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 September 30, 2010

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

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

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

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 – 56,117,002 shares as of October 29, 2010

The Exhibit Index begins on page 41.

SAVVIS, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements.		3
	Unaudited Condensed Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009.		3
	Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2010 and 2009.		4
	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2010 and 2009.		5
	Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the period December 31, 2009 to September 30, 2010.		6
	Notes to Unaudited Condensed Consolidated Financial Statements.		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.		39
Item 4.	Controls and Procedures.		40
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings.		40
Item 1A.	Risk Factors.		40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.		40
Item 3.	Defaults Upon Senior Securities.		40
Item 4.	(Removed and Reserved).		40
Item 5.	Other Information.		40
Item 6.	Exhibits.		41
SIGNATURES			42

2

PART I. FINANCIAL INFORMATION.

ITEM 1. FINANCIAL STATEMENTS.

SAVVIS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

	September 30, 2010			December 31, 2009
ASSETS
Current Assets:
Cash and cash equivalents	$	88,048		$	160,815
Trade accounts receivable, net of allowance of $8,331 and $8,133		74,130			45,754
Prepaid expenses and other current assets		34,407			21,217
Total Current Assets		196,585			227,786
Property and equipment, net		841,083			783,852
Goodwill		77,208			—
Intangible assets, net		20,864			404
Other non-current assets		23,156			12,716
Total Assets	$	1,158,896		$	1,024,758
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Payables and other trade accruals	$	64,849		$	52,710
Current portion of long-term debt and lease obligations		18,901			17,479
Other current accrued liabilities		74,399			68,314
Total Current Liabilities		158,149			138,503
Long-term debt, net of current portion		531,283			376,089
Capital and financing method lease obligations, net of current portion		216,429			223,897
Other non-current accrued liabilities		79,340			76,452
Total Liabilities		985,201			814,941
Stockholders’ Equity:
Common stock; $0.01 par value, 1,500,000 shares authorized; 55,881 and 54,337 shares issued and outstanding		558			545
Additional paid-in capital		871,795			862,834
Accumulated deficit		(685,441	)		(634,429	)
Accumulated other comprehensive loss		(13,217	)		(19,133	)
Total Stockholders’ Equity		173,695			209,817
Total Liabilities and Stockholders’ Equity	$	1,158,896		$	1,024,758

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

3

SAVVIS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
Revenue	$	241,901		$	213,211		$	680,244		$	654,595
Operating Expenses:
Cost of revenue (including non-cash equity-based compensation of $1,536, $1,473, $4,657, and $4,430, respectively) (1)		131,597			117,945			371,186			359,907
Sales, general and administrative expenses (including non-cash equity-based compensation of $3,899, $7,003, $15,776, and $18,722, respectively) (1)		56,500			52,551			165,096			152,704
Depreciation, amortization and accretion		50,335			38,201			133,513			112,335
Total Operating Expenses		238,432			208,697			669,795			624,946
Income from Continuing Operations		3,469			4,514			10,449			29,649
Loss on debt extinguishment		8,735			—			8,735			—
Other (income) and expense		21,845			13,887			52,935			43,268
Loss from Continuing Operations before Income Taxes		(27,111	)		(9,373	)		(51,221	)		(13,619	)
Income tax (benefit) expense		(886	)		557			(307	)		1,868
Loss from Continuing Operations, net of Income Taxes		(26,225	)		(9,930	)		(50,914	)		(15,487	)
Loss from discontinued operations, net of income taxes		(9	)		—			(98	)		—
Net Loss	$	(26,234	)	$	(9,930	)	$	(51,012	)	$	(15,487	)
Loss per Share from Continuing Operations
Basic loss per share	$	(0.47	)	$	(0.18	)	$	(0.92	)	$	(0.29	)
Diluted loss per share	$	(0.47	)	$	(0.18	)	$	(0.92	)	$	(0.29	)
Weighted-Average Common Shares Outstanding
Basic		55,282			53,960			55,453			53,724
Diluted		55,282			53,960			55,453			53,724

(1) Excludes depreciation, amortization and accretion, which is reported separately.

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

4

SAVVIS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Nine Months Ended September 30,
	2010			2009
Cash Flows from Operating Activities:
Net loss	$	(51,012	)	$	(15,487	)
Loss from discontinued operations, net of income taxes		(98	)		—
Loss from continuing operations, net of income taxes		(50,914	)		(15,487	)
Reconciliation of net loss to net cash provided by operating activities:
Depreciation, amortization and accretion		133,513			112,335
Non-cash equity-based compensation		20,433			23,152
Accrued interest		3,617			6,280
Amortization of debt discount		9,386			10,628
Loss on debt extinguishment		7,535			—
Other, net		4,235			927
Net changes in operating assets and liabilities:
Trade accounts receivable, net		(23,082	)		5,472
Prepaid expenses and other current and non-current assets		(17,636	)		(565	)
Payables and other trade accruals		12,421			(5,275	)
Other accrued liabilities		6,456			(8,456	)
Net cash provided by continuing operations		105,964			129,011
Net cash provided by discontinued operations		351			—
Net cash provided by operating activities		106,315			129,011
Cash Flows from Investing Activities:
Payments for capital expenditures		(158,743	)		(75,804	)
Acquisition of Fusepoint, Inc., net of cash received		(112,790	)		—
Net cash used in investing activities		(271,533	)		(75,804	)
Cash Flows from Financing Activities:
Proceeds from long-term debt		643,500			2,865
Principal payments on long-term debt		(524,244	)		(4,950	)
Payments for debt extinguishment costs		(1,179	)		—
Payments for debt issuance costs		(12,740	)		—
Proceeds from stock option exercises		16,538			330
Payments for employee taxes on equity-based instruments		(3,097	)		(1,619	)
Principal payments under capital lease obligations		(19,298	)		(6,090	)
Other, net		(4,607	)		(1,462	)
Net cash provided by (used in) financing activities		94,873			(10,926	)
Effect of exchange rate changes on cash and cash equivalents		(2,422	)		(67	)
Net increase (decrease) in cash and cash equivalents		(72,767	)		42,214
Cash and cash equivalents, beginning of period		160,815			121,284
Cash and cash equivalents, end of period	$	88,048		$	163,498
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	35,084		$	25,642
Cash paid for income taxes	$	1,145		$	1,251

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

5

SAVVIS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands)

	Shares of Common Stock Outstanding		Common Stock		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance at December 31, 2009		54,337	$	545	$	862,834		$	(634,429	)	$	(19,133	)	$	209,817
Issuance of common stock		1,544		13		17,402			—			—			17,415
Payments for employee taxes on equity-based instruments		—		—		(3,097	)		—			—			(3,097	)
Recognition of equity-based compensation costs		—		—		19,693			—			—			19,693
Convertible notes settlement		—		—		(25,037	)		—			—			(25,037	)
Comprehensive loss
Net loss		—		—		—			(51,012	)		—			(51,012	)
Foreign currency translation adjustment		—		—		—			—			2,526			2,526
Change in derivatives		—		—		—			—			3,390			3,390
Net comprehensive loss		—		—		—			(51,012	)		5,916			(45,096	)
Balance at September 30, 2010		55,881	$	558	$	871,795		$	(685,441	)	$	(13,217	)	$	173,695

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

6

SAVVIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data and where indicated)

NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

SAVVIS, Inc. (the Company) provides information technology (IT) services including cloud services, managed hosting, managed security, colocation, professional services and network services through its global infrastructure to businesses and government agencies around the world.

These unaudited condensed consolidated financial statements have been prepared in accordance with United States (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, 2009. Such audited consolidated financial statements are included in the Company’s Annual Report on Form 10-K (the Annual Report) filed with the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes included in the Annual Report.

These unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation and, in the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Material subsequent events have been evaluated through the report issuance date and are disclosed in Note 20.

NOTE 2—RECENT ACCOUNTING PRONOUNCEMENTS

On January 1, 2010, the Company adopted new accounting guidance regarding disclosures about fair value measurements. The guidance amends existing disclosure criteria, requiring entities to disclose the amounts of significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers, the reasons for any transfers in or out of Level 3, and information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. The guidance also amends existing literature to clarify that an entity must provide fair value measurement disclosures for each major class of assets and liabilities. As this new guidance is disclosure only, adoption did not have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.

NOTE 3—ACQUISITION OF FUSEPOINT, INC.

On June 16, 2010, the Company completed its acquisition of Fusepoint, Inc. (Fusepoint), an independent provider of outsourced managed IT and infrastructure services to mid-market and larger enterprises in Canada. With the acquisition of Fusepoint, the Company obtained hosting assets in three data centers in Toronto, Vancouver and Montreal.

The Company acquired Fusepoint for $121.8 million in cash, after adjustment for estimated working capital and debt levels. At the closing, $12.5 million of the purchase price was placed in escrow for possible application against the working capital adjustment, certain tax liabilities, and indemnification claims that may be made in the first year following closing. The Company funded the acquisition through available cash on hand and an additional $110.0 million of debt through the utilization of increased borrowing capacity under the Company’s revolving credit facility, which was amended and upsized to $150.0 million. The acquisition has been accounted for using the acquisition method of accounting. Acquisition and integration related costs of $0.5 million and $4.0 million were included in the Company’s unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2010.

As of September 30, 2010, the Company had not finalized its valuation analysis, primarily due to final valuation of deferred tax positions. While the Company believes the final valuation will not differ materially from the information presented, such information is preliminary and subject to revision pending the finalization of the valuation. The Company expects to finalize the valuation and all acquisition accounting in 2010.

7

Allocation of Purchase Price

The following presents the purchase price for the acquisition of Fusepoint, which was subject to adjustment based upon the difference between the estimated net working capital and debt transferred on the date of closing and the actual amount of net working capital and debt transferred on the date of closing. The purchase price was finalized on August 26, 2010.

Aggregate cash purchase price for the acquisition	$	124,500
Working capital adjustment		(2,705	)
Purchase price	$	121,795

Of the $121.8 million purchase price, $110.0 million was funded through borrowings on the Company’s then existing revolving credit facility and the remaining $11.8 million through available cash on hand.

The following presents the preliminary purchase price allocation, including goodwill and intangible assets, based on the estimated fair values of the acquired assets and assumed liabilities of Fusepoint as of the date of acquisition, June 16, 2010.

Current assets	$	15,002
Property and equipment, net		23,729
Goodwill		76,878
Intangible assets		22,519
Other noncurrent assets		1,530
Current liabilities		(6,786	)
Capital lease obligations, net of current portion		(5,640	)
Other non-current liabilities		(5,437	)
Purchase price	$	121,795
Less cash assumed in acquisition		(9,005	)
Purchase price, net	$	112,790

The intangible assets acquired consisted of the customer relationships of Fusepoint assumed through the acquisition. The excess of the purchase price over net tangible and intangible assets acquired resulted in goodwill of $76.9 million, which represents the Company’s ability to implement operational synergies, the value of the expansion into new markets and the acquired workforce of Fusepoint. The goodwill is not expected to be deductible for U.S. income tax purposes. All assets acquired, including goodwill, are included in the Company’s hosting segment.

The unaudited condensed consolidated financial statements for the three months ended September 30, 2010 include $9.7 million and $0.9 million of revenue and net loss from continuing operations, respectively, and for the nine months ended September 30, 2010 include $11.2 million and $1.3 million of revenue and net loss from continuing operations, respectively, which reflect the operating results of Fusepoint since the date of acquisition. The following unaudited pro forma information presents a summary of the combined results of operations of the Company and of Fusepoint for the periods presented as if the acquisition had occurred on January 1, 2010 and January 1, 2009, along with certain pro forma adjustments. These pro forma adjustments give effect to the amortization of deferred financing costs and additional quarterly financing fees incurred by the Company with the assumption of additional debt to finance the acquisition and the removal of Fusepoint’s recognition of a deferred gain related to their sale-leaseback of property. The results of operations for Fusepoint’s application services business have been excluded from this unaudited pro forma information, as these assets were classified as held for sale on September 30, 2010. The following unaudited pro forma information has been prepared for comparative purposes only and is not necessarily indicative of the results of operations as they would have been had the acquisition occurred on the assumed date, nor is it necessarily an indication of future operating results.

	Three Months Ended						Nine Months Ended
	September 30, 2010			September 30, 2009			September 30, 2010			September 30, 2009
Revenue	$	241,901		$	226,653		$	698,451		$	668,037
Cost of revenue		131,597			123,625			380,303			365,587
Selling, general and administrative expenses		56,500			54,986			167,416			155,139
Income from continuing operations		3,469			14,177			23,023			39,312
Net loss from continuing operations		(26,225	)		(7,409	)		(48,332	)		(12,966	)

8

NOTE 4—DISCONTINUED OPERATIONS

On June 16, 2010, the Company acquired Fusepoint as described in Note 3. As a part of this transaction, the Company acquired Fusepoint’s applications services business (FAS), which the Company does not consider core to its future operations and has committed to a plan of sale. FAS, which is a part of the Company’s hosting segment, provides service from two locations, Montreal and Quebec City, both of which provide clients with the design, development, integration and maintenance of mission critical e-business applications. As the Company has committed to a plan of sale, this portion of the acquired business qualified for held for sale accounting treatment at September 30, 2010. No gains or losses on the fair value have been recorded on the Company’s financial statements, as FAS was recorded through acquisition accounting at its estimated fair value. The results of operations for FAS have been classified as discontinued operations in the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2010 and the unaudited condensed consolidated statement of cash flows for the nine months ended September 30, 2010.

The following table presents the operating results of FAS during the three and nine months ended September 30, 2010:

	Three Months Ended			Nine Months Ended
	September 30, 2010			September 30, 2010
Revenue	$	1,567		$	1,822
Cost of revenue		1,353			1,579
Sales, general and administrative		275			342
Loss from discontinued operations		(61	)		(99	)
Other (income) expense		(2	)		38
Loss before income taxes		(59	)		(137	)
Income tax (benefit) expense		(50	)		(39	)
Net loss from discontinued operations	$	(9	)	$	(98	)

The following table presents the assets and liabilities, which are recorded in each respective balance sheet category, of FAS as of September 30, 2010:

Assets
Current Assets:
Cash and cash equivalents	$	2,011
Trade accounts receivable, net		1,365
Prepaid expenses and other current assets		99
Total Current Assets		3,475
Property and equipment, net		12
Goodwill		744
Other non-current assets		436
Total Assets	$	4,667
Liabilities
Current Liabilities:
Payables and other trade accruals	$	10
Other accrued liabilities		255
Total Current Liabilities		265
Other accrued liabilities, non-current		222
Due to affiliate		3,863
Total Liabilities	$	4,350

9

NOTE 5—FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company has estimated the fair value of its financial instruments as of September 30, 2010 and December 31, 2009 using available market information or other appropriate valuation methods. Assets and liabilities are categorized as Level 1, Level 2, or Level 3, dependant on the reliability of the inputs used in the valuation. Level 1 is considered more reliable than Level 3, as Level 3 depends on management’s assumptions. The definitions of the levels are as follows:

• Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, directly or indirectly, such as a quoted price for similar assets or liabilities in active markets.

• Level 3: Inputs are unobservable and are only used to measure fair value when observable inputs are not available. The inputs reflect the entity’s own assumptions and are based on the best information available. This allows for the fair value of an asset or liability to be measured when no active market for that asset or liability exists.

The carrying amounts of cash and cash equivalents, trade accounts receivable, other current assets, payables and other trade accruals, and other current liabilities approximate fair value because of the short-term nature of such instruments. As of September 30, 2010 and December 31, 2009, substantially all of the Company’s $88.0 million and $160.8 million, respectively, of cash and cash equivalents were held in money market accounts, which are valued using Level 1 inputs. On August 4, 2010, the Company entered into a variable interest rate term loan agreement (the Term Loan) and a revolving facility agreement (the Revolver). The proceeds from the Term Loan were used to extinguish portions of its then existing long-term debt, including 98.4% of its convertible notes (the Notes), its revolving credit facility (the Credit Agreement), its loan agreement with Cisco Systems Capital Corporation (the Cisco Loan) and its loan agreement with Lombard North Central Plc (the Lombard Loan Agreement). The fair value of the Notes was estimated based on Level 1 inputs of the recent trading values, as provided by a third party. The Company is exposed to interest rate volatility with respect to the variable interest rates of its Term Loan and Revolver. The Term Loan and the Revolver bear interest at current market rates plus applicable margin. The variable interest rate of the Term Loan is subject to an interest rate cap, as described in Note 11. The fair values of the Term Loan, Revolver, Credit Agreement, Lombard Loan Agreement and Cisco Loan, none of which are traded on an active market, are estimated by considering the Company’s credit rating, current rates available to the Company for debt of the same remaining maturities, and the terms of the debt. The fair value of the interest rate swap associated with the Lombard Loan Agreement, the interest rate cap associated with the Term Loan and the Company’s foreign currency hedges are valued using Level 2 market value inputs as provided by a third party, adjusted for the Company’s credit risk.

The following table presents the carrying values and estimated fair values of the Company’s long-term debt and derivative instruments as of the dates indicated:

	September 30, 2010				December 31, 2009
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Interest rate cap	$	355	$	355	$	—	$	—
Foreign currency hedges		96		96		—		—
Liabilities:
Term loan	$	533,935	$	559,691	$	—	$	—
Convertible notes		2,848		3,075		305,921		310,069
Lombard loan agreement		—		—		55,973		60,881
Cisco loan agreement		—		—		20,795		20,667
Credit agreement		—		—		—		—
Revolver		—		—		—		—
Interest rate swap		—		—		3,177		3,177
Foreign currency hedges		—		—		116		116

10

NOTE 6—LOSS PER SHARE

The Company computes basic loss per common share by dividing net loss by the weighted-average number of common shares outstanding during the period, excluding unvested restricted stock awards subject to cancellation. Diluted loss per common share is computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares represent the incremental common shares issuable for stock option and restricted preferred unit exercises, unvested restricted stock units and restricted stock awards that are subject to repurchase or cancellation, and conversion of debt securities. The Company calculates the dilutive effect of outstanding stock options, restricted preferred units, restricted stock units, and restricted stock awards on earnings per share by application of the treasury stock method. The dilutive effect from convertible securities is calculated by application of the if-converted method. The Company had no dilutive securities for the three and nine months ended September 30, 2010 and 2009.

The following tables set forth the computation of basic and diluted loss per common share:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
Loss from continuing operations, net of income taxes	$	(26,225	)	$	(9,930	)	$	(50,914	)	$	(15,487	)
Loss from discontinued operations, net of income taxes		(9	)		—			(98	)		—
Net loss	$	(26,234	)	$	(9,930	)	$	(51,012	)	$	(15,487	)
Weighted-average shares outstanding – basic		55,282			53,960			55,453			53,724
Effect of dilutive securities: (1)
Stock options (2)		—			—			—			—
Restricted preferred units (2) (3)		—			—			—			—
Restricted stock units and restricted stock awards (2)		—			—			—			—
Weighted-average shares outstanding – diluted		55,282			53,960			55,453			53,724
Basic loss per common share:
Loss from continuing operations	$	(0.47	)	$	(0.18	)	$	(0.92	)	$	(0.29	)
Loss from discontinued operations		—			—			—			—
Net loss	$	(0.47	)	$	(0.18	)	$	(0.92	)	$	(0.29	)
Diluted loss per common share:
Loss from continuing operations	$	(0.47	)	$	(0.18	)	$	(0.92	)	$	(0.29	)
Loss from discontinued operations		—			—			—			—
Net loss	$	(0.47	)	$	(0.18	)	$	(0.92	)	$	(0.29	)

(1) For the three and nine months ended September 30, 2010, the effects of including the 0.04 million incremental shares associated with the convertible notes and the assumed conversion of 5.8 million equity instruments into common stock were anti-dilutive and, therefore, excluded from the calculation of diluted net loss per common share. For the three and nine months ended September 30, 2009, the effects of including the 4.9 million incremental shares associated with the convertible notes and the assumed conversion of 6.4 million equity instruments into common stock were anti-dilutive and, therefore, excluded from the calculation of diluted net loss per common share.

(2) As of September 30, 2010, the Company had 3.9 million stock options and 1.9 million shares of restricted stock units and restricted stock awards outstanding. As of September 30, 2009, the Company had 5.5 million stock options, 0.3 million restricted preferred units, and 0.6 million shares of restricted stock units and restricted stock awards outstanding.

(3) As of September 30, 2010, there were no outstanding restricted preferred units.

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NOTE 7—PREPAIDS AND OTHER ASSETS

The following table presents the components of prepaids and other current and non-current assets as of September 30, 2010 and December 31, 2009:

	September 30, 2010		December 31, 2009
Prepaids and other current assets:
Prepaid maintenance	$	12,678	$	8,632
Prepaid rent		4,492		229
Prepaid insurance		2,828		1,533
Deferred install costs		9,279		7,202
Other prepaids		3,962		2,318
Other current assets		1,168		1,303
Total prepaids and other current assets	$	34,407	$	21,217
Other non-current assets:
Deferred financing costs	$	11,578	$	6,596
Other deferred costs		4,085		2,644
Non-current prepaids		2,263		1,297
Other non-current assets		5,230		2,179
Total other non-current assets	$	23,156	$	12,716

NOTE 8—PROPERTY AND EQUIPMENT

The following table presents property and equipment, by major category, as of September 30, 2010 and December 31, 2009:

	September 30, 2010			December 31, 2009
Facilities and leasehold improvements	$	775,248		$	719,597
Communications and data center equipment		623,633			543,908
Software		133,075			103,498
Office equipment		29,376			27,572
		1,561,332			1,394,575
Less accumulated depreciation and amortization		(720,249	)		(610,723	)
Property and equipment, net	$	841,083		$	783,852

Depreciation and amortization expense for property and equipment was $47.7 million and $37.2 million for the three months ended September 30, 2010 and 2009, respectively, and $128.9 million and $109.4 million for the nine months ended September 30, 2010 and 2009, respectively.

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NOTE 9—GOODWILL AND INTANGIBLE ASSETS

The following table presents the Company’s goodwill and intangible assets as of September 30, 2010 and December 31, 2009:

	September 30, 2010			December 31, 2009
Goodwill:
Hosting	$	77,208		$	—
Intangible assets:
Customer relationships		35,793			13,160
Other intangible assets		2,437			2,437
		38,230			15,597
Accumulated amortization		(17,366	)		(15,193	)
Intangible assets, net		20,864			404
Total goodwill and intangible assets, net	$	98,072		$	404

As described in Note 3, as part of the acquisition of Fusepoint, the Company recorded $76.9 million of goodwill, which represented the Company’s ability to implement operational synergies, the value of the expansion into new markets and the acquired workforce of Fusepoint, and $22.5 million of intangible assets, which represent the customer relationships assumed through the acquisition. Both the goodwill and the intangible assets from the Fusepoint acquisition are denominated in Canadian Dollars and, as such, are subject to foreign currency fluctuations. The Company’s foreign currency translation gain and losses, including those related to goodwill and other intangible assets, are a component of other comprehensive loss. Of the $77.2 million of goodwill at September 30, 2010, $0.7 million was associated with the Fusepoint application services business, which is classified as held for sale.

Amortization expense for intangible assets was $1.7 million and $0.1 million for the three months ended September 30, 2010 and 2009, respectively, and $2.2 million and $0.3 million for the nine months ended September 30, 2010 and 2009, respectively. Estimated future amortization expense related to these intangible assets is as follows:

Remainder of 2010	$	1,718
2011		6,141
2012		5,260
2013		4,307
2014		3,219
Thereafter		219
Total future amortization of intangible assets	$	20,864

NOTE 10—LONG-TERM DEBT

The following table presents the carrying value of long-term debt as of September 30, 2010 and December 31, 2009:

	September 30, 2010		December 31, 2009
Term loan, net of current portion of $5,500 and $0, respectively	$	528,435	$	—
Convertible notes		2,848		305,921
Lombard loan agreement		—		55,973
Cisco loan facility, net of current portion of $0 and $6,600, respectively		—		14,195
Revolver		—		—
Credit agreement		—		—
Long-term debt	$	531,283	$	376,089

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Credit Facilities

Term loan and revolver. On August 4, 2010, the Company entered into senior secured credit facilities consisting of a $550.0 million six-year term loan facility (the Term Loan) and a $75.0 million three-and-a-half-year revolving credit facility (the Revolver) with a group of lenders for which Banc of America Securities LLC and Morgan Stanley Senior Funding, Inc. served as joint lead arrangers and joint bookrunners and Credit Suisse Securities (USA) LLC and Suntrust Robinson Humphrey, Inc. served as arrangers and joint bookrunners. The Term Loan and Revolver contain various affirmative, negative and financial covenants which are measured on a quarterly or annual basis and restrict the ability of the Company to create liens, incur additional indebtedness, and make capital expenditures, among other things, except as permitted by the terms of the agreement, and require maintenance of certain financial measures at defined levels. The Company’s obligations under the Term Loan and the Revolver, and the guarantees of the guarantors, are secured by a first-priority security interest in substantially all of the Company’s assets, interest in assets and proceeds thereof. The Company may elect to pay interest on a base or Eurodollar rate, plus applicable margin. The Term Loan requires 0.25% quarterly principal amortization payments beginning December 31, 2010, with the remaining balance payable on the maturity date, August 4, 2016. The Company incurred a 3.0%, or $16.5 million, original issue discount associated with the Term Loan. The Revolver contains a $40.0 million letter of credit provision, of which $9.7 million had been issued as of September 30, 2010. Unused commitments on the Revolver are subject to an annual commitment fee of 0.50% and a fee is applied to outstanding letters of credit of 4.75%. The applicable interest rate on Eurodollar loans under the Revolver would have been 6.50% at September 30, 2010; however, there were no outstanding borrowings. As of September 30, 2010, the applicable interest rate for the Term Loan was 6.75%, including the Eurodollar floor of 1.75%, and outstanding borrowings totaled $550.0 million. Unamortized original issue discount of $16.1 million on the Term Loan remained as of September 30, 2010.

Credit agreement. In August 2010, as part of a refinancing transaction, the Company repaid the $110.0 million outstanding, plus an additional $1.5 million in fees, and terminated the Company’s amended and restated credit agreement with Wells Fargo Capital Finance (the Credit Agreement). The Credit Agreement was amended in June 2010 to increase the available borrowing capacity in order to fund the purchase price of the Fusepoint acquisition. Under the amended terms of the Credit Agreement the Company had borrowing capacity of $150.0 million which included a $40.0 million letter of credit provision. Borrowings under the Credit Agreement could be used to fund working capital, acquisitions, capital expenditures and other general corporate purposes. The Company elected to pay interest on a three month LIBOR rate, plus an applicable margin. The interest rate at the time of extinguishment was 6.50%. With the June 2010 amendment of the Credit Agreement, the Company incurred $2.6 million of additional debt issuance costs, the majority of which were recognized as a loss on debt extinguishment during the three months ended September 30, 2010. As of September 30, 2010, there were approximately $9.2 million of outstanding letters of credit remaining with the terminated Credit Agreement provider, which are backed by letters of credit issued under the Revolver.

Loan agreement and lease facility. The Company maintained a term loan and security agreement (the Loan Agreement) and maintains a master lease agreement (the Lease Agreement) with Cisco Systems Capital Corporation. The Loan Agreement provided for borrowings of up to $33.0 million, at an annual interest rate of 6.50%, to purchase network equipment, which were secured by a first-priority security interest in the equipment. The Lease Agreement provides a lease facility (the Lease Facility) to purchase equipment with borrowings at the discretion of Cisco Systems Capital Corporation. The effective interest rate on current borrowings ranges from 6.50% to 6.75%. On August 4, 2010, as part of a refinancing transaction, the Company repaid the $16.9 million in borrowings outstanding on the Loan Agreement, along with $0.1 million of interest, and $11.2 million of the $13.1 million outstanding leases under the Lease Facility. There was a $0.2 million loss on debt extinguishment associated with the repayment of the leases. As of September 30, 2010, the Company had $1.8 million borrowings outstanding under Lease Facility.

Lombard loan agreement. On August 4, 2010, as part of a refinancing transaction, the Company repaid and terminated, on behalf of its subsidiary SAVVIS UK Limited (SAVVIS UK), the loan agreement (the Lombard Loan Agreement) it maintained with Lombard North Central, Plc. (Lombard). The Lombard Loan Agreement had a five-year term and required monthly interest installments for the full term and quarterly principal installments that were to begin in 2011. The Company had guaranteed the obligations of SAVVIS UK under the Lombard Loan Agreement and the obligations were secured by a first priority security interest in substantially all of SAVVIS UK’s then existing data center assets and certain future assets. The Company maintained a letter of credit of $21.2 million, which was released with the termination of the agreement. A total of $55.8 million, or £35.0 million, was paid to Lombard, which included both the outstanding principal and accrued and unpaid interest. There were £0.4 million, or approximately $0.6 million, of unamortized debt issuance costs related to the Lombard Loan Agreement which were recognized as a loss on debt extinguishment during the three months ended September 30, 2010.

14

Convertible Notes

In May 2007, the Company issued $345.0 million aggregate principal amount of 3.0% Convertible Senior Notes due May 15, 2012 (the Notes). Interest is payable semi-annually on May 15 and November 15 of each year and commenced November 15, 2007.

The Notes are governed by an Indenture dated May 9, 2007, between the Company, as issuer, and The Bank of New York, as trustee (the Indenture). The Indenture does not contain any financial covenants or restrictions on the payment of dividends, the incurrence of senior debt or other indebtedness, or the issuance or repurchase of securities by the Company. The Notes are unsecured and are effectively subordinated to the Company’s existing or future secured debts to the extent of the assets securing such debt.

Upon conversion, holders will receive, at the Company’s election, cash, shares of the Company’s common stock, or a combination thereof. However, the Company may at any time irrevocably elect for the remaining term of the Notes to satisfy its conversion obligation in cash up to 100% of the principal amount of the Notes converted, with any remaining amount to be satisfied, at the Company’s election, in cash, shares of its common stock, or a combination thereof.

The initial conversion rate is 14.2086 shares of common stock per $1,000 principal amount of Notes, subject to adjustment. This represents an initial conversion price of approximately $70.38 per share of common stock. Holders of the Notes may convert their Notes prior to maturity upon the occurrence of specified circumstances, which includes certain trading levels of the Company’s common stock, the occurrence of certain distributions or corporate events, such as distribution to stockholders, consolidation, merger or sale of all of substantially all of the Company’s assets, or any time on or after February 15, 2012. Upon conversion, due to the conversion formulas associated with the Notes, if the Company’s stock is trading at levels exceeding the conversion price per share of common stock, and if the Company elects to settle the obligation in cash, additional consideration beyond the $345.0 million of gross proceeds received would be required. At September 30, 2010, the Notes did not meet any of the criteria to allow the Notes to be redeemed at the holders’ discretion and are therefore not considered redeemable or convertible.

The Notes contain settlement features that require the Company to account for the liability and equity components of the Notes separately. The Company has calculated the fair value of the liability component using an interest rate of 8.36% per annum.

On July 1, 2010 the Company commenced a tender offer to purchase any and all of the outstanding Notes for an amount in cash equal to $990 per $1,000 principal amount of the Notes validly tendered and accepted for purchase plus accrued and unpaid interest up to, but not including, the date of purchase. The tender offer expired August 4, 2010, and the Company purchased and extinguished 98.4% of the $345.0 million outstanding principal amount of the Notes, or $339.4 million, for $336.0 million. An additional $2.2 million was paid for accrued and unpaid interest. On September 14, 2010, at $990 per $1,000 principal amount, the Company purchased and extinguished $2.5 million of the remaining outstanding principal amount of the Notes for $2.5 million, including accrued and unpaid interest. As of September 30, 2010, $3.1 million principal amount of the Notes remained outstanding. Of the $338.5 million paid, $25.0 million was attributed to the reacquisition of the equity component of the Notes. As a result of both transactions, the Company recognized a loss on debt extinguishment of $4.3 million, which represents the $2.5 million unamortized debt issuance costs related to the extinguished Notes, the $1.4 million difference between the fair value attributed to the liability component and the carrying value of the Notes at extinguishment and the $0.4 million fees paid to third parties for the facilitation of the transactions.

The following table summarizes the carrying amounts of the equity and liability components of the Notes, along with the unamortized discount and net carrying amount of the liability component.

	September 30, 2010			December 31, 2009
Equity component	$	654		$	72,609
Liability component:
Principal amount	$	3,106		$	345,000
Unamortized discount		(258	)		(39,079	)
Net carrying amount	$	2,848		$	305,921

15

The following table summarizes the amount of interest cost recognized for the periods relating to both the contractual interest and the accretion of the discount of the liability component of the Notes:

	Three Months Ended September 30,
	2010		2009
Interest at 3% stated coupon rate	$	997	$	2,588
Discount amortization		1,339		3,615
Total interest expense	$	2,336	$	6,203
	Nine Months Ended September 30,
	2010		2009
Interest at 3% stated coupon rate	$	6,172	$	7,763
Discount amortization		8,951		10,629
Total interest expense	$	15,123	$	18,392

The debt issuance costs related to the Notes, net of accumulated amortization, were $0.02 million as of September 30, 2010.

Debt Covenants

Under the terms of the Company’s Term Loan and Revolver agreements, they are required to comply with certain financial covenant ratios consisting of quarter covenants for maximum total leverage and minimum fixed charge coverage ratios and annual maximum capital expenditures. As of September 30, 2010, the Company was in compliance with such financial covenants.

The provisions of the Company’s debt agreements contain covenants including, but not limited to, maintaining specified financial conditions, restricting or limiting the Company’s ability to incur more debt, issue guarantees, pay dividends, make capital expenditures, and repurchase stock (subject to financial measures and other conditions). The Company was in compliance with all such covenants as of and during the nine months ended September 30, 2010, and anticipates compliance with all covenants for at least the next twelve months. However, 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 cross defaults and acceleration of repayment.

Loss on Debt Extinguishment

As a result of the August 4, 2010 refinancing transaction and September 14, 2010 Notes retirement, the Company recognized an $8.7 million loss on debt extinguishment during the three months ended September 30, 2010. This loss on debt extinguishment consisted of $6.1 million unamortized deferred financing costs, a $1.4 million loss representing the difference between the fair value and carrying value of the Notes, and $1.2 million in costs primarily related to bank and legal fees.

Future Principal Payments

As of September 30, 2010, aggregate future principal payments of long-term debt were $1.4 million for the remainder of the year ended December 31, 2010, and $5.5 million, $8.6 million, $5.5 million, $5.5 million and $526.6 million for the years ended December 31, 2011, 2012, 2013, 2014, and thereafter, respectively. Depending on settlement options at the Company’s election, the Notes, which mature in May 2012, may be settled in cash, shares, or a combination thereof. The weighted-average cash interest rate applicable to outstanding borrowings was 6.7% and 3.2% as of September 30, 2010 and December 31, 2009, respectively.

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NOTE 11—DERIVATIVES

The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed by using derivative instruments are foreign currency exchange rate risk and variable interest rate risk. The fair value of the Company’s cash flow hedges are recorded as assets or liabilities, as applicable, on the balance sheet with the offset in accumulated other comprehensive loss. To the extent that the periodic changes in the fair value of the derivatives are not effective, or if the hedge ceases to qualify for hedge accounting, the ineffective portion of the non-cash changes are recognized immediately in the consolidated statement of operations in the period of the change. As the hedged items impact earnings, the related hedging gains or losses are reclassified from accumulated other comprehensive loss and recognized in the consolidated statements of operations.

Foreign Currency Hedges

The Company engages in foreign currency hedging transactions to mitigate its foreign currency exchange risk. The Company had recorded a foreign currency hedge asset of $0.1 million as of September 30, 2010 and a foreign currency hedge liability of $0.1 million as of December 31, 2009.

Interest Rate Swap

On August 2, 2010, the Company terminated its interest rate swap agreement (the Swap Agreement) with National Westminster Bank, Plc (NatWest), for £2.0 million, or approximately $3.2 million. In January 2009, the Company had dedesignated its existing interest rate swap and redesignated a new interest rate swap by entering into the Swap Agreement. At the time of dedesignation, the fair value of the existing interest rate swap was £2.5 million, which represented the financing element of the Swap Agreement, and was to be amortized to earnings as the originally hedged cash flows affect earnings. The Swap Agreement hedged the monthly interest payments incurred and paid under the Lombard Loan Agreement during the three year period beginning January 1, 2009 and ending December 31, 2011. Under the terms of the Swap Agreement, the Company owed monthly interest to NatWest at a fixed LIBOR rate of 5.06%, and received from NatWest payments based on the same variable notional amount at the one month LIBOR interest rate set at the beginning of each month. The Swap Agreement effectively fixed the interest payments paid under the Lombard Loan Agreement at 7.86%. During the three and nine months ended September 30, 2010, the Company recognized $0.1 million and $0.8 million gains, respectively, on hedge ineffectiveness in the consolidated statement of operations, which were offset by $0.1 million and $0.8 million, respectively, in amortization of the financing element of the Swap Agreement. At settlement, the market value of the interest rate swap was a non-current liability of £2.0 million, or approximately $3.2 million. The Company recognized a loss on settlement of £2.0 million, or approximately $3.1 million, in other income and expense.

Interest Rate Cap

On September 30, 2010, the Company, as required by the Term Loan, entered into an interest rate cap hedge agreement (the Cap Agreement) with Bank of America, N.A. (BOA). The Cap Agreement caps the three month Eurodollar interest rates paid to BOA on a beginning notional principal amount of $155.0 million of Term Loan outstanding. During the three year period beginning October 4, 2010 and ending October 3, 2013, the notional amount of the Cap Agreement declines by the 0.25% quarterly principal amortization of the Term Loan as it applies to the original notional principal amount. The Cap Agreement effectively caps the interest rates paid to BOA on the then outstanding capped notional principal amount of the Term Loan at 3.0% during year one, 3.5% during year two and 4.0% during year three. During the three and nine months ended September 30, 2010, the Company did not recognize any gains or losses on the Cap Agreement. The fair value of the Cap Agreement was $0.4 million at September 30, 2010.

The following table presents the terms of the Cap Agreement:

	October 4, 2010		October 4, 2011		October 4, 2012		October 3, 2013
Cap Agreement
Notional amount	$	155,000	$	153,450	$	151,900	$	150,738
Interest rate		3.0%		3.5%		4.0%		4.0%

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Balance Sheet Presentation

The Company’s foreign currency hedges and the interest rate cap are presented within other current assets. The interest rate swap was presented on a net basis in other non-current accrued liabilities.

The following table summarizes the fair value of the derivatives on a net basis:

	September 30,		December 31,
	2010		2009
Assets:
Interest rate cap	$	355	$	—
Foreign currency hedges		96		—
Liabilities:
Interest rate swap		—		(3,177	)
Foreign currency hedges		—		(116	)
	$	451	$	(3,293	)

Income Statement Presentation

Realized gains and losses represent amounts related to the settlement of derivative instruments, which are reported on the consolidated statement of operations in other income and expense. All of the Company’s derivative instruments are cash flow hedges; as such, unrealized gains and losses, which represent the change in fair value of the derivative instruments, are recorded as a component of other comprehensive loss.

The following table presents the Company’s realized gains and losses on derivative instruments:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
Realized gains (losses)
Interest rate swap (1)	$	(3,375	)	$	(196	)	$	(4,568	)	$	(329	)
Interest rate cap		—			—			—			—
Foreign currency hedges		—			204			(477	)		204
	$	(3,375	)	$	8		$	(5,045	)	$	(125	)

(1) The three and nine months ended September 30, 2010 includes the $3.1 million realized loss on the settlement of the interest rate swap.

NOTE 12—CAPITAL AND FINANCING METHOD LEASE OBLIGATIONS

The following table presents future minimum payments due under capital and financing method leases as of September 30, 2010:

Remainder of 2010	$	10,257
2011		40,981
2012		39,275
2013		37,203
2014		37,212
Thereafter		212,791
Total capital and financing method lease obligations		377,719
Less amount representing interest		(198,488	)
Less current portion		(13,401	)
Capital and financing method lease obligations, net	$	165,830

Financing method lease obligation payments represent interest payments over the term of the lease; as such, the table above excludes a $50.6 million deferred gain that will be realized upon termination of the lease in accordance with accounting rules for financing method leases.

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NOTE 13—OPERATING LEASES

The following table presents future minimum payments under operating leases as of September 30, 2010:

Remainder of 2010	$	17,389
2011		71,438
2012		64,303
2013		56,803
2014		41,146
Thereafter		247,309
Total future minimum lease payments	$	498,388

Rental expense under operating leases was $20.4 million and $18.0 million for the three months ended September 30, 2010 and 2009, respectively, and $59.1 million and $54.8 million for the nine months ended September 30, 2010 and 2009, respectively.

NOTE 14—OTHER ACCRUED LIABILITIES

The following table presents the components of other current and non-current accrued liabilities as of September 30, 2010 and December 31, 2009:

	September 30,		December 31,
	2010		2009
Other current accrued liabilities:
Deferred revenue	$	20,840	$	20,829
Wages, employee benefits, and related taxes		19,820		18,470
Taxes payable		3,501		4,221
Other current liabilities		30,238		24,794
Total other current accrued liabilities	$	74,399	$	68,314
Other non-current accrued liabilities:
Asset retirement obligations	$	31,036	$	29,653
Deferred rent		17,374		16,622
Acquired contractual obligations in excess of fair value and other		12,400		13,823
Deferred revenue		13,948		8,728
Other non-current liabilities		4,582		7,626
Total other non-current accrued liabilities	$	79,340	$	76,452

Acquired contractual obligations in excess of fair value and other as of September 30, 2010 and December 31, 2009 represent amounts remaining from acquisitions related to fair market value adjustments of acquired facility leases and idle capacity on acquired long-term maintenance contracts that the Company did not intend to utilize.

NOTE 15—COMMITMENTS, CONTINGENCIES, AND OFF-BALANCE SHEET ARRANGEMENTS

The Company’s customer contracts generally span multiple periods, which results 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 $15.1 million, $30.1 million, $13.9 million, $9.7 million, $8.3 million, and $51.9 million during the years ended December 31, 2010, 2011, 2012, 2013, 2014, 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 contractual amounts may become immediately due and payable. Furthermore, certain of these termination liabilities are potentially 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 September 30, 2010, the maximum termination liability would have been $129.0 million. To mitigate this exposure, at times, the Company aligns its minimum spending commitments with customer revenue commitments for related services.

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In the normal course of business, the Company is a party to certain guarantees and financial instruments with off-balance sheet risk as they are not reflected in the accompanying consolidated balance sheets, such as letters of credit, indemnifications, and operating leases under which certain facilities are leased. The agreements associated with such guarantees and financial instruments mature at various dates through January 2031, and may be renewed as circumstances warrant. As discussed in Note 10, the Company had $9.7 million in letters of credit outstanding at September 30, 2010, which are pledged as collateral to primarily support certain facility leases and utility agreements. Also, in connection with its 2007 sale of the assets related to its content delivery network services, the Company agreed to indemnify the purchaser should it incur certain losses due to a breach of the Company’s representations and warranties. The Company has not incurred a liability relating to these indemnification provisions in the past, and management believes that the likelihood of any future payout relating to these provisions is remote. As such, the Company has not recorded a liability during any period related to these indemnification provisions.

The Company’s guarantees and financial instruments are valued based on the estimated amount of exposure and the likelihood of performance being required. To management’s knowledge, no claims have been made against these guarantees and financial instruments nor does it expect exposure to material losses resulting therefrom. As a result, the Company determined such guarantees and financial instruments do not have significant value and has not recorded any related amounts in its consolidated financial statements.

The Company is subject to various legal proceedings and actions arising in the normal course of its business. While the results of all such proceedings and actions cannot be predicted, management believes, based on facts known to management today, that the ultimate outcome of all such proceedings and actions will not have a material adverse effect on the Company’s consolidated 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, equity-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.

NOTE 16—ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table presents accumulated other comprehensive loss as of September 30, 2010 and December 31, 2009:

	September 30,		December 31,
	2010		2009
Foreign currency translation	$	(13,412)	$	(15,938	)
Unrealized loss on derivatives (1)		195		(3,195	)
Accumulated other comprehensive loss	$	(13,217)	$	(19,133	)

(1) Includes foreign currency cash flow hedges and interest rate swap.

NOTE 17—EQUITY-BASED COMPENSATION

The following table presents information associated with the Company’s equity-based compensation awards for the nine months ended September 30, 2010:

	Restricted Stock  Units			Restricted Stock			Options and RPUs
Outstanding at beginning of period		712			319			5,706
Granted		1,425			22			778
Delivered/Exercised		(83	)		(293	)		(1,539	)
Forfeited		(156	)		(17	)		(851	)
Cancelled		(17	)		(7	)		(162	)
Outstanding at end of period		1,881			24			3,932

As of September 30, 2010, the Company had $28.2 million of unrecognized compensation cost which is expected to be recognized over a weighted-average period of 2.8 years.

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NOTE 18—INCOME TAXES

For the nine months ended September 30, 2010, the Company recorded an income tax benefit of $0.3 million on a loss from continuing operations before income taxes of $51.2 million. Comparatively, for the year ended December 31, 2009, the Company recorded income tax expense of $2.7 million on a loss before income taxes of $18.1 million. Management currently anticipates a pretax loss in 2010, however, income tax expense on the Company’s legacy business is expected due to certain jurisdictional alternative minimum taxes. This income tax expense is expected to be offset by a deferred tax benefit on the post-acquisition Fusepoint operations.

As of December 31, 2009, the Company had approximately $130.2 million in U.S. net operating loss (NOL) carryforwards. These carryforwards exclude $53.7 million of additional NOLs due to limitations related to equity-based compensation, which are available from an income tax return perspective.

With the exception of the net deferred tax liability position acquired as part of the Fusepoint acquisition, the Company maintains a full valuation allowance on net deferred tax assets arising primarily from NOL carryforwards and other tax attributes because the future realization of such benefits is uncertain. As a result, to the extent that those benefits are realized in future periods, they will favorably affect tax expense and net income.

NOTE 19—INDUSTRY SEGMENT AND GEOGRAPHIC REPORTING

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker in deciding how to allocate resources to an individual segment and in assessing performance of the segment. During the fourth quarter of 2009, the Company’s chief operating decision maker, which is defined as the chief executive officer, began to manage the Company’s business differently, separating management by product and using different information than was previously used. As a result, the Company now has two reportable segments based on products: hosting and network. Hosting products consist of colocation and managed hosting services and provide the core facilities, computing, data storage and network infrastructure on which to run business applications. Network products are comprised of managed network services, hosting area network, application transport and bandwidth services.

Management of the Company evaluates the performance of the two segments primarily based on revenue and adjusted EBITDA. Adjusted EBITDA is defined as income from continuing operations before depreciation, amortization and accretion, and non-cash equity-based compensation. The Company uses adjusted EBITDA as a performance measure because they believe that such information is a relevant measure of a company’s operating performance and liquidity in their industry. The calculation of adjusted EBITDA is not specified by U.S. generally accepted accounting principles. The Company’s calculation of adjusted EBITDA may not be comparable to similarly titled measures of other companies.

The following table presents operating segment results for the periods indicated, and excludes the results of the Company’s discontinued operations:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
Revenue:
Hosting	$	176,724		$	148,155		$	487,654		$	452,632
Network		65,177			65,056			192,590			201,963
Total revenue	$	241,901		$	213,211		$	680,244		$	654,595
Adjusted EBITDA:
Hosting	$	66,892		$	55,582		$	185,132		$	179,964
Network		15,747			18,484			48,601			51,540
Corporate – other (1)		(23,400	)		(22,875	)		(69,338	)		(66,368	)
Total adjusted EBITDA	$	59,239		$	51,191		$	164,395		$	165,136

(1) Corporate - other adjusted EBITDA includes all general and administrative costs not directly associated with hosting services or network services. Costs not directly associated with hosting services or network services include, but are not limited to, acquisition and integration costs and costs related to the finance, accounting, legal, human resources, and internal IT departments.

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As the Company’s segments are based on products, with the exception of non-cash equity-based compensation and depreciation, amortization and accretion, the components of cost of revenue can be directly tied to the appropriate segment. Total selling, general and administrative costs can be broken down into sales and marketing and general and administrative. A portion of sales and marketing expenses are directly related to a specific product, such as the direct sales forces, and the remainder of the costs are allocated to segments based on a percentage of customer installations or bookings, as applicable, during the period and, as a result, may fluctuate. The majority of general and administrative costs are allocated to the corporate – other segment, as the costs primarily relate to corporate groups such as finance, legal, human resources, and internal IT. Less than 10% of the general and administrative costs can be attributed directly to a segment, and these consist of costs for the Company’s WAM!NET engineering and cloud teams. The Company does not allocate the components of other income and expense or tax expense to segments.

Total assets, depreciation, amortization and accretion, non-cash equity-based compensation, interest income and expense, and income tax expense by segment have not been disclosed by segment as the information is not available to the Company’s chief operating decision maker.

The following table presents a reconciliation of adjusted EBITDA to income from continuing operations and a reconciliation of adjusted EBITDA to loss from continuing operations before income taxes:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
Adjusted EBITDA reconciliation
Income from continuing operations	$	3,469		$	4,514		$	10,449		$	29,649
Depreciation, amortization and accretion		50,335			38,201			133,513			112,335
Non-cash equity-based compensation		5,435			8,476			20,433			23,152
Adjusted EBITDA	$	59,239		$	51,191		$	164,395		$	165,136
Reconciliation of adjusted EBITDA to loss from continuing operations before income taxes
Adjusted EBITDA	$	59,239		$	51,191		$	164,395		$	165,136
Depreciation, amortization and accretion		(50,335	)		(38,201	)		(133,513	)		(112,335	)
Non-cash equity-based compensation		(5,435	)		(8,476	)		(20,433	)		(23,152	)
Interest income		41			33			92			191
Interest expense		(18,391	)		(14,533	)		(49,439	)		(43,710	)
Loss on debt extinguishment		(8,735	)		—			(8,735	)		—
Other income (expense)		(3,495	)		613			(3,588	)		251
Loss from continuing operations before income taxes	$	(27,111	)	$	(9,373	)	$	(51,221	)	$	(13,619	)

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The table below presents selected financial information for the Company’s three geographic regions: Americas, EMEA (Europe, Middle East, and Africa) and Asia, for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009
Revenue:
Americas	$	195,838	$	175,517	$	551,913	$	545,479
EMEA		33,648		27,879		93,591		80,233
Asia		12,415		9,815		34,740		28,883
Total revenue	$	241,901	$	213,211	$	680,244	$	654,595
					September 30, 2010		December 31, 2009
Property and equipment, net:
Americas					$	697,452	$	678,163
EMEA						117,596		82,329
Asia						26,035		23,360
Total property and equipment, net					$	841,083	$	783,852

For the three and nine months ended September 30, 2010, revenue earned in the Americas represented approximately 81% of total revenue and for the three and nine months ended September 30, 2009, revenue earned in the Americas represented approximately 82% and 83% of total revenue, respectively. Substantially all of the Company’s other non-current assets reside in the Americas geographic region.

NOTE 20—SUBSEQUENT EVENTS

None.

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

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is provided in addition to the accompanying unaudited condensed consolidated financial statements and notes thereto to assist readers in understanding our results of operations, financial condition, and cash flows. You should read the following discussion in conjunction with our audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2009, and our MD&A as of and for the year ended December 31, 2009, included in our Annual Report on Form 10-K for such period as filed with the United States Securities Exchange Commission, or the SEC. The following discussion contains, in addition to historical information, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, or the Act, that involve risks and uncertainties, including those set forth in Part I, Item 1A of our Annual Report on Form 10-K and in subsequent SEC filings. These forward-looking statements within the meaning of the Act may contain, among others, statements regarding projections and estimates, expectations, and management’s plans, strategies and objectives which should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the timing when, or by which, such performance or results will be achieved. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “project,” “estimate,” “preliminary” and similar expressions. We caution against placing undue reliance on forward-looking statements, which reflect our good faith beliefs with respect to future events and are based on information currently available to us as of the date the forward-looking statement is made.

EXECUTIVE SUMMARY

Overview

We provide information technology, or IT, services including cloud services, managed hosting, managed security, colocation, professional services, and network services through our global infrastructure to businesses and government agencies around the world. Our services are designed to offer a flexible and comprehensive IT solution that meets the specific IT infrastructure and business needs of our customers. Our suite of products can be purchased individually, in various combinations, or as part of a total or partial outsourcing arrangement. Our colocation solutions meet the specific needs of customers who require control of their physical assets, while our managed hosting solution offerings provide customers with access to our services and infrastructure without the upfront capital costs associated with equipment acquisition. By partnering with us, our customers may drive down the costs of acquiring and managing IT infrastructure and achieve increased operational efficiency by taking advantage of our global monitoring, application performance support and other operational support systems and tools, which allow our clients to focus their resources on their core business while we focus on the delivery and performance of their IT infrastructure services.

Our Services

We present our revenue in two categories of services: (1) hosting services and (2) network services.

Hosting Services provide the core facilities, computing, including cloud services, data storage, security and network infrastructure on which to run business applications. We manage 31 data centers located in North America, Europe, and Asia with approximately 1.51 million square feet of gross raised floor space. Our hosting services are comprised of colocation and managed hosting and allow our customers to choose which parts of their IT infrastructure they own and operate versus those that we own and operate for them. Customers can scale their use of our services as their own requirements change and as customers learn the benefits of outsourcing IT infrastructure management.

• Colocation is designed for customers seeking data center space and power for their server and networking equipment needs. Our data centers provide our customers around the world with a secure, high-powered, purpose-built location for their IT equipment.

• Managed Hosting Services provide a fully managed solution for a customer’s IT infrastructure and network needs. In providing our managed hosting services, we deploy industry leading hardware and software platforms that are installed in our data centers to deliver the physical or virtualized services necessary for operating our customers’ applications. Managed hosting services include:

• Cloud Services enable significant new levels of scalability, flexibility, and cost efficiency for businesses. Cloud is a style of computing that aligns business needs with IT capacity to drive more efficient and effective use of a customer’s infrastructure resources. The value of virtualized infrastructure, fully automated or scheduled provisioning processes, security assurances in complex environments, and flexible business terms can result in lower infrastructure and maintenance costs, preservation of capital, elasticity to respond to changing business needs and unanticipated load changes, acceleration of new application platforms, better end-user experience and reduction of carbon footprint through consolidation and lower energy consumption.

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• Managed Security Services provide global around-the-clock monitoring and management of security appliances, software, and network-based controls, and incident response, for our managed hosting and network services customers. We focus on delivering security services in a cost-effective manner while attempting to adhere to industry best practices to protect infrastructure and application assets. Utilizing our advanced network tools to detect and filter malicious traffic before it reaches our customers’ infrastructures, we work to mitigate the impact of such attacks. We also provide virtualized security services by using industry-standard virtualization technology in our data centers to reduce the need for our customers to pay for dedicated security equipment.

• Professional Services are provided through our skilled personnel who assist our customers in getting maximum value from our service offerings. We offer assistance and consultation in security for network and hosting environments, virtualization, web-based applications, business recovery, software as a service, program management, infrastructure, and migration. Our professional services organization assists our customers with ongoing operational support, as well as assessing, designing, developing, implementing, and managing outsourcing solutions.

• Dedicated Hosting provides customers with managed hosting services on hardware and software that is isolated to a single customer. Customers requiring dedicated infrastructure usually have either stringent internal requirements for application performance, security, or data integrity, or they are attempting to become compliant with external industry or governing regulations. In a dedicated hosting scenario, customers are provided discrete hardware components.

• Utility Computing and Storage provides customers with an available, secure applications platform that delivers scalability of an entire range of IT infrastructure at lower total cost than found with traditional service provider models. We achieve this combination of lower cost and better service through the use of virtualization technology. Whereas IT infrastructure services have traditionally been provided by discrete hardware components, advances in virtualization technology and software have enabled us to provide a broad range of functionality without the challenges of implementing and managing discrete components. Not only does this enable us to improve our own asset utilization, it also results in our ability to dynamically configure services to meet customer requirements with a flexible model. Through our managed network, we provide connectivity between the customer and the utility computing platform housed in our data centers. With our utility computing and storage solution, our customers pay only for the services they currently need, while maintaining the ability to scale up or down the services to meet their changing business needs.

Network Services are comprised of our managed network services, including managed VPN, hosting area network, or HAN, and bandwidth services.

• Managed VPN service is a fully managed, end-to-end solution that includes hardware, management systems, and operations to transport an enterprise’s voice, video and data applications at corresponding quality-of-service levels, whether those applications are housed at our customer’s site or in our data centers. Customers that purchase this service are generally geographically dispersed enterprises seeking to transmit latency-sensitive data more cost effectively in a secure environment among their multiple locations around the world.

• Hosting Area Network is a dedicated network that provides secure, high speed Internet connectivity for hosting and cloud customers located in our data centers, along with value-added services such as load balancing and network-based firewalls.

• Bandwidth Services are provided to enterprises and wholesale carrier customers. We offer Tier 1 Internet services in the North America, Europe, and Asia that are managed, unmanaged, or integrated with our VPN. In addition, we offer carrier diversity by enabling connectivity either to Internet providers built into our data centers or to providers in carrier hotels that are connected to our data centers by our metro Ethernet rings.

For further information on our business and services, please refer to Part I, Item 1 of our Annual Report on Form 10-K.

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Business Trends and Outlook

We continue to be impacted by the overall economy in that the predictability in timing of sales cycles for new business has continued to be challenged by lengthy decision making cycles caused, in part, by strained IT budgets. Despite these challenges, we believe we have considerable opportunity and believe that companies will increasingly consider adopting outsourced IT solutions as they attempt to reduce their infrastructure spending and meet the increasing demands from their user communities. Our services model enables our enterprise customers to choose from a number of different strategies designed to reduce their IT costs. Our focus is to provide mission-critical, non-discretionary IT infrastructure outsourcing and we believe that our target customer base considers us specialists in the areas of server management, storage, virtualization, security and network infrastructure. With the completion in 2008 of a significant phase of our global data center expansion, and additional expansion in key markets in 2010, we believe we have the right footprint, operational plan, and functionality in place to provide our customers with the products and services they need at the locations where they need it. Additionally, with our recent acquisition of Fusepoint, Inc., we have expanded our global footprint into Canada. We continue to work with our existing customers to understand their business needs and related geographic and product extension opportunities. We believe that the pursuit of this understanding will foster stronger, mutually beneficial relationships with our customers. We are also evaluating and entering into strategic alliances, such as our agreement with Thomson Reuters, which provides managed hosting and network solutions to Thomson Reuters customers through our data centers.

The center point of our strategy is to grow our hosting business through our managed hosting service offerings. We believe that we can show customers that we can decrease their costs by moving towards our managed hosting solutions for their IT needs. While colocation and network services play an important and foundational role, we remain intensely focused on growing our managed hosting business, specifically in our new offerings such as cloud services. We successfully launched the first of our cloud service offerings during 2009 and launched our advanced virtual private data center for cloud services in the second quarter of 2010. In the fourth quarter of 2009, we experienced revenue decreases from non-core, below-market margin colocation customers, including certain of those in the internet content business; however, in 2010 the colocation market has improved, pricing has stabilized and we remain committed to delivering growth in that product. We have increased our focus on our network services and have started to see stabilization in that segment of our business, while continuing to provide an integrated managed hosting and managed network solution, particularly in hosted applications requiring higher network performance characteristics; however, we do expect certain of our network products to continue to experience pricing pressure. Approximately two-thirds of our revenue comes from customers that purchase all three of our primarily services: managed hosting, colocation and network. Accordingly, we believe the intersection of these three services allows us to produce a much higher return on invested capital than managed hosting, colocation or network alone, particularly by leveraging technologies for shared platform resources.

Based on current economic conditions and demand for our services, we will also continue to remain focused on initiatives that we believe will continue to improve and grow our business, including:

• Increasing the quality of our infrastructure and the reliability of our services through additional investments in systems;

• Improving efficiencies in our services and support and our general and administrative areas through process and productivity improvements;

• Expanding data center space to support growth in our hosting products and services;

• Investing in cloud platforms and services;

• Increasing client satisfaction through our delivery of differentiated services as reflected in responses to our customer satisfaction surveys; and

• Exploring options for acquisitions, divestitures and strategic alliances that facilitate the achievement of our business objectives.

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Significant Events

Tender offer. On July 1, 2010, we commenced a tender offer to purchase any and all of our outstanding 3.0% Convertible Senior Notes, or the Notes, due May 15, 2012 for an amount in cash equal to $990 per $1,000 principal amount of the Notes validly tendered and accepted for purchase plus accrued and unpaid interest up to, but not including, the date of purchase. The tender offer expired August 4, 2010, and we purchased 98.4% of the $345.0 million outstanding principal amount of the Notes, or $339.4 million, for $336.0 million. An additional $2.2 million was paid for accrued and unpaid interest. On September 14, 2010, at $990 per $1,000 principal amount, we purchased and extinguished $2.5 million of the remaining outstanding principal amount of the Notes for $2.5 million, including accrued and unpaid interest. As of September 30, 2010, $3.1 million principal amount of the Notes remained outstanding. As a result of both transactions, we recognized a loss on debt extinguishment of $4.3 million, which represents the $2.5 million unamortized debt issuance costs related to the extinguished Notes, the $1.4 million difference between the fair value attributed to the liability component and the carrying value of the Notes at extinguishment and the $0.4 million fees paid to third parties for the facilitation of the transactions.

Debt refinancing. On August 4, 2010, we entered into senior secured credit facilities consisting of a $550.0 million six-year term loan facility, or the Term Loan, and a $75.0 million three-and-a-half-year revolving credit facility, or the Revolver, with a group of lenders for which Banc of America Securities LLC and Morgan Stanley Senior Funding, Inc. served as joint lead arrangers and joint bookrunners and Credit Suisse Securities (USA) LLC and Suntrust Robinson Humphrey, Inc. served as arrangers and joint bookrunners. The proceeds of the Term Loan were used, together with cash on hand, to repay existing indebtedness, including the $336.0 million principal and $2.2 million interest paid on tendered Notes, the $110.0 million outstanding on the Company’s existing revolving credit facility, which was terminated, with an additional $1.5 million in interest and fees, $16.9 million principal and $0.1 million interest on the loan agreement with Cisco Systems Capital Corporation, or Cisco, and $11.2 million of the $13.1 million outstanding on the lease agreements with Cisco, plus an additional $0.2 million in fees, the £35.0 million, or approximately $55.8 million, outstanding on the loan agreement with Lombard North Central, Plc., or Lombard, and the £2.0 million, or approximately $3.2 million, settlement of the interest rate swap related to the loan agreement with Lombard. The Term Loan requires 0.25% quarterly principal amortization payments beginning December 31, 2010, with the remaining balance payable on the maturity date, August 4, 2016. There was 3.0%, or $16.5 million, original issue discount associated with the Term Loan, which will be recognized as interest expense over the term of the loan. The Revolver contains a $40.0 million letter of credit provision and can be used to fund working capital, for capital expenditures and other general corporate purchases.

Credit agreement. In August 2010, as part of a refinancing transaction, we repaid the $110.0 million outstanding, plus an additional $1.5 million in fees, and terminated our amended and restated credit agreement with Wells Fargo Capital Finance, or the Credit Agreement. The Credit Agreement was amended in June 2010 to increase the available borrowing capacity in order to fund the purchase price of the Fusepoint acquisition. Under the amended terms of the Credit Agreement we had borrowing capacity of $150.0 million, which included a $40.0 million letter of credit provision. Borrowings under the Credit Agreement could be used to fund working capital, acquisitions, capital expenditures and other general corporate purposes. We elected to pay interest on a three month LIBOR rate, plus an applicable margin. The interest rate at the time of extinguishment was 6.50%. With the June 2010 amendment of the Credit Agreement, we incurred $2.6 million of additional debt issuance costs, the majority of which were recognized as a loss on debt extinguishment during the three months ended September 30, 2010. As of September 30, 2010, there were approximately $9.2 million of outstanding letters of credit remaining with the terminated Credit Agreement provider, which are backed by letters of credit issued under the Revolver.

Fusepoint acquisition. On June 16, 2010, we completed our acquisition of Fusepoint, Inc., or Fusepoint. Fusepoint is an independent provider of outsourced managed IT and infrastructure services to mid-market and larger enterprises in Canada. With the acquisition of Fusepoint, we obtained hosting assets in three data centers in Toronto, Vancouver and Montreal. We acquired Fusepoint for $121.8 million in cash, after adjustment for estimated working capital and debt levels. At the closing, $12.5 million of the purchase price was placed in escrow for possible application against this working capital adjustment, certain tax liabilities, and indemnification claims that may be made in the first year following closing. We funded the acquisition through available cash on hand and the assumption of an additional $110.0 million of debt through the utilization of increased borrowing capacity under the Credit Agreement, which was amended and upsized to $150.0 million as described above. The acquisition has been accounted for using the acquisition method of accounting. Acquisition and integration related costs of $0.5 million and $3.5 million were included in our unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2010, respectively.

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RESULTS OF OPERATIONS

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

Three Months Ended September 30, 2010 Compared to the Three Months Ended September 30, 2009

Executive Summary of Results of Operations

Revenue increased $28.7 million, or 13%, for the three months ended September 30, 2010 compared to the three months ended September 30, 2009, primarily as a result of a 19% increase in total hosting revenue. Income from continuing operations decreased $1.0 million to $3.5 million for the three months ended September 30, 2010 compared to income from continuing operations of $4.5 million for the three months ended September 30, 2009, primarily due to increases in depreciation and other operating expenses. Loss from continuing operations before income taxes for the three months ended September 30, 2010 was $27.1 million compared to $9.4 million for the three months ended September 30, 2009.

The following table presents revenue by major service category (dollars in thousands):

	Three Months Ended September 30,
	2010		2009		Dollar Change		Percentage Change
Revenue:
Colocation	$	95,211	$	85,341	$	9,870		12	%
Managed hosting		81,513		62,814		18,699		30	%
Total hosting		176,724		148,155		28,569		19	%
Network services		65,177		65,056		121		0	%
Total revenue	$	241,901	$	213,211	$	28,690		13	%

Revenue. Revenue was $241.9 million for the three months ended September 30, 2010, an increase of $28.7 million, or 13%, from $213.2 million for the three months ended September 30, 2009. Total hosting revenue was $176.7 million for the three months ended September 30, 2010, an increase of $28.6 million from $148.2 million for the three months ended September 30, 2009. The increase was driven by increases in both managed hosting and colocation revenue. The $18.7 million increase in managed hosting revenue included $4.2 million of incremental revenue resulting from our acquisition of Fusepoint, and the $9.9 million increase in our colocation revenue included $4.6 million of incremental revenue resulting from our acquisition of Fusepoint. The organic growth of $19.8 million reflected growth in our colocation, dedicated hosting, storage and professional services products. Network services revenue was $65.2 million for the three months ended September 30, 2010, an increase of $0.1 million from $65.1 million for the three months ended September 30, 2009.

Cost of revenue. Cost of revenue includes facility rental costs, utilities, circuit costs and other operating costs for hosting space; costs of leasing local access lines to connect customers to our Points of Presence, or PoPs; leasing backbone circuits to interconnect our PoPs; indefeasible rights of use, operations and maintenance; and salaries and related benefits for engineering, service delivery and provisioning, customer service, consulting services and operations personnel who maintain our network, monitor network performance, resolve service issues, and install new sites. Cost of revenue excludes depreciation, amortization and accretion, which is reported as a separate line item of operating costs, and includes non-cash equity-based compensation. Cost of revenue was $131.6 million for the three months ended September 30, 2010, an increase of $13.7 million, or 12%, from $117.9 million for the three months ended September 30, 2009. The increase included $5.1 million of incremental costs resulting from our acquisition of Fusepoint. The remaining $8.6 million increase was primarily due to $3.2 million in increased customer installation costs driven by an increase in revenue, a $1.6 million increase in software and other maintenance, a $1.5 million increase in facilities costs, a $0.7 million increase in salaries, wages and benefits, driven by higher severance costs, and a $0.6 million increase in travel and consultant costs to support acquisition and integration activities.

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Sales, general and administrative expenses. Sales, general and administrative expenses include sales and marketing salaries and related benefits; product management, pricing and support salaries and related benefits; sales commissions and referral payments; advertising, direct marketing and trade show costs; occupancy costs; executive, financial, legal, tax and administrative support personnel and related costs; professional services, including legal, accounting, tax and consulting services; and bad debt expense. It excludes depreciation, amortization and accretion, which is reported as a separate line item of operating costs, and includes non-cash equity-based compensation. Sales, general and administrative expenses were $56.5 million for the three months ended September 30, 2010, an increase of $3.9 million, or 8%, from $52.6 million for the three months ended September 30, 2009. The increase included $2.3 million of incremental costs resulting from our acquisition of Fusepoint. The remaining $1.6 million increase was primarily due to $1.8 million in commissions, $1.4 million in marketing and legal costs, $0.9 million in temporary employees, and $0.5 million in software maintenance, partially offset by a $3.1 million decrease in non-cash equity-based compensation expense.

Depreciation, amortization and accretion. Depreciation, amortization and accretion expense consists primarily of the depreciation of property and equipment, amortization of intangible assets, and accretion expense related to the aging of the discounted present value of certain liabilities and unfavorable long-term contracts assumed in acquisitions. Depreciation, amortization and accretion was $50.3 million for the three months ended September 30, 2010, an increase of $12.1 million, or 32%, from $38.2 million for the three months ended September 30, 2009. This increase included $3.6 million in depreciation on tangible assets acquired with our acquisition of Fusepoint, along with amortization of the acquired intangible assets. The remaining $8.5 million increase was due to depreciation on the addition of new data center assets and other capital expenditures of $13.1 million, which was partially offset by a $1.7 million decrease in depreciation due to certain assets becoming fully depreciated and $2.9 million decrease in deprecation due to foreign currency impact from assets in our international regions.

Loss on debt extinguishment. Loss on debt extinguishment was $8.7 million for the three months ended September 30, 2010. This represents the loss incurred with the refinancing of our long-term debt, as described in the Significant Events section of this document, and consisted of $6.1 million unamortized deferred financing costs, a $1.4 million loss representing the difference between the fair value and carrying value of the Notes, and $1.2 million in costs primarily related to bank and legal fees.

Other income and expense. Other income and expense represents interest on our long-term debt, interest on our capital and financing method lease obligations, certain other non-operating charges, and interest income on our invested cash balances. Other income and expense was $21.8 million for the three months ended September 30, 2010, an increase of $7.9 million, or 57%, from $13.9 million for the three months ended September 30, 2009. The $3.9 million increase in interest expense for the three months ended September 30, 2010 was driven by $5.9 million interest on our term loan and $1.2 million of interest related to the expansion of an existing data center in Chicago which resulted in the reclassification of the lease to a capital lease, partially offset by a $2.3 million decrease in accreted convertible debt interest and a $1.6 million decrease in convertible notes interest, both a result of the extinguishment of the majority of our convertible notes during the current quarter. Other income and expense declined $4.1 million primarily due to the $3.1 million loss on the settlement of our interest rate swap. The following table presents a quarterly overview of the components of other income and expense (dollars in thousands):

	Three Months Ended September 30,
	2010			2009			Dollar Change			Percentage Change
Other (income) and expense
Interest expense	$	18,391		$	14,533		$	3,858			27	%
Interest income		(41	)		(33	)		(8	)		(24	%)
Other (income) expense		3,495			(613	)		4,108			670	%
Total other (income) and expense	$	21,845		$	13,887		$	7,958			57	%

Loss from continuing operations before income taxes. Loss from continuing operations before income taxes for the three months ended September 30, 2010 was $27.1 million, a decline of $17.7 million from a loss from continuing operations before income taxes of $9.4 million for the three months ended September 30, 2009.

Income tax (benefit) expense. Income tax benefit for the three months ended September 30, 2010 was $0.9 million compared to income tax expense of $0.6 million for the three months ended September 30, 2009. The $1.5 million improvement was due to a tax benefit generated from Fusepoint operations, in addition to the expectation of a lower alternative minimum tax liability in 2010.

Loss from continuing operations, net of income taxes. Loss from continuing operations, net of income taxes for the three months ended September 30, 2010 was $26.2 million, a decline of $16.3 million, from a loss from continuing operations, net of income taxes of $9.9 million for the three months ended September 30, 2009, driven by the factors previously described.

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Loss from discontinued operations, net of income taxes. Loss from discontinued operations, net of income taxes, was $0.01 million for the three months ended September 30, 2010. This represents the loss from our applications services business which was acquired in connection with our acquisition of Fusepoint, Inc. These assets have been classified as held for sale.

Net loss. Net loss for the three months ended September 30, 2010 was $26.2 million, a decline of $16.3 million, from a net loss of $9.9 million for the three months ended September 30, 2009, driven by the factors previously described.

Segment Information

Segment Adjusted EBITDA

The discussion of our results of operations by segment presented below includes references to and analysis of our segment adjusted EBITDA results. Adjusted EBITDA represents income from continuing operations before depreciation, amortization and accretion, and non-cash equity-based compensation. Adjusted EBITDA is reconciled below to its most comparable measure, income from continuing operations. Adjusted EBITDA is further reconciled to income loss from continuing operations before income taxes in Note 19 of Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. We use adjusted EBITDA as a performance measure to evaluate our segments because we believe that such information is a relevant measure of a company’s operating financial performance and liquidity in our industry. The calculation of adjusted EBITDA is not specified by United States generally accepted accounting principles. As such, our calculation of adjusted EBITDA may not be comparable to similarly titled measures of other companies.

The following table presents revenue and adjusted EBITDA by segment, and excludes the results of our discontinued operations (dollars in thousands):

	Three Months Ended September 30,
	2010			2009			Dollar Change			Percent Change
Revenue
Hosting	$	176,724		$	148,155		$	28,569			19	%
Network		65,177			65,056			121			0	%
Total revenue	$	241,901		$	213,211		$	28,690			13	%
Adjusted EBITDA
Hosting	$	66,892		$	55,582		$	11,310			20	%
Network		15,747			18,484			(2,737	)		(15	%)
Corporate - other (1)		(23,400	)		(22,875	)		(525	)		(2	%)
Total adjusted EBITDA	$	59,239		$	51,191		$	8,048			16	%
Adjusted EBITDA reconciliation
Income from continuing operations	$	3,469		$	4,514
Depreciation, amortization and accretion		50,335			38,201
Non-cash equity-based compensation		5,435			8,476
Adjusted EBITDA	$	59,239		$	51,191

(1) Includes all costs not directly associated with hosting services or network services, including $0.5 million acquisition and integration related costs in the three months ended September 30, 2010.

Revenue

Hosting. Revenue from our hosting segment was $176.7 million for the three months ended September 30, 2010, a $28.6 million increase from $148.2 million for the three months ended September 30, 2009. The increase was driven by increases in both managed hosting and colocation revenue. The $18.7 million increase in managed hosting revenue included $4.2 million of incremental revenue resulting from our acquisition of Fusepoint, and the $9.9 million increase in our colocation revenue included $4.6 million of incremental revenue resulting from our acquisition of Fusepoint. The organic growth of $19.8 million reflected growth in our colocation, dedicated hosting, storage and professional services products.

Network. Network services revenue was $65.2 million for the three months ended September 30, 2010, an increase of $0.1 million from $65.1 million for the three months ended September 30, 2009.

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Adjusted EBITDA

Hosting. Adjusted EBITDA for our hosting segment was $66.9 million for the three months ended September 30, 2010, an increase of $11.3 million, or 20%, from $55.6 million for the three months ended September 30, 2009. The increase was driven by a $28.6 million increase in hosting revenue, partially offset by a $17.3 million increase in hosting costs. Costs directly associated with our hosting segment include the costs of facility rentals, utilities, equipment and software maintenance costs and other operating costs for hosting space and the salaries and related benefits for personnel directly or indirectly associated with our hosting products. The $17.3 million increase in costs was comprised primarily from a $2.0 million increase in installation costs for new customers, a $2.4 million increase in utility costs on expanded data centers and incremental customer usage, $2.2 million higher software maintenance costs, primarily due to new business and increased license usage, a $4.3 million increase in personnel costs to support new customer revenue growth and $3.5 million of increased sales and marketing costs, predominately due to increased sales commissions related to new and renewed business along with a new marketing campaign related to new product launches. Segment adjusted EBITDA as a percentage of segment revenue was 38% for the three months ended September 30, 2010 and September 30, 2009.

Network. Adjusted EBITDA for our network segment was $15.7 million for the three months ended September 30, 2010, a decrease of $2.7 million, or 15%, from $18.5 million for the three months ended September 30, 2009. Costs directly associated with our network segment include costs of leasing local access lines to connect customers to our Points of Presence, or PoPs, leasing backbone circuits to interconnect our PoPs, indefeasible rights of use, operations, and maintenance, and salaries and related benefits for personnel directly or indirectly associated with our network products. The $2.7 million decline in adjusted EBITDA was primarily driven by a $2.1 million increase in local loop and circuit costs due to new business and $0.6 million in IRU maintenance due to a prior year favorable dispute settlement. Segment adjusted EBITDA as a percentage of segment revenue decreased to 24% for the three months ended September 30, 2010 compared to 28% for the three months ended September 30, 2009.

Corporate - other. Corporate - other adjusted EBITDA includes all operating costs not directly associated with our hosting or network segments, primarily general and administrative costs including executive, financial, legal, tax, internal IT and administrative support personnel and related costs, costs for professional services, including legal, accounting, tax and consulting services. These costs were $23.4 million for the three months ended September 30, 2010 an increase of $0.5 million from $22.9 million for the three months ended September 30, 2009. This was driven by $0.5 million of acquisition and integration costs related to our acquisition of Fusepoint.

Nine Months Ended September 30, 2010 Compared to the Nine Months Ended September 30, 2009

Executive Summary of Results of Operations

Revenue increased $25.6 million, or 4%, for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009, primarily as a result of an 8% increase in hosting revenue, which was partially offset by a 5% decrease in network services revenue. Income from continuing operations decreased $19.2 million to $10.4 million for the nine months ended September 30, 2010 compared to income from continuing operations of $29.6 million for the nine months ended September 30, 2009, primarily due to increases in depreciation and other operating expenses. Loss from continuing operations before income taxes for the nine months ended September 30, 2010 was $51.2 million compared to $13.6 million for the nine months ended September 30, 2009.

The following table presents revenue by major service category (dollars in thousands):

	Nine Months Ended September 30,
	2010		2009		Dollar Change			Percentage Change
Revenue:
Colocation	$	261,959	$	254,429	$	7,530			3	%
Managed hosting		225,695		198,203		27,492			14	%
Total hosting		487,654		452,632		35,022			8	%
Network services		192,590		201,963		(9,373	)		(5	%)
Total revenue	$	680,244	$	654,595	$	25,649			4	%

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Revenue. Revenue was $680.2 million for the nine months ended September 30, 2010, an increase of $25.6 million, or 4%, from $654.6 million for the nine months ended September 30, 2009. Revenue for the nine months ended September 30, 2009 included $3.0 million of non-recurring termination fees and $12.8 million of revenue from the American Stock Exchange, or AMEX, a customer which was acquired by the New York Stock Exchange and subsequently cancelled its service with us in 2009. Total hosting revenue was $487.6 million for the nine months ended September 30, 2010, an increase of $35.0 million from $452.6 million for the nine months ended September 30, 2009. The increase was driven by a $27.5 million increase in managed hosting revenue, which included $4.9 million of incremental revenue resulting from our acquisition of Fusepoint. The growth in managed hosting revenue was moderated by a loss of $10.0 million in revenue from AMEX and $3.0 million in one-time early termination fees recorded in the nine months ended September 30, 2009. Offsetting this prior year non-recurring revenue was net growth of $35.6 million, which reflected growth in our dedicated hosting, storage and professional services products. Colocation revenue increased $7.5 million for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009, which included $0.5 million in non-recurring revenue from AMEX. The $7.5 million increase included $5.3 million of incremental revenue resulting from our acquisition of Fusepoint. Organically, we experienced a $2.7 million increase in colocation revenue. Network services revenue was $192.6 million for the nine months ended September 30, 2010, a decrease of $9.4 million, or 5%, from $202.0 million for the nine months ended September 30, 2009. Included in network services revenue for the nine months ended September 30, 2009 was approximately $2.3 million of non-recurring revenue from AMEX. The remaining $7.1 million decrease was driven primarily by a $8.0 million decline in internet access revenue.

Cost of revenue. Cost of revenue was $371.2 million for the nine months ended September 30, 2010, an increase of $11.3 million, or 3%, from $359.9 million for the nine months ended September 30, 2009. This increase included $5.8 million of incremental costs resulting from our acquisition of Fusepoint. The remaining $5.5 million increase was primarily driven by a $4.4 million increase in third-party contractors to support revenue growth.

Sales, general and administrative expenses. Sales, general and administrative expenses were $165.1 million for the nine months ended September 30, 2010, an increase of $12.4 million, or 8%, from $152.7 million for the nine months ended September 30, 2009. This increase included $2.8 million of incremental costs resulting from our acquisition of Fusepoint. The remaining $9.6 million increase was driven by a $5.6 million increase in people costs primarily related to increased headcount and higher commissions on improved sales performance and $4.0 million of acquisition and integration costs related to our acquisition of Fusepoint.

Depreciation, amortization and accretion. Depreciation, amortization and accretion was $133.5 million for the nine months ended September 30, 2010, an increase of $21.2 million, or 19%, from $112.3 million for the nine months ended September 30, 2009, and included $4.2 million in depreciation on tangible assets acquired with our acquisition of Fusepoint, along with amortization of the acquired intangible assets. The remaining $17.0 million increase was due to the addition of new data centers and other capital expenditures of $29.2 million, which was partially offset by a $6.6 million decrease in depreciation due to certain assets becoming fully depreciated and $5.6 million decrease in depreciation due to foreign currency impact from assets in our international regions.

Loss on debt extinguishment. Loss on debt extinguishment was $8.7 million for the nine months ended September 30, 2010. This represents the loss incurred with the refinancing of our long-term debt, as described in the Significant Events section of this document, and consisted of $6.1 million unamortized deferred financing costs, a $1.4 million loss representing the difference between the fair value and carrying value of the Notes, and $1.2 million in costs primarily related to bank and legal fees.

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Other income and expense. Other income and expense was $52.9 million for the nine months ended September 30, 2010, an increase of $9.7 million, or 22%, from $43.3 million for the nine months ended September 30, 2009. The $5.7 million increase in interest expense for the nine months ended September 30, 2010 was due to $5.9 million of interest on our term loan, $3.6 million of interest related to the expansion of an existing data center in Chicago which resulted in the reclassification of the lease to a capital lease and $1.0 million of interest on our revolving debt agreement, partially offset by a $1.7 million decrease in accretion on our convertible notes, a $1.6 million decrease in interest on our convertible notes, a $0.9 million decrease in interest on our Lombard loan, and a $0.7 million decrease in interest on our Cisco loan and leases, with the decreases relating to a refinancing transaction that occurred in August 2010. Interest income decreased $0.1 million due to lower average interest rates and lower average daily cash balances invested during the nine months ended September 30, 2010. Other expense increased $3.8 million primarily due to the settlement of our interest rate swap during the nine months ended September 30, 2010. The following table presents a year-to-date overview of the components of other income and expense (dollars in thousands):

	Nine Months Ended September 30,
	2010			2009			Dollar Change		Percentage Change
Other (income) and expense
Interest expense	$	49,439		$	43,710		$	5,729		13	%
Interest income		(92	)		(191	)		99		52	%
Other (income) expense		3,588			(251	)		3,839		1529	%
Total other (income) and expense	$	52,935		$	43,268		$	9,667		22	%

Loss from continuing operations before income taxes. Loss from continuing operations before income taxes for the nine months ended September 30, 2010, was $51.2 million, a decline of $37.6 million, from a loss from continuing operations before income taxes of $13.6 million for the nine months ended September 30, 2009.

Income tax (benefit) expense. Income tax benefit for the nine months ended September 30, 2010 was $0.3 million compared to income tax expense of $1.9 million for the nine months ended September 30, 2009. The $2.2 million improvement was due to a tax benefit generated from Fusepoint operations, in addition to the expectation of a lower alternative minimum tax liability in 2010.

Loss from continuing operations, net of income taxes. Loss from continuing operations, net of income taxes for the nine months ended September 30, 2010 was $50.9 million, a decline of $35.4 million, from a loss from continuing operations, net of income taxes of $15.5 million for the nine months ended September 30, 2009, driven by the factors previously described.

Loss from discontinued operations, net of income taxes. Loss from discontinued operations, net of income taxes, was $0.1 million for the nine months ended September 30, 2010. This represents the loss from our applications services business acquired in our acquisition of Fusepoint, Inc. These assets have been classified as held for sale.

Net loss. Net loss for the nine months ended September 30, 2010, was $51.0 million, a decline of $35.5 million from a net loss of $15.5 million for the nine months ended September 30, 2009, primarily driven by the factors previously described.

Segment Information

Segment Adjusted EBITDA

The discussion of our results of operations by segment presented below includes references to and analysis of our segment adjusted EBITDA results. Adjusted EBITDA represents income from continuing operations before depreciation, amortization and accretion, and non-cash equity-based compensation. Adjusted EBITDA is reconciled below to its most comparable measure, income from continuing operations. Adjusted EBITDA is further reconciled to loss from continuing operations before income taxes in Note 19 of Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. We use adjusted EBITDA as a performance measure to evaluate our segments because we believe that such information is a relevant measure of a company’s operating financial performance and liquidity in our industry. The calculation of adjusted EBITDA is not specified by United States generally accepted accounting principles. As such, our calculation of adjusted EBITDA may not be comparable to similarly titled measures of other companies.

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The following table presents revenue and adjusted EBITDA by segment, and excludes the results of our discontinued operations (dollars in thousands):

	Nine Months Ended September 30,
	2010			2009			Dollar Change			Percent Change
Revenue
Hosting	$	487,654		$	452,632		$	35,022			8	%
Network		192,590			201,963			(9,373	)		(5	%)
Total revenue	$	680,244		$	654,595		$	25,649			4	%
Adjusted EBITDA
Hosting	$	185,132		$	179,964		$	5,168			3	%
Network		48,601			51,540			(2,939	)		(6	%)
Corporate - other (1)		(69,338	)		(66,368	)		(2,970	)		(4	%)
Total adjusted EBITDA	$	164,395		$	165,136		$	(741	)		(0	%)
Adjusted EBITDA reconciliation
Income from continuing operations	$	10,449		$	29,649
Depreciation, amortization and accretion		133,513			112,335
Non-cash equity-based compensation		20,433			23,152
Adjusted EBITDA	$	164,395		$	165,136

(2) Includes all costs not directly associated with hosting services or network services, including $4.0 million acquisition and integration related costs in the nine months ended September 30, 2010.

Revenue

Hosting. Revenue from our hosting segment was $487.6 million for the nine months ended September 30, 2010, an increase of $35.0 million from $452.6 million for the nine months ended September 30, 2009. The increase was driven by a $27.5 million increase in managed hosting revenue, which included $4.9 million of incremental revenue resulting from our acquisition of Fusepoint. During the nine months ended September 30, 2009, we recorded approximately $3.0 million of non-recurring termination fees and approximately $10.0 million of revenue from AMEX. Offsetting this prior year non-recurring revenue was net growth of $35.6 million, which reflected growth in our dedicated hosting, storage and professional services products. Colocation revenue increased $7.5 million for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009, which included $0.5 million in non-recurring revenue from AMEX. The $7.5 million increase included $5.3 million of incremental revenue from our acquisition of Fusepoint. Organically, we experienced a $2.7 million increase in colocation revenue.

Network. Network services revenue was $192.6 million for the nine months ended September 30, 2010, a decrease of $9.4 million, or 5%, from $202.0 million for the nine months ended September 30, 2009. Included in network services revenue for the nine months ended September 30, 2009 was approximately $2.3 million of non-recurring revenue from AMEX. The remaining $7.1 million decrease was driven primarily by an $8.0 million decline in internet access revenue.

Adjusted EBITDA

Hosting. Adjusted EBITDA for our hosting segment was $185.1 million for the nine months ended September 30, 2010, an increase of $5.2 million, or 3%, from $180.0 million for the nine months ended September 30, 2009 which included $3.0 million of non-recurring termination fee revenue which had no associated costs. The increase was driven by a $35.0 million increase in revenue, partially offset by a $29.9 million increase in costs. The $29.9 million increase in costs was primarily driven by $5.4 million of higher software maintenance costs, primarily due to new business and increased license usage, and an additional $8.9 million of costs for increased headcount and third party contractors to support increased managed hosting revenue. Additionally, sales and marketing expenses increased $9.4 million on higher commissions and expanded marketing efforts for hosting products. Segment adjusted EBITDA as a percentage of segment revenue was 38% for the nine months ended September 30, 2010 compared to 40% for the nine months ended September 30, 2009.

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Network. Adjusted EBITDA for our network segment was $48.6 million for the nine months ended September 30, 2010 and $51.5 million for the nine months ended September 30, 2009. The revenue decline of $9.3 million was primarily due to $8.0 million in internet access, and was offset by $6.4 million of cost savings comprised of $4.0 million of reduced local loop and circuit costs driven by revenue reductions and $2.3 million of lower personnel costs. Segment adjusted EBITDA as a percentage of segment revenue was 25% for the nine months ended September 30, 2010 compared to 26% for the nine months ended September 30, 2009.

Corporate – other. Corporate – other adjusted EBITDA includes all operating costs not directly associated with our hosting or network segments, primarily general and administrative costs including executive, financial, legal, tax, internal IT and administrative support personnel and related costs, costs for professional services, including legal, accounting, tax and consulting services. These costs were $69.3 million for the nine months ended September 30, 2010 an increase of $3.0 million from $66.4 million for the nine months ended September 30, 2009. This was driven by $4.0 million of acquisition and integration costs related to our acquisition of Fusepoint.

LIQUIDITY AND CAPITAL RESOURCES

Sources and Use of Cash

As of September 30, 2010, our cash and cash equivalents balance was $88.0 million and we have $65.3 million of available capacity on our revolving credit facility. On July 1, 2010, we commenced a tender offer to purchase any and all of the outstanding Notes for an amount in cash equal to $990 per $1,000 principal amount of the Notes validly tendered and accepted for purchase plus accrued and unpaid interest up to, but not including, the date of purchase. The tender offer expired August 4, 2010, and the Company purchased 98.4% of the $345.0 million outstanding principal amount of the Notes, or $339.4 million, for $336.0 million, plus and additional $2.2 million of accrued and unpaid interest. On September 14, 2010, at $990 per $1,000 principal amount, we purchased and extinguished $2.5 million of the remaining outstanding principal amount of the Notes for $2.5 million, including accrued and unpaid interest. As of September 30, 2010, $3.1 million principal amount of the Notes remained outstanding. The repurchase of the Notes was funded through our entry into $625.0 million of senior secured credit facilities, which is comprised of a $550.0 million term loan maturing in 2016 and a $75.0 million revolving credit facility maturing in early 2014. The $550.0 million of term loan debt funded the repurchase of the Notes, the repayment of our Lombard loan for approximately $55.8 million, the settlement and subsequent termination of our revolving credit facility with Wells Fargo Capital Finance of $110.0 million, approximately $28.4 million of loans and leases with Cisco Systems Capital Corporation, including interest, and the settlement of the interest rate swap related to our Lombard loan for approximately $3.2 million. We believe we have sufficient cash to fund business operations and capital expenditures for at least twelve months from the date of this filing, from cash on hand, operations, and available debt capacity.

The following table presents our cash flows for the periods indicated (dollars in thousands):

	For the Nine Months  Ended September 30,
	2010			2009
Cash provided by (used in):
Operating activities	$	106,315		$	129,011
Investing activities		(271,533	)		(75,804	)
Financing activities		94,873			(10,926	)
Effect of exchange rates on cash and cash equivalents		(2,422	)		(67	)
Net increase (decrease) in cash and cash equivalents	$	(72,767	)	$	42,214

Operating activities. We generated $106.3 million of cash from operating activities during the nine months ended September 30, 2010, a decrease of $22.7 million in cash from operating activities of $129.0 million for the nine months ended September 30, 2009. This decrease was driven by the lengthening of collection cycles and increased prepayments for maintenance and rent related costs. We anticipate continuing to generate cash from operating activities during the next twelve months.

Investing activities. Net cash used in investing activities for the nine months ended September 30, 2010 was $271.5 million, an increase of $195.7 million from net cash used in investing activities of $75.8 million for the nine months ended September 30, 2009. The increase in cash used was driven by our net investment of $112.8 million in Fusepoint. Additionally, we incurred incremental data center expansion related capital expenditures of $37.1 million during the nine months ended September 30, 2010.

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Financing activities. Net cash provided by financing activities for the nine months ended September 30, 2010 was $94.9 million, an increase of $105.8 million from net cash used by financing activities of $10.9 million for the nine months ended September 30, 2009. This increase primarily relates to $110.0 million in proceeds from long term debt, less related debt issuance costs of $2.6 million, used to fund our acquisition of Fusepoint, and $16.5 million proceeds from stock option exercises in the nine months ended September 30, 2010, partially offset by the $12.9 million net impact of a refinancing transaction that occurred during the three months ended September 30, 2010 and other activity, net. We anticipate our financing activities for the next twelve months to consist primarily of principal payments on our capital lease obligations and long-term debt.

Trade Accounts Receivable

Trade accounts receivable, net of allowance, was $74.1 million as of September 30, 2010, an increase of $28.3 million from $45.8 million at December 31, 2009, and included $4.9 million of trade accounts receivable, net acquired with Fusepoint. The remaining $23.4 million increase is primarily driven by a lengthening of the collection cycle through both more aggressive cash management strategies employed by and extended payment terms granted to, certain customers. We continue to monitor and adjust our cash collection process and cash management strategies to mitigate any adverse impacts on our liquidity and cash flows from operations. Other than any financing activities we may pursue, customer collections are our primary source of cash. As such, we are vulnerable to economic downturn and the impact it may have on our customers’ spending. We believe we have a strong customer base with no one customer accounting for more than 10% of our revenues; however, 27% of our revenue for the nine months ended September 30, 2010 was generated by customers in the financial services industry and 8% of that by our largest customer, Thomson Reuters, who also represents 16% of our outstanding net accounts receivable balance. Given the ongoing economic environment and uncertainty in the financial services industry, we remain cautious regarding these customers and their future impact on our revenue and profitability.

Long-term Debt and Other Financing

Long-term debt. The following table sets forth our long-term debt and other financing as of September 30, 2010 and December 31, 2009 (dollars in thousands):

	September 30, 2010		December 31, 2009
Term loan (1)	$	533,935	$	—
Convertible notes		2,848		305,921
Lombard loan facility		—		55,973
Other financing (2)		—		20,795
Revolver		—		—
Credit agreement		—		—
Capital and financing method lease obligations (3)		229,830		234,776
Total long-term debt and other financing	$	766,613	$	617,465

(1) The amount presented in the table above includes current amounts due of $5.5 million for September 30, 2010.

(2) Other financing includes borrowings under our Cisco loan agreement, for which the weighted-average interest rate was 6.50% as of December 31, 2009. The amount presented in the table above includes the current amounts due of $6.6 million for December 31, 2009. The loan was paid in full on August 4, 2010.

(3) Capital and financing method lease obligations include capital and financing method leases on certain of our facilities and equipment held under capital leases. The weighted-average interest rates for such leases were 12.87% as of September 30, 2010 and 15.32% as of December 31, 2009. The amounts presented in the table above include the current amounts due of $13.4 million as of September 30, 2010 and $10.9 million as of December 31, 2009.

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Term loan and revolver. On August 4, 2010, we entered into senior secured credit facilities consisting of a $550.0 million six-year term loan facility, or the Term Loan, and a $75.0 million three-and-a-half-year revolving credit facility, or the Revolver, with a group of lenders for which Banc of America Securities LLC and Morgan Stanley Senior Funding, Inc. served as joint lead arrangers and joint bookrunners and Credit Suisse Securities (USA) LLC and Suntrust Robinson Humphrey, Inc. served as arrangers and joint bookrunners. The Term Loan and Revolver contain various affirmative, negative and financial covenants which are measured on a quarterly or annual basis and restrict our ability to create liens, incur additional indebtedness, and make capital expenditures, among other things, except as permitted by the terms of the agreement, and require maintenance of certain financial measures at defined levels. Our obligations under the Term Loan and the Revolver, and the guarantees of the Guarantors, are secured by a first-priority security interest in substantially all of our assets, interest in assets and proceeds thereof. We may elect to pay interest on a base or Eurodollar rate, plus applicable margin. The Term Loan requires 0.25% quarterly principal amortization payments beginning December 31, 2010, with the remaining balance payable on the maturity date, August 4, 2016. We incurred a 3.0%, or $16.5 million, original issue discount associated with the Term Loan. The Revolver contains a $40.0 million letter of credit provision, of which $9.7 million had been issued as of September 30, 2010. Unused commitments on the Revolver are subject to an annual commitment fee of 0.50% and a fee is applied to outstanding letters of credit of 4.75%. The applicable interest rate on Eurodollar loans under the Revolver would have been 6.50% at September 30, 2010; however, there were no outstanding borrowings. As of September 30, 2010, the applicable interest rate for the Term Loan was 6.75%, including the Eurodollar floor of 1.75%, and outstanding borrowings totaled $550.0 million. Unamortized original issue discount of $16.1 million on the Term Loan remained as of September 30, 2010.

Credit agreement. In August 2010, as part of a refinancing transaction, we repaid the $110.0 million outstanding, plus an additional $1.5 million in fees, and terminated our amended and restated credit agreement, or the Credit Agreement, with Wells Fargo Capital Finance. The Credit Agreement was amended in June 2010 to increase the available borrowing capacity in order to fund the purchase price of the Fusepoint acquisition. Under the amended terms of the Credit Agreement, we had borrowing capacity of $150.0 million which included a $40.0 million letter of credit provision. Borrowings under the Credit Agreement could be used to fund working capital, acquisitions, capital expenditures and other general corporate purposes. We elected to pay interest on a three month LIBOR rate, plus an applicable margin. The interest rate at the time of extinguishment was 6.50%. With the June 2010 amendment of the Credit Agreement, we incurred $2.6 million of additional debt issuance costs, the majority of which were recognized as a loss on debt extinguishment during the three months ended September 30, 2010. As of September 30, 2010, there were approximately $9.2 million of outstanding letters of credit remaining with the terminated Credit Agreement provider, which are backed a letter of credit issued under the Revolver.

Loan agreement and lease facility. We maintained a term loan and security agreement, or the Loan Agreement, and maintain a master lease agreement, or the Lease Agreement, with Cisco Systems Capital Corporation. The Loan Agreement provided for borrowings of up to $33.0 million, at an annual interest rate of 6.50%, to purchase network equipment, which were secured by a first-priority security interest in the equipment. The Lease Agreement provides a lease facility, or the Lease Facility, to purchase equipment with borrowings at the discretion of Cisco Systems Capital Corporation. The effective interest rate on current outstanding borrowings ranges from 6.50% to 6.75%. On August 4, 2010, as part of a refinancing transaction, we repaid the outstanding $16.9 million in borrowings outstanding on the Loan Agreement, along with $0.1 million of interest, and $11.2 million of the $13.1 million outstanding leases under the Lease Facility. There was a $0.2 million loss on debt extinguishment associated with the repayment of the leases. As of September 30, 2010, we had $1.8 million in outstanding borrowings under Lease Facility.

Lombard loan agreement. On August 4, 2010, as part of a refinancing transaction, we repaid and terminated, on behalf of our subsidiary SAVVIS UK Limited, or SAVVIS UK, the loan agreement, or the Lombard Loan Agreement, it maintained with Lombard North Central, Plc., or Lombard. The Lombard Loan Agreement had a five-year term and required monthly interest installments for the full term and quarterly principal installments that were to begin in 2011. We had guaranteed the obligations of SAVVIS UK under the Lombard Loan Agreement and the obligations were secured by a first priority security interest in substantially all of SAVVIS UK’s then existing data center assets and certain future assets. We maintained a letter of credit of $21.2 million, which was released with the termination of the agreement. A total of $55.8 million, or £35.0 million, was paid to Lombard, which included both the outstanding principal and accrued and unpaid interest. There were £0.4 million, or approximately $0.6 million, unamortized debt issuance costs related to the Lombard Loan Agreement recognized as a loss on debt extinguishment during the three months ended September 30, 2010.

Interest rate swap. On August 2, 2010, as a result of the refinancing of the Lombard Loan Agreement, we terminated our interest rate swap agreement, or the Swap Agreement, with National Westminster Bank, Plc., or NatWest, for £2.0 million, or approximately $3.2 million. In January 2009, we had dedesignated our existing interest rate swap and redesignated a new interest rate swap by entering into the Swap Agreement. At the time of dedesignation, the fair value of the existing interest rate swap was £2.5 million, which represented the financing element of the Swap Agreement, and was to be amortized to earnings as the originally hedged cash flows affect earnings. The Swap Agreement hedged the monthly interest payments incurred and paid under the Lombard Loan Agreement during the three year period beginning January 1, 2009 and ending December 31, 2011. At settlement, the market value of the interest

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rate swap was a non-current liability of £2.0 million, or approximately $3.2 million. We recognized a loss on settlement of £2.0 million, or approximately $3.1 million.

Interest rate cap. On September 30, 2010, as required by the Term Loan, we entered into an interest rate cap hedge agreement, or the Cap Agreement, with Bank of America, N.A., or BOA. The Cap Agreement caps the three month Eurodollar interest rates paid to BOA on a beginning notional principal amount of $155.0 million of Term Loan outstanding. During the three year period beginning October 4, 2010 and ending October 3, 2013, the notional amount of the Cap Agreement declines by the 0.25% quarterly principal amortization of the Term Loan as it applies to the original notional principal amount. The Cap Agreement effectively caps the interest rates paid to BOA on the then outstanding capped notional principal amount of the Term Loan at 3.0% during year one, 3.5% during year two and 4.0% during year three. The fair value of the Cap Agreement was a $0.4 million liability at September 30, 2010.

Future principal payments. The following table sets forth our aggregate future principal payments of long-term debt and other financing as of September 30, 2010 (dollars in thousands):

	Future Principal Payments of Long-term Debt and Other Financing
	Total		Remainder 2010		2011		2012		2013		2014		Thereafter
Term loan (1)	$	550,000	$	1,375	$	5,500	$	5,500	$	5,500	$	5,500	$	526,625
Convertible notes (1)		3,106		—		—		3,106		—		—		—
Capital lease obligations (2)		176,705		3,076		13,140		12,815		12,226		13,904		121,544
Revolver		—		—		—		—		—		—		—
Total	$	729,811	$	4,451	$	18,640	$	21,421	$	17,726	$	19,404	$	648,169

(1) Represents principal amount of the term loan and the convertible notes.

(2) Does not include future payments on our financing method lease obligation as they represent interest payments over the term of the lease.

The weighted-average cash interest rate applicable to outstanding borrowings was 6.7% and 3.2% as of September 30, 2010 and December 31, 2009, respectively.

For further information on our long-term debt and related derivatives, please refer to Notes 10 and 11, respectively, of Notes to the Financial Statements located in this Quarterly Report on Form 10-Q.

Debt Covenants

Under the terms of our Term Loan and Revolver agreements, we are required to comply with certain financial covenant ratios consisting of quarterly covenants for maximum total leverage and minimum fixed charge coverage ratios and annual maximum capital expenditures. As of September 30, 2010, we were in compliance with all such financial covenants.

The provisions of our debt agreements contain covenants including, but not limited to, restricting or limiting our ability to incur more debt, issue guarantees, pay dividends, make capital expenditures, and repurchase stock (subject to financial measures and other conditions). We were in compliance with all such covenants as of and during the nine months ended September 30, 2010, and anticipate compliance with all covenants for at least the next twelve months. However, 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 cross defaults and acceleration of repayment obligations.

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 $15.1 million, $30.1 million, $13.9 million, $9.7 million, $8.3 million, and $51.9 million during the years ended December 31, 2010, 2011, 2012, 2013, 2014, and thereafter, respectively. Should we not meet the minimum spending levels in any given term, decreasing termination liabilities, representing a percentage of the remaining contractual amounts, may become immediately due and payable. Furthermore, certain of these termination liabilities are potentially 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 September 30, 2010, the maximum liability

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would have been $129.0 million. To mitigate this exposure, at times, we align our minimum spending commitments with customer revenue commitments for related services.

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

We have employment agreements with key executive officers that contain provisions with regard to base salary, bonus, equity-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

As of September 30, 2010 we did not have any significant off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K. In the normal course of business, we are a party to certain guarantees and financial instruments with off-balance sheet risk as they are not reflected in our consolidated balance sheets, such as letters of credit, indemnifications, and operating leases under which certain facilities are leased. The agreements associated with such guarantees and financial instruments mature at various dates through January 2031, and may be renewed as circumstances warrant. As of September 30, 2010, we had $9.7 million in letters of credit outstanding, pledged as collateral to support certain facility leases and utility agreements. Also, in connection with the 2007 sale of our assets related to content delivery network services, we agreed to indemnify the purchaser should it incur certain losses due to a breach of our representations and warranties. We have not incurred a liability relating to these indemnification provisions in the past, and we believe that the likelihood of any future payout relating to these provisions is remote. Therefore, we have not recorded a liability during any period related to these indemnification provisions.

Our guarantees and financial instruments are valued based on the estimated amount of exposure and the likelihood of performance being required. No claims have been made against these guarantees and financial instruments nor, based on our past experience, do we expect exposure to material losses resulting therefrom. As a result, we determined such guarantees and financial instruments did not have significant value and have not recorded any related amounts in our consolidated financial statements.

CRITICAL ACCOUNTING ESTIMATES

Our discussion and analysis of our financial condition, results of operations, liquidity and capital resources is based upon our financial statements, which are prepared in accordance with United States generally accepted accounting principals, or U.S. GAAP. U.S. GAAP requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Our critical accounting policies that affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements are discussed in more detail in Note 2 to the Notes to the Consolidated Financial Statements and in Management’s Discussion and Analysis of Financial Condition and Results of Operations under the caption “Critical Accounting Estimates” included in our Annual Report on Form 10-K as filed with the SEC on March 5, 2010. There have been no significant changes to our critical accounting policies during the nine months ended September 30, 2010.

For information on recently adopted and recently issued accounting pronouncements, please refer to Note 2 of Notes to the Financial Statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Interest Rate Risk

As of September 30, 2010, we had $550.0 million outstanding variable rate debt on our term loan, with an interest rate payable as of September 30, 2010 of Eurodollar floor plus margin of 6.75%. The Company entered into an interest rate cap agreement on September 30, 2010 to cap the interest on a portion of our term loan between 3.0% and 4.0% during the three year agreement. There was 3% original issue discount on the term loan, which is accreted over the life of the loan and recognized as interest expense. The carrying value of the term loan as of September 30, 2010 was $533.9 million. The remainder of our outstanding debt was fixed rate debt and was comprised of our convertible notes. The convertible notes bear cash interest on the $3.1 million principal at 3% per annum, and an additional 5.36% of interest expense is recognized as accretion of the discounted portion of the convertible notes. As of September 30, 2010, the carrying amount of the convertible notes was $2.8 million.

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There have been no 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, 2009.

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 (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the Exchange Act)) as of the end of the period covered by this report. Based on management’s evaluation as of the end of the period covered by this report, our CEO and CFO have concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in United States Securities and Exchange Commission rules and forms.

Changes in Internal Control over Financial Reporting

In September 2010, we implemented a new billing system for our global operations. As a result, we have updated our internal controls as necessary to accommodate the modifications to our business processes and accounting procedures. There have not been any other significant changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the period covered by this report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION.

ITEM 1. LEGAL PROCEEDINGS.

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

ITEM 1A. RISK FACTORS.

There have been no material changes from the Risk Factors we previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K as of and for the year ended December 31, 2009, as filed with the United States Securities and Exchange Commission.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. (REMOVED AND RESERVED).

None.

ITEM 5. OTHER INFORMATION.

None.

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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	Incorporated by Reference
		Form 10-Q	Form	Filing Date with the SEC	Exhibit Number
2.1	Agreement and Plan of Merger dated May 28, 2010 by and among Fusepoint, Inc., Savvis, Inc., Blue Jay Merger Sub, Inc., and M/C Venture Partners V, L.P., as Stockholders’ Representative		8-K	June 1, 2010	2.1
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 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		8-K	August 1, 2008	3.1
10.1*	Employment, Confidentiality, Severance and Non-Competition Agreement dated August 31, 2010 between the Registrant and James E. Ousley		8-K	September 3, 2010	10.1
10.2	Credit Agreement dated August 4, 2010 by and among SAVVIS Communications Corporation, SAVVIS, Inc., each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer		8-K	August 11, 2010	10.1
10.3	Form of Employment, Confidentiality, Severance and Non-Competition Agreement for use after August 3, 2010	X
10.4	Form of Indemnification Agreement with Directors and Executive Officers	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

* Compensation arrangement

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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: November 5, 2010	By: /s/ James E. Ousley
	James E. Ousley
	Chief Executive Officer
	(principal executive officer)
Date: November 5, 2010	By: /s/ Gregory W. Freiberg
	Gregory W. Freiberg
	Chief Financial Officer
	(principal financial officer and principal accounting officer)

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EX-10.3

EXHIBIT 10.3

EMPLOYMENT, CONFIDENTIALITY, SEVERANCE AND NON-COMPETITION AGREEMENT

THIS EMPLOYMENT, CONFIDENTIALITY, SEVERANCE AND NON-COMPETITION AGREEMENT (this “Agreement”) is entered into as of [                    ,         ] by and between [            ] (the “Executive”) and SAVVIS, INC., a Delaware corporation, (“SAVVIS”) and all its subsidiaries (collectively referred to as the “Company”). Capitalized terms used but not defined herein have the respective meanings ascribed to such terms in Section 7 of this Agreement.

WHEREAS, Executive acknowledges that:

• the Company and its Affiliates are and will be engaged in a number of highly competitive lines of business.

• the Company and its Affiliates conduct business throughout the United States and in numerous foreign countries;

• the Company and its Affiliates possess Confidential Information and customer goodwill that provide the Company and its Affiliates with a significant competitive advantage; and

• the Company’s and its Affiliates’ success depends to a substantial extent upon the protection of its Confidential Information (which includes trade secrets and customer lists) and customer goodwill by all of their employees;

• Executive has and will continue to have possession of Confidential Information; and

WHEREAS, if Executive were to leave the Company, the Company and its Affiliates would in all fairness need certain protections to prevent competitors from gaining an unfair competitive advantage over them.

NOW, THEREFORE, in consideration of the covenants and agreements hereinafter set forth, the parties agree as follows:

1. Term of Agreement. This Agreement will remain in effect from the date hereof until the date the Executive’s employment with the Company terminates for any reason. The following provisions shall survive termination or expiration of this Agreement for any reason, to the extent applicable and in accordance with their terms: Sections 4, 5, 6 and 8. Executive’s employment is “at-will”, and nothing contained herein shall be deemed a guarantee of employment with Company for any period of time.

2. Capacity and Performance.

(a) During the term hereof, the Executive shall serve the Company in the position to which he or she is appointed from time to time. Executive’s position as of the date of this Agreement is [            ]. During the term hereof, Executive will be employed by the Company on a full-time basis and shall perform the duties and responsibilities of his or her

position and such other duties and responsibilities on behalf of the Company and its Affiliates, reasonably related to that position, as may be designated from time to time by the Compensation Committee (the “Compensation Committee”) of the Board of Directors of SAVVIS (the “Board”) or other designee.

(b) During the term hereof, the Executive shall devote his full business time and his best efforts, business judgment, skill and knowledge 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, except as may otherwise be expressly approved in advance by the Compensation Committee or other designee in writing.

3. Compensation and Benefits. As compensation for all services performed by the Executive under and during the term hereof, and subject to performance of the Executive’s duties and the fulfillment of the obligations of the Executive to the Company and its Affiliates, pursuant to this Agreement or otherwise:

(a) Base Salary. During the term hereof, the Company shall pay the Executive a base salary, which as of the date of execution of this Agreement is set at the rate of [                     Dollars ($            ) ] per annum, payable in accordance with the regular payroll practices of the Company for its executives subject to adjustment from time to time by the Compensation Committee, in its sole discretion. Such base salary, as from time to time adjusted, is hereafter referred to as the “Base Salary”.

(b) Incentive and Bonus Compensation.

(i) For service rendered during the Company’s fiscal year ending December 31, [    ], the Executive will be eligible, at the Compensation Committee’s discretion, to receive a bonus payment equal to [        ]% of Base Salary, payable in accordance with the terms of the Company’s [            ] Annual Incentive Plan.

(ii) Commencing on January 1, [    ] and for the remainder of the term hereof, the Executive shall be entitled to participate in the Company’s Annual Incentive Plan (the “Annual Incentive Plan”) on terms to be determined annually by the Compensation Committee prior to the commencement of each fiscal year. Nothing contained herein shall obligate the Company to continue the Annual Incentive Plan. Any compensation paid to the Executive under the Annual Incentive Plan shall be in addition to the Base Salary. Except as otherwise expressly provided under the terms of the Annual Incentive Plan or this Agreement, the Executive shall not be entitled to earn bonus or other compensation for services rendered to the Company.

[Insert equity grant provisions if applicable.]

4. Termination of Employment.

(a) Executive’s employment with the Company may be terminated as follows:

(i) by the Company with Cause;

(ii) by the Company without Cause;

(iii) upon Executive’s death or Disability (defined herein);

(iv) by Executive with Good Reason; or

(v) by Executive without Good Reason.

(b) Upon termination of Executive’s employment for any reason, all rights and obligations under this Agreement shall cease, except as referred to in Section 1 and except that Executive shall be entitled to (i) payment of his or her salary through the effective date of termination, plus (ii) payment of any other amounts owed but not yet paid to Executive as of the effective date of termination (such as reimbursement for business expenses incurred prior to termination in accordance with the Company’s expense and reimbursement policy, plus (iii) any other benefits to which Executive may be entitled which provide for payment or other benefits following termination (such as under disability insurance plan).

(c) Severance Benefits.

(i) If the Executive is subject to termination pursuant to an Involuntary Termination (as defined in Section 7), then in addition to any amounts / benefits owed under Section 4(b), the Company shall pay the Executive: (x) an amount equal to 100% of his or her then current annual Base Salary for one year (the “Severance Payment”) and (y) at the discretion of the Compensation Committee, a pro-rated portion of the bonus that the Executive would be entitled to receive under the Company’s Annual Incentive Plan (“Bonus”). The pro-rated Bonus will be calculated by the compensation committee by extrapolating the Company’s anticipated full year performance based on the current year performance to date and then multiplying the resulting full year extrapolation by a fraction the numerator of which is the number of days during the calendar year the Executive worked in the year of Involuntary Termination up to the termination date and the denominator of which is 365. Any such Bonus shall be paid not later than 30 days after the date of the Involuntary Termination. If the Executive is subject to an Involuntary Termination prior to March 31 of any calendar year, and has, therefore, not yet received payment for the prior year under the Annual Incentive Plan, then the Executive will also be entitled to such payment under the Annual Incentive Plan as he would otherwise have been entitled to receive had he remained employed on March 31 of the year of Involuntary Termination. Any such Bonus shall be paid at the time bonuses are paid to other employees under the Annual Incentive Plan and not later than the end of the year during which the Involuntary Termination occurred.

(ii) Further, if and only if the Involuntary Termination occurs within twelve (12) months after a Change in Control (a “Change in Control Termination”), then (x) in addition to the Severance Payment, any stock awards, stock options, stock appreciation rights or other equity-based awards (each an “Equity Award”) that were outstanding immediately prior to the effective date of the Change in Control Termination shall, unless such Equity Awards are no longer outstanding, to the extent not then vested, fully vest and become exercisable as of such date and the Executive shall have the right to exercise any such Equity Award until the earlier to occur of (A) twelve (12) months from the date of the Change in Control Termination and (B) the expiration date of such Equity Award as set forth in the agreement evidencing such award; and (y) the Executive shall be entitled to the Bonus, which shall be paid not later than 30 days after the date of the Change in Control Termination.

(d) Timing of and Conditions to Payment. Any Severance Payment due under Section 4(c) shall be paid bi-monthly, in accordance with the Company’s standard payroll procedures, for the twelve (12) month period following the effective date of termination. Any other provision of this Agreement notwithstanding, no severance benefits shall be payable unless and until each of the following has occurred:

(i) the Executive has executed and delivered to the Company a general release (in a form prescribed by the Company) of all known and unknown claims that he or she may then have against the Company or persons affiliated with the Company and has agreed not to prosecute any legal action or other proceeding based upon any of such claims;

(ii) the Executive has, no later than the effective date of termination, delivered to the Company a resignation from all offices, directorships and fiduciary positions with the Company and it affiliates;

(iii) the effective date of the Executive’s Involuntary Termination;

(iv) the date of the Company’s receipt of the Executive’s executed General Release, which must be no later than 21 days following the effective date of termination (except in the case of group terminations, such time period shall be 45 days);

(v) the expiration of any rescission or revocation period applicable to the Executive’s executed General Release; and

(vi) the Executive is and continues to be in compliance with all of his or her obligations under this Agreement, including, without limitation, Sections 5 and 6, and under the agreements and other documents referred to or incorporated by reference herein.

The Company will commence payment of the Severance Payment within ten (10) business days of satisfaction / occurrence of the last of the foregoing items (1) through (5). For purposes of Section 409A of the Internal Revenue Code of 1986, as amended (“Code”), an installment Severance Payment shall be deemed to be made as of the applicable bimonthly payroll date following the Executive’s effective date of termination if made by the 15th day of the third calendar month following such payroll date.

(e) Health Care Benefit. Following an Involuntary Termination, the Company will pay to the Executive a monthly taxable cash payment in an amount equal (on an after tax basis, taking into account federal, state, local and foreign taxes) to the monthly COBRA (Consolidated Omnibus Budget Reconciliation Act) premium(s) in effect as of immediately prior to the Executive’s Involuntary Termination for the most expensive level of coverage under the group health plan(s) applicable to the Executive at the time of the Executive’s Involuntary Termination. The monthly payments will commence with the first month following the Executive’s Involuntary Termination and will terminate upon the earlier of (a) the Executive having received twelve monthly payments and (b) the Executive becoming re-employed and entitled to coverage under the new employer’s group health plan. The Executive agrees to notify the Company in writing immediately upon becoming re-employed and entitled to coverage under a new employer’s group health plan.

(f) Withholding Taxes. All payments made under this Agreement shall be subject to reduction to reflect taxes or other charges required to be withheld by law.

(g) Section 409A Savings Clause. This Agreement is intended to comply with the requirements of Section 409A of the Code (including the exceptions thereto) to the extent applicable, and the Agreement shall be interpreted in a manner consistent with such requirements. Notwithstanding any other provision hereof, if any provision of the Agreement conflicts with the requirements of Section 409A of the Code (or an exception thereto), such provision shall be deemed reformed so as to comply with the requirements of Section 409A of the Code (or an exception thereto) and shall be interpreted and applied accordingly.

Amounts payable other than those expressly payable on a deferred or installment basis, will be paid as promptly as practical and, in any event, within 2 ¹/2 months after the end of the year in which such amount was earned.

Any amount that the Executive is entitled to be reimbursed will be reimbursed as promptly as practical and in any event not later than the last day of the calendar year after the calendar year in which the expenses are incurred, and the amount of the expenses eligible for reimbursement during any calendar year will not affect the amount of expenses eligible for reimbursement in any other calendar year.

If at the time of separation from service (i) the Executive is a specified employee (within the meaning of Section 409A and using the identification methodology selected by the Company from time to time), and (ii) the Company makes a good faith determination that an amount payable by the Company to the Executive constitutes deferred compensation (within the meaning of Section 409A) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A, then the Company will not pay such amount on the otherwise scheduled payment date but will instead pay it in a lump sum on the first business day after such six-month period together with interest for the period of delay, compounded annually, equal to the prime rate (as published in the Wall Street Journal) in effect as of the dates the payments should otherwise have been provided.

5. Confidential Information.

(a) The Executive acknowledges that the Company and its Affiliates continually develop Confidential Information, that the Executive may develop Confidential Information for the Company or its Affiliates and that the Executive will have possession of and access to Confidential Information during the course of employment. The Executive will comply with the policies and procedures of the Company and its Affiliates for protecting Confidential Information, and shall not disclose to any Person or use, other than as required by applicable law or for the proper performance of his duties and responsibilities to the Company and its Affiliates, any Confidential Information obtained by the Executive incident to his employment or other association with the Company or any of its Affiliates. The Executive understands that this restriction shall continue to apply after his employment terminates, regardless of the reason for such termination. The confidentiality obligation under this Section 5 shall not apply to information which is generally known or readily available to the public at the time of disclosure or becomes generally known through no wrongful act on the part of the Executive or any other Person having an obligation of confidentiality to the Company or any of its Affiliates.

(b) All documents, records, tapes and other media of every kind and description relating to the business, present or otherwise, of the Company or its Affiliates and any copies, in whole or in part, thereof (the “Documents”), whether or not prepared by the Executive, shall be the sole and exclusive property of the Company and its Affiliates. The Executive shall safeguard all Documents and shall surrender to the Company at the time his employment terminates, or at such earlier time or times as the Board or its designee may specify, all Documents then in the Executive’s possession or control.

(c) In the event that Executive is requested or becomes legally compelled (by oral questions, interrogatories, requests for information or documents, deposition, subpoena, civil investigative

demand or similar process) to disclose any of the Confidential Information, the Executive shall, where permitted under applicable law, rule or regulation, provide written notice to the Company promptly after such request so that the Company may, at its expense, seek a protective order or other appropriate remedy (the Executive agrees to reasonably cooperate with the Company in connection with seeking such order or other remedy). In the event that such protective order or other remedy is not obtained, the Executive shall furnish only that portion of the Confidential Information that the Executive is advised by counsel is required, and shall exercise reasonable efforts to obtain assurance that confidential treatment will be accorded such Confidential Information. In addition, the Executive may disclose Confidential Information in the course of inspections, examinations or inquiries by federal or state regulatory agencies and self regulatory organizations that have requested or required the inspection of records that contain the Confidential Information provided that the Executive exercises reasonable efforts to obtain reliable assurances that confidential treatment will be accorded to such Confidential Information. To the extent such information is required to be disclosed and is not accorded confidential treatment as described in the immediately preceding sentence, it shall not constitute “Confidential Information” under this Agreement.

6. Certain Covenants.

(a) The Executive agrees that, during his employment with the Company, he or she will not undertake any outside activity, whether or not competitive with the business of the Company or its Affiliates that could reasonably give rise to a conflict of interest or otherwise materially interfere with his or her duties and obligations to the Company or any of its Affiliates.

(b) During the term of Executive’s employment and for twelve (12) months following termination of his or her employment for any reason (the “Restricted Period”), the Executive shall not, directly or indirectly, whether as owner, partner, investor, consultant, agent, employee, co-venturer or otherwise:

(i) compete with the Company or any of its Affiliates within the geographic area in which the Company does business or undertake any planning for any business competitive with the Company or any of its Affiliates. Specifically, but without limiting the foregoing, the Executive agrees not to engage in any manner in any activity that is directly or indirectly competitive with the business of the Company or any of its Affiliates as conducted or under consideration at any time during the Executive’s employment, and further agrees not to work or provide services, in any capacity, whether as an employee, independent contractor or otherwise, whether with or without compensation, to any Person who is engaged in any business that is competitive with the business of the Company or any of its Affiliates for which the Executive has provided services. The foregoing, however, shall not prevent the Executive’s passive ownership of two percent (2%) or less of the equity securities of any publicly traded company. Notwithstanding any provision in this Agreement, section 6. (b) (i) shall not be deemed to create post-employment non-competition restrictions on the Executive if the Executive’s primary residence is in the state of California; or

(ii) solicit or encourage any customer of the Company or any of its Affiliates to terminate or diminish its relationship with them; or

(iii) seek to persuade any such customer of the Company or any of its Affiliates to conduct with anyone else any business or activity which such customer conducts with the Company or any of its Affiliates; provided that these restrictions shall apply only if the Executive

has performed work for such Person during his employment with the Company or one of its Affiliates or has been introduced to, or otherwise had contact with, such Person as a result of his employment or other associations with the Company or one of its Affiliates or has had access to Confidential Information which would assist in the Executive’s solicitation of such Person.

(iv) solicit for hiring any employee or independent contractor of the Company or any of its Affiliates or seek to persuade any employee or independent contractor of the Company or any of its Affiliates to discontinue or diminish such employee or independent contractor’s relationship with the Company or any of its Affiliates.

(c) Cooperation and Non-Disparagement. The Executive agrees that, during the Restricted Period, he or she shall cooperate with the Company in every reasonable respect and shall use his or her best efforts to assist the Company with the transition of the Executive’s duties to his or her successor. The Executive further agrees that, during the Restricted Period, he or she shall not in any way or by any means disparage the Company, the members of the Company’s Board or the Company’s officers and employees.

(d) Assignment of Inventions. The Executive shall promptly and fully disclose all Work Product (defined herein) to the Company. Executive hereby assigns to the Company all of Executive’s rights, title, and interest (including but not limited to all patent, trademark, copyright and trade secret rights) in and to all work product prepared by Executive, made or conceived in whole or in part by Executive within the scope of Executive’s employment by the Company or within six (6) months thereafter, or that relate directly to or involve the use of Confidential Information (“Work Product”). Executive further acknowledges and agrees that all copyrightable Work Product prepared by Executive within the scope of Executive’s employment with the Company are “works made for hire” and, consequently, that the Company owns all copyrights thereto. The Executive agrees to execute any and all applications for domestic and foreign patents, copyrights or other proprietary rights and to do such other acts (including without limitation the execution and delivery of instruments of further assurance or confirmation) requested by the Company to assign the Work Product to the Company and to permit the Company to enforce any patents, copyrights or other proprietary rights to the Work Product. The Executive will not charge the Company for time spent in complying with these obligations. Notwithstanding the foregoing, any provision in this Agreement which provides that Executive shall assign, offer to assign, any of his or her rights in an invention to the Company shall not apply to an invention that the Executive developed entirely on his or her own time without using the Company’s equipment, supplies, facilities, or trade secret information except for those inventions that either:

(i) relate at the time of conception or reduction to practice of the invention to the Company’s business or actual demonstrably anticipated research or development of the Company; or

(ii) result from any work performed by the Executive for the Company.

(e) Acknowledgement Regarding Restrictions. The Company has expended a great deal of time, money and effort to develop and maintain its confidential business information which, if misused or disclosed, could be very harmful to its business and could cause the Company to be at a competitive disadvantage in the marketplace. The Company would not be willing to proceed with the execution of this Agreement but for the Executive’s signing and agreeing to abide by the terms of this Agreement. The Executive recognizes and acknowledges that he or she has and will have access to Confidential Information of the Company, and that the Company, in all fairness, needs certain protection in order to ensure that the Executive does not misappropriate or misuse any trade secret or other Confidential Information or take any other action which could result in a loss of the goodwill of the

Company and, more generally, to prevent the Executive from having or providing others with an unfair competitive advantage over the Company. To that end, the Executive acknowledges that the foregoing restrictions, both separately and in total, are reasonable and enforceable in view of the Company’s legitimate interests in protecting the goodwill, confidential information and customer loyalty of its business. To the extent that any provision of this Agreement is adjudicated to be invalid or unenforceable because it is somehow overbroad or otherwise unreasonable, that provision shall not be void but rather shall be limited only to the extent required by applicable law and enforced as so limited to the greatest extent allowed by law, and the validity or enforceability of the remaining provisions of this Agreement shall be unaffected and such adjudication shall not affect the validity or enforceability of such remaining provisions.

(f) Right to Injunctive Relief. The Executive further agrees that in the event of any breach hereof the harm to the Company will be irreparable and without adequate remedy at law and, therefore, that injunctive relief with respect thereto will be appropriate. In the event of a breach or threatened breach of any of the Executive’s obligations under the terms of Sections 5 or 6 hereof, the Company shall be entitled, in addition to any other legal or equitable remedies it may have in connection therewith (including any right to damages that it may suffer), to temporary, preliminary and permanent injunctive relief restraining such breach or threatened breach (without the obligation to post bond), together with reasonable attorney’s fees incurred in preliminarily enforcing its rights hereunder. The Executive specifically agrees that if there is a question as to the enforceability of any of the provisions of Sections 5 or 6 hereof, the Executive will not engage in any conduct inconsistent with or contrary to such Section until after the question has been resolved by a final judgment of a court of competent jurisdiction.

7. Definitions.

(a) Definition of “Affiliate.” For all purposes under this Agreement, “Affiliate” shall mean, with respect to any Person, all Persons directly or indirectly controlling, controlled by or under common control with such Person, where control may be by either management authority, contract or equity interest. As used in this definition, “control” and correlative terms have the meanings ascribed to such words in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

(b) Definition of “Cause.” For all purposes under this Agreement, “Cause” shall mean any of the following (i) the Executive’s willful and continued failure to perform substantially the duties of his/her responsibilities (other than due to physical or mental incapacity); (ii) the Executive’s unauthorized use or disclosure of trade secrets which causes substantial harm to the Company; (iii) the Executive’s engaging in illegal conduct that is likely to be injurious to the Company; (iv) the Executive’s acts of fraud, dishonesty, or gross misconduct, or gross negligence in connection with the business of the Company; (v) the Executive’s conviction of a felony; (vi) the Executive’s engaging in any act of moral turpitude reasonably likely to substantially and adversely affect the Company or its business; (vii) the Executive engaging in the illegal use of a controlled substance or using prescription medications unlawfully; (viii) the Executive’s abuse of alcohol; or (ix) the breach by the Executive of a material term of this Agreement, including, without limitation, his or her obligations under Sections 5 or 6.

(c) Definition of “Change in Control.” For all purposes under this Agreement, “Change in Control” means the occurrence of any of the following:

(A) any Person (as defined herein) becomes the beneficial owner directly or indirectly (within the meaning of Rule 13d--3 under the Exchange Act) of more than 50% of SAVVIS’ then outstanding voting securities (measured on the basis of voting power); or

(B) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by SAVVIS’ shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(C) the closing of an agreement of merger or consolidation with any other corporation or business entity, other than (x) a merger or consolidation which would result in the voting securities of SAVVIS outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least 50% of the combined voting power of the voting securities of SAVVIS or such surviving entity outstanding immediately after such merger or consolidation, or (y) a merger or consolidation effected to implement a recapitalization of SAVVIS (or similar transaction) in which no Person acquires more than 50% of the combined voting power of SAVVIS’ then outstanding securities;

(D) the liquidation or dissolution of SAVVIS or the closing of a sale or disposition by SAVVIS of all or substantially all of its assets.

For purposes of this paragraph, “Person” means any individual, entity or group within the meaning of Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof; however, a Person shall not include (aa) SAVVIS or any of its subsidiaries, (bb) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, (cc) an underwriter temporarily holding securities pursuant to an offering of such securities, (dd) a corporation owned, directly or indirectly, by the shareholders of SAVVIS in substantially the same proportions as their ownership of SAVVIS common stock, (ee) any person or entity or group acquiring securities of SAVVIS pursuant to an issuance of securities approved by the Board, or (ff) any of the following entities or their affiliates: Welsh, Carson, Anderson & Stowe VIII L.P. and WCAS Management Corporation.

(d) Definition of “Confidential Information.” For all purposes under this Agreement, “Confidential Information” shall mean any and all information of the Company and its Affiliates that is not generally known by others with whom they compete or do business, or with whom any of them plans to compete or do business and any and all information, publicly known in part or not, which, if disclosed by the Company or its Affiliates would assist in competition against them. Confidential Information includes without limitation such information relating to (i) trade secrets, the development, research, testing, manufacturing, marketing and financial activities of the Company and its Affiliates, (ii) the Products, (iii) the costs, sources of supply, financial performance and strategic plans of the Company and its Affiliates, (iv) the identity and special needs of the customers of the Company and its Affiliates and (v) client lists and the people and organizations with whom the Company and its Affiliates have business relationships and the substance of those relationships. Confidential Information also includes any information that the Company or any of its Affiliates have received, or may receive hereafter, belonging to customers or others with any understanding, express or implied, that the information would not be disclosed.

(e) Definition of “Disability.” For all purposes under this Agreement, “Disability” shall mean the Executive becoming disabled during his employment hereunder through any illness, injury, accident or condition of either a physical or psychological nature and, as a result, is unable to perform substantially all

of his duties and responsibilities hereunder, notwithstanding the provision of any reasonable accommodation, for one hundred and eighty (180) days during any period of three hundred and sixty-five (365) consecutive calendar days.

(f) Definition of “Good Reason.” For all purposes under this Agreement, “Good Reason” shall mean the occurrence of any of the following events: (i) a change in the Executive’s position that materially reduces his or her authority and level of responsibility as an officer of the Company (provided that it is understood that the Chief Executive Officer of SAVVIS as a matter of management flexibility may direct a change in the Executive’s reporting relationships or job title or a transfer of the Executive to a different officer position and such change or transfer shall be not deemed to result in a reduction in the Executive’s authority or level of responsibility unless it is so substantial that a reasonable executive would feel compelled to resign under the circumstances), (ii) a material reduction in his or her level of compensation (including base salary and target bonus) or (iii) a relocation of his or her employment more than fifty (50) miles from the metropolitan area in which the Executive’s office is located at the time of resignation; provided, however, that in the case of the preceding clauses (i), (ii) and (iii), Good Reason shall only exist if effected without the Executive’s consent and is not a result of a Company-wide or department-wide policy or practice. Notwithstanding the foregoing, Good Reason shall only exist if (A) the Executive provides written notice to the Company within ninety (90) days of the occurrence of the event or condition constituting Good Reason, (B) the Company is provided a period of thirty (30) days to cure the event or condition giving rise to Good Reason (the “Cure Period”) and fails to do so prior to the end of the Cure Period, and (C) the Executive terminates employment within thirty (30) days after the end of the Cure Period.

(g) Definition of “Intellectual Property.” For all purposes under this Agreement, “Intellectual Property” shall mean inventions, discoveries, developments, methods, processes, compositions, works, concepts and ideas (whether or not patentable or copyrightable or constituting trade secrets) conceived, made, created, developed or reduced to practice by the Executive (whether alone or with others, whether or not during normal business hours or on or off Company premises) during the Executive’s employment and during the period of six (6) months immediately following termination of his employment that relate to either the Products or any prospective activity of the Company or any of its Affiliates or that make use of Confidential Information or any of the equipment or facilities of the Company or any of its Affiliates.

(h) Definition of “Involuntary Termination.” For all purposes under this Agreement, “Involuntary Termination” shall mean termination of employment under Section 4(a)(ii) or Section 4(a)(iv).

(i) Definition of “Person.” For all purposes under this Agreement, “Person” shall mean an individual, a corporation, a limited liability company, an association, a partnership, an estate, a trust and any other entity or organization.

(j) Definition of “Products.” For all purposes under this Agreement, “Products” shall mean all products planned, researched, developed, tested, manufactured, sold, licensed, leased or otherwise distributed or put into use by the Company or any of its Affiliates, together with all services provided or planned by the Company or any of its Affiliates, during the Executive’s employment.

8. Miscellaneous Provisions.

(a) Conflicts. If any provision of this Agreement conflicts with any other agreement, policy, plan, practice or other Company document, then the provisions of this Agreement will control. This Agreement will supersede any prior agreement between the Executive and the Company with respect to the subject matters contained herein and may be amended only by a writing signed by an officer of the Company (other than the Executive).

(b) Notice. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid or deposited with an overnight courier, with shipping charges prepaid. In the case of the Executive, mailed notices shall be addressed to him or her at the home address which he or she most recently communicated to the Company in writing. In the case of SAVVIS or the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of SAVVIS’ Senior Vice President and General Counsel.

(c) Waiver. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Executive and by an authorized officer of the Company (other than the Executive). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(d) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

(e) No Retention Rights. Nothing in this Agreement shall confer upon the Executive any right to continue in service for any period of specific duration or to interfere with or otherwise restrict in any way the rights of the Company or any subsidiary of the Company or of the Executive, which rights are hereby expressly reserved by each, to terminate his or her service at any time and for any reason, with or without Cause and with or without notice.

(f) Choice of Law; Venue. The parties acknowledge that they each have, and will continue to have, substantial contacts with the State of Missouri, where the Company has its headquarters. This Agreement has been drafted and negotiated in the State of Missouri. To ensure that any disputes arising under this Agreement are resolved in accordance with the parties’ expectations, this Agreement shall be governed by and construed under the laws of the State of Missouri and applicable federal laws. The substantive law (and statutes of limitations) of the State of Missouri shall be applied to disputes arising under this Agreement, as the parties agree that their expectations with respect to the scope and enforcement of this Agreement are based on Missouri law, and that Missouri law is therefore more applicable to such disputes. Should Missouri law be found not to apply to this Agreement for any reason, the parties agree that the severance benefit described in Section 4 shall not be payable, the provisions of Section 4 notwithstanding. Each party agrees that any proceeding relating to this Agreement shall be brought in the state courts of Missouri located in St. Louis County or the federal courts of the District of Missouri, Eastern Division. Each party hereby consents to personal jurisdiction in any such action brought in any such Missouri court, consents to service of process by the methods for notice under Section 8(b) hereof made upon such party, and such party’s agent and waives any objection to venue in any such Missouri court or to any claim that any such Missouri court is an inconvenient forum.

(g) Attorney’s Fees. In the event of any action by either party to enforce or interpret the terms of this Agreement, the prevailing party with respect to any particular claim shall (in addition to other relief to which it or he may be awarded) be entitled to recover his or its attorney’s fees in a reasonable amount incurred in connection with such claim.

(h) Successors. This Agreement and all rights of the parties hereunder shall inure to the benefit of, and be enforceable by, such parties’ personal or legal representatives, executors, administrators, successors, heirs and assigns, as applicable.

(i) Entire Agreement. This Agreement, together with the other agreements and any documents, instruments and certificates referred to herein, constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings and agreements, whether written or oral, with respect to the subject matter contained herein.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

SAVVIS, INC.	EXECUTIVE
By:	By:
Name:	Name:
Title:

EX-10.4

EXHIBIT 10.4

INDEMNIFICATION AGREEMENT

This Indemnification Agreement (this “Agreement”) is made as of              by and between SAVVIS, Inc., a Delaware corporation (the “Company”), and              (“Indemnitee”).

WHEREAS, highly competent persons have become more reluctant to serve publicly-held corporations as directors, officers or in other capacities unless they are provided with adequate protection through insurance and adequate indemnification against claims and actions against them arising out of their service to and activities on behalf of the corporations.

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals, the Company will continue to attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, directors, officers and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the corporation or business enterprise itself. The Company’s certificate of incorporation (as amended from time to time, the “Certificate”) and the Company’s bylaws (as amended from time to time, the “Bylaws”) require indemnification of the directors and officers of the Company. Indemnitee may also be entitled to indemnification pursuant to the Delaware General Corporation Law (the “DGCL”). The Certificate, the Bylaws and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and the directors, officers and other persons with respect to indemnification and advancement of expenses.

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such directors, officers and other persons to the fullest extent permitted by applicable law.

WHEREAS, this Agreement is a supplement to and in furtherance of the Certificate, the Bylaws and any resolutions adopted by the Board pursuant thereto or otherwise, and shall not be deemed a substitute therefor (unless they are more favorable to Indemnitee than this Agreement), nor to diminish or abrogate any rights of Indemnitee thereunder.

WHEREAS, Indemnitee is willing to serve as a director or officer (or continue to so serve, as the case may be) of the Company (and/or one or more of its subsidiaries) on the condition that he or she is indemnified, and his or her expenses are advanced, and on the other terms and conditions set forth herein, and the Company desires Indemnitee to so serve.

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

Section 1. Services to the Company. Indemnitee agrees to serve as a director and/or officer (or continue to so serve, as the case may be) of the Company (and/or one or more of its subsidiaries), and by its execution of this Agreement the Company confirms its request that Indemnitee serve as a director and/or officer (or continue to so serve, as the case may be). Indemnitee may at any time and for any reason resign from such position or terminate such service with immediate effect (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to retain Indemnitee in such position, but neither such resignation or termination nor the length of such service shall affect Indemnitee’s rights under this Agreement. This Agreement shall not be deemed an employment contract between the Company (or any of its subsidiaries or any Enterprise (as defined below)) and Indemnitee, supersede any employment contract to which Indemnitee is a party or create any right of Indemnitee to continued employment.

Section 2. Definitions. As used in this Agreement:

(a) “Corporate Status” means the status of a person who is or was a director (or a member of any committee of the board of directors), officer, employee, trustee, manager or agent of the Company or any of its subsidiaries, or of any predecessor thereof, or of any other corporation, limited liability company, partnership or joint venture, trust, or other enterprise, or of any predecessor thereof, which such person is or was serving at the request of the Company.

(b) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(c) “Enterprise” means the Company or any of its subsidiaries, or any predecessor thereof, and any other corporation, limited liability company, partnership, joint venture, trust, or other enterprise, or any predecessor thereof, of which Indemnitee is or was serving at the request of the Company as a director, officer, employee, trustee, manager, agent or fiduciary.

(d) “Expenses” means all attorneys’ fees, disbursements and expenses, retainers, court, arbitration and mediation costs, transcript costs, fees, disbursements and expenses of experts, witness fees, travel expenses, duplicating costs, costs of collecting and producing documents, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in or otherwise participating in, a Proceeding. Expenses also shall include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including, without limitation, the premium, security for and other costs relating to any cost bond, supersedeas bond or other appeal bond or its equivalent and (ii) for purposes of Section 10(d) only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise. Expenses, however, shall not include amounts paid in settlement by Indemnitee without the Company’s prior written consent (which shall not be unreasonably withheld or delayed).

(e) “Independent Counsel” means a law firm, or a member of a law firm competent to render an opinion under applicable law, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent (i) the Company or any of its subsidiaries or Indemnitee in any matter (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements similar to this Agreement) or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

(f) “Proceeding” means any threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolution mechanism, claim, demand, discovery request, formal or informal investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or any of its subsidiaries or otherwise and whether of a civil, criminal, administrative, legislative or investigative nature, including any appeal therefrom, in which Indemnitee was, is, will be or is or was threatened with being, involved as a party, potential party, witness or otherwise by reason of or in connection with the fact that Indemnitee is or was a director or officer of the Company or any of its subsidiaries, by reason of or in connection with any action taken or not taken by him or her or of any action or inaction on his or her part while acting as director or officer of the Company or any of its subsidiaries or by reason of or in connection with the fact that he or she is or was serving at the request of the Company or any of its subsidiaries as a director, officer, employee, trustee, manager or agent of another corporation, limited liability company, partnership, joint venture, trust, or other enterprise, or any predecessor thereof, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement or advancement of expenses can be provided under this Agreement.

(g) “To the fullest extent permitted by applicable law” means, without limitation:

i. to the fullest extent permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement or the corresponding provision of any amendment to or replacement of the DGCL; and

ii. to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the scope and/or extent to which a corporation may indemnify its directors and officers.

(h) References herein to “other enterprise” shall include all employee benefit plans of the Company and/or its subsidiaries, or any predecessor thereof; references herein to “fines” shall include any excise tax assessed with respect to any employee benefit plan; references herein to “serving at the request of the Company” shall include any service as a director, officer, employee, trustee, manager or agent of the Company or any of its subsidiaries which imposes duties on, or involves services by, such director, officer, employee, trustee, manager or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted

in good faith and in a manner he or she reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

Section 3. Indemnification in General. Indemnitee shall be indemnified by the Company to the fullest extent permitted by applicable law against all Expenses, losses, liabilities, judgments, fines, penalties and amounts paid in settlement (including, without limitation, all interest, assessments and other charges in connection therewith) actually and reasonably incurred by Indemnitee or on his or her behalf in connection with any Proceeding or any claim, issue or matter therein (including, without limitation, a Proceeding by or in the right of the Company to procure a judgment in its favor) .

Section 4. Indemnification for Expenses if Indemnitee is Partly Successful. Notwithstanding any other provisions of this Agreement, if Indemnitee is not wholly successful in any Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify and hold harmless Indemnitee, to the fullest extent permitted by law, against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection with each successfully resolved claim, issue or matter, and against all Expenses reasonably incurred in connection with a claim, issue or matter related to any claim, issue, or matter on which Indemnitee was successful. For purposes of this Section 4 and without limitation, the termination of any claim, issue or matter in such Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

Section 5. Exclusions. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to provide any indemnification in connection with any claim made against Indemnitee:

(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy of the Company or other indemnity provision applicable to the Company, except with respect to any excess beyond the amount paid under any such insurance policy or other such indemnity provision; or

(b) for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or similar successor statute, that the Company is entitled to recover from Indemnitee, or (ii) any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act); or

(c) except as provided in Section 10(a) or 10(d) of this Agreement, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any

Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

Section 6. Advances of Expenses. Notwithstanding any provision of this Agreement to the contrary, the Company shall advance, to the fullest extent not prohibited by applicable law, the Expenses incurred by Indemnitee in connection with any Proceeding, and such advancement shall be made within 30 days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Advances shall be unsecured and interest free. Advances shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Advances shall include any and all reasonable Expenses incurred pursuing a Proceeding to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. The Indemnitee shall qualify for advances upon the execution and delivery to the Company of this Agreement, which shall constitute an undertaking providing that Indemnitee undertakes to repay the advance to the extent that it is ultimately determined in a judgment or order by a court of competent jurisdiction from which no further appeal can be taken that Indemnitee is not entitled to be indemnified by the Company for such advanced Expenses. This Section 6 shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 5.

Section 7. Procedure for Notification and Defense of Claim.

(a) Indemnitee shall notify the Company in writing of any matter with respect to which Indemnitee intends to, or could, seek indemnification or advancement of Expenses hereunder as soon as reasonably practicable following the receipt by Indemnitee of written notice thereof. The written notification to the Company shall include a description of the nature of the Proceeding and the facts underlying the Proceeding to the extent then reasonably known to Indemnitee. To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably requested by the Company which is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification hereunder. The omission by Indemnitee to notify the Company hereunder will not relieve the Company from any liability which it may have to Indemnitee hereunder or otherwise than under this Agreement, and any delay in so notifying the Company shall not constitute a waiver by Indemnitee of any rights under this Agreement. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.

(b) The Company will be entitled to participate in the Proceeding at its own expense, except where counsel for Indemnitee reasonably conclude, and so advise the Company, that the interests of the Company and Indemnitee with respect to such Proceeding are or may be or become adverse.

(c) The Company shall not settle, without Indemnitee’s prior written consent (which may be provided or withheld in Indemnitee’s sole discretion), any Proceeding (in whole or in part) against Indemnitee or which could have been brought against Indemnitee, unless such settlement: (i) involves only the payment of money by persons other than the Indemnitee; (ii) includes an unconditional written release of Indemnitee from all liability (including, without limitation, with respect to any Expense, judgment, fine, penalty or damages) from and concerning any matters that are the subject of, or related to, such Proceeding; (iii) contains an acknowledgement that the settlement is not, nor is it construed as, an admission of wrongdoing by, or liability of, Indemnitee, and that any such wrongdoing by, or liability of, Indemnitee is denied; and (iv) imposes no limitation upon any conduct of Indemnitee.

Section 8. Procedure Upon Application for Indemnification.

(a) The Company intends that Indemnitee shall be indemnified to the fullest extent permitted by applicable law as provided in this Agreement and it shall be presumed that no determination with respect to Indemnitee’s entitlement to indemnification shall be required in connection with such indemnification. Any decision that a determination is required by applicable law in connection with any indemnification of Indemnitee, and any such determination, shall be made within thirty (30) days after receipt of Indemnitee’s written request for indemnification, and shall be made by one of the following three methods, which shall be at the election of the Board: (i) by a majority vote of the directors of the Company who are not parties to such Proceeding, even though less than a quorum, with the advice of Independent Counsel, (ii) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, with the advice of Independent Counsel or (iii) if there are no such directors, or if such directors so direct, by Independent Counsel in a written opinion to the Company and Indemnitee. Payment to Indemnitee shall be made as soon as practicable (but in any event, within ten (10) days) after the determination of entitlement to indemnification. Notwithstanding anything to the contrary in this Agreement, in no event shall a determination be required in connection with advancement of Expenses pursuant to Section 6, in connection with indemnification for Expenses incurred as a witness or potential witness (or participation other than as a party), incurred in connection with any Proceeding or portion thereof with respect to which Indemnitee has been successful in whole or in part on the merits or otherwise, or in connection with any Proceeding brought by Indemnitee pursuant to Section 10(d).

(b) If the determination of Indemnitee’s entitlement to indemnification is to be made by Independent Counsel pursuant to clause (iii) of Section 8(a), the Independent Counsel shall be selected by Indemnitee. The Company may, within ten (10) days after written notice of such selection, deliver to Indemnitee a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court of competent jurisdiction has determined that such objection is without merit. If, within fifteen (15) days after the earlier of submission by Indemnitee of a written request for indemnification pursuant to Section 7(a) hereof, and the final disposition of the Proceeding, including any appeal

therein, no Independent Counsel shall have been selected and not objected to, the Indemnitee may petition a court of competent jurisdiction for resolution of any objection which shall have been made by the Company to the selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by such court or by such other person as such court shall designate (which person shall meet the requirements of an “Independent Counsel” as defined in Section 2 of this Agreement), and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 8 hereof. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 10(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

(c) If the determination of Indemnitee’s entitlement to indemnification is to be made by Independent Counsel pursuant to clause (iii) of Section 8(a), Independent Counsel shall provide a written opinion to the Company, a copy of which shall simultaneously be delivered to Indemnitee, of its determination as to whether Indemnitee is entitled to indemnification. Indemnitee shall reasonably cooperate with the Independent Counsel making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such counsel upon reasonable advance written request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Notwithstanding anything to the contrary in this Agreement, any Expenses incurred by Indemnitee in so cooperating with the Independent Counsel shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

(d) The Company agrees to pay the reasonable fees and expenses of the Independent Counsel and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

Section 9. Presumptions and Effect of Certain Proceedings.

(a) In making a determination with respect to Indemnitee’s entitlement to indemnification hereunder, and in making any determination in any judicial or arbitral review thereof, the person or persons or entity making such determination shall, to the fullest extent not prohibited by applicable law, presume that a determination is not required, that Indemnitee has met the applicable standard of conduct and is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 7(a) of this Agreement, and the Company shall, to the fullest extent not prohibited by applicable law, have the burden of proof by clear and convincing evidence to overcome such presumptions in connection with the making by the Board or a committee thereof or the Independent Counsel, as the case may be, of any determination contrary to such presumptions. Neither the failure of the Company (including by the Board or a committee thereof or Independent Counsel, as the case may be) to have made a determination prior to the commencement of any Proceeding pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by the Board or Independent Counsel, as the case may be) that Indemnitee has not met such

applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

(b) If the person or persons or entity making the determination of whether Indemnitee is entitled to indemnification hereunder shall not have made a determination within 30 days after receipt by the Company of the Indemnitee’s request therefor, the requisite determination of entitlement to indemnification shall, to the fullest extent not prohibited by applicable law, be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent a prohibition of such indemnification under applicable law; provided, however, that in the event that Independent Counsel has been empowered or selected to make the determination of whether Indemnitee is entitled to indemnification hereunder, such 30-day period may be extended for a reasonable time, not to exceed an additional 10 days, if such Independent Counsel in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto and has informed the Company and Indemnitee in writing thereof on or before the expiration of such 30-day period.

(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, finding, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not meet the applicable standard of conduct or that a court of competent jurisdiction has determined that indemnification is not permitted by this Agreement or otherwise.

(d) For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. The provisions of this Section 9(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

(e) The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

Section 10. Remedies of Indemnitee.

(a) In the event that (i) a determination is made pursuant to Sections 8 and 9 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 6 of this Agreement, (iii) payment of indemnification is not made pursuant to Section 4 or the next-to-last sentence of Section 8(a) of this Agreement within ten (10) days after receipt by the Company of a written request therefor, (iv) payment of indemnification pursuant to Section 3 of this Agreement is not made within ten (10) days after an actual or deemed determination has been made that Indemnitee is entitled to indemnification, or (v) in the event that the Company or any other

person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any Proceeding designed to deny, or recover from, Indemnitee the benefits provided or intended to be provided hereunder, then Indemnitee may commence a proceeding in the Delaware Chancery Court to determine his or her entitlement to such indemnification or advancement of Expenses. Alternatively, Indemnitee, at his or her option, may commence an arbitration seeking such determination, to be conducted by a single arbitrator (such arbitrator to be an attorney with at least 15 years experience advising with respect to, and/or litigating, issues of Delaware law involving corporate governance) pursuant to the Commercial Arbitration Rules of the American Arbitration Association (“AAA”), to be conducted in the city where Indemnitee then resides (or as near to such city as AAA can reasonably effectuate). Indemnitee shall commence such proceeding or arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding or arbitration pursuant to this Section 10(a); provided, however, that failure by Indemnitee to so commence such proceeding or arbitration shall not adversely affect Indemnitee’s rights under this Agreement, and provided further, however, that such time period shall not apply in respect of a proceeding brought by Indemnitee to enforce his or her rights under Section 4 of this Agreement. The Company shall not oppose Indemnitee’s right to seek relief pursuant to this Section 10(a).

(b) Any judicial proceeding or arbitration commenced pursuant to Section 10(a) shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of any adverse determination or lack of a determination, or any other matter described in clauses (i)-(v) of Section 10(a). In any judicial proceeding or arbitration commenced pursuant to Section 10(a) the Company shall have the burden by clear and convincing evidence of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

(c) If a determination shall have been made pursuant to Section 8 of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by, and may not challenge, such determination in any forum; provided, that the Company may challenge such determination in the Delaware Chancery Court no later than 180 days after it has been made, if in an Indemnitee’s written request for indemnification pursuant to Section 7(a), Indemnitee has made a misstatement of a material fact and the person or persons or entity making the determination had reasonably relied on such misstatement of material fact in making its determination.

(d) The Company shall, to the fullest extent not prohibited by applicable law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 10 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement. It is the intent of the Company that Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to Indemnitee hereunder. The Company shall indemnify and hold harmless Indemnitee, to the fullest extent permitted by applicable law, against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefor) advance, to the fullest extent not prohibited by applicable law, such Expenses to

Indemnitee, which are incurred by Indemnitee in connection with any Proceeding brought by Indemnitee for indemnification, or advancement of Expenses, from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company or any of its subsidiaries, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

Section 11. Non-Exclusivity; Survival of Rights; Insurance; Subrogation; Exculpation.

(a) The rights of Indemnitee to indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may now or at any time be entitled under applicable law, including without limitation, the Certificate, the Bylaws, applicable law, any agreement, a resolution of the Board or any committee thereof, any liability insurance policy of the Company or otherwise; provided, that (i) to the extent that Indemnitee is entitled to be indemnified by, or receive advancement of Expenses from, the Company and by any shareholder of the Company or any affiliate (other than the Company and its subsidiaries) of any such shareholder or any insurer under a policy procured by any such shareholder or affiliate, the obligations of the Company hereunder shall be primary and the obligations of such shareholder, affiliate or insurer secondary, and (ii) the Company and its subsidiaries shall not be entitled to contribution or indemnification from or subrogation against such shareholder, affiliate or insurer. No termination, alteration, amendment or repeal of this Agreement or of any provision hereof shall limit or restrict any right or protection of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in or in connection with his or her Corporate Status prior to such termination, alteration, amendment or repeal. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Certificate, Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. The Company shall not adopt any amendment to the Certificate or Bylaws, the effect of which would be to deny, diminish or encumber Indemnitee’s rights to indemnity pursuant to the Certificate, Bylaws, the DGCL or any other applicable law as applied to any act or failure to act occurring in whole or in part prior to the date upon which the amendment was approved by the Board or the stockholders of the Company, as the case may be. If the Company shall adopt any amendment to the Certificate or Bylaws the effect of which is to so deny, diminish or encumber Indemnitee’s rights to indemnity, such amendment shall apply only to acts or failures to act occurring entirely after the effective date thereof and the Company shall, contemporaneously with the adoption of such amendment, notify Indemnitee in writing of the effect of such amendment on Indemnitee’s rights to indemnity. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment by Indemnitee of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b) For the duration of Indemnitee’s service as a director and/or officer of the Company or any of its subsidiaries, and thereafter for so long as Indemnitee shall be subject to

any pending or possible Proceeding indemnifiable hereunder, the Company shall use commercially reasonable efforts (taking into account the scope and amount of coverage available relative to the cost thereof) to cause to be maintained in effect policies of directors’ and officers’ liability insurance providing coverage for Indemnitee that is at least substantially comparable in scope and amount to that provided by the Company’s current policies of directors’ and officers’ liability insurance. Upon request, the Company shall provide Indemnitee with a copy of all directors’ and officers’ liability insurance applications, binders, policies, declarations, endorsements and other related materials, and will notify Indemnitee of any material changes that have been made to such documents. To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees or agents of the Company, its subsidiaries or of any other corporation, partnership, joint venture, trust, or other enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee, trustee, manager or agent under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has directors’ and officers’ liability insurance in effect, the Company shall give prompt notice of such matter to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of or in connection with such matter in accordance with the terms of such policies.

(c) Subject to Section 11(a), in the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute such papers required and take such actions as the Company may reasonably request which are necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

(d) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the written request of the Company or its subsidiaries as a director, officer, employee, trustee, manager or agent of any other corporation, limited liability company, partnership, joint venture, trust, or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such other corporation, limited liability company, partnership, joint venture, trust, or other enterprise.

(e) Indemnitee shall not be personally liable to the Company or any of its subsidiaries or to the stockholders of the Company or any such subsidiary for monetary damages for breach of fiduciary duty as a director of the Company or any such subsidiary; provided, however, that the foregoing shall not eliminate or limit the liability of the Indemnitee (i) for any breach of the Indemnitee’s duty of loyalty to the Company or such subsidiary or the stockholders thereof; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; (iii) under Section 174 of the DGCL or any similar provision of other applicable corporations law; or (iv) for any transaction from which the Indemnitee derived an improper personal benefit. If the DGCL or such other applicable law shall be amended to permit further elimination or limitation of the personal liability of directors, then the liability of the Indemnitee shall, automatically, without any further action, be eliminated or limited to the fullest extent permitted by the DGCL or such other applicable law as so amended.

(f) No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company or any of its subsidiaries against Indemnitee or Indemnitee’s estate, spouse, heirs, executors, personal or legal representatives, administrators or assigns after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period, provided, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern.

Section 12. Duration of Agreement; Successors and Assigns.

(a) This Agreement shall continue until and terminate upon the later of (i) ten years after the date that Indemnitee shall have ceased to serve as a director or officer of the Company, or (ii) one year after the final termination, by settlement or by final judgment or order no longer subject to appeal, of all Proceedings then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder, and of all Proceedings commenced by Indemnitee pursuant to Section 10 of this Agreement.

(b) This Agreement shall be binding upon the Company and its successors and assigns, and shall inure to the benefit of Indemnitee and his or her estate, spouse, heirs, executors, administrators, personal or legal representatives and assigns. The Company shall require and cause any successor or assignee (whether by direct or indirect purchase, merger, consolidation or otherwise to all or substantially all of the securities, business or assets of the Company), by written agreement in form and substance reasonably satisfactory to Indemnitee, expressly to assume and agree in writing to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if such succession or assignment had not taken place. No such assumption and agreement shall relieve the Company of any of its obligations hereunder, and neither this Agreement nor any obligations hereunder shall otherwise be assignable or delegable by the Company (and any such other purported assignment or delegation shall be null and void).

Section 13. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever, then: (i) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by applicable law; (ii) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (iii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

Section 14. Enforcement; Entire Agreement.

(a) The Company expressly confirms and agrees that (i) it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve (or continue to serve) as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director or officer of the Company and (ii) the Board has reviewed this Agreement with the assistance of the Company’s legal counsel and has expressly approved the same by resolution of the Board, which resolution has been duly included in the minutes of the Board and the books and records of the Company.

(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written or implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Certificate, the Bylaws, applicable law, any agreement and any resolution of the Board or any committee thereof, and shall not be deemed a substitute therefor (unless they are more favorable to Indemnitee than this Agreement), nor to diminish or abrogate any rights of Indemnitee thereunder.

Section 15. Modification and Waiver. No supplement, modification, amendment, repeal, alteration, termination or cancellation of this Agreement or any provision or portion thereof shall be binding unless executed by Indemnitee and the Company. No waiver of any of the provisions of this Agreement shall be effective unless in writing and executed by the party giving such waiver, nor shall any waiver be deemed or shall constitute a waiver of any other provisions of this Agreement (whether or not similar), nor shall any waiver of any provisions of this Agreement constitute a continuing waiver.

Section 16. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which Indemnitee reasonably believes may be subject to indemnification or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise.

Section 17. Notices. All notices, requests, demands and other communications under this Agreement shall be in writing to the following addresses and shall be deemed to have been duly given (i) on the date of delivery when personally delivered or transmitted by facsimile or electronic mail prior to 5:00 p.m. local time (subject, in the case of delivery by facsimile or electronic mail, to written confirmation of receipt), (ii) one business day after deposit with Federal Express or similar overnight courier service or (iii) three business days after being mailed by first class mail, return receipt requested:

(a) If to Indemnitee, at the address indicated on the signature page of this Agreement or such other address as Indemnitee shall provide in writing to the Company.

(b) If to the Company to:

SAVVIS, Inc.

1 SAVVIS Parkway

Town & Country, Missouri 63017

Attention: General Counsel

Facsimile: (952) 852-4810

Email: pete.bazil@savvis.net

or to any other address as may have been furnished in writing to Indemnitee by the Company.

Section 18. Contribution. Without limiting the foregoing provisions of this Agreement, in order to provide for just and equitable contribution in circumstances in which the indemnification provided for in this Agreement is held by a court of competent jurisdiction to be unavailable to Indemnitee in whole or in part, it is agreed that, in such event, the Company shall, to the fullest extent permitted by applicable law, contribute to the payment of all of Indemnitee’s losses and liabilities, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement (including, without limitation, all interest, assessments and other charges in connection therewith) and/or for Expenses, incurred by or on behalf of Indemnitee in connection with any Proceeding, including any appeals, relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

Section 19. Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 10(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Chancery Court, and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Chancery Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Chancery Court and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Chancery Court has been brought in an improper or inconvenient forum.

Section 20. Identical Counterparts. This Agreement may be executed in one or more counterparts (via facsimile or electronic mail), each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

Section 21. Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

* * * * *

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

SAVVIS, INC.

By:

Name:

Title:

INDEMNITEE

By:

Name:

Address:

Email:

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer

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

I, James E. Ousley, 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 (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

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

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

Date:	November 5, 2010	By:	/s/ James E. Ousley
			James E. Ousley Chief Executive Officer (principal executive officer)

43

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer

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

I, Gregory W. Freiberg, 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 (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

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

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

Date:	November 5, 2010	By:	/s/ Gregory W. Freiberg
			Gregory W. Freiberg Chief Financial Officer (principal financial officer and principal accounting officer)

44

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 September 30, 2010, 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:	November 5, 2010	By:	/s/ James E. Ousley
			James E. Ousley Chief Executive Officer

45

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 September 30, 2010, 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:	November 5, 2010	By:	/s/ Gregory W. Freiberg
			Gregory W. Freiberg Chief Financial Officer

46