clause in its entirety and substituting in lieu thereof the following: “During the term hereof, the Executive shall devote his full business time and his best efforts, business judgment, skill and knowledge exclusively to the advancement of the business and interests of the Company and its Affiliates and to the discharge of his duties and responsibilities hereunder. The Executive shall not engage in any other business activity or serve in any industry, trade, professional, governmental or academic position during the term of this Agreement, without informing and obtaining approval from the Board in writing.”

2. Amendment of Section 4 (Compensation and Benefits) of the Agreement. Section 4(a) of the Agreement is hereby amended by deleting “Three Hundred and Fifty Thousand Dollars ($350,000)” and substituting in lieu thereof “Four Hundred and Twenty-Five Thousand Dollars ($425,000).”

3. Amendment to Section 5 (Termination of Employment and Severance Benefits) of the Agreement. Section 5(e) of the Agreement is hereby amended by deleting clause (i) thereof in its entirety and substituting in lieu thereof the following: “(i) Removal of the Executive, without his consent, from the position of President of the Company (or a successor corporation);”

4. Reimbursement of Reasonable Living Expenses. The Company shall reimburse the Executive for six months’ of reasonable living and travel expenses in the St. Louis area pending completion of a move to St. Louis, Missouri. This reimbursement is subject to the reasonable substantiation and other documentation requirements of the Company.

1

5. Grant of Additional Stock Options and Restricted Stock Units. (a) As of May 26, 2006, the Company grants to the Executive an option to purchase 3,000,000 shares of the common stock, $.01 par value of the Company (“Common Stock”) under the SAVVIS, Inc. 2003 Compensation Plan (the “Compensation Plan”) at an exercise price per share equal to the public market closing price on the business day immediately prior to the date of grant (the “Option”). The shares that are subject to the Option shall vest at the rate of Twenty-Five percent (25%) per year (each, an “Annual Vesting Period”) commencing on May 30, 2007 and on each anniversary thereafter (each a “Vesting Date”), and shall have all such other terms and conditions that are applicable to the stock option grant made by the Company to the Executive on March 29, 2006. (b) As of May 26, 2006, the Company grants to the Executive 800,000 restricted stock units (“Restricted Stock Units”) to the Executive under the Compensation Plan with the same terms and conditions that are applicable to the restricted stock unit grant made by the Company to the Executive on March 29, 2006.

6. No Other Amendments. Except as expressly amended, modified and supplemented by this First Amendment, the provisions of the Agreement are and shall remain in full force and effect.

7. Governing Law. This is a Missouri contract and shall be construed and enforced under and be governed in all respects by the laws of Missouri, without regard to the conflict of laws principles thereof.

8. Counterparts. This First Amendment may be executed in counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.

IN WITNESS WHEREOF, this First Amendment has been executed as a sealed instrument by the Company, by its duly authorized representative, and by the Executive, as of the date first above written.

THE EXECUTIVE:	THE COMPANY
/s/ Jonathan C. Crane	By:	/s/ Phil Koen
	Title:	Chief Executive Officer

2

EX-10.4

Exhibit 10.4

CONSENT AND AMENDMENT NO. 2 TO CREDIT AGREEMENT

This CONSENT AND AMENDMENT NO. 2 TO CREDIT AGREEMENT (“Amendment”) is entered into as of June 30, 2006, by and among SAVVIS Communications Corporation, a Missouri corporation (“Borrower”), SAVVIS, Inc. (f/k/a SAVVIS Communications Corporation), a Delaware corporation (“Holdings”), Wells Fargo Foothill, Inc., as a Lender and as Agent for all Lenders (“Agent”) and the other Lenders party to the Credit Agreement (as hereinafter defined).

WITNESSETH:

WHEREAS, Borrower, Holdings, Agent and Lenders are parties to that certain Credit Agreement, dated as of June 10, 2005 (as amended, modified and supplemented from time to time, the “Credit Agreement”; capitalized terms not otherwise defined herein have the definitions provided therefore in the Credit Agreement);

WHEREAS, Borrower has informed Agent and Lenders that it desires to (a) purchase real property and related assets (the “Fort Worth Assets”) located at 14901 FAA Boulevard, Fort Worth, Tarrant County, Texas (the “Fort Worth Location”) on or about the date hereof, (b) sell the Fort Worth Assets to Digital Centreport, L.P. (“Dupont”) pursuant to a Purchase and Sale Agreement by and between Borrower and Dupont dated June 30, 2006 and (c) enter into a lease agreement with Dupont whereby Borrower will lease the Fort Worth Location from Dupont pursuant to an Amended and Restated Lease Agreement by and between Borrower and Dupont dated as of June 30, 2006 (collectively, the “Sale Leaseback Transaction”);

WHEREAS, in absence of the prior written consent of Lenders, the Sale Leaseback Transaction would result in Defaults under the Sections 6.1 and 6.4 of the Credit Agreement and separate Events of Default under Section 7.2 of the Credit Agreement; and

WHEREAS, Borrower has informed Agent and Lenders that it desires to amend the Credit Agreement in certain respects and Agent and Lenders have agreed to amend the Credit Agreement as set forth herein;

NOW THEREFORE, in consideration of the mutual conditions and agreements set forth in the Credit Agreement and this Amendment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Consent. Subject to the satisfaction of the conditions set forth in Section 3 below, Lenders hereby consent to the Sale Leaseback Transaction. This is a limited consent and shall not be deemed to constitute a consent to or waiver of any Event of Default, Default or breach of the Credit Agreement or of the other Loan Documents or other requirements of any provision of the Credit Agreement or other Loan Documents.

2. Amendment. Subject to the satisfaction of the conditions set forth in Section 2 below, the Credit Agreement is amended as follows:

(a) Section 2.12(a)(ii) of the Credit Agreement is hereby amended by deleting the reference to “$15,000,000” therein and inserting “$20,000,000” in lieu thereof.

(b) The definition of the term “Dupont Leases” in Schedule 1.1 to the Credit Agreement is hereby amended by deleting the word “and” immediately prior to clause (v) thereof, redesignating clause (v) as clause (vi) thereof, and inserting a new clause (v) therein to read as follows:

“(v) Amended and Restated Lease Agreement, dated as of June 30, 2006, between Borrower and Digital Centrepoint, L.P. regarding the premises at 14901 FAA Boulevard, Fort Worth, Tarrant County, Texas, and”

3. Conditions to Effectiveness. The effectiveness of this Amendment is subject to the following conditions precedent (unless specifically waived in writing by each of Agent), each to be in form and substance satisfactory to Agent:

(a) Agent shall have received a fully executed copy of this Amendment, together with the Consent and Reaffirmation attached hereto;

(b) Borrower shall have delivered to Agent final versions of the documentation evidencing the Sale Leaseback Transaction, together with such other documents, agreements and instruments as may be requested or required by Agent in connection with this Amendment, each in form and content acceptable to Agent;

(c) All proceedings taken in connection with the transactions contemplated by this Amendment and all documents, instruments and other legal matters incident thereto shall be reasonably satisfactory to Agent and its legal counsel; and

(d) No Default or Event of Default shall have occurred and be continuing.

4. Miscellaneous.

(a) Warranties and Absence of Defaults. In order to induce Agent to enter into this Amendment, each of Borrower and Holdings hereby warrants to Agent, as of the date hereof, that the representations and warranties of Borrower and Holdings contained in the Credit Agreement are true and correct as of the date hereof as if made on the date hereof (other than those which, by their terms, specifically are made as of certain dates prior to the date hereof).

(b) Expenses. Each of Borrower and Holdings, jointly and severally, agree to pay on demand all costs and expenses of Agent in connection with the preparation, negotiation, execution, delivery and administration of this Amendment and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith. All obligations provided herein shall survive any termination of the Credit Agreement as amended hereby.

(c) Governing Law. This Amendment shall be a contract made under and governed by the internal laws of the State of New York.

-2-

(d) Counterparts. This Amendment may be executed in any number of counterparts, and by the parties hereto on the same or separate counterparts, and each such counterpart, when executed and delivered, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment.

5. Release.

(a) In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each of Borrower and Holdings, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and Lenders, and their successors and assigns, and their present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, each Lender and all such other Persons being hereinafter referred to collectively as the “Releasees” and individually as a “Releasee”), of and from all demands, actions, causes of action, suits, covenants, contracts, controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually, a “Claim” and collectively, “Claims”) of every name and nature, either known or suspected, both at law and in equity, which Borrower or Holdings or any of their successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever which arises at any time on or prior to the day and date of this Amendment, including, without limitation, for or on account of, or in relation to, or in any way in connection with any of the Credit Agreement, or any of the other Loan Documents or transactions thereunder or related thereto.

(b) Each of Borrower and Holdings understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.

[Signature Page Follows]

-3-

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed under seal and delivered by their respective duly authorized officers on the date first written above.

SAVVIS COMMUNICATIONS CORPORATION, a Missouri corporation, as Borrower
By:	/s/ Jeffrey H. VonDeylen
Title:	Chief Financial Officer
SAVVIS, INC., a Delaware corporation, as Holdings
By:	/s/ Jeffrey H. VonDeylen
Title:	Chief Financial Officer
WELLS FARGO FOOTHILL, INC., a California corporation, as Agent and as a Lender
By:	/s/ Kristy Loucks
Title:	Vice President

Consent and Amendment No. 2 to Credit Agreement

-4-

OAK HILL SECURITIES FUND, L.P., as a Lender
By:	Oak Hill Securities GenPar, L.P., its General Partner
By:	Oak Hill Securities MGP, Inc., its General Partner
By:	/s/ Scott D. Krase
Title:	Vice President
OAK HILL SECURITIES FUND II, L.P., as a Lender
By:	Oak Hill Securities GenPar II, L.P., its General Partner
By:	Oak Hill Securities MGP II, Inc., its General Partner
By:	/s/ Scott D. Krase
Title:	Vice President
OAK HILL CREDIT ALPHA FINANCE I, LLC, as a Lender
By:	Oak Hill Credit Alpha Fund, L.P. its Member
By:	Oak Hill Credit Alpha Gen Par, L.P. its General Partner
By:	Oak Hill Credit Alpha MGP, LLC, its General Partner
By:	/s/ Scott D. Krase
Title:	Vice President
OAK HILL CREDIT ALPHA FINANCE I (OFFSHORE), LTD., as a Lender
By:	/s/ Scott D. Krase
Title:	Vice President
FB COMMERICAL FINANCE, INC., as a Lender
By:	/s/ Greg Hewitt
Title:	Vice President

Consent and Amendment No. 2 to Credit Agreement

-5-

EX-10.5

Exhibit 10.5

[***] The asterisks denote that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

AMENDED AND RESTATED LEASE AGREEMENT

This Amended and Restated Lease Agreement (“Lease”), dated for reference purposes only June 30, 2006, is made by and between DIGITAL CENTREPORT, L.P., a Texas limited partnership (“Lessor”), and SAVVIS COMMUNICATIONS CORPORATION, a Missouri corporation (“Lessee”) (collectively the “Parties,” or individually a “Party”).

BACKGROUND

A. The Parties previously entered into that certain Purchase and Sale Agreement as of June 30, 2006 (“Agreement”) pursuant to which Lessee is to convey and Lessor is to acquire the Premises (as hereafter defined).

B. It is a condition to the consummation of the closing under the Agreement that Lessor and Lessee enter into a lease pursuant to which Lessee leases from Lessor and Lessor leases to Lessee the Premises on the terms and conditions set forth in this Lease effective as of the closing date under the Agreement.

C. As of the closing date under the Agreement, there is in effect a certain lease having an effective date of August 3, 2000 by and between CentrePort Properties, Inc. (“CentrePort”) as landlord, and Exodus Communications, Inc. (“Exodus”), predecessor in interest to SAVVIS Communications Corporation, a Missouri corporation (“SAVVIS”), successor by merger to SAVVIS, Inc., a Delaware corporation, as tenant, as amended by First Amendment to Lease having an effective date of August 3, 2000 by and between CentrePort and Exodus, as further amended by Second Amendment to Lease having an effective date of February 28, 2001 by and between CentrePort and Exodus, as further amended by Third Amendment to Lease effective             , 2002 (sic) by and between CentrePort and Exodus, and as further amended by Letter Agreement dated April 28, 2004 by and between CentrePort and SAVVIS, as tenant and successor to Exodus ( “Original Lease”) which, concurrent with the closing under the Agreement, has been assigned to Lessor hereunder by SAVVIS Communications Corporation, as landlord and successor in interest to CentrePort pursuant to that certain assignment and assumption agreement dated as of June between SAVVIS Communications Corporation as landlord, assignor and Digital CentrePort, L.P. as successor landlord and assignee.

D. The Lessor and Lessee desire to amend and restate the Original Lease with this Lease on the terms and conditions reflected herein such that, from and after the Commencement Date, THIS LEASE AMENDS, RESTATES AND SUPERSEDES THE ORIGINAL LEASE IN ITS ENTIRETY.

1. BASIC PROVISIONS (“BASIC PROVISIONS”).

1.1 Definitions.

1. Additional Rent: All Real Property Taxes, insurance premiums and deductibles, costs, expenses, and other amounts which Lessee is required to pay to Lessor and

-1-

costs and expenses, if any, incurred or paid by Lessor pursuant to this Lease (other than Fixed Rent), together with every fine, penalty, interest and cost which may be added in accordance with this Lease for non-payment or late payment.

2. Additional Data Center Fixtures. Any items similar to Critical Fixtures or Utility Installations installed in the Premises by Lessee at its cost (and not in any way funded or paid for by Lessor).

3. Agreed Use: General office and any computer data and/or telecommunications center purposes and/or the provision of managed hosting and IP services and/or colocation services to Lessee’s subtenants customers using the Premises and the use by such customers and subtenants of such services (collectively, “Data Center Purposes”) and/or, as to the space described in Paragraph 7.5, for office/warehouse/distribution purposes until such time as such time , if at all, that such space as described in Paragraph 7.5 is used for Data Center Purposes in which event, from any after use of such space for Data Center Purposes, such space may only be used for Data Center Purposes, and in any case for all purposes necessary and/or appropriate to enable Lessee and its subtenants and customers to be able to use the Premises for Data Center Purposes, (e.g. use of the roof for installation of equipment, conduits, risers, fiber entrances piping, plenum and all other components of an systems serving the Premises) subject to Paragraph 6.

4. Broker: The Staubach Company which has been compensated in connection with the Agreement and is not entitled to any additional compensation in connection with this Lease.

5. Building 2 Funding. The funding of Tenant Improvements that Lessor may provide pursuant to Paragraph 7.5.

6. Critical Fixtures: The Equipment listed on Exhibit E including, without limitation, all installed fuel tanks, generators, HVAC units, air-conditioners, power distribution units, computer room air conditioners, risers, antennas, satellite dishes, pads, raised flooring, and similar installed fixtures and appurtenances serving the Building 1 Data Center as of the Lease Commencement Date (and any Replacements therefor made from time to time during the Term) but excluding Excluded Equipment, Excluded Intangible Property and any Removable Obsolete Items that Lessee has removed from the Premises.

7. Excluded Equipment: The items listed on Exhibit F including, without limitation, all furniture, trade fixtures, satellite communications dish and equipment, racks, servers, routers, computer and other similar moveable equipment in all cases existing at the Premises as of the Lease Commencement Date or brought onto the Premises after the Lease Commencement Date by Lessee, its subtenants and/or Lessee’s customers and any Lessee Owned Alterations installed by Lessee at its cost and all replacements thereof but specifically excluding any Additional Data Center Fixtures.

8. Excluded Intangible Property: The items listed on Exhibit G

-2-

9. Exhibits: The following Exhibits and Schedules all of which are deemed incorporated herein by this reference:

Exhibit A-1 - Land

Exhibit A-2 – Site Plan

Exhibit B – Work Letter

Exhibit C – Legal Description for Adjacent Developable Land

Exhibit D – State/Local Law Provisions

Exhibit E – Critical Fixtures

Exhibit F – Excluded Equipment

Exhibit G – Excluded Intangible Property

10. Extension Option: As defined in Paragraph 3.2.

11. Extension Term: Any of the three sixty (60) month periods described in Paragraph 3.2 that become effective upon an effective exercise by Lessee of its Extension Option.

12. Fixed Rent: As defined in Paragraph 1.5

13. Improvements: The (i) single story fully improved data center containing approximately 109,500 square feet of space (“Building 1 Data Center”); (ii) two story office annex containing approximately 38,700 square feet of space for office and conference facilities (the “Annex”); (iii) single story currently unimproved warehouse space containing approximately 115,500 square feet of space (“Building 2”); and (iv) all fixtures, appurtenances and site improvements, lighting, electrical, power, installed communications, fire protection, security, mechanical, plumbing and heating, ventilation and air conditioning systems now or in the future, on or serving or used in connection with the operation of the Building 1 Data Center, the Annex and/or Building 2 or any other portion of the Premises other than the Excluded Equipment and the Excluded Intangible Property.

14. Initial Term: The period commencing upon the Lease Commencement Date and ending on the day prior to the fifteenth (15^th) anniversary of the Commencement Date (“Expiration Date”) subject to extension pursuant to Paragraphs 3.1 and 3.2.

15. Insuring Party: Lessor unless otherwise specified in this Lease.

16. Land: That certain lot or parcel of real estate located at 14901 FAA Boulevard, Fort Worth, Texas, consisting of approximately 11.47 acres as more fully described on Exhibit A-1 attached hereto and depicted on the site plan attached hereto as Exhibit A-2.

17. Lessor Mortgage: Any mortgages, deeds of trust or any other similar hypothecations hypothecation or security device on the Premises or any portion thereof securing a Lender’s Loan, regardless of whether or not such instrument or agreement is recorded. For the avoidance of doubt, the parties acknowledge and agree that the term “Mortgagee” shall refer to any current Lender and future Lender and any person or entity who acquires the Premises as a

-3-

result of or through any foreclosure of the Lessor Mortgage or the grant of deed in lieu of foreclosure, and the term “Loan” shall refer to any a loan outstanding which is secured by the Premises and “Lender” shall refer to any person or entity to whom Lessor is indebted under a Loan.

18. Lease Commencement Date: As of June 30, 2006.

19. Lease Default Rate: [***], but shall not exceed the maximum rate allowed by law. It is the intention of the parties hereto to conform strictly to the applicable usury Laws, and whenever any provision herein provides for payment by Lessee to Lessor of interest at a rate in excess of the highest legal rate permitted to be charged in the State of Texas, such rate herein provided to be paid shall be deemed reduced to such highest legal rate and if previously paid, shall be refunded to Lessee by Lessor within ten (10) days of demand therefor.

20. Lessee: SAVVIS Communications Corporation, a Missouri corporation

21. Lessee Business Address: SAVVIS Communications Corporation 1 Savvis Parkway Town & Country, Missouri 6307 Attention: Chief Legal Officer Facsimile:                                 

22. Lessee Owned Alterations: Tenant Improvements (as defined under the Work Letter) not paid for by Lessor under Paragraph 7.5

23. Lessor: Digital Centreport, L.P., a Texas limited partnership

24. Lessor Business Notice and Address: 600 West 7^th Street, Suite 510 Los Angeles, CA 90017 Attn: Chris Kenney Facsimile: (213) 688-2811

25. Intentionally Omitted.

26. Non Removable Items: (i) Tenant Improvements if paid for by Lessor pursuant Paragraph 7.5, (ii) Permitted Alterations and Restricted Alterations; and (iii) Critical Fixtures, other than to the extent constituting (a) Lessee Owned Alterations, (b) Excluded Equipment, or (c) Removable Obsolete Items.

[***] The asterisks denote that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

-4-

27. Permitted Alteration: Any (i) alteration, change, addition, improvement, installation, reconstruction or replacement of, to or in any part of the Premises (“a Project”) when the cost to effect such Project is less than [***]; (ii) any Excluded Equipment; and (iii) the removal of Removable Obsolete Items and the installation of Permitted Obsolete Item Replacements.

28. Permitted Obsolete Item Replacement(s): An item replacing a Removable Obsolete Item that Lessee has in fact removed from the Premises that (x) does not materially and adversely diminish the value of the Premises as the Premises existed when the Removable Obsolete Item so replaced was in-place at the Premises and (y) contributes to the functionality of the data/telecommunications center portion of the Premises as a first class data/telecommunications center in a manner equivalent (taking into account then current technology) to the contribution that the Removable Obsolete Item made to the functionality of the data/telecommunications center portion of the Premises as a first class data/telecommunications center.

29. Premises: The Land, the Improvements, Utility Infrastructure, Utility Installations, Critical Fixtures, (in all cases, other than Excluded Property) and all rights, easements, rights of way, and other appurtenances thereto.

30. Real Property Tax Exclusions: Any and all federal, state or local (i) franchise, capital stock or similar taxes, if any, of Lessor (unless in lieu of or a substitute for any other tax or assessment upon or with respect to any of the Premises which, if such other tax or assessment were in effect on the Lease Commencement Date, would be payable by Lessee hereunder or by Applicable Requirements), (ii) income, excess profits or other taxes, if any, of Lessor, determined on the basis of or measured wholly or in part by Lessor’s net income (unless in lieu of or a substitute for any other tax or assessment upon or with respect to any of the Premises which, if such other tax or assessment were in effect on the Lease Commencement Date, would be payable by Lessee hereunder or by Applicable Law), (iii) any estate, inheritance, succession, gift, capital levy or similar taxes of Lessor, (iv) taxes imposed upon Lessor under Paragraph 59A of the Internal Revenue Code of 1986, as amended, or any similar state, local, foreign or successor provision, (v) any amounts paid by Lessor pursuant to the Federal Insurance Contribution Act (commonly referred to as FICA), the Federal Unemployment Tax Act (commonly referred to as FUTA), or any analogous state unemployment tax act, or any other payroll related taxes, including, but not limited to, any required withholdings relating to wages, (vi) any taxes in connection with the transfer or other disposition of any interest, other than Lessee’s (or any person claiming under Lessee), in the Premises or this Lease, to any person or entity, including, but not limited to, any transfer, capital gains, sales, gross receipts, value added, income, stamp, real property gains or withholding tax (unless attributable to a Breach or unless such transfer is to Lessee or a person designated by Lessee), or (vii) any tax that would not have

[***] The asterisks denote that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

-5-

been imposed but for the failure of Lessor to comply with certification, information, documentation or other reporting requirements applicable to Lessor, if compliance with such requirements is required by statute or regulation of the relevant taxing authority as a precondition to relief or exemption from such tax, and (viii) any interest, penalties, professional fees or other charges relating to any item listed in clauses (i) through (vii) above.

31. Real Property Taxes: Other than Real Property Tax Exclusions, any form of real estate tax or assessment; general, special, ordinary or extraordinary, or rental levy or tax (other than inheritance, gift, personal income or estate taxes); improvement bond; fees and/or charges assessed or otherwise payable under any community facilities district, metro district, special service district or any other special taxing district or authority; rent tax, and/or license fee imposed upon or levied against any legal or equitable interest of Lessor in the Premises, Lessor’s right to other income therefrom, and/or Lessor’s business of leasing, by any authority having the direct or indirect power to tax, including any city, state or federal government, or any school, agricultural, sanitary, fire, street, drainage or other improvement district thereof and any tax, fee, levy, assessment or charge, or any increase therein, imposed by reason of events occurring prior to and/or during the Term of this Lease, including but not limited to, a change in the ownership of the Premises or completion of construction thereon.

32. Removable Obsolete Item(s): An item of Utility Installations and/or Critical Fixtures (other than an item of Excluded Property) that (i) Lessor and Lessee have mutually agreed has become obsolete and is not then necessary for the functionality of the data/telecommunications center portion of the Premises as a first class data/telecommunications center (taking into account then current technology), and (ii) the removal of which Lessor acknowledges in writing to Lessee will not materially and adversely diminish the value of the Premises as the Premises exist with such item retained in-place at the Premises.

33. Renewal Option(s): The Lessee shall have the right to extend the Initial Term of this Lease on and subject to the terms and conditions of Paragraph 3.2 of this Lease.

34. Replacements: Any Permitted Obsolete Item Replacement and any other replacement of any Critical Fixtures, or Utility Installations, or Utility Infrastructure which do not comprise Excluded Equipment.

35. Restricted Alterations: Any alteration, change, addition, improvement, installation, reconstruction or replacement of, to or in any part of the Premises which is not a Permitted Alteration.

36. Lessee Notice Address:	SAVVIS Communications Corporation 12851 Worldgate Drive Herndon, Virginia 20170 Attention: VP Procurement Facsimile:
	with copy to: 12851 Worldgate Drive Herndon, Virginia 20170 Attention: Chief Legal Office Facsimile: 702-234-8374

-6-

37. Term: The Initial Term and any Extension Term thereof which becomes effective pursuant to Paragraph 3.2.

38. Utility Installations: All floor and window coverings, air lines, power panels, electrical distribution, security and fire protection systems, communication systems, lighting fixtures, fencing and all mechanical, electrical and plumbing equipment other , plumbing, and fencing in or on the Premises and all replacements thereof.

39. Utility Infrastructure: All utility infrastructure used in or located on the or in connection with the Premises, including, without limitations, all duct banks, conduits, piping, handholes, manholes, and similar appurtenances located on said property and all fiber, power, and other utility lines running through said property not dedicated to the City of Ft. Worth or owned by a third party and all replacements thereof.

40. Yahoo Sublease: Amended and Restated Sublease and Services Agreement by and between Lessee and Yahoo executed by Lessee on October 5, 2004, and executed by Yahoo on February 28, 2005.

1.2 Original Lease Waiver: Lessee further acknowledges and agrees that, notwithstanding anything to the contrary contained in the Original Lease, Lessee excuses Lessor from any further obligations under the Original Lease and waives any and all claims which Lessee may have against Lessor under the Original Lease.

1.3 Fixed Rent for Building 1 Data Center:

Period	Annual Fixed Rent per square foot per month		Fixed Rent per month (monthly)
Commencement Date through the first twelve (12) months of the Term.	$	30.00	$	273,750.00
On each anniversary of the Commencement Date through the Expiration Date, as the same may be extended pursuant to the terms of this Lease.		Annual Fixed Rent shall increase by 2.5%		Fixed Rent per month shall increase by 2.5%

-7-

Fixed Rent for the Annex:

Period	Annual Fixed Rent per square foot per month		Fixed Rent per month (monthly)
Commencement Date through the first twelve (12) months of the Term.	$	7.00	$	67,375.00
On each anniversary of the Commencement Date through the Expiration Date, as the same may be extended pursuant to the terms of this Lease.		Annual Fixed Rent shall increase by 2.5%		Fixed Rent per month shall increase by 2.5%

Fixed Rent for Building 2:

Period	Annual Fixed Rent per square foot per month		Fixed Rent per month (monthly)
Commencement Date through the first twelve (12) months of the Term.	$	7.00	$	22,575.00
On each anniversary of the Commencement Date through the Expiration Date, as the same may be extended pursuant to the terms of this Lease.		Annual Fixed Rent shall increase by 2.5%		Fixed Rent per month shall increase by 2.5%

In addition to the foregoing, provided Lessor is providing the Building 2 Funding, commencing upon the earlier to occur of (i) Substantial Completion of the Tenant Improvements and (ii) the complete disbursement by Lessor of all funds required to be disbursed under this Lease by Lessor for the Tenant Improvements, in addition to all other amounts which Lessee is required to pay under this Lease, Lessee shall be required to pay the Building 2 Additional Annual Rent as provided in Paragraph 7.5.

2. PREMISES.

2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the Term, at the rental, and upon all of the terms, covenants and conditions set forth in this Lease. Unless otherwise provided herein, any statement of size set forth in this Lease, or that may have been used in calculating rental, is an

-8-

approximation which the Parties agree is reasonable and the rental based thereon is not subject to revision.

2.2 Condition. Lessee and Lessor acknowledge and agree that Lessee has had possession of the Premises under the Original Lease and Lessee accepts the Premises in an AS-IS, WHERE LOCATED CONDITION as of the Lease Commencement Date.

2.3 Compliance. Lessor shall have no responsibility for any non-compliance with all applicable laws, conditions, covenants or restrictions, conditional use permits and other matters of record, building codes, regulations and ordinances (individually an “Applicable Requirement” and collectively, “Applicable Requirements”). Lessee is responsible for determining whether or not the zoning is appropriate for Lessee’s intended use and for maintaining the Premises in complete compliance with all Applicable Requirements. Notwithstanding anything to the contrary contained in this Lease, Lessee shall have the right to protest or contest any Applicable Requirement. Pending the determination of any such protest or contest and provided all conditions set forth in the immediately preceding sentence are at all times satisfied, Lessee shall not be obligated to comply with the Applicable Requirement which is being protested or contested in accordance with the immediately preceding sentence, if such non-compliance is specifically permitted under Applicable Requirement.

2.4 Assignment of Warranties. Lessor and Lessee shall have the joint right to pursue any rights which Lessor has under all transferable warranties, guaranties and indemnities, express or implied, and similar rights which Lessor may have, if any, as to the against any manufacturer, seller, engineer, contractor or builder with respect to the Premises (including the roof and all systems at the Premises and all improvements forming a part of the Premises) including, but not limited to, any rights and remedies existing under contract or pursuant to the Uniform Commercial Code. To the extent necessary for Lessee to pursue such rights, Lessor shall reasonably cooperate with Lessee in connection therewith at no cost or expense to Lessor (and all at Lessee’s cost) Notwithstanding the foregoing to the contrary, Lessee shall not have the right to enforce any warranties which Lessor is not entitled to transfer to Lessee; provided, however, that upon Lessee’s request and in accordance with Lessee’s instructions from time to time, Lessor shall enforce such warranties at Lessee’s cost. It is agreed and understood that Lessee shall be responsible for managing to completion at Lessee’s cost and expense, the roof repair matters in effect as of the Lease Commencement Date and shall assign or transfer or cause to be assigned or transferred all warranties relative to the roof of the Building 1 Data Center, the Annex and Building 2.

2.5 No Merger. There shall be no merger of this Lease nor of the leasehold estate created hereby with the fee estate in or ownership of the Premises by reason of the fact that the same entity may acquire or hold or own (i) this Lease or such leasehold estate or any interest therein and (ii) the fee estate or ownership of any of the Premises or any interest therein. No such merger shall occur unless and until all persons having any interest in (x) this Lease or such leasehold estate and (y) the fee estate in the Premises including, without limitation, Lender’s interest therein, shall join in a written, recorded instrument effecting such merger.

-9-

3. TERM.

3.1 Automatic Extension. Upon Substantial Completion of the Tenant Improvements (as such terms are defined in the Work Letter attached hereto as Exhibit B) to Building 2, the Expiration Date of the Initial Term of this Lease shall (i) if the Building 2 Funding is used, be automatically extended to the date which is one hundred eighty (180) months following the date that Substantial Completion of the Tenant Improvements is achieved, and (ii) if only Lessee’s Funds (as defined in Paragraph 7.5(a)(i)) are used, be automatically extended for the Construction Period (as defined in Paragraph 7.5(a)(i)).

3.2 Extension Option. Lessee shall have the right to extend the Expiration Date for up to three (3) consecutive periods of sixty (60) months each (each being a “Renewal Option”) by serving Lessor prior written notice of the exercise of such Option Term at least two hundred seventy (270) days prior to the then Expiration Date (the “Renewal Option Exercise Deadline”) subject, however to the following conditions:

3.2.1 The Renewal Option granted to Lessee in this Lease is personal to the original Lessee, and cannot be assigned or exercised by anyone other than said original Lessee other than pursuant to an assignment which is either permitted to be effected without Lessor’s consent or requires such consent but as to which Lessor has provided such consent; provided, as to any assignment other than those that may be effected without Lessor’s consent, Lessor may elect to approve such assignment on the condition that the Renewal Option is not assignable to and shall not be deemed assigned to such assignee and in which case the Renewal Option shall terminate following any such assignment.

3.2.2 Lessee shall have no right to exercise an Option: (i) during the time Lessee is in Breach of this Lease, (ii) if Lessee is not in possession and/or occupancy of at least fifty percent (50%) of the floor area of the Building 1 Data Center and Building 2 (it being agreed and understood that for purposes of this Paragraph 3.2.2, the term “possession and/or occupancy” includes the provision by Lessor of managed hosting and IP services and/or colocation services to Lessee’s subtenants customers using the Premises) any portion of the Premises; or (iii) Lessee did not exercise all previous Options (it being agreed and understood that the period of time within which an Option may be exercised by Lessee shall not be extended or enlarged by reason of Lessee’s inability to exercise an Option because of the provisions of this Paragraph 3.2.2.

3.2.3 In the event Lessee does not exercise its renewal option by the applicable Option Exercise Deadline and Lessor, after making diligent, good faith efforts to enter into a lease with a new tenant for a term commencing, rent commencing or any other rights or obligations of either Lessor or such tenant commencing within ninety (90) days following the expiration of the Term, fails to enter into such a lease, then Lessee shall surrender the Premises at end of the Initial Term in accordance with Paragraph 7.6 (c) but Lessee shall continue to pay Fixed Rent following the end of the Term at the then rate in effect for the month in which the expiration of the Term occurs for ninety (90) days after the expiration of the Term unless prior to the end of such ninety (90) day period, Lessor has entered into a lease with a new tenant for a term commencing, rent commencing or any other rights or obligations of either Lessor or such tenant commencing during such ninety (90) day period in which event the foregoing rental

-10-

obligation shall cease as of the commencement of such term, rent or other rights or obligations. This Paragraph 3.2.3 shall survive the expiration of the Term.

4. RENT.

4.1 Rent Defined. All obligations of Lessee under this Lease to pay money to Lessor including, without limitation, Fixed Rent and Additional Rent (collectively, the “Rent”).

4.2 Payments to Third Parties. Unless otherwise provided in this Lease, Lessee shall pay directly to Lessor or, as applicable to third (3^rd) parties as and when due and payable pursuant to Lessee’s agreement or other arrangement with the applicable third (3^rd) party, all charges for matters that are the responsibility of Lessee under this Lease including without limitation, maintenance contracts, supply contracts, vendor contracts, gas, electricity, light, heat, water, sewage, power, and other utility services, protective and security services, telephone and other communications services, and for all other public or private utility services, which shall be used, rendered or supplied upon or in connection with the Premises or any part thereof, at any time during the Term from and after the Lease Commencement Date. If Lessee shall fail to pay any such charges when the same shall become due (after the expiration of the applicable cure periods therefor), then Lessor, not sooner than ten (10) days after notice to Lessee (except in the event of an emergency, as reasonably determined by Lessor, in which case prior notice shall not be necessary) of its intent to do so, may but shall not be obligated to, pay the same on behalf of Lessee and shall be entitled to reimbursement for the same. In addition, Lessee shall be required to pay a monthly property management fee of [***] which amount shall increase by [***] on each anniversary of the Commencement Date during the Term.

4.3 Payment. Upon execution and delivery of this Lease, Lessee shall pay the Fixed Rent, prorated appropriately for the first month of the Initial Term. Thereafter, Lessee shall cause payment of Fixed Rent and other Rent or charges, as the same may be adjusted hereunder from time to time, to be received by Lessor in lawful money of the United States, without offset or deduction (except as specifically permitted in this Lease), on or before the day on which it is due. Fixed Rent and other Rent or charges for any period during the Term hereof which is for less than one (1) full calendar month shall be prorated based upon the actual number of days of said month. Payment of Fixed Rent and other Rent or charges shall be made to Lessor at its address stated herein or to such other persons or place as Lessor may from time to time designate in writing. Acceptance of a payment which is less than the amount then due shall not be a waiver of Lessor’s

[***] The asterisks denote that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

-11-

rights to the balance of such Fixed Rent and other Rent or charges, regardless of Lessor’s endorsement or notation on any check so stating.

5. NET LEASE. This Lease is intended to be a “net” lease and the Rent shall be net to Lessor during each year of the Term and all sums payable hereunder to Lessor shall be paid without setoff, deduction or abatement except as otherwise provided under this Lease. Subject to the provisions of this Lease, Lessee is responsible for all costs and expenses related to the use, operation, maintenance, and repair of the Premises during the Term, and except to the extent specifically and explicitly provided in this Lease, LESSOR SHALL NOT BE REQUIRED TO MAKE OR EFFECT ANY REPAIRS OR MAINTENANCE TO THE PREMISES OR TO EXPEND ANY FUNDS RELATED TO THE USE OR OPERATION OF THE PREMISES, WHETHER FORESEEN OR UNFORESEEN AND LESSEE EXPRESSLY WAIVES ANY CLAIM FOR SAME.

6. USE.

6.1 Use. Lessee shall use and occupy the Premises in compliance with Applicable Requirements only for the Agreed Use, and for no other purpose. In no event shall the Premises be used for any purpose or in any manner which violates any legally enforceable covenants, conditions and restrictions encumbering the Premises. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, creates property damage, waste or a nuisance, or that illegally or unreasonably disturbs owners and/or occupants of, or causes damage to neighboring properties. Lessor may not exercise any right it may have to vote to amend or modify any matters of record or to vote to adopt or to encumber the Premises or permit the Premises to be encumbered with or by any covenants, restrictions, easement and/or agreements, other than a Lessor Mortgage, without the prior written consent of Lessee which Lessee may withhold in its discretion if such matter will or could materially adversely affect Lessee’s use of or operations at the Premises, or will or could materially diminish Lessee’s rights under this Lease or materially increase its obligations (including, without limitation its costs) under this Lease as compared to Lessee’s rights and obligations as if the Premises or Lessee were not subject to such matter; provided, however, Lessor freely may encumber the Premises with Lessor Mortgages.

6.2 Hazardous Substances.

(a) Use and Storage of Hazardous Substances. The term “Hazardous Substance” as used in this Lease shall mean any hazardous, toxic or dangerous, substance, material or waste whose presence, use, manufacture, disposal, transportation, or release, either by itself or in combination with other materials, is either: (i) potentially injurious to the public health, safety or welfare, the environment or the Premises, (ii) regulated by any applicable governmental authority, or (iii) a reasonable basis for potential liability of Lessor to any governmental agency or third party under any applicable statute or common law theory.

-12-

Hazardous Substances shall include, but not be limited to, PCB’s, hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products or fractions thereof. Lessor acknowledges that the Agreed Use of the Premises by Lessee necessarily involves the presence, storage, use and transportation of Hazardous Substances including, but not limited to, diesel fuel stored in underground and above-ground storage tanks, batteries and cleaning agents as described in the Phase I Environmental Site Assessment dated May 2006 prepared by GaiaTech, Project No. A3210-610-0 (“Environmental Report”), a copy of which has been provided to Lessor. Lessee shall be allowed to use, store and transport only such Hazardous Substances and in such containers, vessels and quantities as described in the Environmental Report or as reasonably becomes necessary during the term of this Lease for the Agreed Use of the Premises by Lessee (or other use approved in writing by Lessor per Paragraph 6.1). Lessee shall be responsible for complying with all Applicable Requirements concerning such Hazardous Substances including, but not limited to, obtaining any permits, licenses, registrations or other authorizations required for Lessee’s use, storage and transportation of such Hazardous Substances. Notwithstanding the foregoing, Lessee shall not install after the Commencement Date any underground storage tank for storage of Hazardous Substances without written consent of the Lessor, which consent may not be unreasonably withheld, but may be conditioned upon reasonable demonstration by Lessee that such underground storage tank will not pose a material risk of damage to the public health or environment or of liability to Lessor.

(b) Duty to Inform Lessor. Lessee shall promptly notify Lessor in the event it discovers, becomes aware of or causes a Hazardous Substance Condition (as defined at Paragraph 9.1) at, on, under or about the Premises and shall provide Lessor with a copy of any report, notice, claim or other documentation which it has concerning the presence of such Hazardous Substance Condition.

(c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be spilled or released in, on, under, or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, at Lessee’s sole cost and expense, perform any investigation or Remediation of Hazardous Substance Condition required by governmental authority and/or Applicable Requirements or otherwise necessary to prevent a material dimunition in the market value or marketability of the Premises for sale or lease purposes, on or under the Premises or neighboring properties, that was caused or materially contributed to by Lessee or Lessee Parties, or pertaining to or involving any Hazardous Substance brought onto the Premises beforeor during the Term of this Lease or during any holdover period or period of occupancy of Lessee following the Term, by, or for, Lessee or Lessee Parties, or, during the Term or any holdover period or period of occupancy of Lessee

-13-

following the Term, by any third party (other than Lessor, Lessor’s contractors or Lessor Parties).

(d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, Lessor’s employees, agents (the “Lessor Parties”) and Lessor’s Lender (as defined in Paragraph 30 below) harmless from and against any and all loss of rents and/or damages, liabilities, judgments, claims, expenses, penalties, and attorneys’ and consultants’ fees incurred by or imposed upon Lessor or Lessor Parties at any time before, during or after the Term of this Lease as a result of or in connection with (i) Lessee’s or Lessee’s employees’, agents’, consultants’, contractors’, invitees’ or customers (collectively, the “Lessee Parties”) breach of any of the provisions of this Paragraph 6, or (ii) the presence of Hazardous Substances on, under or about the Premises or other property as a result of Lessee’s and/or any Lessee Parties’ activities or failure to act. Lessee shall have no liability under this Lease with respect to underground migration of any Hazardous Substance under the Premises from other properties which Lessee did not contribute to or exacerbate. Lessee’s indemnity obligation shall include, but not be limited to, injury to person, or damage to property or the environment created by Lessee, and the cost of Remediation (as defined in Paragraph 9.1(f) and shall survive the expiration or termination of this Lease. No termination, cancellation or release agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this Paragraph 6.2 unless Lessor specifically agrees thereto in writing at the time of such agreement and such agreement specifically identifies this Paragraph 6.2 of the Lease.

(e) [reserved]

6.3 Compliance with Applicable Environmental Requirements. Lessee, at Lessee’s expense, shall at all times comply with all laws, rules, orders, ordinances, regulations and requirements of federal, state, county and municipal governmental authorities pertaining to Lessee’s use, storage, transportation and disposal of Hazardous Substances at the Premises or with respect to Lessee’s operations at the Premises (“Applicable Requirements”) as now in effect or as may hereafter come into effect during the Term. Lessee shall promptly Remediate any Hazardous Substance Condition that Lessee or Lessee Parties cause or causes before or during the Term of this Lease or which Lessee or Lessee Parties cause during any holdover period or period of occupancy of Lessee following the Term.

6.4 Investigation and Remediation by Lessor. Lessor shall have the right, but not the duty, to inspect the Premises, including testing of soils or groundwater, at reasonable times and upon at least three (3) business days’ notice to determine whether Lessee is complying with the terms of this Paragraph 6. Lessor shall use its best efforts to minimize interference with Lessee’s business operations and shall repair any damage to Lessee’s property resulting therefrom. Lessee shall cooperate with Lessor in providing non-privileged information and documents necessary for Lessor to evaluate Lessee’s compliance with Applicable Requirements. All costs and expenses incurred by Lessor for

-14-

such inspections shall be paid by Lessor, except that if such inspection demonstrates that Lessee, or Lessee Parties have failed to comply with the provisions of this Lease causing a Hazardous Substance Condition at or with respect to the Premises, then such costs and expenses shall be paid by Lessee. Lessor shall have the right to enter the Premises at reasonable times and upon reasonable notice to Remediate, at its cost, any Hazardous Substance Condition at or with respect to the Premises for which it is responsible under this Lease or Applicable Environmental Requirements. Lessor may enter the Property to perform Remediation of a Hazardous Condition caused or allegedly caused by Lessee only if Lessee fails or refuses to do so after written demand by Lessor.

7. MAINTENANCE; REPAIRS; UTILITY INSTALLATIONS; TRADE FIXTURES AND ALTERATIONS.

7.1 Lessee’s Obligations.

(a) In General. Subject in all cases to the provisions of Paragraph 9 (Damage or Destruction), and 14 (Condemnation), and Paragraph 7.6 (Surrender) and except to the extent caused by the gross negligence or willful misconduct of Lessor, its servants, employees, agents, contractors or invitees, and except for (i) changes in the condition of same resulting from ordinary wear and tear to, and (ii) repairs and replacements of any Removable Obsolete Item (the foregoing being the “Maintenance Exceptions”), Lessee shall, at Lessee’s sole expense and to the extent necessary and appropriate to keep and maintain in at least the repair, condition and appearance existing on the Lease Commencement Date, the Premises (including, without limitation, Critical Fixtures and Tenant Improvements), and Utility Installations in at least the repair, condition and appearance existing on the Lease Commencement Date, (whether or not the need for such repairs occurs as a result of Lessee’s use, any prior use, the elements or the age of such portion of the Premises), including, but not limited to, the roof, the structural integrity of the exterior walls and the structural integrity of the floor slab, all equipment or facilities, such as plumbing, heating, ventilating, air-conditioning, electrical, lighting facilities, boilers, pressure vessels, fire protection system, fixtures, walls (interior and exterior), foundation, ceilings, roofs, the roof membrane, floors, floorings, windows, doors, plate glass, skylights, landscaping, driveways, parking lots, fences, retaining walls, signs, sidewalks and parkways located in, or on the Premises. Lessee, in keeping the Premises in the condition as required above, shall exercise and perform good maintenance practices, specifically including the procurement and maintenance of the service contracts required by Paragraph 7.1(b) below. Subject to the Maintenance Exceptions, Lessee’s obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all Improvements thereon or a part thereof in the condition as required above. Subject to the Maintenance Exceptions, Lessee shall, during the Term of this Lease, keep the exterior appearance of the Building in a condition and appearance consistent with the exterior

-15-

appearance existing on the Lease Commencement Date, including, when necessary to maintain such condition, the exterior repainting of the Building, if applicable. Except for Maintenance Exceptions for which there is an obligation elsewhere provided for in this Lease for Lessor to undertake and obligation, it is intended by the Parties hereto that Lessor have no obligation, in any manner whatsoever, to repair and maintain the Premises, or the equipment therein, all of which obligations are intended to be that of the Lessee as provided in this Lease subject to the Maintenance Exceptions. It is the intention of the Parties that the terms of this Lease govern the respective obligations of the Parties as to maintenance and repair of the Premises, and they expressly waive the benefit of any statute now or hereafter in effect to the extent it is inconsistent with the terms of this Lease.

(b) Service Contracts. Lessee shall, at Lessee’s sole expense, procure and maintain contracts, in form and substance reasonably satisfactory to Lessor, with copies to Lessor, for, and with contractors specializing and experienced in the maintenance of the following equipment and improvements, if any, if and when installed on the Premises: (i) the building systems for which service contracts are customarily available; (ii) Utility Infrastructure, (iii) elevators, (iv) landscaping and irrigation systems, (v) roof covering and drains, (vi) driveways and parking lots, and (vii) Critical Fixtures.

(c) [reserved]

(d) Lessor’s Election. If Lessee fails to meet any obligation set forth in this Paragraph 7, Lessor may, after thirty (30) days’ written notice to Lessee and failure of Lessee to cure during said period unless such failure is of a such a nature that it cannot, with reasonable diligence be cured within such period provided Lessee has commenced to effect such repair, replacement or other maintenance within such thirty (30) day period and is diligently working toward completing such repairs, replacement or other maintenance and continuing to attempt to effect such repairs, replacement or other maintenance then the cure period shall be extended by such period as may be required with the application of reasonable diligence to cure such failure but without notice in the event of an emergency, do whatever is necessary to cure such failure as may be appropriate under the circumstances for the account of and at the expense of Lessee. If an emergency exists, Lessor shall use reasonable efforts to notify Lessee of the situation by phone or other available communication before taking any such action to cure such failure. In the event Lessor is entitled to cure such failure as provided under this Paragraph 7.1 (d) and does so, Lessee shall reimburse Lessor within ten (10) business days of receipt of notice

-16-

that Lessor has paid for such work plus a [***] administrative fee (“Administrative Fee”) which shall constitute Additional Rent payable by Lessee under this Lease and shall be paid by Lessee to Lessor on demand. In the case of reimbursement of service contract costs, Lessor may invoice Lessee monthly to be paid with Fixed Rent and other charges hereunder including any such Administrative Fee that is payable by Lessee.

7.2 Lessor’s Obligations. Intentionally Omitted.

7.3 Permitted Alterations; Restricted Alterations.

(a) Lessor Consent; Lessee Owned Alterations and Utility Installations. Lessee may freely make or cause to be made Permitted Alterations without the consent of Lessor. Lessee shall obtain the prior written consent of Lessor to any Restricted Alteration, which consent shall not be unreasonably withheld or conditioned by Lessor and which shall be given or denied (and if denied with reason therefor) within ten (10) days after submission by Lessee of a request for such consent. Lessee may not effect any Permitted Alterations or any Restricted Alterations unless and until (i) Lessee has obtained all applicable governmental permits therefor, if any, and delivered copies of same to Lessor, if any; (ii) Lessee has submitted to Lessor copies of all applicable plans and specifications; (iii) Lessee has furnished Lessor with copies of both the permits and the plans and specifications prior to commencement of the work; and (iv) for work which is anticipated to cost more than [***] upon Lessor’s request, delivery to Lessor of a lien and completion bond in an amount equal to one and one-half times the estimated cost of such work and/or upon Lessee’s posting additional security for the completion of such work. Any Permitted Alterations or Restricted Alterations shall be performed in a workmanlike manner with good and sufficient materials and in compliance with all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner. Lessee shall promptly upon completion furnish Lessor with as-built plans and specifications for any Permitted Alterations or Restricted Alterations, whether or not Lessor’s consent is required other than as to the installation of Excluded Equipment, the removal of Removable Obsolete Items or the installation of Permitted Obsolete Item Replacements or any other Permitted Alterations or Restricted Alterations not customarily the subject of as-built plans and specifications.

[***] The asterisks denote that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

-17-

(b) Lessor Cooperation. At Lessee’s sole cost and without liability to Lessor, Lessor agrees to cooperate with Lessee (including signing applications upon Lessee’s written request) in obtaining any necessary permits, variances and consents for any Permitted Alterations or any Restricted Alterations approved by Lessor; provided none of the foregoing shall, in any manner, result in a net reduction of access to or ingress to or egress from the Premises, a diminution in the value of the Premises, a change in zoning or otherwise have an adverse effect on the ability to use the Premises for Data Center Purposes or as to the portion of the Premises described in Paragraph 7.5, as an office/warehouse/distribution facility if not improved for Data Center Purposes.

(c) Lessee shall notify Lessor reasonably in advance of any removal of Removable Obsolete Items or the installation of Permitted Obsolete Item Replacements.

7.4 Indemnification. Lessee shall discharge, (by payment or by filing the necessary bond, or otherwise), any mechanics’, materialmen’s or other lien against the Premises, arising out of any payment due for any for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises. Lessee shall give Lessor not less than ten (10) days’ notice prior to the commencement of any work in, on or about the Premises other than the installation of Excluded Equipment, and Lessor shall have the right to post notices of non-responsibility. If Lessee shall contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond in an amount equal to one and one-half times the amount of such contested lien, claim or demand, indemnifying Lessor against liability for the same. If Lessor elects to participate in any such action, Lessee shall pay Lessor’s attorneys’ fees and costs. The provisions of this Paragraph 7.3(c) shall survive the expiration or earlier termination of this Lease.

7.5 Building 2 Tenant Improvements

(a) Lessor shall not unreasonably withhold, condition or delay its approval for Tenant Improvements to Building 2 for a data center. Lessor acknowledges that Lessee’s may improve Building 2, at a minimum, consistent with the specifications and quality of the Building 1 Data Center. Lessee shall deliver to Lessor and the TI Architect (as defined in the Work Letter) TI Design Drawings (as defined in the Work Letter) detailing Lessee’s requirements for the Tenant Improvements. Lessor shall deliver to Lessee the written objections, questions or comments of Lessor and the TI Architect with regard to the TI Design Drawings. Lessee shall cause the TI Design Drawings to be revised to address such written comments and shall resubmit said drawings to Lessor. Such process shall continue until Lessor has approved the TI Design Drawings and, if the Parties have not already done so, the Parties shall execute the Work Letter. Lessee agrees to reimburse Lessor for all of its costs in connection with the design and construction of the Tenant Improvements (whether or not the same are ultimately constructed) and any other costs incurred by Lessor under the Work Letter either as an expense to be included

-18-

in the Budget (as defined in the Work Letter) if Lessor provides the Building 2 Funding or promptly after demand therefor by Lessor if Lessee’s Funds (as defined below) are used to fund the Tenant Improvements. Such Tenant Improvements may, subject to the provisions of this Lease, be financed in either in whole or in part with Lessee’s own funds or with funds that Lessee procures from a third party (“Lessee Funds”) or with Building 2 Funding subject to the following:

(i) In the event Lessee obtains the financing for such Tenant Improvements without any Building 2 Funding, then Lessee shall construct or cause to be constructed such Tenant Improvements consistent with the Work Letter and shall be entitled to pledge, hypothecate or otherwise grant security interest in such Tenant Improvements to Lessee’s lenders and Lessor will reasonably cooperate with Lessee in order to allow Lessee to facilitate such construction and such financing. In such event, provided Lessee completes such Tenant Improvements during the first five (5) years of the Original Term, the Initial Term shall be extended for a period (“Construction Period) equal to the lesser of twelve (12) months or the period from the date on which Lessee obtains building permits until Substantial Completion and Lessee shall be required to provide Lessor with documentation confirming the Period promptly after Substantial Completion. Further, in the event that Lessee obtains the financing for such Tenant Improvements without any Building 2 Funding, then in such event, such Tenant Improvements shall constitute Lessee Owned Alterations and at the end of the Term, Lessee may elect to either (i) remove all and not less than all such Lessee Owned Alterations and restore Building 2 to the condition in which it existed prior to the installation of such Tenant Improvements or (ii) to surrender such Lessee Owned Alterations at the end of the Term without any warranty whatsoever in which event, notwithstanding anything to the contrary in this Lease, Lessor is deemed to have waived any right to require Lessee to remove same; or

(ii) In the event Lessee desires to utilize Building 2 Funds for all or a portion of the Tenant Improvements (for a data center), then in such event, the following conditions to such funding shall apply:

(1) Lessee and Lessor will execute the Work Letter.

(2) Notwithstanding anything to contrary contained in this Lease or in the Work Letter, Lessor agrees that it will consider providing Building 2 Funding provided Lessee and Lessor agree in writing on the all aspects of the Tenant Improvements (including the TI Construction Drawings (as defined in the Work Letter) and the Budget) within eighteen (18) months from the Lease Commencement Date.

(3) Notwithstanding anything to the contrary in this Lease or the Work Letter, in the event the Parties seek to develop the TI Construction Drawings and the Budget and the Parties have not mutually agreed on same in the exercise of their respective sole discretion as of the date which is eighteen (18) months after the Lease Commencement Date, Lessor shall have no further obligations under this Paragraph 7.5 or the Work Letter and Lessee promptly shall reimburse Lessor for all costs and expenses incurred by Lessor in connection with the planning and review

-19-

by Lessor of the Tenant Improvements and any other costs incurred by Lessor under the Work Letter.

(4) Notwithstanding anything to the contrary in this Lease or the Work Letter, Lessor may approve or disapprove the TI Design Drawings, the TI Construction Drawings and the Budget in its sole and absolute discretion.

(5) Tenant Improvements to the extent funded by Building 2 Funds shall belong to Lessor and to the extent funded by Lessee Funds belong to Lessee and at the termination or expiration of the Term, all Tenant Improvements shall become part of and be surrendered with the Premises and belong to Lessor.

(c) Lessee acknowledges and agrees that Lessee shall be required to continue to pay Rent for Building 2 during the construction of the Tenant Improvements whether or not funded with Building 2 Funding or Lessee Funds. Lessee waives any and all claims which Lessee may have against Lessor arising out of the construction of the Tenant Improvements and Lessee’s loss of use of Building 2, including, without limitation, any claim for an abatement of Rent.

(d) On the first day of each month during the Original Term (as the same shall have been extended as a result of the construction of the Tenant Improvements) following Substantial Completion (as defined in the Work Letter) of the Tenant Improvements, Fixed Rent shall include the amount necessary to fully amortize in equal monthly installments over the Amortization Period the TI Costs (as defined in Paragraph 5(b) the Work Letter) with annualized interest at a rate equal to [***] as of Substantial Completion of the Tenant Improvements plus [***] (“Building 2 Additional Annual Rent”). As used herein, the “Amortization Period” shall mean the [***] period following Substantial Completion of the Tenant Improvements. Following Substantial Completion of the Tenant Improvements, Lessor shall provide Lessee with written notice of the amount of the TI Costs (as defined in the Work Letter) and the amount of the Building 2 Additional Annual Rent.

The Parties acknowledge and agree that interest will accrue on funds disbursed by Lessor on a monthly basis during the design and construction of the Tenant Improvements at a rate equal to [***] in place at the start of construction plus [***]. The monthly interest accrual will be based on the outstanding balance of funds disbursed by Lessor for TI Costs as of the beginning of such month. The interest accruals will accrue into and form part of the Budget and TI Costs.

(e) Notwithstanding anything contained in this Lease to the contrary, Lessor agrees that it shall not transfer ownership of the Premises to a third party unaffiliated with Lessor prior to Lessor’s completion of payment for the Tenant Improvements unless until Lessor has provided Lessee with such assurances or security as are reasonably necessary and appropriate to assure

[***] The asterisks denote that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

-20-

that the financing to be provided by Lessor under this Paragraph 7.5 is and will be available for so long as Lessor is required to do so under this Lease; provided however, that in no event shall the obligations and prohibitions stated in this paragraph continue past the date which is thirty-three (33) months after the Lease Commencement Date.

7.6 Ownership; Removal; Surrender; and Restoration.

(a) Ownership. Subject to Lessor’s right to require removal or elect ownership as hereinafter provided, all Permitted Alterations (other than Excluded Equipment), Restricted Alterations, Lessee Owned Alterations shall belong and be the property of Lessee until the expiration or termination of this Lease at which time such items shall be deemed part of the Premises and shall a belong to and be surrendered to Lessor. Notwithstanding anything to the contrary in this Lease, Excluded Equipment shall at all times belong to Lessee, its sublessees and/or customers as the as the case may be, and may be removed by such Lessee, such sublessee’s or customers at any time during the Term (or within sixty (60) days thereafter); provided, however, in the event, at the end of the Term, with respect to Building 2, Lessee may elect to remove the Lessee Owned Alterations or any Additional Data Center Fixtures, in which case Lessee shall be required to remove all Lessee Owned Alterations and Additional Data Center Fixtures and restore Building 2 to shell condition (and in the event Lessee elects not to remove all of the Lessee Owned Alterations and Additional Data Center Fixtures, Lessor is deemed to have waived any right to require any removal of same and the same shall be deemed abandoned and become the property of Lessor).

(b) Removal of Non Removable Property; Removable Obsolete Items Prior to Surrender. Notwithstanding anything to the contrary contained in this Lease, in no event shall Lessee remove or permit the removal of any of the items constituting Non-Removable Property at any time during the Term unless Lessee is simultaneously replacing the same with a comparable item of at least equal value. In no event shall Lessee remove or permit the removal of any of the Non-Removable Property upon the expiration or earlier termination of this Lease. Lessee will advise Lessor reasonably prior to the removal of any Removable Obsolete Items to permit Lessor to have the opportunity to determine if Lessor elects to take possession of any such Removable Obsolete Items. Lessor shall have the right to direct how each item is disposed of and to receive any consideration received from the disposal of the same. Notwithstanding anything to the contrary in this Lease, Excluded Equipment shall at all times belong to Lessee, its sublessees and/or customers as the as the case may be, and may be removed by such Lessee, such sublessee’s or customers at any time prior to surrender of the Premises.

-21-

(c) Surrender/Restoration. At the expiration or other termination of this Lease, Lessee shall surrender the Premises and all Non-Removable Items, including without limitation, the Utility Infrastructure and Critical Fixtures (other than Removable Obsolete Items that Lessee has removed), and all Permitted Alterations and Restricted Alterations (other than Excluded Equipment) to Lessor in as good order and condition as they were at the commencement of the Term or may be put in thereafter in accordance with this Lease subject to reasonable wear and tear and limited to Lessee’s obligations under Paragraph 9 (Damage or Destruction), and 14 (Condemnation). As used in this Lease, “ordinary wear and tear” shall not include any damage or deterioration that would have been prevented by good maintenance practice. For the avoidance of doubt, the parties acknowledge and agree that all Utility Infrastructure and Critical Fixtures, Tenant Improvements, Additional Data Center Fixtures Additional Data Center Fixtures (subject to the removal provisions under Paragraph 7.6(a) with respect to Building 2 and it being agreed that Additional Data Center Fixtures may not in any event be removed from Building 1) and all Permitted Obsolete Item Replacements (other than Removable Obsolete Items that Lessee has removed) shall remain upon and be surrendered with the Premises as a part thereof at the termination or other expiration of the Term. All Permitted Alterations and Restricted Alterations, shall become the property of Lessor and shall remain upon and be surrendered with the Premises as a part thereof expiration or other termination of the Term. Notwithstanding the foregoing, in the event Lessor provides Lessee notice, at the time Lessor approves a Restricted Alteration, that such alteration will be subject to removal upon the expiration or other termination of the Term, then Lessee shall remove, at its sole cost and expense, the applicable alteration(s), as directed by Lessor. Alterations, Excluded Equipment and personal property of Lessee not so removed at the end of the Term or within sixty (60) days after the expiration or other termination of the Term for any reason whatsoever shall become the property of Lessor, and Lessor may thereafter cause such alterations and other property to be removed from the Premises. Lessor shall not in any manner or to any extent be obligated to reimburse Lessee for any Additional Data Center Fixtures, Tenant Improvements, Lessee Owned Alterations, Permitted Alterations, Restricted Alterations or other property which becomes the property of Lessor as a result of such expiration or other termination. The provisions of this Paragraph 7.6 shall survive the expiration or other termination of this Lease.

(d) Lessee shall repair any damage resulting or caused by the removal of any Excluded Equipment and shall restore the affected area of the Premises to the condition existing immediately prior to such removal. Lessor and Lessee agree that no such removal by Lessee shall be deemed or construed as an abandonment of the Premises by Lessee, any law or Applicable Requirement to the contrary notwithstanding.

-22-

8 INSURANCE; INDEMNITY.

8.1 Payment For Insurance. Regardless of whether the Lessor or Lessee is the Insuring Party, Lessee shall pay for (i) all insurance required to be maintained by Lessee under Paragraph 8, and (ii) all insurance maintained by Lessor in connection with the Premises. Premiums for policy periods commencing prior to or extending beyond the Term of this Lease shall be prorated to correspond to the Term of this Lease. Payment shall be made by Lessee to Lessor within ten (10) days following receipt of an invoice for any amount due.

8.2 Liability Insurance.

(a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability Policy of Insurance protecting Lessee and Lessor against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than [***]¹ per occurrence with an “Additional Insured-Managers or Lessors of Premises Endorsement” and contain the “Amendment of the Pollution Exclusion Endorsement” for damage caused by heat, smoke or fumes from a hostile fire. The Policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an “insured contract” for the performance of Lessee’s indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation hereunder. All insurance carried by Lessee shall be primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall be considered excess insurance only. In addition, Lessee shall obtain and keep in force excess or umbrella insurance in the amount of [***] which shall comply in all respects with requirements set forth herein for insurance. The amount of insurance required to be carried by Lessee shall be subject to reasonable periodic increases specified by Lessor based upon the recommendations of Lessor’s professional insurance advisers, the requirements of Lessor’s Lender and other relevant factors. The liability insurance limits required in Paragraph 8.2 (a) may be obtained by any combination of primary and excess or umbrella liability insurance.

(b) Carried by Lessor. Lessor shall, at its option, maintain liability insurance as described in Paragraph 8.2(a), in addition to, and not in lieu

[***] The asterisks denote that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

-23-

of, the insurance required to be maintained by Lessee. Lessee shall not be named as an additional insured therein.

8.3 Property Insurance – Building, Improvements and Rental Value.

(a) Building and Improvements. The Insuring Party shall obtain and keep in force a policy or policies in the name of Lessor, with loss payable to Lessor, any groundlessor, and to any Lender(s) insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full replacement cost of the Premises, as the same shall exist from time to time, or the amount required by any Lessor’s Lender. If Lessor is the Insuring Party, however, Lessee Owned Alterations and Utility Installations, Excluded Equipment, and Lessee’s personal property and Lessee Owned Alterations shall be insured by Lessee under Paragraph 8.4 rather than by Lessor. Such policy or policies shall insure against all risks of direct physical loss or damage (including the perils of flood and/or earthquake), including coverage for debris removal and the enforcement of any Applicable Requirements requiring the upgrading, demolition, reconstruction or replacement of any portion of the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause and waiver of subrogation. If such insurance coverage has a deductible clause, the deductible amount shall not exceed [***]per occurrence (except in the case of earthquake insurance), and Lessee shall be liable for such deductible amount in the event of an Insured Loss.

(b)Rental Value. The Insuring Party shall obtain and keep in force a policy or policies in the name of Lessor, with loss payable to Lessor and any Lender, insuring the loss of the full Rent for not less than [***]. Said insurance shall provide that in the event the Lease is terminated by reason of an insured loss, the period of indemnity for such coverage shall be extended beyond the date of the completion of repairs or replacement of the Premises, to provide for not less than [***] loss of Rent from the date of any such loss. Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and the amount of coverage shall be adjusted [***] to reflect the projected Rent otherwise payable by Lessee, for the next [***] period. Lessee shall be liable for any deductible amount in the event of such loss. The deductible for such Rental Value insurance shall be the same amount as that for the insurance to be maintained under Paragraph 8.3 (a).

[***] The asterisks denote that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

-24-

(c) Adjacent Premises. If the Premises are part of a larger building, or of a group of buildings owned by Lessor which are adjacent to the Premises, the Lessee shall pay for any increase in the premiums for the property insurance of such building or buildings if said increase is caused by Lessee’s acts, omissions, use or occupancy of the Premises.

8.4 Lessee’s Property/Business Interruption Insurance.

(a) Property Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee’s personal property, Excluded Equipment, and Lessee Owned Alterations and Utility Installations. Such insurance shall be full replacement cost coverage with a deductible not to exceed [***] per occurrence. The proceeds from any such insurance shall be used by Lessee first to reduce any outstanding indebtedness under the existing credit agreement with Wells Fargo Foothill, Inc., dated June 10, 2005 as same may be amended and then, any remaining proceeds shall be used for the replacement of personal property, Excluded Equipment and Lessee Owned Alterations and Utility Installations. Lessee shall provide Lessor with written evidence that all such insurance is in force.

(b) Business Interruption. Lessee shall obtain and maintain loss of income and extra expense insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable to all perils commonly insured against by prudent lessees in the business of Lessee or attributable to prevention of access to the Premises as a result of such perils.

(c) Additional Insurance. In addition to the insurance required above, Lessee shall maintain (i) Worker’s Compensation Insurance in the amount required by applicable law; (ii) Employer’s Liability Insurance with a limit of not less than [***] for bodily injury each accident; [***] for bodily injury by disease for each person; and [***] for bodily injury by disease, policy limit.

(d) No Representation of Adequate Coverage. Lessor makes no representation that the limits or forms of coverage of insurance specified herein are adequate to cover Lessee’s property, business operations or obligations under this Lease.

8.5 Insurance Policies. Insurance required herein shall be provided by companies duly licensed or admitted to transact business in the state where the Premises are located, and maintaining during the policy term a “General Policyholders Rating” of

[***] The asterisks denote that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

-25-

at least A, X, or such other equivalent rating as set forth in the most current issue of “Best’s Insurance Guide”. Neither party shall not do or permit to be done anything which invalidates the required insurance policies. Each party shall, prior to the earlier of the Commencement Date, deliver to the other certified copies of policies of such insurance or certificates evidencing the existence and amounts of the required insurance. Lessee shall name Lessor and its lender(s), as the case may be, as additional insureds as to the insurance to be maintained by Lessee under Paragraph 8.2 (a). Each party shall receive, at least thirty (30) days prior written notice of any material change, cancellation or nonrenewal of such policies. Each party shall furnish the other party with evidence of renewals or “insurance binders” evidencing renewal thereof, or Lessor may order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon demand (or Lessee may order such policy and pay the premium directly to the insurer. Such policies shall be for a term of at least one year, or the length of the remaining Term of this Lease, whichever is less. If either Party shall fail to procure and maintain the insurance required to be carried by it, the other Party may, but shall not be required to, procure and maintain the same.

8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor each hereby release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property arising out of or incident to the perils required to be insured against herein. The effect of such releases and waivers is not limited by the amount of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to have their respective property damage insurance carriers waive any right to subrogation that such companies may have against Lessor or Lessee, as the case may be, and to provide evidence thereof.

8.7 Indemnity.

(a) Subject to Paragraph 8.6, except for Lessor’s negligence, or willful misconduct of any Lessor Indemnitee or any contractor or invitee of Lessor and not of Lessee and except respecting any matter related to, resulting from or in connection with a breach by Lessor of its obligations under this Lease, Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, employees, officers, directors, members, Lessor’s master or ground lessor, partners, property managers and Lessor’s Lender (individually, a “Lessor Indemnitee” and collectively, “Lessor Indemnitees”), from and against any and all claims, and all damages (other than consequential, incidental or punitive damages), liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or liabilities arises out of, involves, or in is connection with, the use and/or occupancy of the Premises by Lessee. If any action or proceeding is brought against Lessor by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessee’s expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be defended or indemnified. All of the indemnification obligations of Lessee set forth in this Lease including, without limitation, the obligations set forth in this Paragraph 8.7 shall survive the expiration or earlier termination of this Lease.

-26-

(b) Subject to Paragraph 8.6, except for Lessee’s negligence, or willful misconduct of any Lessee Indemnitee or any contractor or invitee of Lessee and not of Lessor and except respecting any matter related to, resulting from or in connection with a breach by Lessee of its obligations under this Lease, Lessor shall indemnify, protect, defend and hold harmless the Premises, Lessee and its agents, employees, officers, directors, members, partners, property managers and Lessee’s Lender (individually, a “Lessee Indemnitee” and collectively, “Lessee Indemnitees”), from and against any and all claims, and all damages (other than consequential, incidental or punitive damages), liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or liabilities for injury or death to persons or damage to property occurring within or about the Premises caused by the negligence of Lessor or Lessor Parties in connection with their entry upon the Premises. If any action or proceeding is brought against Lessee by reason of any of the foregoing matters, Lessor shall upon notice defend the same at Lessor’s expense by counsel reasonably satisfactory to Lessee and Lessee shall cooperate with Lessor in such defense. Lessee need not have first paid any such claim in order to be defended or indemnified. All of the indemnification obligations of Lessor set forth in this Lease including, without limitation, the obligations set forth in this Paragraph 8.7 shall survive the expiration or earlier termination of this Lease.

8.8 Exemption of Lessor from Liability. Lessor shall not be liable for damage to the goods, wares, merchandise or other property of Lessee, Lessee’s employees, contractors, invitees, customers, or any other person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upon the Premises or upon other portions of the Building of which the Premises are a part, or from other sources or places. Notwithstanding Lessor’s negligence or breach of this Lease, Lessor shall under no circumstances be liable for injury to Lessee’s business or for any loss of income or profit therefrom.

8.9 Lessor shall ensure that its lenders are not entitled to obtain any insurance proceeds otherwise available to Lessor or relative to the Premises unless and until this Lease is terminated; provided, however, such lender may hold such funds in trust and act as a disbursing agent therefor provided the disbursement of such funds is not subject to deduction, offset, abatement or any other form of withholding that might otherwise be provided in such lenders loan documents with Lessor and such Lenders shall be entitled to retain any excess not required by Lessor to be expended pursuant to the terms of this Lease.

9. DAMAGE OR DESTRUCTION.

9.1 Definitions.

(a) “Premises Partial Damage” means damage or destruction to the Premises, other than Lessee Owned Alterations and Utility Installations and other items such as Additional Data Center Fixtures and Excluded Equipment which belong to Lessee during the Term, which can reasonably be Restored in nine (9) months or less from the date of the damage or destruction as determined pursuant to the Completion Estimate. Lessor

-27-

shall notify Lessee in writing within thirty (30) days from the date of the damage or destruction as to whether or not the damage is Partial or Total.

(b) “Premises Total Destruction” means damage or destruction to the Premises, other than Lessee Owned Alterations and Utility Installations and other items such as Additional Data Center Fixtures and Excluded Equipment which belong to Lessee during the Term, which cannot reasonably be Restored in nine (9) months or less from the date of the damage or destruction as determined pursuant to the Completion Estimate. Lessor shall notify Lessee in writing within thirty (30) days from the date of the damage or destruction as to whether or not the damage is Partial or Total.

(c) “Insured Loss” means damage or destruction to the Premises, other than Lessee Owned Alterations and Utility Installations and other items such as Additional Data Center Fixtures and Excluded Equipment which belong to Lessee during the Term, which was caused by an event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits involved.

(d) “Replacement Cost” means the cost to repair or rebuild the Improvements owned by Lessor at the time of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by the operation of Applicable Requirements, and without deduction for depreciation.

(e) “Hazardous Substance Condition” means the release or presence of Hazardous Substances into the soils, groundwater, surface water or structures of the Premises at or above such levels or concentrations for which Remediation is required pursuant to Applicable Requirements.

(f) “Remediation” means investigation, removal, treatment, disposal, institutional controls and any other action necessary to address Hazardous Substances in the environment so that any remaining Hazardous Substances are at or below levels or concentrations acceptable for commercial property under Applicable Requirements.

(g) “Restoration” or “Restored” means, following a casualty or Taking, the restoration of the Premises (other than Excluded Equipment, Lessee Owned Alterations, Utility Installations, Additional Data Center Fixtures, and other items which belong to Lessee during the Term) to as nearly as possible its value, condition and character immediately prior to such casualty or Taking, in accordance with the provisions of this Lease, provided, however, in the event of a Taking, the foregoing obligation shall take into account and be subject to the limitations and constraints on such restoration obligation applicable to the Premises (other than Excluded

-28-

Equipment, Lessee Owned Alterations, Utility Installations, Additional Data Center Fixtures, and other items which belong to Lessee during the Term) in the condition which they exist following such Taking. Notwithstanding the foregoing, such Restoration may depart from the exact condition of the Premises immediately prior to the casualty or Taking, provided that (i) the use of the Premises permitted under this Lease shall not be changed as a result of any such Restoration, (ii) all such Restoration shall be performed in a good and workmanlike manner, and shall be expeditiously completed in compliance with all Applicable Requirements, and (iii) Lessor shall discharge all liens filed against any of the Premises arising out of such Restoration, except to the extent Lessee is responsible for the same.

(h) “Completion Estimate” means a good faith estimate by a reputable architect or contractor with significant experience in constructing and/or reconstructing data/telecommunication center facilities selected by Lessor and reasonably approved or disapproved by Lessee by notice sent to Lessee within five (5) business days after Lessor advises Lessee of Lessor’s choice for such architect or contractor (and if disapproved, with reasons therefor) which estimate shall indicate the period of time necessary to effect the Restoration taking into account the time necessary to obtain all necessary building permits and approvals, assuming that overtime will not be used, the effect of weather and all other appropriate factors relevant to determining the applicable reconstruction period. Failure by Lessee to respond to Lessor’s selection of a an architect or contractor shall be deemed an acceptance of Lessor’s selection.

9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Lessee shall promptly contribute funds equal to the amount of the deductible as and when required to complete said repairs, and Lessor shall, at Lessor’s expense (subject to receipt of adequate insurance proceeds and limited to the extent of the insurance proceeds so received), effect Restoration (but not as to Excluded Equipment or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and this Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor’s election repair any damage or destruction the total cost to repair of which is [***] or less. Lessee shall not be entitled to reimbursement of any funds contributed by Lessee to effect such Restoration.

9.3 Partial Damage - Uninsured Loss. Notwithstanding anything to the contrary contained herein, if a Premises Partial Damage occurs and such damage is not completely covered (less any applicable deductible) by the insurance described in

[***] The asterisks denote that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission

-29-

‘Paragraph 8.3(a), then Lessor may either (i) effect Restoration (but not as to Excluded Equipment, Additional Data Center Fixtures or Lessee Owned Alterations, Utility Installations and other items owned by Lessee during the Term) as soon as reasonably possible at Lessor’s expense and this Lease shall continue in full force and effect, or (ii) to give written notice to Lessee within sixty (60) days after the date of the occurrence of such damage of Lessor’s intention to terminate this Lease as of the date of the occurrence of such damage; provided, however, in the event Lessor elects to terminate this Lease, Lessee shall have the right in writing to Lessor within 15 days thereafter, at Lessee’s option to effect such Restoration damage as soon as reasonably possible at Lessee’s expense and this Lease shall continue in full force and effect provided, the Term shall toll for a period equal to the period of Restoration, not to exceed a maximum of 12 months. As a condition to effectuating such Restoration, Lessor may require Lessee to provide Lessor with reasonably adequate security to assure Lessor and its Lender, if any, of payment by Lessee for the Restoration.

9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, at the election of Lessor, this Lease shall terminate sixty (60) days following such Premises total Destruction. If the damage or destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall have the right to recover Lessor’s damages from Lessee, to the extent not covered by insurance required to be carried hereunder. If Lessor does not elect to terminate this Lease, then the Premises Total Destruction shall be treated as a Premises Partial Damage and the provisions of Paragraph 9.2 above shall apply.

9.5 Damage Near End of Term. If at any time during the last year of this Lease there is damage for which the cost to repair exceeds two (2) month’s Fixed Rent, whether or not an Insured Loss, Lessor may terminate this Lease effective sixty (60) days following the date of occurrence of such damage by giving written termination notice to Lessee within thirty (30) days after the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable option to extend this Lease, then Lessee may preserve this Lease by, (a) exercising such option and (b) providing Lessor with any shortage in insurance proceeds needed to make the repairs on or before the earlier of (i) the date which is ten days after Lessee’s receipt of Lessor’s written notice purporting to terminate this Lease, or (ii) the day prior to the date upon which such option expires. If Lessee duly exercises such option during such period and provides Lessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor’s commercially reasonable expense, repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option and provide such funds or assurance during such period, then this Lease shall terminate on the date specified in the termination notice and Lessee’s option shall be extinguished.

9.6 Abatement of Rent; Lessee’s Remedies.

(a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent payable by Lessee for the

-30-

period required for the Restoration nor Remediation shall be abated in proportion to the degree to which Lessee’s use of the Premises is impaired, but not to exceed the proceeds received from the Rental Value insurance. All other obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such damage, destruction, remediation, repair or restoration except as provided herein.

(b) Remedies. If Lessor shall be obligated or shall elect to effect such Restoration and does not commence, in a substantial and meaningful way, such Restoration within ninety (90) days after such obligation shall accrue or such election shall have been made, Lessee may, at any time prior to the commencement of such Restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of Lessee’s election to terminate this Lease on a date not less than sixty (60) days following the giving of such notice. If Lessee gives such notice and such repair or restoration is not commenced within thirty (30) days thereafter, this Lease shall terminate as of the date specified in said notice. If the repair or restoration is commenced within said thirty (30) days, this Lease shall continue in full force and effect. “Commence” shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual work on the Premises, whichever first occurs.

9.7 Termination-Advance Payments. Upon termination of this Lease pursuant to Paragraph 9, an equitable adjustment shall be made concerning advance Fixed Rent and any other advance payments made by Lessee to Lessor.

9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease shall govern the effect of any damage to or destruction of the Premises with respect to the termination of this Lease and hereby waive the provisions of any present or future statute to the extent inconsistent herewith.

10. REAL PROPERTY TAXES.

10.1 [reserved].

10.2 Payment of Taxes. Lessee shall pay and discharge, before any interest or penalties are due thereon, all Real Property Taxes. Lessor shall promptly deliver to Lessee any bill or invoice Lessor receives with respect to any tax; provided, that the Lessor’s failure to deliver any such bill or invoice shall not limit Lessee’s obligation to pay such tax; provided, however, Lessor, and not Lessee, shall be responsible for (i) any penalties payable as a result of any failure by Lessor to timely deliver such bills or invoices, and (ii) any penalties paid or payable by Lessor not resulting from an act or omission of Lessee. Lessor agrees to cooperate with Lessee to enable Lessee to receive tax bills directly from the respective taxing authorities. Lessee shall deliver, or cause to be delivered, to Lessor, evidence that the taxes required to be paid pursuant to this Paragraph 31 have been so paid before they are delinquent and are not then delinquent. If any such taxes shall cover any period of time prior to the Commencement Date, Lessee

-31-

shall nonetheless pay the same. If any such taxes shall cover any period of time after the Expiration Date, taxes shall be prorated to cover only that portion of the tax bill applicable to the period from the Commencement Date through the Expiration Date, and Lessor shall reimburse Lessee for any overpayment by Lessee. In the event that any assessment against the Premises is payable in installments, Lessee may pay such assessment in installments; and in such event, Lessee shall be liable only for those installments which become due and payable or during the Term, or which are appropriately allocated to the Term even if due and payable after the Term; provided however,. Lessor may not consent to the imposition of special assessments against the Premises without Lessee’s prior written consent.

(a) [reserved]

(b) Lessee’s Right to Contest. Unless Lessor elects to contest any Real Property Taxes, Lessee may, upon the receipt of prior written approval of Lessor, such approval not to be unreasonably withheld, freely contest (including seeking an abatement or reduction of) any Real Property Taxes against the Premises and attempt to obtain a reduction in the assessed valuation of the Premises for the purpose of reducing any such tax assessment; provided, Lessee may also have the right to attempt to settle or compromise such contest through negotiations so long as Lessee’s contest is relative to taxes for a single year. Lessor shall be entitled to participate in any contest or negotiates intended to affect multiple tax years and Lessee shall not commence any such action or proceeding or reach any settlement without the prior written approval of Lessor which approval Lessor may withhold in its discretion. In the event Lessor approves, and upon the request of Lessee, but without expense or liability to Lessor (and at Lessee’s sole cost and expense), Lessor shall cooperate with Lessee and execute any document which may be reasonably necessary and proper for any proceeding related hereto. In the event a refund of Real Property Taxes is obtained and actually paid to Lessor, Lessor shall credit an appropriate portion thereof (after deducting any unrecouped, out-of-pocket expenses or losses in connection with obtaining such refund) to the next installment(s) of Fixed Rent. If such refund is received after the end of the Term and relates to periods during the Term, Lessor shall remit such refund to Lessee within thirty (30) days after receipt. Any rebate applicable to any portion of the Term shall belong to Lessee. In the event Lessor desires to contest any Real Property Taxes, Lessee agrees to cooperate with Lessor and execute any document which may be reasonably necessary and proper for any such proceeding, at no cost to Lessee. This provision shall survive the expiration or other termination of this Lease.

10.3 Personal Property Taxes. Lessee shall pay, prior to delinquency, all taxes assessed against and levied upon Lessee Owned Alterations and/or Utility Installations, Excluded Equipment and all personal property of Lessee and any components of the Premises that are taxed as personal property whether or not owned by

-32-

Lessor or Lessee. When possible, Lessee shall cause such property to be assessed and billed separately from the real property of Lessor. If any Excluded Equipment or any of Lessee’s said personal property shall be assessed with Lessor’s real property, Lessee shall pay Lessor the taxes attributable to such Excluded Equipment or to such personal property within thirty (30) days after receipt of a written statement.

10.4 UTILITIES. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal and other utilities and services supplied to the Premises, together with any taxes thereon. Lessor shall not be liable for damages, consequential or otherwise, nor shall there be any Rent abatement arising out of any curtailment or interruption whatsoever in utility services.

11. ASSIGNMENT AND SUBLETTING.

11.1 Lessor’s Consent Required.

(a) Lessee shall not voluntarily or by operation of law assign, transfer, hypothecate, mortgage or encumber (collectively, “assign or assignment”) or except as otherwise permitted herein, all or any part of Lessee’s interest in this Lease or in the Premises or sublease all or any portion of the Premises without Lessor’s prior written consent, which consent, subject to the provisions of this Paragraph 12, in regard to subleasing, shall not be unreasonably withheld; provided however, that Lessee may (i) freely enter into any colocation or similar use or license agreement however characterized or denominated without the consent of Lessor and (ii) execute and deliver a collateral assignment of Lessee’s interests in this Lease; provided all such arrangements shall terminate upon the termination or earlier expiration of this Lease.

(b) Notwithstanding the foregoing, so long as no Breach is then in effect, Lessee shall have the right, without the consent of Lessor but with prior written notice to Lessor, and in accordance with the other provisions of this Paragraph 12 as if consent were required, (a) to assign this Lease or sublease all or any portion of the Premises to: (i) any corporation or entity which controls Lessee in whole or in part;; or (ii) any corporation or entity controlled in whole or in part by, controlling or under common control with Lessee (each of (i)-(ii) hereinafter called a “related entity”), provided such transfer or sublease must be for a legitimate business purpose and not for purposes of avoiding the performance of Lessee’s obligations hereunder; provided further, that such related entity satisfies the requirements of Paragraph 11.2 (a) below. As used in this Paragraph 12; “control” shall mean the power to direct or cause the direction of the day to day management and policies of such corporation, whether through the ownership of voting securities, by contract, by interlocking boards of directors, or otherwise. Notwithstanding the foregoing, in the event of any assignment, subletting, or other transfer under this Lease, Lessee shall remain liable for performance and compliance with all of the terms,

-33-

conditions and provisions of this Lease. A change in the control of Lessee, whether through the ownership of voting securities, by contract, by interlocking boards of directors, or otherwise shall not constitute an assignment requiring consent. Neither any transfer of control of Lessee nor any transfer or assignment of interests in Lessee or the issuance of new non voting or voting stock in Lessee shall be deemed to be an assignment of this Lease by Lessee that is subject to the provisions of this Paragraph 12 (including all consent requirements)

11.2 Lessee may freely sublease all or any portion of the Premises to any entity that is not a related entity, provided the space being subleased in any one sublease does not exceed 55,000 square feet; provided Lessee delivers to Lessor the following items: (i) a description of any proposed alterations, if any, and a request for Lessor’s consent to the same which may be granted or withheld in Lessor’s sole discretion; (ii) a statement that the proposed use by such subtenant will be consistent with and permitted under the Agreed Use; (iii) a list of any Hazardous Substances that such subtenant proposes to utilize and a request for Lessor’s consent to the same which shall not be unreasonably withheld, delayed or conditioned; (iv) a written confirmation from such subtenant that it will comply with the provisions of Paragraph 11.4 (a); (v) an insurance certificate confirming sublessee is maintaining insurance requirements of Lessee under this Lease and naming Lessor as an additional insured; (vi) a written confirmation from such subtenant that the sublease and subtenant’s rights thereunder are subject and subordinate to the terms of this Lease; and (vii) there will be no storage at the Premises other than ancillary to the operation of the subtenant’s data center. In the event that Lessee proposes to effect a sublease of more than 55,000 square feet, Lessee shall first request Lessor’s approval of such sublease which Lessor shall not unreasonably withhold, delay or condition (and which shall given or denied with reasons therefore within 15 days after Lessee submits to Lessor the items required to be submitted under this Paragraph 11.2, Paragraph 11.3, Paragraph 11.4 and Paragraph 11.5. Lessee informs the Lessor, in writing, of all material terms of any proposed sublease at least thirty (30) days prior to commencement date thereof and no Default or Event of Default shall have occurred and be continuing when the sublease is entered into.

(a) The involvement of Lessee or its assets in any transaction, or series of transactions (by way of merger, sale, acquisition, financing, transfer, leveraged buy-out or otherwise), whether or not a formal assignment or hypothecation of this Lease or Lessee’s assets occurs, which results or will result in a reduction of the Net Worth of Lessee as it was represented at the time of the execution of this Lease shall be considered an assignment of this Lease to which Lessor may withhold its consent. “Net Worth of Lessee” shall mean the net worth of Lessee established under generally accepted accounting principles.

11.3 Terms and Conditions Applicable to Assignment and Subletting.

(a) Regardless of Lessor’s consent, any assignment or subletting shall not: (i) be effective, in the case of an assignment without the express

-34-

written assumption by such assignee of the obligations of Lessee under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the primary liability of Lessee for the payment of Rent or for the performance of any other obligations to be performed by Lessee;

(b) Lessor may accept Rent or performance of Lessee’s obligations from any person other than Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver or estoppel of Lessor’s right to exercise its remedies for Lessee’s Default or Breach;

(c) Lessor’s consent to any assignment or subletting requiring such consent hereunder shall not constitute a consent to any subsequent assignment or subletting;

(d) In the event of any Breach by Lessee, Lessor may proceed directly against Lessee, including any assignee, without first exhausting Lessor’s remedies against any other person or entity responsible therefore to Lessor;

(e) Each request for consent to an assignment or subletting requiring Lessor’s consent, shall be in writing, accompanied by information relevant to Lessor’s determination, in the case of a proposed assignment requiring Lessor’s consent, as to the financial and operational responsibility and appropriateness of the proposed assignee, including but not limited to the intended use by such assignee and/or required modification of the Premises, if any, and in the case of a sublessee, as to the intended use by such sublessee and/or required modification of the Premises, if any, together with a fee to Lessor of [***] as consideration for Lessor’s considering and processing said request (the “Assignment/Sublease Request Processing Fee”). Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested. Lessee shall reimburse Lessor for all reasonable out of pocket costs actually incurred by Lessor in connection with the consideration of any request, including reasonable attorneys’ fees;

(f) Any assignee of, this Lease shall, by reason of accepting such assignment, be deemed to have assumed and agreed to conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Lessee during the term of said

[***] The asterisks denote that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

-35-

assignment, other than such obligations as are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has specifically consented to in writing. Each sublease of the Premises or any part thereof shall be subject and subordinate to the provisions of this Lease and the sublessee shall affirm same in such sublease;and

(g) Unless Lessor specifically consents in writing to the assignment of the Renewal Option to an assignee, such Renewal Option is not assignable or assumable or assumed by such assignee.

11.4 Additional Terms and Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein:

(a) From and after a Breach by Lessee in the payment to Lessor of Rent, Lessor may collect from the subtenant rent otherwise payable by subtenant to Lessee unless and until Lessor waives any such Breach with any such rent so collected being deemed applied to Lessee’s obligations under this Lease. Lessor shall not, by reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee’s obligations to such sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Lessor stating that a Breach by Lessee in the payment to Lessor of Rent exists, to pay to Lessor all rent due and to become due under the sublease. Sublessee shall rely upon any such notice from Lessor and shall pay all rents to Lessor without any obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from Lessee to the contrary; provided, the foregoing shall not be deemed a waiver by Lessee of its right against Lessor.

(b) Any matter requiring the consent of the sublessor under a sublease shall also require the consent of Lessor.

(c) No sublessee shall further assign or sublet all or any part of the Premises without Lessor’s prior written consent.

(d) If Lessee shall assign this Lease or sublet substantially all of the Premises or for substantially all of the then remaining Term of the Lease for consideration in excess of the pro-rata portion of rent applicable to the space subject to the assignment or sublet, then Lessee shall pay to Lessor

-36-

as Additional Rent, [***] of any such excess immediately upon receipt, less Lessee’s reasonable out of pocket expenses for marketing, brokerage commissions, legal fees, and all other expenses and costs incurred by Lessee in connection with such assignment or subletting.

11.5 Conditions to Consent to Assignment or Subletting. Lessee acknowledges that Lessor’s agreement to lease the Premises to Lessee at the rent and upon the terms stated herein is in material reliance upon Lessor’s evaluation of the original Lessee’s background, experience and ability, as well as the nature of the use of the Premises by the original Lessee as set forth in Paragraph 6. In the event that Lessee shall request Lessor’s written consent to assign or sublease the Premises as required in this Paragraph 12, then each such request for consent shall be in writing and accompanied by the following applicable to such proposed sublease or assignment as the case may be and as indicated below:

(a) Balance sheets, income statements and tax returns of the proposed assignee for the most recent three (3) fiscal years.

(b) A complete business biography and history of the proposed assignee and its officers, partners and managers, if any.

(c) A statement of the specific uses for which the Premises will be utilized by the proposed assignee or sublessee.

(d) Preliminary plans prepared by an architect or civil engineer for all alterations to the Premises that are contemplated to be made by the proposed assignee or sublessee.

(e) A list prepared by the proposed assignee or sublessee of all buildings in which the proposed assignee has been a lessee during the past five (5) years, which list shall include the address of each such building and the last known name, address and telephone number of the lessor of each such building.

(f) A list prepared by the proposed assignee of all lawsuits in which the proposed assignee has been a named party, either as plaintiff or defendant, during the past three (3) years, which list shall include the name and location of the court, the case name and case number and a brief description of the nature of the action.

(g) Written approval of the proposed assignment or sublease and a reaffirmation of liability, in a form satisfactory to Lessor’s counsel, from

[***] The asterisks denote that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

-37-

all previous assignors of this Lease, not previously expressly released by Lessor, if any.

(h) Lessor may refuse to consent to any assignment requiring Lessor’s consent for any reason whatsoever. Lessor may refuse to consent to any sublet which requires Lessor’s consent hereunder on any commercially reasonable grounds, including without limitations the potential inability of the proposed sublessee to fulfill the Lease terms and the financial irresponsibility or instability of the proposed sublessee, the lack of suitability of the Premises for the intended use by the proposed sublessee, the potential for unlawful or undesirable use of the Premises by the sublessee, or the character or business reputation of the proposed sublessee. In any dispute which arises under this paragraph, Lessee shall pay to Lessor all of Lessor’s costs and expenses reasonably incurred by Lessor in making the investigation and factual findings provided for in this paragraph.

12. DEFAULT; BREACH; REMEDIES.

12.1 Default; Breach. A “Default” is defined as a failure by the Lessee to comply with or perform any of the terms, covenants, conditions under this Lease. A “Breach” is defined as the occurrence of one or more of the following Defaults, and the failure of Lessee to cure such Default within any applicable grace period:

(a) The abandonment of the Premises; or the vacating of the Premises without apparent intent to return and without providing a reasonable level of security, or which results in the coverage of the property insurance described in Paragraph 8.3 being jeopardized as a result thereof, or without providing reasonable security to minimize potential vandalism;.

(b) The failure of Lessee to make any payment of Rent when due which is not cured within five (5) days after written notice thereof; provided, Lessee shall only be entitle to such notice twice in any successive twelve month period commencing with the Lease Commencement Date.;

(c) [intentionally omitted]

(d) The failure by Lessee to provide (i) the rescission of an unauthorized assignment or subletting, (ii) an Estoppel Certificate within the time period provided for in Paragraph 16(a),or (iii) a requested subordination subject to and to the extent required of Lessee under Paragraph 29,

-38-

(e) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, other than those described in subparagraph 12.1(a), (b), (c) or (d) above, where such Default continues for a period of thirty (30) days after written notice (unless a shorter cure period is provided for elsewhere in this Lease); provided, however, that if the nature of Lessee’s Default is such that more than thirty (30) days are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee commences such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion.

(f) The occurrence of any of the following events: (i) the making of any general arrangement or assignment for the benefit of creditors; (ii) becoming a “debtor” as defined in 11 U.S.C. § 101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within sixty (60) days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where possession is not restored to Lessee within thirty (30) days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where such seizure is not discharged within thirty (30) days; provided, however, in the event that any provision of this subparagraph (e) is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions.

(g) The discovery that any financial statement of Lessee given to Lessor was intentionally,

materially false with material adverse impact on the financial condition of Lessee.

12.2 Remedies. If Lessee fails to perform any of its affirmative duties or obligations, within any applicable notice or grace period (or in case of an emergency, without notice), Lessor may, at its option, perform such duty or obligation on Lessee’s behalf, including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. The costs and expenses of any such performance by Lessor shall be due and payable by Lessee upon receipt of invoice therefor. If any check given to Lessor by Lessee shall not be honored by the bank upon which it is drawn, Lessor, at its option, may require all future payments to be made by Lessee to be by cashier’s check. In the event of a Breach, Lessor may, with or without further notice or demand, and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach:

(a) Terminate Lessee’s right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall

-39-

immediately surrender possession to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys’ fees, and leasing commissions. The worth at the time of award of the amount referred to in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount [***] at the time of award plus [***]. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate suit. If a notice and grace period required under Paragraph 12.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required by Paragraph 12.1. In such case, the applicable grace period required by Paragraph 12.1 and the unlawful detainer statute shall run concurrently, and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute.

(b) Continue the Lease and Lessee’s right to possession and recover the Rent as it becomes due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessor’s interests, shall not constitute a termination of the Lessee’s right to possession. No expiration or termination of the Term of this Lease pursuant to this Section 12.2, by operation of law or otherwise, and no re-entry, repossession or removal pursuant to this Section 12.2 or otherwise, and no reletting of the Premises pursuant to this Section 12.2 or otherwise, shall

[***] The asterisks denote that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

-40-

relieve Lessee of its liabilities and obligations hereunder, all of which shall survive such expiration, termination, re-entry, repossession, removal or reletting.

(c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of the state wherein the Premises are located. The expiration or termination of this Lease and/or the termination of Lessee’s right to possession shall not relieve Lessee from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by reason of Lessee’s occupancy of the Premises. Mention in this Lease of any particular remedy shall not preclude Lessor from any other remedy at law or in equity, including the right of injunction. Lessee waives any rights of redemption granted by any applicable laws if Lessee is evicted or dispossessed, for any cause, or if Lessor obtains possession of the Premises by reason of the violation by Lessee of any of the terms of this Lease.

(d).

12.3 Late Charges; Interest

(a) Lessee hereby acknowledges that late payment by Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent shall not be received by Lessor within five (5) days after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a [***] of each such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of such late payment. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee’s Default or Breach with respect to such overdue amount, nor prevent the exercise of any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for three (3) consecutive installments of Base Rent, then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessor’s option, become due and payable quarterly in advance. Notwithstanding anything to the contrary herein, Lessee shall be obligated to pay the foregoing charge the for the first event in any successive twelve month period commencing with the Lease Commencement Date that would otherwise give rise to such obligation.

(b) Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when due as to scheduled payments (such as Fixed Rent) or within

[***] The asterisks denote that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

-41-

thirty (30) days following the date on which it was due for non-scheduled payment, shall bear interest from the date when due, as to scheduled payments, or the thirty-first (31st) day after it was due as to non-scheduled payments at the Lease Default Rate.

12.4 Interest. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, within thirty (30) days following the date on which it was due for non-scheduled payment, shall bear interest from the date when due, as to scheduled payments, or the thirty-first (31st) day after it was due as to non-scheduled payments at the Lease Default Rate.

12.5 Breach by Lessor. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an obligation required to be performed by Lessor. For purposes of this paragraph, a reasonable time shall in no event be less than thirty (30) days after receipt by Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for such purpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however, that if the nature of Lessor’s obligation is such that more than thirty (30) days are reasonably required for its performance, then Lessor shall not be in breach if performance is commenced within such thirty (30) day period and thereafter diligently pursued to completion by the earlier to occur of sixty (60) days from such notice or such date as is appropriate for such matter. In such event, Lessee shall be entitle to any remedies available to it at law or in equity.

13. CONDEMNATION.

13.1 Lessor, promptly after obtaining knowledge of the institution of any proceeding for condemnation, shall notify Lessee thereof, and subject to the provisions of this Paragraph 14, Lessee shall have the right to participate in such proceedings.

13.2 If the entire Premises shall be taken or appropriated under the power of eminent domain or conveyed in lieu thereof (any such event, a “Taking”) this Lease and all right, title and interest of Lessee hereunder shall cease and come to an end on the date of vesting of title pursuant to such Taking with respect to the Premises, and the Fixed Rent and Additional Rent payable with respect to the Premises shall be apportioned as of the date of such vesting.

13.3 If there is a Taking of less than the entire Premises and a result of such Taking (A) Restoration of the Premises remaining after such Taking will not enable the use by Lessee of the remaining rentable portion of the Premises to be materially consistent with the use being made of the Premises on the date immediately preceding such Taking, (B) there remains no reasonable means of legal and physical, pedestrian and vehicular (as opposed to simply legal) access to the Premises; (C) the remaining available parking is not sufficient to comply with Applicable Requirements, Lessee or Lessor may terminate this Lease by delivering a notice of such termination to the other not later than thirty (30) days after the date of such vesting, specifying as the date for termination a date not later than the later of (1) the date of such vesting or (2) thirty (30) days after such

-42-

notice. On the date of termination (x) the term of this Lease and all right, title and interest of Lessee hereunder shall cease, and (y) the Fixed Rent and Additional Rent payable with respect to the Premises shall be apportioned as of the effective date of such termination.

13.4 If there is a Taking of less than the entire Premises and the entire Lease is not terminated as provided in Paragraph 13.3 above, this Lease shall terminate as to the rentable area of the Premises so taken upon vesting of title pursuant to such Taking. Upon such Taking, the Fixed Rent to be paid under this Lease for the remainder of the Term shall be equitably reduced and Lessor shall effect the Restoration of the Premises caused by such Condemnation to the extent of any proceeds actually received by Lessor to the condition of the same immediately prior to such Taking.

13.5 Notwithstanding anything to the contrary contained in this Paragraph 13, if there is a Taking of any part of the Premises during the Term which shall be temporary in nature, this Lease shall be and remain unaffected by such Taking and Fixed Rent shall be equitably reduced.

13.6 Condemnation awards and/or payments shall be the property of Lessor, whether such award shall be made as compensation for diminution in value of the leasehold, the value of the part taken, or for severance damages; provided, however, that Lessee may apply for a separate award for (i) Lessee’s relocation expenses, (ii) loss of business goodwill, (iii) the then unamortized value of any Permitted Alterations and Restricted Alterations approved by Lessor; (ii) the value of the Excluded Equipment, and (iv) Lessee’s relocation costs without regard to whether or not this Lease is terminated pursuant to the provisions of this Paragraph; provided the foregoing does not diminish the award otherwise available to Lessor. In the event that Lessor does not provide Building 2 Funding and Lessee proceeds to build out Building 2 as a data center, then in the event of a Taking, Lessee shall be entitled to an equitable share of any condemnation proceeds allocable to the unamortized Lessee Owned Alterations. In the event there is no condemnation award specifically for the unamortized Lessee Owned Alterations, and Lessor and Lessee cannot mutually agree on the allocation of such award, the parties shall apply to a court of competent jurisdiction to equitably allocate such award.

13.7 Lessor shall ensure that its lenders are not entitle to obtain any condemnation proceeds unless and until this Lease is terminated; provided, however, such lender may hold such funds in trust and act as a disbursing agent therefor provided the disbursement of such funds is not subject to deduction, offset, abatement or any other form of withholding that might otherwise be provided in such lenders loan documents with Lessor.

14. BROKERS.

14.1 Representations and Indemnities of Broker Relationships. Lessee and Lessor each represent and warrant to the other that it has had no dealings with any person, firm, broker or finder (other than the Broker) in connection with this Lease, and

-43-

that no one other than said named Broker is entitled to any commission or finder’s fee in connection herewith. Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any costs, expenses, attorneys’ fees reasonably incurred with respect thereto.

14.2 Brokers’ Commissions. The Broker has been compensated in connection with the Agreement pursuant to a separate written agreement between Lessor and Broker and Lessor represents and warrants to Lessee that Broker is not entitled to any compensation in connection with this Lease.

15. ESTOPPEL CERTIFICATES.

(a) Each Party (as “Responding Party”) shall within ten (10) days after written notice from the other Party (the “Requesting Party”) execute, acknowledge and deliver to the Requesting Party a statement in writing in form of a commercially reasonable “Estoppel Certificate” form, plus such additional information, confirmation and/or statements as may be reasonably requested by the Requesting Party, or Lessor’s lender, if any.

(b) If the Responding Party shall fail to execute or deliver the Estoppel Certificate within such ten day period, such party shall provide a second notice and the Responding Party shall five (5) days after such second notice in which to respond after which , in addition to any other remedies available under this Lease to the Requesting Party,. the Requesting Party may execute an Estoppel Certificate stating that: (i) the Lease is in full force and effect without modification except as may be represented by the Requesting Party, (ii) there are no uncured defaults in the Requesting Party’s performance, and (iii) if Lessor is the Requesting Party, not more than one month’s rent has been paid in advance. Prospective purchasers and encumbrancers may rely upon the Requesting Party’s Estoppel Certificate, and the Responding Party shall be estopped from denying the truth of the facts contained in said Certificate.

16. DEFINITION OF LESSOR. If Lessor shall at any time transfer its interest in the Premises or this Lease and provided that the transferee assumes the obligations of Lessor under the Lease occurring after such transfer, Lessor shall be released of any obligations occurring after such transfer, and Lessee shall look solely to Lessor’s successors for performance of such obligations. Upon such transfer or assignment and delivery of the Security Deposit to the transferee, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by such transferee.

17. SEVERABILITY. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.

-44-

18. DAYS. Unless otherwise specifically indicated to the contrary, the word “days” as used in this Lease shall mean and refer to calendar days.

19. LIMITATION ON LIABILITY. In consideration of the benefits accruing hereunder, Lessee on behalf of itself and all successors and assigns of Lessee, covenants and agrees that, notwithstanding anything to the contrary and notwithstanding any applicable law to the contrary:

(a) the liability of Lessor under this Lease (including any liability for any actual or alleged failure, breach or default by Lessor under this Lease and/or negligence of Lessor hereunder) and any recourse against Lessor shall be limited solely to Lessor’s interest in the Premises (and not any other assets of Lessor); and

(b) the obligations of Lessor under this Lease do not constitute personal obligations of the members, partners or subpartners of Lessor, or any of the managers, directors, officers or shareholders of Lessor or Lessor’s members, partners or subpartners, and Lessee shall not seek recourse against any such person or against any of their personal assets for satisfaction of any liability with respect to this Lease.

20. TIME OF ESSENCE. Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease.

21. NO PRIOR OR OTHER AGREEMENTS. This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective.

22. NOTICES.

22.1 Notice Requirements. All notices required or permitted by this Lease shall be in writing and may be delivered in person (by hand or by courier) or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by a recognized overnight courier which issues receipts of delivery, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 23. The addresses noted adjacent to a Party’s signature on this Lease shall be that Party’s address for delivery or mailing of notices. Either Party may by written notice to the other specify a different address for notice, except that upon Lessee’s taking possession of the Premises, the Premises shall constitute Lessee’s address for notice. A copy of all notices to Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate in writing.

22.2 Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed given forty-eight (48) hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantee next day delivery shall be deemed given

-45-

twenty-four (24) hours after delivery of the same to the Postal Service or courier. If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next business day.

23. WAIVERS. No waiver by Lessor of a Default or Breach of any term, covenant or condition hereof by Lessee, and no waiver by Lessee of any breach or default by Lessor shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any other term , covenant or condition hereof or of any subsequent default or breach by Lessor of the same or of any other term any covenant or condition hereof. Lessor’s consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent. Lessee’s consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessee’s consent to, or approval of, any subsequent or similar act by Lessor, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent. The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of monies or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment.

24. RECORDING. Lessor and Lessee acknowledges that a memo of the Original Lease is of record and agrees to execute a modification of such memo to reflect the applicable terms of this Lease.

25. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over, then the Fixed Rent shall be increased to [***] of the Fixed Rent applicable during the month immediately preceding the expiration or termination, and shall indemnify and hold harmless Lessor against any loss arising out of such holding over. In addition, Lessee shall remain responsible for paying Operating Expenses, Real Property Taxes, insurance and all other costs and expenses and Rent which are the responsibility of Lessee under this Lease. Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee.

26. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.

27. COVENANTS AND CONDITIONS; CONSTRUCTION OF AGREEMENT. All provisions of this Lease to be observed or performed by Lessee are both covenants and

[***] The asterisks denote that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

-46-

conditions. In construing this Lease, all headings and titles are for the convenience of the parties only and shall not be considered a part of this Lease. Whenever required by the context, the singular shall include the plural and vice versa. This Lease shall not be construed as if prepared by one of the parties, but rather according to its fair meaning as a whole, as if both parties had prepared it.

28. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the parties, their personal representatives, successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located.

29. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.

29.1 Subordination. This Lease and any Renewal Option granted hereby shall not be subject or subordinate to Lessor Mortgage, now or hereafter placed upon the Premises, to any and all advances made on the security thereof, or to any renewals, modifications, or extensions thereof unless and until Lessor delivers to Lessee an commercially reasonable form of a so called “subordination, non-disturbance and attornment” agreement executed by any Mortgagee providing, among other provisions, that (i) This Lease and any Renewal Option is subordinate only to the lien of any such Security Device and not to the terms thereof; (ii) in the event of a foreclosure or termination of any Lessor Mortgage, Mortgagee will not disturb Lessee’s possession of the Premises, or this Lease or Lessee’s rights hereunder, including any Renewal Option, so long as Lessee is not in Breach hereof and attorns to the record owner of the Premises. Any Lender may elect to have this Lease and/or any Renewal Option granted hereby superior to the lien of its Lessor Mortgage by giving written notice thereof to Lessee, whereupon this Lease and such Renewal Options shall be deemed prior to such Lessor Mortgage , notwithstanding the relative dates of the documentation or recordation thereof.

29.2 Attornment. Subject to the non-disturbance provisions of Paragraph 29.1, Lessee agrees to attorn to a Mortgagee or any other party who acquires ownership of the Premises by reason of a foreclosure of a Mortgage, and that in the event of such foreclosure, such new owner shall not: (i) be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership; (ii) be subject to any offsets or defenses which Lessee might have against any prior lessor, or (iii) be bound by prepayment of more than one (1) month’s rent.

30. ATTORNEYS’ FEES. If any Party or Broker brings an action or proceeding involving the Premises to enforce the terms hereof or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys’ fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, “Prevailing Party” shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys’ fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully

-47-

reimburse all attorneys’ fees reasonably incurred. In addition, Lessor shall be entitled to attorneys’ fees, costs and expenses incurred in the preparation and service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach.

31. LESSOR’S ACCESS; SHOWING PREMISES; REPAIRS. Subject to the terms of this Lease, neither Lessor nor anyone acting by or through Lessor shall interfere or impede the right of Lessee and its sublessees, customers, and their respective vendors, contractors, agents and employees’ to have access to the Premises on a 24 hour per day, 7 days per week 365 day per year basis. Upon reasonable notice to Lessee, but in no event less than 24 hours’ prior notice, and during Lessee’s business hours, Lessor and their respective employees, contractors, agents and representatives may enter onto the Premises to (i) show the Premises to purchasers and potential purchasers, and to mortgagees and potential mortgagees, or (ii) for the purpose of inspecting the Premises or performing any work which Lessor is required or permitted to perform under this Lease; provided, that, for purposes of subpart (ii) of this sentence, Lessor shall not be required to give notice prior to entry onto the Premises during the continuance of an Event of Default (hereinafter defined) or in the event of an emergency situation. Upon reasonable notice to Lessee, during the last two hundred seventy (270) days of the then-current Term, unless Lessee shall have exercised the next Renewal Option, Lessor also may enter onto the Premises to show the Premises to persons wishing to rent the same, and during such period to place notices offering the Premises “For Rent” or “For Sale” on the front of the Building. However, Lessor shall not place any such notices on or in any door or show window of the Building. No such entry shall constitute an eviction of Lessee but any such entry shall be effected by Lessor in such reasonable manner as to minimize any disruption of Lessee’s business operation and so as not to breach Lessee’s security policies (which shall no event result in an absolute prohibition on Lessor’s entry but which may result in reasonable constraints on Lessor’s right of entry to facilities consistent with commercially reasonable constraints on third party access to secure data/telecommunications center facilities). Notwithstanding the foregoing, Lessee may designate one or more areas as a secure area based on the sensitive nature of the activities conducted in such portion of the Premises, and Lessor shall have no right of access thereto without being accompanied by Lessee’s designated representative except in the case of emergencies. Any persons desiring to enter the Premises by, through or on behalf of Lessor may be required to execute a commercially reasonable nondisclosure agreement.

32. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises without Lessor’s prior written consent. Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to permit an auction.

33. SIGNS. At Lessee;s sole cost, Lessee may install, replace, relocate and maintain and repair in and on the Building, such signs, awnings, lighting effects and fixtures as may be used from time to time by Lessee (collectively, “Signs”). At Lessee’s sole cost and without liability to Lessor, Lessor agrees to cooperate with Lessee (including signing applications upon Lessee’s written request) in obtaining any necessary permits, variances and consents for Lessee’s Signs. All Signs of Lessee shall comply with Applicable Requirements. Lessee will remove all signage upon the termination or expiration of this Lease.

-48-

34. TERMINATION; MERGER. Unless specifically stated otherwise in writing by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all existing subtenancies. Lessor’s failure within ten (10) days following any such event to elect to the contrary by written notice to the holder of any such lesser interest, shall constitute lessor’s election to have such event constitute the termination of such interest.

35. CONSENTS. Except as otherwise provided herein, wherever in this Lease the consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheld or delayed. Lessor’s actual reasonable costs and expenses (including but not limited to architects’, attorneys’, engineers’ and other consultants’ fees) incurred in the consideration of, or response to, a request by Lessee for any Lessor consent, including but not limited to consents to an assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentation therefor. Lessor’s consent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated in writing by Lessor at the time of such consent. The failure to specify herein any particular condition to Lessor’s consent shall not preclude the imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. In the event that either Party disagrees with any determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall furnish its reasons in writing and in reasonable detail within ten (10) business days following such request.

36. INTENTIONALLY OMITTED.

37. QUIET POSSESSION. Subject to payment by Lessee of the Rent and performance of all of the covenants, conditions and provisions on Lessee’s part to be observed and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term hereof.

38. WAIVER OF LESSOR’S LIEN. Lessor hereby subordinates any right it may have during the Term of this Lease to distrain Excluded Property, inventory and other personal property of Lessee and any Lessor’s lien or similar lien it may have upon such Excluded Property, inventory and any other personal property of Lessee regardless of whether such lien is created by statute or otherwise to the interests of any lender to whom Lessee has granted or in the future grants a security interest in any such item. In addition, subject to the provisions of this Paragraph 38, Lessor hereby waives any claim it may have on any property located in the Premises that is leased by Lessee or owned or leased by any sublessee or customer of Lessee. At the request of Lessee, Lessor shall execute such waivers and/or such subordination agreements evidencing, subject to the provisions of this Paragraph 38, such waiver and/or such subordination for the benefit of such sublessees, customers and/or holders of security interests in or lessors of any Excluded Property, inventory or any other personal property of Lessee and/or of its sublessees and/or customers. Lessor agrees to acknowledge (in a written form reasonably satisfactory to Lessor) to such persons and entities at such times and for such purposes as Lessee

-49-

may reasonably request that Excluded Property owned by Lessee are Lessee’s property and not part of the Building (regardless of whether or to what extent trade fixtures and/or other personal property are affixed to the Building) or otherwise subject to the terms of this Lease. Subject to compliance with Lessee’s reasonable requirements regarding maintaing and providing evidence of insurance and an agreement to reimburse Lessor for any damage cased during any enty on the Premises Lessor shall permit all such sublessees, customers, equipment lessors and holders of such security interests to have access to and be able to remove from the Premises such property in which they have an interest, so long as such parties reasonably compensate Lessor for the period of time they occupy the Premises and the duration of occupancy does not extend beyond sixty (60) days following Lessee’s right to occupy the Premises; provided, however, that in the event any such sublessees, customers, equipment lessors and holders of such security interests fail to remove their property within sixty (60) days following the expiration or earlier termination of this Lease, all such persons and entities shall be deemed to have abandoned such property. Lessor and Lessee acknowledge that the Collateral Access Agreement by and among Digital CentrePort, L.P., SAVVIS Communications Corporation, and Wells Fargo Foothill, Inc., dated as of June 30, 2006 (“Collateral Access Agreement”) shall govern as among the parties thereto in the event of any inconsistency between this Section 38 and the Collateral Access Agreement.

39. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties.

40. RESERVATIONS. Neither Lessor nor Lessee may grant or reserve easements or join in the grant of any easements (including, without limitation, access and/or reciprocal easements affecting the Premises and neighboring projects), rights and dedications without the prior written consent of the requesting party which consent shall not be unreasonably, withheld, delayed or conditioned.

41. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment “under protest” and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay.

42. AUTHORITY. If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. Each Party shall, within thirty (30) days after request, deliver to the other party satisfactory evidence of such authority.

-50-

43. INTENTIONALLY OMITTED.

44. OFFER. Preparation of this Lease by either Party or their agent and submission of same to the other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended to be binding until executed and delivered by all Parties hereto.

45. AMENDMENTS. This Lease may be modified only in writing, signed by the Parties in interest at the time of the modification. As long as they do not materially change Lessee’s obligations hereunder, Lessee agrees to make such reasonable non-monetary modifications to this Lease as may be reasonably required by a Lender in connection with the obtaining of normal financing or refinancing of the Premises.

46. MULTIPLE PARTIES. If more than one person or entity is named herein as either Lessor or Lessee, such multiple Parties shall have joint and several responsibility to comply with the terms of this Lease.

47. YAHOO SUBLEASE. If, for any reason, the Yahoo Sublease does not automatically terminate concurrently with a termination of this Lease, Lessee shall indemnify, protect, defend and hold harmless the Lessor and its agents, employees, officers, directors, members, partners, property managers and Lessor’s Lender and all of their respective successor and assigns, from and against any and all claims, loss of rents and/or damages, liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or liabilities arising out of, involving, or in connection with, the failure of the Yahoo Sublease to terminate as of the date that this Lease terminates. If any action or proceeding is brought against Lessor by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessee’s expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be defended or indemnified. The provisions of this Paragraph 49 shall survive the expiration or earlier termination of this Lease

48. UNAVOIDABLE DELAYS. Except for the payment of Rent, if the performance of either party of any act required herein, including, without limitation, the design, planning, permitting, construction and completion of the Tenant Improvements, is prevented or delayed by reason of strikes, lockouts, labor disputes, governmental delays, acts of God, fire, floods, epidemics, freight embargoes, unavailability of materials and supplies, development moratoriums imposed by any governmental authority, or other causes beyond the reasonable control of such party, such party shall be excused from performing that obligation for the period equal to the period of prevention or delay.

49. [RESERVED]

50. FINANCIAL INFORMATION. So long as Lessee is a wholly owned subsidiary of SAVVIS, Inc. a Delaware corporation (“Parent”), Lessee shall submit to Lessor, either in print or in electronic form, promptly upon request, annual financial statements for Parent, incorporating the operations of Lessee audited by an independent certified public accountant, prepared in accordance with generally accepted accounting principles consistently applied; provided however, in the event that Lessee and/or Parent are publicly listed companies with Lessee being a wholly owned subsidiary of Parent if Parent is a publicly held company and Lessee is not a publicly held company and either Lessee if it is a publicly held company or Parent if it is a publicly held company and wholly owns Lessee, and in either case is required to

-51-

file quarterly and annual statements with the SEC, then Lessee shall submit to Lessor (or direct them to where such statements may be obtained), when filed with the SEC, copies of Lessee’s and Parent’s, as the case may be, forms 10Q and 10K in lieu of other financial statements; provided further, however, if Lessee is itself not a publicly listed company but Parent is a publicly listed company and Lessee’s and Parent’s financial statements are prepared on a consolidated basis, then delivery of Parent’s financial statements shall be deemed to satisfy the foregoing obligation of Lessee to deliver its financial statements. Notwithstanding the foregoing, neither Lessee nor Parent shall be required to submit any such forms or financial statements otherwise required to be delivered pursuant to this Paragraph 50 if, on or before the applicable delivery date, such financial statements are available on EDGAR. Notwithstanding the foregoing, if Lessee is not itself a publicly held company or is a wholly owned subsidiary of Parent but Parent is not a publicly listed company, then Lessee shall furnish Lessor with true and complete copies of (i) Lessee’s most recent audited annual financial statements within 90 days of the end of each of Lessee’s fiscal years, (ii) Lessee’s most recent unaudited quarterly financial statements within 45 days of the end of each of Lessee’s first three fiscal quarters of each of Lessee’s fiscal years, all of which shall be treated by Lessor as confidential information belonging to Lessee, and (iii) any other financial information or summaries that Lessee typically provides to its lenders or shareholders and Lessor hereby agrees to maintain such non-public financial information as proprietary and confidential and agrees not to disclose any such information, other than as may be required by Applicable Requirements, to any third party, other than Lessor’s lenders, any prospective purchaser of the Premises or investor in Lessor or the Premises, or to Lessor’s attorneys, accountants, and similar business advisor(s); provided, however, any such disclosure of financial information to any of the foregoing parties may only be made subject to disclosure restrictions that are at least as restrictive as the provisions set forth in this Paragraph 50.

51. INTERPRETATION. Neither party hereto nor their respective attorneys shall be deemed the drafter of this Lease for purposes of interpreting or construing any of the provisions of this Lease in any judicial proceeding which may hereafter arise between the parties or their respective assigns or successors-in-interest. No prior drafts of this Lease shall be used in interpreting or construing this Lease. This Lease shall be interpreted in accordance with the fair meaning thereof, and not strictly for or against any party hereto. Lessee acknowledges that it has read this Lease in its entirety and has had the opportunity to freely negotiate any or all of the terms hereof before executing the same. This Lease shall, unless otherwise specified herein, be subject to the following rules of interpretation: (a) the singular includes the plural and the plural the singular; (b) words importing any gender include the other genders; (c) references to persons or entities include their permitted successors and assigns; (d) words and terms which include a number of constituent parts, things or elements, shall be construed as referring separately to each constituent part, thing or element thereof, as well as to all of such constituent parts, things or elements as a whole; (e) references to statutes are to be construed as including all rules and regulations adopted pursuant to the statute referred to and all statutory provisions consolidating, amending or replacing the statute referred to; (f) references to Leases and other contractual instruments shall be deemed to include all subsequent amendments thereto or changes therein entered into in accordance with their respective terms; (g) the words “approve” or “consent” or “agree” or derivations of said words or words of similar import mean, unless otherwise expressly provided herein or therein, the prior approval, consent, or agreement in writing of the person holding the right to approve, consent or agree with respect to the matter in question, and the

-52-

words “require” or “judgment” or “satisfy” or derivations of said words or words of similar import mean the requirement, judgment or satisfaction of the person who may make a requirement or exercise judgment or who must be satisfied, which approval, consent, agreement, requirement, judgment or satisfaction shall, unless otherwise expressly provided herein or therein, be in the reasonable discretion of the person holding the right to approve, consent or agree or who may make a requirement or judgment or who must be satisfied; (h) the words “include” or “including” or words of similar import shall be deemed to be followed by the words “without limitation”; (i) the words “hereto” or “hereby” or “herein” or “hereof” or “hereunder,” or words of similar import, refer to this Lease in its entirety; (j) references to sections, articles, paragraphs or clauses are to the sections, articles, paragraphs or clauses of this Lease; and (k) numberings and headings of sections, articles, paragraphs and clauses are inserted as a matter of convenience only and shall not affect the construction of this Lease.

52. ACQUISITION OF ADJACENT PARCEL. Provided this Lease is then in full force and effect and no event of Default by Lessee is in existence either on the date of delivery of Lessee’s Land Notice (as hereinafter defined) or, unless waived in writing by Lessor for the purpose of the Right of First Offer for Build to Suit (as hereinafter defined), thereafter, and provided further that, as demonstrated by current financial statements furnished by Lessee to Lessor, there has been no material adverse change in the financial condition of Lessee since the Commencement Date, if Lessor enters into a purchase and sale agreement to acquire or acquires the adjacent 8.12 acres of land as shown on Exhibit C attached hereto, as vacant developable land (as distinct from land containing facilities or buildings constructed thereon) (“Adjacent Developable Land”), Lessor will offer Lessee the opportunity to negotiate a build to suit lease with Lessor for construction of a building solely for use by Lessee on such tract (“Right of First Offer for Build to Suit”). The rights granted to Lessee in this Paragraph 55 are personal to Lessee and may not be assigned or transferred by Lessee to a third party. The Right of First Offer for Build to Suit is exercisable at the following times and upon the following conditions:

(a). If, at any time during the Term, Lessor enters into a purchase and sale agreement to acquire or acquires the Adjacent Developable Land as vacant developable land, Lessor shall provide written notice thereof to Lessee (“Lessor’s Land Notice”) and shall include in Lessor’s Land Notice an offer to Lessee to lease the Adjacent Developable Land pursuant to a build to suit lease generally upon the terms and conditions stated in Lessor’s Land Notice and such other terms and conditions as may be agreed upon in the New Lease (as hereinafter defined). Lessee shall have a period of seven (7) days after the date of delivery of Lessor’s Land Notice to notify Lessor (“Lessee’s Land Notice”) whether Lessee elects to exercise the right granted hereby to lease the Adjacent Developable Land pursuant to a build to suit. If Lessee elects not to give or fails to give Lessee’s Land Notice to Lessor within the required seven (7) day period, Lessee shall be deemed to have forever waived its right to lease the Adjacent Developable Land pursuant to this Paragraph.

(b). If Lessee fails or elects not to exercise the right to lease the Adjacent Developable Land, Lessor shall have the right to lease or sell all or any portion of said Adjacent Developable Land to any prospective lessee or buyer on such terms and provisions as may be acceptable to Lessor, and Lessee shall have no further Right of First Offer for Build to Suit.

-53-

(c). If Lessor and Lessee have not entered into a built to suit lease agreement (“New Lease”) for the Adjacent Developable Land consistent with the terms set forth in Lessor’s Land Notice and with other terms and conditions acceptable to each of them in their respective sole discretion, within fifteen (15) days following Lessor’s receipt of the Lessee’s Land Notice, Lessee shall be deemed to have irrevocably and forever waived Lessee’s right to lease the Adjacent Developable Land pursuant to the provisions of this Paragraph 55 in which case (i) Lessee shall have no further rights under this Paragraph 55, and (ii) Lessor shall have the right to lease or sell the Adjacent Developable Land to any third party on any terms and conditions acceptable to Lessor or, if Lessor so elects, not acquire the Adjacent Developable Land.

(d). If, for any reason (even if Lessor has delivered a Lessor’s Land Notice and the Parties have negotiated the New Lease), Lessor does not acquire the Adjacent Developable Land, Lessor has no liability to Lessee and the provisions of this Paragraph 55 and the New Lease shall have no force or effect.

53. State or Local Law Provisions. The State/Local Law Provisions, if any, attached hereto as Exhibit “D” are modifications to the terms of this Lease and, if conflicting, such State/Local Law Provisions shall control in the event of any conflict with the other provisions of this Lease or any exhibits hereto.

54. Entire Agreement. This Lease, including the Background and Exhibits attached hereto, constitutes the entire agreement between Lessor and Lessee pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, letters of intent, negotiations and discussions, whether oral or written, of the Parties, and there are no warranties, representations or other agreements, express or implied, made to either Party by the other Party in connection with the subject matter hereof except as specifically set forth herein.

-54-

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.

The parties hereto have executed this Lease at the place and on the dates specified above their respective signatures.

[The remainder of this page has intentionally been left blank. Signature pages follow.]

-55-

LESSOR:
DIGITAL CENTREPORT, L.P.,
a Texas limited partnership
By:	DRT CENTREPORT, LLC, a Delaware limited liability company, Its general partner
	By:	NATIONAL SAFE HARBOR EXCHANGES, a California corporation, Its sole member
		By:	/s/ Lori Church
		Its:	Vice President

-56-

LESSEE:
SAVVIS COMMUNICATIONS CORPORATION, a Missouri corporation
By:	/s/ Howard Shartel
Name:	Howard Shartel
Its:	VP- Procurement and Property

-57-

EXHIBIT A-1

Being a 11.47 acre tract of land situated in the James J. Goodman Survey, Abstract No. 583, Tarrant County, Texas and being all of Lot 1, Block 314A, Area 3, Section 4, Centreport, an addition to the City of Fort Worth, Texas as recorded in Cabinet A, Slide 11171, Plat Records Tarrant County, Texas, and being more particularly described as follows:

BEGINNING at a 1/2” iron rod found for comer at the intersection of the east right-of way line of Cambridge Road (a 60 foot right-of way) and the southerly right-of-way line of Kingsport Road (a 60 foot right-of way), for the POINT OF BEGINNING;

THENCE South 89 deg. 48 min. 20 sec. East, following along said south right-of-way line a distance of 50.08 feet to a 1/2” iron rod found for corner, said point being, the beginning of a tangent curve to the right having a radius of 482.58 feet, a delta angle of 49 deg. 05 min. 33 sec., and a long chord which bears South 65 deg. 15 min. 33 sec. East, 400.95 feet;

THENCE southeasterly, along said curve to the right, and said south right-of line, an arc distance of 413.49 feet to a 1/2” iron rod found for corner;

THENCE South 40 deg. 42 min. 47 sec. East, continuing along said south right-of-way line, a distance of 383.51 feet to a 1/2” iron rod found for corner;

THENCE South 49 deg. 17 min. 14 sec. West, leaving said south right-of-way line, a distance of 766.84 feet to a l/2” iron rod found for corner, said point being in the north right-of-way line of F.A.A. Boulevard (a 92 foot right-of-way);

THENCE North 40 deg. 42 min. 47 sec. West, following along said north right-of-way line, a distance of 370.13 feet to a 1/2” iron rod found for corner, said point being, the beginning of a tangent curve to the left having a radius of 2246.22 feet, a delta angle of 4 deg. 55 min. 59 sec., and a long chord which bears North 43 deg. 10 min. 46 sec. West, 193.33 feet;

THENCE northwesterly along said curve to the left and said north right-of way line, an arc distance of 193.39 feet to a 1/2” iron rod found for corner, said point being the beginning of a tangent curve to the right having a radius of 20.00 feet, a delta angle of 88 deg. 44 min. 08 sec., and a long chord which bears North 01 deg. 16 min. 41 sec. West, 27.97 feet;

THENCE northwesterly, leaving said north right-of way line, following along said curve to the right, an arc distance of 30.97 feet to a 1/2” iron rod found for corner, said point being in the easterly right-of-way line of said Cambridge Road;

THENCE North 43 deg. 05 min. 23 sec. East, following along the easterly right-of-way line of said Cambridge Road, a distance of 187.76 feet to a 1/2” iron rod found for corner, said point being the beginning of a tangent curve to the left having a radius of 530.06 feet, a delta angle of 42 deg. 03 min. 41 sec., and a long chord which bears North 22 deg. 03 min. 33 sec. East, 380.44 feet;

A-1-1

THENCE northeasterly along said curve to the left and the easterly right-of-way line of said Cambridge Road, an arc distance of 389.12 feet to a 1/2” iron rod found for corner, said point being the beginning of a tangent curve to the right, having a radius of 20.00 feet, a delta angle of 89 deg. 09 min. 58 sec., and a long chord which bears North 45 deg. 36 min. 41 sec. East, 28.08 feet;

THENCE northeasterly along said curve to the right, leaving said east right-of-way line, an arc distance of 31.12 feet to a 1/2” iron rod found for corner, to the POINT OF BEGINNING and CONTAINING 499,307 square feet, 11.47 acres of land, more or less.

A-1-2

EXHIBIT A-2

A-2-1

EXHIBIT B

WORK LETTER

THIS WORK LETTER dated                 ,             (this “Work Letter”) is made and entered into by and between                     , a                     (“Lessor”), and                     , a                      corporation (“Tenant”), and is attached to and made a part of the Lease dated                 ,             (the “Lease”), by and between Lessor and Tenant. Any initially capitalized terms used but not defined herein shall have the meanings given them in the Lease.

General Requirements.

Lessee’s Authorized Representative. Lessee designates                          and                         (either such individual acting alone, “Lessee’s Representative”) as the only persons authorized to act for Lessee pursuant to this Work Letter. Lessor shall not be obligated to respond to or act upon any request, approval, inquiry or other communication (“Communication”) from or on behalf of Lessee in connection with this Work Letter unless such Communication is in writing from Lessee’s Representative. Lessee may change either Lessee’s Representative at any time upon not less than 5 business days advance written notice to Lessor. Neither Lessee nor Lessee’s Representative shall be authorized to direct Lessor’s contractors in the performance of Lessor’s Work (as hereinafter defined).

Lessor’s Authorized Representative. Lessor designates                          and                     (either such individual acting alone, “Lessor’s Representative”) as the only persons authorized to act for Lessor pursuant to this Work Letter. Lessee shall not be obligated to respond to or act upon any request, approval, inquiry or other Communication from or on behalf of Lessor in connection with this Work Letter unless such Communication is in writing from Lessor’s Representative. Lessor may change either Lessor’s Representative at any time upon not less than 5 business days advance written notice to Lessee. Lessor’s Representative shall be the sole persons authorized to direct Lessor’s contractors in the performance of Lessor’s Work.

Architects, Consultants and Contractors. Lessor and Lessee hereby acknowledge and agree that: the architect (the “TI Architect”) and general contractor and any subcontractors for the Tenant Improvements shall be selected by Lessee, subject to Lessor’s approval, which approval shall not be unreasonably withheld, conditioned or delayed.

Tenant Improvements.

Tenant Improvements Defined. As used herein, “Tenant Improvements” shall mean all improvements to Building 2 of a fixed and permanent nature as shown on the TI Construction Drawings, as defined in Paragraph2(c) below. Lessor shall not have any obligation whatsoever with respect to the finishing of the Building 2 for Lessee’s use and occupancy.

Lessee’s Space Plans. Lessee shall deliver to Lessor and the TI Architect schematic drawings and outline specifications (the “TI Design Drawings”) detailing Lessee’s requirements for the Tenant Improvements. Lessor shall deliver to Lessee the written objections, questions or

B-1

comments of Lessor and the TI Architect with regard to the TI Design Drawings. Lessee shall cause the TI Design Drawings to be revised to address such written comments and shall resubmit said drawings to Lessor. Such process shall continue until Lessor has approved the TI Design Drawings.

Working Drawings. Lessee shall cause the TI Architect to prepare and deliver to Lessor for review and comment construction plans, specifications and drawings for the Tenant Improvements (“TI Construction Drawings”), which TI Construction Drawings shall be prepared substantially in accordance with the TI Design Drawings. Lessee shall be solely responsible for ensuring that the TI Construction Drawings reflect Lessee’s requirements for the Tenant Improvements. Lessor shall deliver its written comments on the TI Construction Drawings to Lessee; provided, however, that Lessor may not disapprove any matter that is consistent with the TI Design Drawings without submitting a Change Request. Lessee and the TI Architect shall consider all such comments in good faith and shall notify Lessor how Lessee proposes to respond to such comments, but Lessor’s review rights pursuant to the foregoing sentence shall not delay the design or construction schedule for the Tenant Improvements. Any disputes in connection with such comments shall be resolved in accordance with Paragraph 2(d) hereof. Provided that the design reflected in the TI Construction Drawings is consistent with the TI Design Drawings, Lessor shall approve the TI Construction Drawings submitted by Lessee, unless Lessee submits a Change Request. Once approved by Lessor, subject to the provisions of Paragraph 4 below, Lessee shall not materially modify the TI Construction Drawings except as may be reasonably required in connection with the issuance of the TI Permit (as defined in Paragraph 3 (b) below).

Approval and Completion. Upon any dispute regarding the design of the Tenant Improvements, which is not settled within 15 business days after notice of such dispute is delivered by one party to the other, Lessor may make the final decision regarding the design of the Tenant Improvements. Any changes to the TI Construction Drawings shall be processed as provided in Paragraph4 hereof.

Performance of Lessee’s Work.

Definition of Lessee’s Work. As used herein, “Lessee’s Work” shall mean the work of constructing the Tenant Improvements. Lessee acknowledges and agrees that the Tenant Improvements and the Budget (as hereinafter defined) are subject to Lessor’s written approval which shall not be unreasonably withheld, delayed or conditioned. Notwithstanding anything to the contrary contained herein or in the Lease, if Lessor does not provide any of the funding for the Tenant Improvements, Lessor shall be entitled to receive a copy of the Budget but Lessor shall not have the right to approve the Budget.

Commencement and Permitting. Lessee shall commence construction of the Tenant Improvements upon obtaining a building permit (the “TI Permit”) authorizing the construction of the Tenant Improvements consistent with the TI Construction Drawings approved by Lessee. Lessee shall assist Lessor in obtaining the TI Permit. If any governmental authority having jurisdiction over the construction of Lessee’s Work or any portion thereof shall impose terms or conditions upon the construction thereof that: (ii) increase the cost of constructing Lessee’s Work, or (iii) will materially delay the construction of Lessee’s Work, Lessor and Lessee shall

B-2

reasonably and in good faith seek means by which to mitigate or eliminate any such adverse terms and conditions.

Completion of Lessor’s Work. Lessee shall substantially complete or cause to be substantially completed Lessor’s Work in a good and workmanlike manner, in accordance with the TI Permit subject, in each case, to Minor Variations and normal “punch list” items of a non-material nature that do not interfere with the use of Building 2 (“Substantial Completion” or “Substantially Complete”). Upon Substantial Completion of Lessee’s Work, Lessee shall require the TI Architect and the general contractor to execute and deliver, for the benefit of Lessee and Lessor, a Certificate of Substantial Completion in the form of the American Institute of Architects (“AIA”) document G704. For purposes of this Work Letter, “Minor Variations” shall mean any modifications reasonably required: (i) to comply with all applicable legal requirements and/or to obtain or to comply with any required permit (including the TI Permit); (ii) to comply with any request by Lessee for modifications to Lessee’s Work; (iii) to comport with good design, engineering, and construction practices that are not material; or (iv) to make reasonable adjustments for field deviations or conditions encountered during the construction of Lessee’s Work.

Selection of Materials. Where more than one type of material or structure is indicated on the TI Construction Drawings approved by Lessor and Lessee, the option will be selected at Lessee’s sole and absolute subjective discretion. As to all building materials and equipment that Lessee is obligated to supply under this Work Letter, Lessee shall select the manufacturer thereof in its sole and absolute subjective discretion.

Lessee and Lessor shall be entitled to receive the benefit of all construction warranties and manufacturer’s equipment warranties relating to equipment installed in the Premises.

Changes. Any changes requested by Lessee to the Tenant Improvements after the delivery and approval by Lessor of the TI Design Drawings shall be requested and instituted in accordance with the provisions of this Paragraph 4 and shall be subject to the written approval of Lessor and the TI Architect, such approval not to be unreasonably withheld, conditioned or delayed.

Lessee’s Request For Changes. If Lessee shall request changes to the Tenant Improvements (“Changes”), Lessee shall request such Changes by notifying Lessor in writing in substantially the same form as the AIA standard change order form (a “Change Request”), which Change Request shall detail the nature and extent of any such Change. Such Change Request must be signed by Lessee’s Representative. Lessor shall not unreasonably withhold, delay or condition its consent to such change provided, however, Lessor may reject such change if the net effect of such change would increase the Budget for the Tenant Improvements.

Costs.

Budget For Tenant Improvements. Before the commencement of construction of the Tenant Improvements, Lessor shall obtain a detailed breakdown by trade of the costs incurred or that will be incurred in connection with the design and construction of the Tenant Improvements (the “Budget”). The Budget shall be based upon the TI Construction Drawings approved by

B-3

Lessee and shall include a payment to Lessor of administrative rent (“Administrative Rent”) equal to [***] of the TI Costs (as hereinafter defined) for monitoring and inspecting the construction of the Tenant Improvements and Changes.

Costs Includable in TI Costs. All of the costs in connection with the Tenant Improvements including, without limitation, design, permits and construction costs in connection with the construction of the Tenant Improvements, including, without limitation, the cost of electrical power and other utilities used in connection with the construction of the Tenant Improvements, the cost of preparing the TI Design Drawings and the TI Construction Drawings, all costs set forth in the Budget, including Lessor’s Administrative Rent, Lessor’s out-of-pocket expenses, costs resulting from Lessee Delays and the cost of Changes are collectively referred to as the “TI Costs”.

Lessee Responsibility. Lessee acknowledges and agrees that Lessee shall repay to Lessor the full amount of the TI Costs as provided for in Paragraph 7.5 of the Lease as Building 2 Additional Annual Rent if and only to the extent Lessor provides the financing for such Tenant’s Improvements. Lessee further acknowledges and agrees that Lessor shall have no obligation to bear any portion of the cost of any of the Tenant Improvements unless the same shall be repaid to Lessor as provided for in Paragraph 7.5 of the Lease as Building 2 Additional Annual Rent.

Payment for TI Costs. If Lessor is providing financing for the Tenant Improvements, during the course of design and construction of the Tenant Improvements, Lessor shall pay TI Costs once a month against a draw request in Lessor’s standard form, containing such certifications, lien waivers (including a conditional lien release for each progress payment and unconditional lien releases for the prior month’s progress payments), inspection reports and other matters as Lessor customarily obtains, to the extent of Lessor’s approval thereof for payment, no later than 30 days following receipt of such draw request. Upon completion of the Tenant Improvements (and prior to any final disbursement), Lessee shall deliver to Lessor: (i) sworn statements setting forth the names of all contractors and first tier subcontractors who did the work and final, unconditional lien waivers from all such contractors and first tier subcontractors; (ii) as-built plans (one copy in print format and two copies in electronic CAD format) for such Tenant Improvements; (iii) a certification of substantial completion in Form AIA G704, (iv) a certificate of occupancy for Building 2, and (v) copies of all operation and maintenance manuals and warranties affecting Building 2.

[***] The asterisks denote that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

B-4

Miscellaneous.

Consents. Whenever consent or approval of either party is required under this Work Letter, that party shall not unreasonably withhold, condition or delay such consent or approval, unless expressly set forth herein to the contrary.

Modification. No modification, waiver or amendment of this Work Letter or of any of its conditions or provisions shall be binding upon Lessor or Lessee unless in writing signed by Lessor and Lessee.

B-5

IN WITNESS WHEREOF, Lessor and Lessee have executed this Work Letter to be effective on the date first above written.

LESSEE:

SAVVIS COMMUNICATIONS CORPORATION,

a Missouri corporation

By:

Name:

Its:

LESSOR:
DIGITAL CENTREPORT, L.P., a Texas limited partnership
By:	DRT CENTREPORT, LLC, a Delaware limited liability company, Its general partner
	By:	NATIONAL SAFE HARBOR EXCHANGES, a California corporation, Its sole member
		By:
		Its:

B-6

EXHIBIT C

LEGAL DESCRIPTION

Being a 8.12 acre tract of land situated in the James J Goodman Survey, Abstract No. 583, Tarrant County, Texas and being a portion of that certain parcel conveyed to Centerport Ventures. Inc., Centreport Properties, Inc. by the Plat recorded in Cabinet A, Slide 11171, Plat Records, Tarrant County, Texas, and being more particularly described as follows:

BEGINNING at a point, at the northeast corner of Lot 1, Block 314A, Area 3, Section 4, Centreport Addition, as recorded in Cabinet A, Slide 11171, Plat Records, Tarrant County, Texas, and the southerly right-of-way line of Kingsport Road (a 60 foot R.O.W.) for the POINT OF BEGINNING;

THENCE South 40°42’47” East, along the said southerly right-of-way line, a distance of 438.97 feet to a point for the beginning of a non-tangent curve to the right having a radius of 20.00 feet and a central angle of 86°13’49”, and a long chord which bears South 02°23’46” West, 27.34 feet;

THENCE along said curve to the right an arc distance of 30.10 feet to a point, in the westerly right-of-way line of Diplomacy Road (60 foot R.O.W.), for the beginning of a curve to the right having a radius of 1405.00 feet and a central angle of 3°46’55” and a long chord which bears south 47°33’50” West, 92.72 feet;

THENCE along said curve to the right an arc distance of 92.74 feet to a point;

THENCE South 49°15’48” West, continuing along said westerly right-of-way a distance of 635.47 feet to a point, for the beginning of a curve to the right having a radius of 20.00 feet and a central angle of 90°00’57” and a long chord which bears North 85°43’15” West, 28.29 feet;

THENCE along said curve to the right an arc distance of 31.42 feet to a point, in the northerly right-of-way line of F.A.A. Boulevard (a 92 foot R.O.W.);

THENCE North 40°42’47” West, along said northerly right-of-way line a distance of 441.98 feet to a point, at the southeasterly corner of said Lot 1, Block 314A, Area 3, Section 4, Centreport Addition;

THENCE North 49°17’14” East, along the said easterly line, a distance of 766.84 feet to a point for the POINT OF BEGINNING and CONTAINING 353,847 square feet, 8.12 acres of land more or less.

C-1

EXHIBIT D

State/Local Law Provisions

(1) Computation Methods. Lessor and Lessee are knowledgeable and experienced in commercial transactions and agree that the provisions of this Lease for determining charges, amounts and additional rent payable by Lessee are commercially reasonable and valid even though such methods may not state a precise mathematical formula for determining such charges. ACCORDINGLY, LESSEE VOLUNTARILY AND KNOWINGLY WAIVES ALL RIGHTS AND BENEFITS OF LESSEE UNDER SECTION 93.012 OF THE TEXAS PROPERTY CODE, AS SUCH SECTION NOW EXISTS OR AS MAY BE HEREAFTER AMENDED OR SUCCEEDED.

(2) DTPA Waiver. LESSEE AGREES THAT LESSEE IS WAIVING LESSEE’S RIGHTS UNDER THE DECEPTIVE TRADE PRACTICESCONSUMER PROTECTION ACT, SECTION 17.41 ET SEQ. TEXAS BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. THIS WAIVER IS MADE AFTER CONSULTATION WITH AN ATTORNEY OF LESSEE’S OWN SELECTION AND LESSEE VOLUNTARILY CONSENTS TO THIS WAIVER. Lessee hereby represents and warrants to Lessor that (i) Lessee is not in a significantly disparate bargaining position in relation to Lessor, (ii) Lessee is represented by legal counsel of Lessee’s own choice and designation in connection with this Lease, and (iii) Lessee is leasing the Premises for business and commercial purposes and not for use as a residence.

(3) Waiver of Lien. LESSEE HEREBY WAIVES ANY STATUTORY RIGHTS OTHERWISE APPLICABLE UNDER SECTION 91.004(b) OF THE TEXAS PROPERTY CODE, AS SUCH SECTION NOW EXISTS OR AS SAME MAY BE HEREAFTER AMENDED OR SUCCEEDED; PROVIDED, HOWEVER, SUCH WAIVER SHALL NOT BE NOR SHALL IT BE DEEMED TO CONSTRUED TO MEAN THAT LESSEE HAS WAIVED IT RIGHT TO SEEK DAMAGES FROM LESSOR AND TO RECOVER SUCH DAMAGES BY LEVYING EXECUTION AGAINST LANDLORD’S INTEREST IN THE PREMISES AND/OR RENTS THEREFROM AFTER LESSEE HAS REDUCED ANY SUCH CLAIM FOR DAMAGES TO JUDGMENT.

D-1

EXHIBIT E

Critical Fixtures

[***]

[***] The asterisks denote that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

E-1

EXHIBIT F

Excluded Equipment

[***]

[***] The asterisks denote that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

F-1

EXHIBIT G

EXCLUDED INTANGIBLE PROPERTY

• Such items used solely for the conduct of Seller’s business, such as (but not limited to) trademarks, trade names and copyrights, and excluding any of the Intangible Property which is not transferable;

• Any Intangible Property not used in the operation of the building as a Data Center;

• Any Intangible Property relative to any Excluded Equipment; and

• Any intellectual property including patents, copyrights, trademarks, trade names and licenses, including, without limitation, rights to use software related to any of the foregoing, of Seller.

G-1

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Philip J. Koen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of SAVVIS, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting , or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent function):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 31, 2006	By:	/s/ Philip J. Koen
		Philip J. Koen
		Chief Executive Officer
		(principal executive officer)

42

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jeffrey H. Von Deylen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of SAVVIS, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting , or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent function):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 31, 2006	By:	/s/ Jeffrey H. Von Deylen
		Jeffrey H. Von Deylen
		Chief Financial Officer
		(principal financial officer and principal accounting officer)

43

EX-32.1

EXHIBIT 32.1

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to

to Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned, the Chief Executive Officer of SAVVIS, Inc. (the Company), hereby certifies that, to his knowledge on the date hereof:

(a) the quarterly report on Form 10-Q for the quarterly period ended June 30, 2006, filed on the date hereof with the Securities and Exchange Commission (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934: and

(b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 31, 2006	By:	/s/ Philip J. Koen
		Philip J. Koen
		Chief Executive Officer

44

EX-32.2

EXHIBIT 32.2

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to

to Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned, the Chief Financial Officer of SAVVIS, Inc. (the Company), hereby certifies that, to his knowledge on the date hereof:

(a) the quarterly report on Form 10-Q for the quarterly period ended June 30, 2006, filed on the date hereof with the Securities and Exchange Commission (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934: and

(b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 31, 2006	By:	/s/ Jeffrey H. Von Deylen
		Jeffrey H. Von Deylen
		Chief Financial Officer

45