S-1/A

As filed with the Securities and Exchange Commission on December 20, 2006

Registration Statement No. 333-137607

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 2

TO

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

SWITCH AND DATA, INC.

(Exact name of Registrant as specified in its charter)

Delaware	4813	59-3641081
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

1715 North Westshore Boulevard, Suite 650

Tampa, Florida 33607

(813) 207-7700

(Address, including zip code, and telephone number, including area code, of Registrants’ principal executive offices)

Keith Olsen

President and Chief Executive Officer

Switch and Data, Inc.

1715 North Westshore Boulevard, Suite 650

Tampa, Florida 33607

(813) 207-7700

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Robert J. Grammig, Esquire Holland & Knight LLP 100 North Tampa Street Suite 4100 Tampa, Florida 33602 (813) 227-8500 Facsimile: (813) 229-0134 Andrew J. Pitts, Esquire Cravath, Swaine & Moore LLP Worldwide Plaza 825 Eighth Avenue New York, New York 10019-7475 (212) 474-1000 Facsimile: (212) 474-3700

Approximate date of commencement of proposed sale to the public:    As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box.  ¨

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED December 20, 2006

     Shares

Common Stock

We are selling      shares of our common stock and the selling stockholders are selling      shares of our common stock. We will not receive any of the proceeds from the shares of common stock sold by the selling stockholders.

Prior to this offering, there has been no public market for our common stock. The initial public offering price of our common stock is expected to be between $     and $     per share. We have applied to list our common stock on The Nasdaq Global Market under the symbol “SDXC”.

Investing in our common stock involves risks. See “ Risk Factors” beginning on page 9.

	Per Share	Total
Price to Public	$	$
Underwriting Discounts and Commissions	$	$
Proceeds to the Company	$	$
Proceeds to Selling Stockholders	$	$

The underwriters have an option to purchase a maximum of      additional shares of common stock to cover over-allotments of shares of common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares offered to the public on or about                     , 2007.

Deutsche Bank Securities Jefferies & Company

The date of this prospectus is                     , 2007.

TABLE OF CONTENTS

	Page
Prospectus Summary	1
Risk Factors	9
Forward-Looking Statements	25
Use of Proceeds	27
Dividend Policy	28
Capitalization	29
Dilution	32
Selected Consolidated Financial Data	34
Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Secured Credit Facility	67
Business	69
Management	81
Principal and Selling Stockholders	91
Certain Relationships and Related Party Transactions	93
Description of Capital Stock	95
Shares Eligible for Future Sale	98
Material U.S. Federal Tax Considerations	102
Underwriting	105
Notice to Canadian Residents	110
Legal Matters	112
Experts	112
Where You Can Find More Information	112
Index to Financial Statements	F-1

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PROSPECTUS SUMMARY

This summary highlights information incorporated by reference or contained elsewhere in this prospectus and may not contain all the information that is important to you. You should, therefore, read carefully all the information contained in or incorporated by reference in this prospectus, including that under “Risk Factors,” “Prospectus Summary—Summary Consolidated Financial Information,” “Selected Consolidated Financial Information” and our consolidated financial statements and the notes thereto in this prospectus for a more complete understanding of this offering and our business. Unless otherwise indicated, all information in this prospectus assumes that the underwriters will not exercise their overallotment option.

Business Overview

We are a leading provider of network neutral interconnection and colocation services primarily to Internet dependent businesses including telecommunications carriers, Internet service providers, online content providers and enterprises. As a network neutral provider, we do not own or operate our own network, and, as a result, our interconnection services enable our customers to exchange network traffic through direct connections with each other or through peering connections with multiple parties. Our colocation services provide space and power for customers’ networking and computing equipment allowing those customers to avoid the costs of building and maintaining their own facilities. We provide our services through 34 facilities in 23 markets, representing the broadest network neutral footprint in North America. Our footprint includes our facility in Palo Alto, one of the first commercial Internet exchanges in the world. Our high network densities, as demonstrated by approximately 17,000 interconnections between our customers, create a network effect, which provides an incentive for our existing customers to remain within our facilities and is a differentiating factor in attracting new customers. This network effect combined with our broad geographic footprint contributes to the growth of our customer base and revenue, which we believe will also increase our operating cash flow due to the fixed nature of certain of our operating costs.

Our network neutral business model is a primary differentiating factor in the market. We believe the ability to connect directly with telecommunications carriers and each other enables our customers to reduce network transit costs, to improve the performance of their services and to reduce their time to market. Our diverse customer base includes some of the world’s largest network service providers, multiple system operators, Internet service providers, online content providers and enterprises. Our North America based telecommunications carrier and Internet service provider customers include AboveNet Communications, AOL and Qwest and our international carrier customers include BT, ChungHwa Telecom, Singapore Telecommunications, Telecom Italia and VSNL. Our online content provider customers include DirecTV, Electronic Arts, Google, LimeLight Networks, Yahoo! and YouTube. Our enterprise customers include Internet dependent businesses, including Amazon.com and Factset, and other enterprises such as GlaxoSmithKline, Hewlett Packard, Microsoft and Verisign.

We believe our broad geographic footprint represents a competitive advantage in that we have facilities in 14 of the 15 largest metropolitan service areas in the United States and is the broadest of any of our network neutral competitors. Our presence in these markets enables us to serve customers in locations where Internet traffic is most concentrated and to serve customers who require a broad geographic footprint. As of September 30, 2006, of our top 100 customers as measured by revenue, 73 utilize our services in multiple markets.

Although we have been unable to achieve profitability, since our founding in 1998, we have increased our revenue through a combination of organic growth and acquisitions. We believe

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our customer base of over 830 companies as of September 30, 2006 provides a platform for organic growth. Sales to existing customers in the first nine months of 2006 comprised approximately 76% of incremental sales of our interconnection and colocation services. Since March 2003, we have completed five acquisitions and integrated 12 facilities into our operations. These acquisitions have increased our network densities, expanded our customer base and broadened our geographic footprint.

Several favorable trends in our industry are driving demand for our network neutral interconnection and colocation services. These trends include growth in Internet traffic driven by, among other things, increasing broadband penetration and a proliferation of broadband intensive applications, an increasing need for advanced networking technology provided through reliable and secure infrastructure and a growing awareness of business continuity and disaster recovery planning.

Our Competitive Strengths

We believe that our key competitive strengths position us well to capitalize on the growing demand for interconnection and colocation services. These competitive strengths include the following:

Network Neutral Business Model. We do not own or operate our own network, and, as a result, our customers are able to connect directly to their choice of providers in an open and competitive marketplace.

High Network Densities. The high number of interconnections between our customers creates a network effect, which provides an incentive for existing customers to remain within our facilities and for new customers to join them.

Broad Network Neutral Geographic Footprint. Our broad geographic presence enables us to serve customers in locations where Internet traffic is most concentrated and to serve customers who require a broad geographic footprint.

Robust Facilities and Operational Excellence. We believe our ability to provide and meet a 99.999% uptime guarantee as part of our service level agreements with our customers is attributable primarily to the quality of our facilities and the capabilities of our operations personnel. Our facilities feature redundant power and cooling systems, physical security, fire suppression systems and water leak detection and technical support.

Engineering and Networking Expertise. We have gained significant engineering and networking expertise throughout our history, including through our ownership and operation of our Palo Alto facility, one of the first commercial Internet exchanges in the world.

Our Strategy

Our objective is to be the leading provider of network neutral interconnection and colocation services in North America. The key elements of our strategy are to:

Focus on our Top 10 Markets. We derive the majority of our revenue from our top 10 markets, which are the markets that we believe to be most important strategically to our business. Since January 2005, we have increased our gross square footage in these markets by 27%, and have augmented the power and cooling infrastructure in many of these facilities. We intend to continue to expand capacity in these markets to meet the increasing needs of our existing customers and to serve new customers.

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Leverage Network Densities. By increasing network densities within our facilities, we are able to further enhance our value proposition to our customers. We believe that leveraging our network densities will enable us to continue to attract and retain customers who derive the greatest value from our interconnection services.

Strengthen Existing Customer Relationships and Reach New Customers. We are working to strengthen relationships with our existing customer base, develop relationships with customers in emerging, bandwidth intensive segments and invest in new sales channels that incorporate our services as part of a broader communications solution.

Pursue Selective Acquisitions. Our acquisitions have increased our network densities, expanded our customer base and broadened our geographic footprint. We believe that industry consolidation opportunities remain, and we intend to continue to pursue selective acquisitions.

Summary Risk Factors

An investment in our common stock involves a high degree of risk. The following risks, as well as the other risks discussed in “Risk Factors”, should be carefully considered before participating in this offering:

Material weaknesses in our internal control over financial reporting. In connection with the preparation of our 2005 consolidated financial statements as of December 31, 2005, and during the course of preparing for this offering, our independent registered public accounting firm reported ten control deficiencies, which represent material weaknesses in our internal control over financial reporting. These material weaknesses contributed to the need to restate our 2003, 2004 and 2005 annual consolidated financial statements to correct our accounting for debt issuance costs, stock based compensation expense and discontinued operations.

Net losses. We have incurred losses since our inception and have an accumulated deficit of $209.8 million as of September 30, 2006. Until 2003, we did not generate cash from operations.

Leased properties. We do not own the buildings in which our properties are located and could be forced by our landlords to vacate such facilities.

Service interruptions. We have service level commitment obligations to substantially all of our customers and have at times in the past given credits to our customers as a result of service interruptions due to equipment failures.

Customer retention. Our customer contracts for space and power typically have terms of one to three years and interconnection services are typically provided either on a month-to-month basis or over a one year term. Some of our customers, including our largest customer, based upon our revenues for the year ended December 31, 2005, have elected not to renew their contracts.

Corporate Reorganization

In connection with this offering, Switch and Data, Inc., a Delaware corporation, the shares of which are being sold to the public in this offering, will be the successor to Switch & Data Facilities Company, Inc., our current holding company, following a reorganizational merger that will take place before the completion of this offering. As part of the merger, Switch and Data, Inc., will change its name to Switch & Data Facilities Company, Inc. The certificate of merger will be filed, and the merger and reorganization will become effective, immediately prior to the closing date for the sale of the shares in this offering. The reorganization will include the following:

• An aggregate of              shares of our common stock will be issued in the merger to existing holders of shares of capital stock of Switch & Data Facilities Company, Inc.

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• Various other agreements among the existing stockholders of Switch & Data Facilities Company, Inc. will be terminated or amended.

See “Certain Relationships and Related Party Transactions—Corporate Reorganization.”

Company Information

We were incorporated on July 31, 2006 as a Delaware corporation. Our predecessor, Switch & Data Facilities Company, Inc., also a Delaware corporation, was incorporated on March 15, 2000. The original predecessor of Switch & Data Facilities Company, Inc. was organized in Delaware on March 10, 1998, as Switch & Data Facilities Company, LLC. We currently conduct certain operations through our wholly-owned subsidiaries. Our principal executive offices are located at 1715 North Westshore Boulevard, Suite 650, Tampa, Florida 33607 and our telephone number is (813) 207-7700. We maintain a website at www.switchanddata.com where general information about our business is available. Information contained on our website or that can be accessed through our website is not part of this prospectus, and investors should not rely on any such information in making the decision whether to purchase our common stock.

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The Offering

Common stock offered by Switch & Data              shares

Common stock offered by the selling stockholders              shares

Common stock to be outstanding after this offering              shares (        % of which are the shares being offered in this offering)

Over-allotment option              shares

Use of proceeds We intend to use the net proceeds of this offering to repay bank debt. See “Use of Proceeds.” We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders.

Proposed Nasdaq Global Market symbol SDXC

The number of shares of our common stock to be outstanding after this offering is based on the number of shares outstanding as of                     , 2006, after giving effect to completion of our corporate reorganization as described in “Certain Relationships and Related Party Transactions—Corporate Reorganization.” This information excludes shares of common stock reserved for issuance under our 2006 Stock Incentive Plan. Before we complete this offering, we will have outstanding options under our 2006 Stock Incentive Plan to purchase an aggregate of approximately              shares of our common stock at an exercise price equal to the offering price set forth on the cover of this prospectus.

Assumptions Used in This Prospectus

Unless we otherwise indicate, all information contained in this prospectus assumes:

• an offering price of $             per share of common stock, which is the mid-point of the range set forth on the cover of this prospectus;

• the underwriters not exercising their over-allotment option to purchase up to              shares of our common stock;

• the completion of our corporate reorganization (see “Certain Relationships and Related Party Transactions—Corporate Reorganization”); and

• our issuance of              shares of common stock.

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SUMMARY CONSOLIDATED FINANCIAL DATA

The following summary consolidated financial data is based solely on the consolidated financial data of our predecessor and should be read in conjunction with “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, all of which are included elsewhere in this prospectus. We derived the financial data as of December 31, 2005 and for the years ended December 31, 2003, 2004 and 2005 from the audited financial statements of our predecessor, Switch & Data Facilities Company, Inc., appearing elsewhere in this prospectus. We derived the financial data for the years ended December 31, 2001 and 2002 from the unaudited restated financial statements of our predecessor not included in this prospectus. We derived the financial data as of September 30, 2006 and for the nine months ended September 30, 2006 from our predecessor’s audited financial statements appearing elsewhere in this prospectus. We derived the financial data for the nine months ended September 30, 2005 from our predecessor’s unaudited financial statements appearing elsewhere in this prospectus. The unaudited consolidated interim financial data reflects all adjustments, including usual recurring adjustments, which in the opinion of management are necessary for the fair presentation of that information as of and for the periods presented. The results for the interim periods are not necessarily indicative of the results that you should expect for the full year or in the future. The adjusted pro forma balance sheet data reflects the receipt and application of the estimated net proceeds to us from the sale of          shares of common stock by us in this offering at an assumed initial public offering price of $             per share.

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SUMMARY CONSOLIDATED FINANCIAL INFORMATION

	Year Ended December 31,															Nine Months Ended September 30,
	2001(1)(2)			2002(1)			2003			2004			2005			2005			2006
	(restated)			(restated)												(unaudited)
	(In thousands, except per share data)
Revenues:	$	42,229		$	38,928		$	69,840		$	91,449		$	105,414		$	78,668		$	82,549
Costs and operating expenses
Cost of revenues, exclusive of depreciation and amortization		32,386			22,924			32,333			43,652			54,800			39,954			45,207
Sales and marketing		6,745			4,940			6,883			10,765			9,846			7,305			9,223
General and administrative		8,657			5,662			7,090			9,768			9,568			6,235			7,907
Depreciation and amortization		13,776			13,267			18,509			27,705			30,206			24,184			17,379
Lease litigation settlements		—			—			—			6,629			—			—			—
Asset impairment		16,329			8,338			—			1,015			2,140			2,140			2,193
Total costs and operating expenses		77,893			55,131			64,815			99,534			106,560			79,818			81,909
Operating income (loss)		(35,664	)		(16,203	)		5,025			(8,085	)		(1,146	)		(1,150	)		640
Interest income		489			194			121			140			106			89			71
Interest expense		(2,801	)		(4,485	)		(3,573	)		(5,374	)		(9,356	)		(6,066	)		(10,764	)
Loss from debt extinguishment		—			—			(342	)		(409	)		(769	)		—			—
Other income (expense)		9			—			78			(192	)		166			(7	)		(6	)
Income (loss) from continuing operations before minority interest and income taxes		(37,967	)		(20,494	)		1,309			(13,920	)		(10,999	)		(7,134	)		(10,059	)
Minority interest in net income of consolidated partnership		(2,513	)		(1,878	)		(2,052	)		(380	)		—			—			—
Income taxes		—			—			(80	)		(63	)		(69	)		(140	)		—
Loss from continuing operations		(40,480	)		(22,372	)		(823	)		(14,363	)		(11,068	)		(7,274	)		(10,059	)
Income (loss) from discontinued operations		(12,058	)		(19,142	)		(2,331	)		891			(206	)		(168	)		—
Net loss		(52,538	)		(41,514	)		(3,154	)		(13,472	)		(11,274	)		(7,442	)		(10,059	)
Preferred stock accretions and dividends		(9,787	)		(10,225	)		(15,120	)		(16,938	)		(33,691	)		(9,606	)		(10,054	)
Net loss, attributable to common stockholders	$	(62,325	)	$	(51,739	)	$	(18,274	)	$	(30,410	)	$	(44,965	)	$	(17,048	)	$	(20,113	)
Net income (loss) per share- basic and diluted	$	(1.24	)	$	(0.48	)	$	(0.17	)	$	(0.28	)	$	(0.42	)	$	(0.16	)	$	(0.19	)
Weighted average shares outstanding(3)		50,074			107,787			107,787			107,787			107,787			107,787			107,554
Pro forma net loss per share, basic and diluted (unaudited)(4)													$						$
Pro forma weighted average shares outstanding, basic and diluted (unaudited)(4)

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	As of December 31, 2005			As of September 30, 2006
	Actual			Actual			As Adjusted(5)(6)
Balance Sheet Data:
Cash and cash equivalents	$	10,417		$	4,027
Total assets	$	163,222		$	155,573
Long-term obligations	$	153,602		$	153,221
Total stockholders’ deficit	$	(189,360	)	$	(208,944	)

(1) Amounts for 2001 and 2002 have been restated from the amounts previously reported. See notes to “Selected Consolidated Financial Information” for more information.

(2) Upon adoption of Statement of Financial Accounting Standard No. 142, Goodwill and Other Intangible Assets (“FAS 142”), on January 1, 2002, goodwill is no longer amortized. Only intangible assets with definite lives continue to be amortized.

(3) The number of weighted average basic and diluted shares outstanding for purposes of calculating our earnings per share includes our predecessor’s Common Stock and Series B Common Stock.

(4) Unaudited pro forma basic and diluted net loss per share is computed by dividing net loss by the weighted average number of common shares assumed outstanding for the period resulting from the assumed conversion of outstanding preferred stock as discussed in “Certain Relationships and Related Party Transactions—Corporate Reorganization,” which will occur immediately prior to the offering contemplated by this prospectus.

(5) Adjusted to reflect the reorganization described in “Certain Relationships and Related Party Transactions–Corporate Reorganization.”

(6) Adjusted to reflect the sale of shares of our common stock offered by us in this offering at an offering price of $             per share, less the underwriting discount and estimated offering expenses payable by us, and the use of proceeds from this offering. See “Use of Proceeds.”

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RISK FACTORS

If you purchase shares of our common stock, you will assume a high degree of risk. In deciding whether to invest, you should carefully consider the following risk factors, as well as the other information contained in this prospectus. Any of the following risks as well as other risks and uncertainties discussed in this prospectus could have a material adverse effect on our business, financial condition, results of operations or prospects and cause the value of our stock to decline, which could cause you to lose all or part of your investment. Additional risks and uncertainties of which we are unaware, or that are currently deemed immaterial by us, also may become important factors that affect us.

Risks Related to Our Business

Material weaknesses identified in our internal control over financial reporting may result in our inability to file periodic reports within the time periods required by federal securities laws.

As further described in the section of this prospectus titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in connection with the preparation of our 2005 consolidated financial statements as of December 31, 2005, and during the course of preparing for this offering, our independent registered public accounting firm reported ten control deficiencies, which represent material weaknesses in our internal control over financial reporting. These material weaknesses resulted in, or contributed to, adjustments to our financial statements and, in certain cases, restatement of prior financial statements. In instances where adjustments were only required for the 2005 financial statements, the related material weakness existed only in that fiscal year. Any failure to implement new or improved controls in order to remediate the material weaknesses reported by our independent registered public accounting firm, or any difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations.

The rules of the Securities and Exchange Commission (the “SEC”) require that, as a publicly-traded company following the completion of this offering, we file periodic reports containing our financial statements within a specified time following the completion of quarterly and annual fiscal periods. Any failure by us to timely file our periodic reports with the SEC may result in a number of adverse consequences that could materially and adversely impact the value of your investment, including, without limitation, delisting of our stock from The Nasdaq Global Market, potential action by the SEC against us, possible defaults under our credit arrangements, stockholder lawsuits and general damage to our reputation.

Material weaknesses in our internal control over financial reporting may result in the inability of investors to rely on our financial statements.

Control deficiencies in our internal control over financial reporting could result in a material misstatement to our annual or interim consolidated financial statements that would not be prevented or detected. Upon completion of this offering, we will have had only limited operating experience with the remedial measures we have made to date, and we have significant additional remedial measures that we must undertake. We cannot provide assurance that the measures we have taken to date or any future measures will adequately remediate the material weaknesses reported by our independent registered public accounting firm. In addition, we cannot be certain that there are no additional material weaknesses in our internal control over financial reporting. Our failure to maintain effective disclosure controls and procedures or internal control over financial reporting could require us to restate our financial statements or otherwise cause investors to lose confidence in our reported financial information and could adversely impact our stock price. Any such failure could also adversely affect the results of the

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periodic management evaluations of our disclosure controls and procedures and internal control over financial reporting that will be required under the Sarbanes-Oxley Act of 2002.

We have incurred substantial losses in the past and may continue to incur losses in the future.

We have never been profitable and have incurred losses since our inception. For the years ended December 31, 2004 and 2005, we incurred net losses of approximately $13.5 million and $11.3 million, respectively. For the nine months ended September 30, 2006, we incurred net losses of approximately $10.1 million. Until 2003, we did not generate cash from operations. As of September 30, 2006, we had an accumulated deficit of $209.8 million. There can be no guarantee that we will achieve profitability. Even if we achieve profitability, given the competitive and evolving nature of the industry in which we operate, we may not be able to sustain or increase profitability on a quarterly or annual basis.

Our operating results have fluctuated historically and could continue to fluctuate in the future, which could affect our ability to maintain our current market position or expand.

Our operating results have fluctuated in the past and may continue to fluctuate in the future as a result of a variety of factors, many of which are beyond our control, including the following:

• changes in general economic conditions and specific market conditions in the telecommunications and Internet-related industries;

• demand for interconnection and colocation services at our facilities;

• competition from other suppliers of the services we offer;

• the timing and magnitude of operating expenses, capital expenditures and expenses related to the expansion of sales, marketing and operations, including as a result of acquisitions, if any;

• the cost and availability of power and cooling capacity;

• our closing of existing facilities or our acquisition of additional facilities;

• the mix of our current services; and

• the financial condition and credit risk of our customers.

Any of the foregoing factors could have a material adverse effect on our business, results of operations and financial condition. Although we have experienced growth in revenues in recent quarters, this growth rate is not necessarily indicative of future operating results. A relatively large portion of our expenses are fixed in the short-term, particularly with respect to lease and personnel expenses, depreciation and amortization expenses, and interest expense. Therefore, our results of operations are particularly sensitive to fluctuations in revenues. As such, comparisons to prior periods should not be relied upon as indications of our future performance.

Our ability to maximize the utilization of our facilities is limited by the availability and cost of sufficient electrical power and cooling capacity.

The availability of an adequate supply of electrical power and cooling capacity, and the infrastructure to deliver that power and cooling, is critical to our ability to provide our services. Even though physical space may be available in a facility, the demand for electrical power may exceed our designed capacity. We may be unable to meet the increasing power and cooling needs of our customers if our customer mix does not match our expectations or our customers

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further increase their use of high density electrical power equipment, such as blade servers. In

addition, the amount of saleable space within our facilities is reduced to the extent that we house generators and batteries to provide back-up power. Further, certain of the leases for our

facilities also contain provisions that limit the supply of electrical power and cooling capacity to

such facilities, as a result of which our ability to reach full utilization may be constrained in

these facilities. If the availability of power limits our ability to fully utilize the space within our

facilities, we may be unable to accept new customers at our facilities and our revenue growth

will decline or we may incur additional costs to increase the power supply or acquire space at an additional facility.

The high utilization of our facilities may limit our ability to grow in certain key markets, and we may be unable to expand our existing facilities or locate and secure suitable sites for additional facilities.

Our facilities have reached high rates of utilization in many of our key markets. Our ability to meet the growing needs of our existing customers and to attract new customers in these key markets depends on our ability to add additional capacity by incrementally expanding our existing facilities or by locating and securing additional facilities in these markets that meet specific infrastructure requirements such as access to multiple telecommunications carriers, a significant supply of electrical power, high ceilings and the ability to sustain heavy floor loading. In many markets, the supply of facilities with these characteristics is limited and subject to high demand. If we are unable to expand our capacity in a timely and cost-effective manner, our business and results of operations may be adversely affected.

We are continuing to invest in our expansion efforts, but we may not experience sufficient customer demand in the future to realize expected returns on these investments.

We are considering the acquisition or lease of additional properties, including the construction of new facilities. We would be required to commit substantial operational and financial resources to these facilities, generally up to 18 months in advance of securing customer contracts, and we may not experience sufficient customer demand in those markets to support these facilities once they are built. In addition, unanticipated technological changes could affect customer requirements, and we may not have built such requirements into our new facilities. Any of these contingencies, if they were to occur, could make it difficult for us to realize expected or reasonable returns on these investments and could have a material adverse effect on our operating results.

We do not own the buildings in which our facilities are located. Instead, we have chosen to lease our facility space, and the non-renewal of leases poses significant risk to our ongoing operations.

We would incur significant costs if we were forced to vacate one of our facilities due to the high costs of relocating the equipment in our facilities and installing the necessary infrastructure in a new facility. In addition, if we were forced to vacate a facility, we could lose customers that chose our services based on our location. Our landlords could attempt to evict us for reasons beyond our control. Further, we may be unable to maintain good working relationships with our landlords, which would adversely affect our customer service and could result in the loss of current customers.

In addition, our business would be harmed by our inability to renew leases at favorable terms. Most of our leases provide two five-year renewal options with rents set at then-prevailing market rates. We expect that the then-prevailing market rates will be higher than present rates. To maintain the operating profitability associated with our present cost structure, we must

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increase revenues within existing facilities to offset the anticipated increase in lease payments at the end of the original and renewal terms. Failure to increase revenue sufficiently to offset these projected higher costs would adversely impact our operating income.

Additionally, ten of our leases do not contain renewal options. Renewing these leases at favorable terms will be critical to continuing those operations in the Los Angeles, Atlanta, New York, Philadelphia and Seattle markets. Even those leases which contain renewal options do not ensure long-term operations at those facilities.

If our contracts with our customers are not renewed or are terminated, our business could be substantially harmed.

Our customer contracts for space and power typically have terms of one to three years. Interconnection services are typically provided either on a month-to-month basis or over a one-year term. Our customers may not elect to renew these contracts. Furthermore, our customer contracts are terminable for cause if we breach a material provision of the contract, including the failure to provide power or connectivity for extended periods of time, or violate applicable laws or regulations. We may face increased competition and pricing pressure as our customer contracts become subject to renewal. Our customers may negotiate renewal of their contracts at lower rates, for fewer services or for shorter terms. If we are unable to successfully renew our customer contracts on their current terms, or if our customer contracts are terminated, our business could suffer.

We have been sued by several landlords for breaches of our lease agreements. An adverse determination in any of these proceedings could result in significant liabilities.

We have three ongoing cases with respect to disputes arising out of alleged breaches of our abandoned lease agreements. One of these is a suit filed in West Palm Beach, Florida in May 2002, in which the plaintiff is seeking damages of approximately $29.7 million, consisting of alleged lost rents, lost profits, lost business opportunities, transaction costs relating to our alleged forced sale and attorney’s fees. In a suit filed in Milwaukee, Wisconsin in May 2006, the plaintiff is seeking damages of $4.6 million consisting of alleged lost rents, losses on the sale of the building and attorney’s fees. The third suit was filed in New Orleans, Louisiana in October 2001, and involves a plaintiff that is seeking damages of approximately $3.6 million consisting of alleged lost rent, restorative expenses and lease commission. In the past, we have experienced adverse outcomes in litigation proceedings arising out of similar facts, and we have also settled similar disputes for significant sums. The potential liabilities resulting from these claims may not be covered by our insurance policies or may be disputed by our insurers. Moreover, even if the claims brought against us are unsuccessful or without merit, the cost of defending these suits may result in a material adverse effect on our liquidity. See “Business—Legal Proceedings” for more information.

Any failure of our physical infrastructure or services could lead to significant costs and disruptions that could reduce our revenues, harm our business reputation and have a material adverse effect on our financial results.

Our business depends on providing customers with highly reliable service. The services we provide are subject to failure resulting from numerous factors, including:

• human error;

• power loss;

• improper building maintenance by the landlords of the buildings in which our facilities are located;

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• physical or electronic security breaches;

• fire, earthquake, hurricane, flood and other natural disasters;

• water damage;

• the effect of war, terrorism and any related conflicts or similar events worldwide; and

• sabotage and vandalism.

Problems at one or more of our facilities, whether or not within our control, could result in service interruptions or equipment damage. We have service level commitment obligations to substantially all of our customers. As a result, service interruptions or equipment damage in our facilities could result in credits for service interruptions to these customers. We have at times in the past given credits to our customers as a result of service interruptions due to equipment failures. We cannot assure you that our customers will accept these credits as compensation in the future. Also, service interruptions and equipment failures may expose us to additional legal liability and impair our brand image. We depend on our landlords and other third-party providers to properly maintain the buildings in which our facilities are located. Improper maintenance by such landlords and third parties increase the risk of service interruptions and equipment damage.

Additionally, certain of our facilities, including those in California, Florida and the Pacific Northwest, are located in areas particularly susceptible to natural disasters such as earthquakes, hurricanes and tornadoes. The occurrence of any natural disaster could shut down one or more of our facilities and result in a material adverse effect upon our results of operations. Moreover, we may not have adequate property or liability insurance to cover catastrophic events.

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

We compete with network neutral interconnection and colocation service providers and other telecommunications service providers, including U.S.-based telecommunications carriers and Internet service providers, managed service providers and web hosting companies. Many of our competitors have longer operating histories and significantly greater financial, technical, marketing and other resources than us, and some have a greater presence in our markets and in other markets across the United States and around the world.

Because of their greater financial resources, some of our competitors have the ability to adopt aggressive pricing policies. As a result, we may suffer from pricing pressure that would adversely affect our ability to generate revenues and adversely affect our operating results. In addition, certain of these competitors currently offer network neutral interconnection and colocation services in the same markets where we have facilities, and other competitors may start doing so in the future. Some of these competitors may also provide our current and potential customers with additional benefits, including one-stop shopping options through bundled interconnection and colocation services, and may do so in a manner that is more attractive to our potential customers than our services. These competitors may be able to provide bundled interconnection and colocation services at prices lower than our cost structure allows. If, as a result of such efficiencies, these competitors are able to adopt aggressive pricing policies for interconnection and colocation services, our ability to generate revenues would be materially and adversely affected.

In addition, our competitors may operate more successfully or form alliances to acquire significant market share. Once businesses locate their networking and computing equipment in competitors’ facilities, it may be extremely difficult to convince them to relocate to our facilities. Furthermore, a business that has already invested substantial resources in such arrangements may be reluctant or slow to replace, or limit its existing services by becoming our customer.

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Finally, we may also experience competition from our landlords. Rather than leasing available space in our buildings to us or other large single tenants, they may decide to convert the space instead to smaller units designed for multi-tenant interconnection and colocation use. Landlords may enjoy a cost advantage in providing services similar to those provided by us, and this could also reduce the amount of space available to us for expansion in the future.

If we fail to differentiate our facilities and services from the services provided by our current or future competitors, we may not be able to compete successfully and our business and results of operations may be adversely affected.

Our failure to meet performance standards under our service level agreements could result in our customers terminating their relationship with us and the damage to our reputation could limit our ability to retain existing customers and attract new customers.

We have service level agreements with substantially all of our customers in which we provide various guarantees regarding our levels of service. We may have difficulty meeting these levels of service if we experience service interruptions. If we fail to provide the levels of service required by these agreements, our customers may be able to receive service credits for their accounts or terminate their relationship with us. In addition, our inability to meet our service level commitments may damage our reputation and could consequently limit our ability to retain existing customers and attract new customers, which would adversely affect our ability to generate revenues and negatively impact our operating results. We have issued credits to customers on several occasions in the past due to our failure to meet our service level commitments, and we may do so in the future. We cannot assure you that our customers will accept these credits as compensation in the future.

We are dependent upon third-party suppliers for power and certain other services, and we are vulnerable to service failures of our third-party suppliers and to price increases by such suppliers.

We generally do not control the amount of power our customers draw from their installed circuits. We rely on third parties to provide power, and we cannot ensure that these third parties will deliver such power in adequate quantities or on a consistent basis. If the amount of power available to us is inadequate to support our customer requirements or delivery of power does not occur in a timely manner, we may be unable to provide our services to our customers and our operating results and cash flow may be materially and adversely affected. In addition, our facilities are susceptible to power shortages and planned or unplanned power outages caused by these shortages such as those that occurred in California in 2001, in New York City and the Northeast in 2003 and in Miami in 2005. The overall power shortages in California, where three of our facilities, including our Palo Alto facility, are located, have increased the cost of energy, which we may not be able to pass on to our customers. We also believe that the Northeast remains particularly vulnerable to power shortages. We attempt to limit exposure to power shortages by using backup generators and batteries. Power outages, which may last beyond our backup and alternative power arrangements, would harm our customers and our business. In the past, a limited number of our customers have experienced temporary losses of power. We could incur financial obligations or be subject to lawsuits by our customers in connection with a loss of power. In addition, any loss of services or equipment damage could reduce the confidence of our customers in our services and could consequently impair our ability to attract and retain customers, which would adversely affect both our ability to generate revenues and our operating results.

We are dependent upon third-party suppliers for the resale of Internet access and other services, and we have no control over the quality and reliability of the services provided by

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these suppliers. In the past, some of these providers have experienced significant system failures. Users of our services may in the future experience difficulties due to service failures unrelated to our systems and services. If for any reason these suppliers fail to provide certain services to us, our business, financial condition and results of operations could be adversely affected.

We depend upon a limited number of network service provider customers in certain of our facilities, and the loss of one or more of these customers in those facilities could adversely affect business.

Because we do not own or operate our own network, we depend upon network service providers to colocate and/or interconnect as customers in our facilities and contribute to the network density that attracts our other customers. In several of our smaller markets, we have agreements with only a limited number of network service providers. In these small market facilities, we expect that we will continue to rely upon a smaller number of network service provider customers to maintain network density within those facilities. Our agreements with these network service providers will expire over a one to three-year period if not renewed. A loss of one or more of these customers could have a material and adverse effect on the operations of one or more of our facilities.

Our ability to grow depends on a diverse customer base, and our failure to develop and maintain a diverse customer base could harm our business and adversely affect our results of operations.

Our ability to grow depends on our ability to develop and maintain a diverse customer base, consisting of a variety of businesses, including telecommunications carriers, Internet service providers and enterprises. We believe creating a diverse customer base in each facility will generate incremental interconnection revenues in the long-term and increase our overall revenues. Our ability to attract and retain these customers will depend on a variety of factors, including the presence of multiple telecommunications carriers in our facilities, the mix of services offered by us, our overall customer mix, the operating reliability and security of our facilities and our ability to market our services effectively across different customer segments. If we fail to develop and maintain a diverse customer base, our business and results of operations may be adversely affected.

We intend to make future acquisitions, which pose integration and other risks that could harm our business.

Since March 2003, we have made the following five acquisitions: the acquisition of the assets and certain liabilities of PAIX.net, Inc. in March 2003; the acquisition of the stock of Meridian Telesis in January 2004; the acquisition of the stock of the RACO Group in March 2004; the acquisition of the limited partnership interests of the Site II partnership in 2004; and the acquisition of the stock of LayerOne Holdings in January 2005. We may acquire complementary businesses, product or service lines and technologies in the future. There can be no assurance that we will be able to successfully integrate our acquisitions. To finance these acquisitions, we may incur additional debt and issue additional shares of our stock, which will dilute existing stockholders’ ownership interests in us and may adversely affect our business and operations.

Specific challenges we have encountered in our prior acquisitions include the following:

• unexpected additional capital expenditures to improve the condition of the acquired equipment so as to achieve the desired level of quality of service;

• additional capital expenditures because of less product availability than expected;

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• loss of customers; and

• difficulties in maintaining uniform procedures, policies and controls.

Future acquisitions may expose us to the challenges set forth above and other risks such as:

• the diversion of senior management’s attention from daily operations to the negotiation of transactions and integration of the acquired businesses, product or service lines and technologies;

• the inability to achieve projected synergies;

• the possible loss or reduction in value of acquired businesses;

• the possible loss of key personnel; and

• the assumption of undisclosed liabilities.

The failure to successfully integrate acquired businesses, operations or technologies could have a material adverse effect on our business, results of operations and financial condition. Successful integration will depend on our ability to manage acquired operations, realize revenue growth from an expanded customer base and eliminate duplicative and excess costs, among other factors.

Our costs will increase significantly as a result of operating as a public company, and our management will be required to devote substantial time to complying with public company regulations.

We have never operated as a public company. As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002, as well as recent rules subsequently implemented by the SEC and The Nasdaq Stock Market, have imposed various new requirements on public companies, including changes in corporate governance practices, and these requirements will continue to evolve. Our management and other personnel will need to devote a substantial amount of time to comply with these evolving requirements. Moreover, these rules and regulations relating to public companies will increase our legal and financial compliance costs and will make some activities more time-consuming and costly.

In addition, the Sarbanes-Oxley Act requires, among other things, that we maintain and periodically evaluate our internal control over financial reporting and disclosure controls and procedures. In particular, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge to satisfy the ongoing requirements of Section 404.

Failure to design, implement and maintain effective internal controls could have a material adverse effect on our business and stock price.

As a public company, we will have significant requirements for enhanced financial reporting and internal controls. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the

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economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our financial statements and harm our operating results. In addition, we will be required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, which will require annual management assessments of the effectiveness of our internal control over financial reporting and a report by our independent auditors that both addresses management’s assessments and our internal controls. We must complete our first Section 404 annual management report as of December 31, 2007, and our auditor must complete its first attestation report as of December 31, 2008 and we must include these reports in our 2007 and 2008 Form 10-Ks, (to be filed in early 2008 and 2009, respectively). As described above, during the course of our internal control testing, we identified deficiencies and we may discover additional deficiencies, which we may not be able to remediate in time to meet our deadline for compliance with Section 404. Testing and maintaining internal controls may divert our management’s attention from other matters that are important to our business. We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 or our independent auditors may not issue a favorable assessment. We cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or their effect on our operations. If either we are unable to conclude that we have effective internal control over financial reporting or our independent auditors are unable to provide us with an unqualified report, investors could lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.

Our services have a long sales cycle that may have a material adverse effect on our business, financial condition and results of operations.

A customer’s decision to license rack, cabinet or cage space in one of our facilities and to purchase interconnection services typically involves a significant commitment of our time and resources. Many customers are reluctant to commit to purchasing our interconnection and colocation services until they are confident that our facility has adequate available carrier connections and network density. As a result, we experience a long sales cycle for our services. Furthermore, we may expend significant time and resources in pursuing a particular sale or customer that does not generate revenue. Delays due to the length of our sales cycle or costs incurred that do not result in sales may have a material adverse effect on our business, financial condition and results of operations.

Our success largely depends upon retaining the services of our management team.

We are highly dependent on our management team. We expect that our continued success will largely depend upon the efforts and abilities of members of our management team. The loss of services of any key executive for any reason could have a material adverse effect upon us. Our success also depends upon our ability to identify, develop and retain qualified employees. The loss of some of our management and other employees could have a material adverse effect on our operations.

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

Many of our competitors are large telecommunications service providers that promote their brands with significantly larger budgets than we have for brand promotion. If we fail to develop

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and maintain brand recognition through sales and marketing efforts and a reputation for high quality service, we may be unable to attract new customers and risk losing existing customers to competitors with better known brands.

We have not been successful in attracting customers in several regional markets. We have closed several facilities and our failure to attract sufficient customers in our remaining regional markets could cause us to close one or more of our facilities and lose prospective customers and may adversely affect our business.

We maintain a presence in select regional markets across the U.S. and, in several of those markets, we have not been successful in attracting customers to our facilities. We have also exited certain markets. In connection with our exit from these markets and in other markets, we have taken significant asset impairment and discontinuation charges. We presently intend to exit the Kansas City market within the next 9 to 12 months. We are also currently considering exiting another market which currently represents less than 1% of our revenues.

We have significant debt obligations which include restrictive covenants that limit our flexibility to manage our business; failure to comply with these covenants could trigger an acceleration of our outstanding indebtedness.

As of September 30, 2006, outstanding indebtedness under our credit facilities totaled approximately $144.8 million. Our credit facilities require that we maintain specific financial ratios and comply with covenants, including various financial covenants, which contain numerous restrictions on our ability to incur additional debt, pay dividends or make other restricted payments, sell assets, enter into affiliate transactions and take other actions. Furthermore, our existing financial arrangements are, and future financing arrangements are likely to be, secured by all of our assets. If we are unable to meet the terms of the financial covenants or if we breach any of these covenants, a default could result under one or more of these agreements. We have in the past violated certain covenants under our credit facilities, including a violation of the fixed charge covenant in March 2006 and violations of the leverage coverage, interest coverage and fixed charge covenants in September 2006, each of which were subsequently waived by our lenders pursuant to amendments to the credit facilities. A default, if not waived by our lenders, could result in the acceleration of outstanding indebtedness and cause our debt to become immediately due and payable.

If we are unable to generate sufficient cash available to repay our debt obligations when they become due and payable, we will have to refinance such obligations, or otherwise we will not be able to repay our debt. If new financing is made available, its terms may not be favorable to us and our business may be adversely affected.

We could incur substantial costs as a result of violations of or liabilities under environmental laws.

We are subject to various environmental and health and safety laws and regulations, including those relating to the generation, storage, handling and disposal of hazardous substances and wastes. Certain of these laws and regulations impose liability, without regard to fault or the lawfulness of the disposal activity, for the entire cost of the investigation and cleanup of contaminated sites on current and former owners and operators of real property and persons who have disposed of or released hazardous substances at any location. Our facilities contain tanks for the storage of diesel fuel and significant quantities of lead acid batteries to provide back-up power. We maintain an environmental compliance program that includes the implementation of required technical and operational procedures designed to minimize the potential for leaks and spills, maintenance of records and manufacturers’ recommended preventative maintenance. However, we cannot guarantee that these systems will remain free

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from leaks or that the use of these systems will not result in spills. Any leak or spill of hazardous materials could result in interruptions to our operations and expenditures that could have a material adverse effect on our business, financial condition and results of operations. Moreover, hazardous substances or regulated materials of which we are not aware may be present at facilities we operate and lease. To the extent any such contaminants are discovered at our facilities, we may be responsible under applicable laws, regulations or leases for any required removal or cleanup at substantial cost. In addition, non-compliance with or liabilities under existing environmental or health and safety laws and regulations, or the adoption of more stringent requirements in the future, could result in fines, penalties, third-party claims and other costs that could be material.

Risks Related to Our Industry

Our business depends on general economic performance and the continued use of the Internet, as well as the increasing adoption and usage of bandwidth intensive services.

Acceptance and use of the Internet may not continue to develop at historical rates and a sufficiently broad base of consumers may not continue to use the Internet and other online services as a medium of communication, commerce and entertainment. Demand for Internet services and products is subject to a high level of uncertainty and such services and products are subject to significant pricing pressure. As a result, we cannot be certain that a viable market for our services will be sustainable in many of our markets. If the market for our services grows more slowly than we currently anticipate, our revenues and operating results will be materially and adversely affected.

Industry consolidation may have a negative impact on our business.

The telecommunications industry is currently undergoing consolidation. For example, two of our significant customers, Qwest and Level 3, acquired OnFiber and Progress Telecom, respectively, both of which are also significant customers. As our customers consolidate, there may be fewer telecommunications service providers available in our facilities and, with less network density in our facilities, our network neutral interconnection and colocation services may become less attractive to our customers. Further, our customers may require less interconnection and colocation services as they combine businesses. Given the competitive and evolving nature of this industry, further consolidation of our customers and competitors may present a risk to our network neutral business model and have a material adverse effect on our revenues and results of operations.

Changes in technology could adversely affect our business.

The markets for the services we offer are characterized by rapidly changing technology, evolving industry standards, frequent new service introductions, shifting distribution channels and changing customer demands. We may not be able to adequately adapt our services or acquire new services that can compete successfully. We risk losing customers to our competitors if we are unable to adapt to this rapidly evolving marketplace.

In addition, our large telecommunications service provider customers that may be colocated at our facilities and our competitors’ facilities may, for reasons that are beyond our control, decide to upgrade the equipment in our competitors’ facilities but not at our facilities. This could lead to the phasing out of our facilities as a marketplace for telecommunications services, making our services less desirable for our customers. Such an occurrence would adversely affect our financial condition, our ability to retain existing customers and our ability to attract new customers.

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Government regulation of data networks is largely unsettled, and depending on its evolution, may adversely affect our business.

The telecommunications industry is currently undergoing a transformation in technology as it moves from a traditional dedicated circuit network architecture to a design where all forms of traffic—voice, video, and information—are transmitted as digital bits over IP-based networks. With the advent of these digital data transmissions and the growth of the Internet, data networks are becoming the networks over which all communications services can be offered. Determining the appropriate regulatory framework for these data networks is one of the most significant challenges facing federal and state telecommunication policy makers. As a result of this fundamental shift in the telecommunications industry’s underlying technology, various laws and governmental regulations in Canada and at the federal, state and local level in the U.S., governing IP-based services, related communications services and information technologies remain largely unsettled.

We are currently regulated by the Federal Communications Commission and the Canadian Radio Television and Telecommunications Commission regarding our provision of International Private Line interexchange services. We are also regulated by the New York State Department of Public Service regarding the provisions of intrastate interexchange services. Due to changing technology and applications of that technology it is uncertain whether and how existing laws or regulations or new laws or regulations will be applied by the Federal Communications Commission and other regulatory agencies in the future to other currently unregulated services we offer, or to new services or products that we may offer in the future.

Terrorist activity throughout the world and military action to counter terrorism could adversely impact our business, particularly in regards to our operations located in the San Francisco Bay Area and New York City.

The September 11, 2001 terrorist attacks in the U.S., the ensuing declaration of war on terrorism, the war in Iraq and the continued threat of terrorist activity and other acts of war or hostility appear to be having an adverse effect on business, financial and general economic conditions internationally. These effects may, in turn, increase our costs due to the need to provide enhanced security, which would have a material adverse effect on our business and results of operations. These circumstances may also adversely affect our ability to attract and retain customers, our ability to raise capital and the operation and maintenance of our facilities. We may not have adequate property and liability insurance to cover catastrophic events or attacks brought on by these factors. In addition, we depend heavily on the physical infrastructure, particularly as it relates to power, that exists in the markets in which we operate. Any damage to such infrastructure in these markets, and particularly in New York City and the San Francisco Bay Area, markets where we operate that are likely to be more prone to terrorist activity as the principal financial and technology centers of the United States, respectively, may materially and adversely affect our business.

Risks Related to the Offering

We may face litigation with certain of our stockholders.

Several years ago, we were sued by certain of our stockholders related to minority stockholder issues. Our predecessor’s capital needs necessitated a number of rounds of financing and the terms and conditions of such financing varied. The later rounds of financing generally contained more favorable terms for the investors than the earlier rounds. Although many of our predecessor’s stockholders hold multiple classes of stock, a number hold few or none of the classes that were issued in the later rounds. In particular, pursuant to an investors agreement between our predecessor and virtually all of its stockholders and under our

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predecessor’s certificate of incorporation, a formula is set forth establishing the amount of shares of common stock that the holders of each class of securities in our predecessor will receive in connection with our corporate reorganization. The result of the application of this formula is that it is highly unlikely that holders of our predecessor’s Common Stock, Series B Common Stock and Series A, B and C Special Junior Stock will receive any of our common stock or any other consideration in connection with our corporate reorganization. Holders of our predecessor’s Series B Convertible Preferred Stock will likely receive less than their original investment in us. As a result, certain of our predecessor’s stockholders, even though they agreed to the formula in the investors agreement, may commence litigation seeking damages and other expenses and potentially other forms of relief, including, but not limited to, injunctive

relief. Although we intend to vigorously oppose any litigation claims that may be raised, there is no assurance that we will prevail. If we do not prevail, the damages awarded and our other costs and expenses could be material and any injunctive relief awarded could cause significant or permanent delays in our corporate reorganization and the offering of our common stock contemplated in this prospectus. Even if we prevail, the distraction of management could result in a material adverse effect upon our business and results of operations and we could incur substantial legal expenses.

There is no existing market for our common stock, and you cannot be certain that an active trading market or a specific share price will be established.

Prior to this offering, there has been no public market for shares of our common stock. We have applied to list our common stock on The Nasdaq Global Market. We cannot predict the extent to which investor interest in our company will lead to the development of a trading market on The Nasdaq Global Market or otherwise or how liquid that market might become. The initial public offering price for the shares of our common stock will be determined by negotiations between us and the underwriters, and may not be indicative of the price that will prevail in the trading market following this offering. The market price for our common stock may decline below the initial public offering price, and our stock price is likely to be volatile.

If our stock price fluctuates after this offering, you could lose a significant part of your investment.

The market price of our stock may be influenced by many factors, some of which are beyond our control, including those described above under “Risks Related to Our Business” and the following:

• the failure of securities analysts to publish research about us after this offering or to make changes in their financial estimates;

• announcements by us or our competitors of significant contracts, productions, acquisitions or capital commitments;

• variations in quarterly operating results;

• general economic conditions;

• terrorist acts;

• future sales of our common stock; and

• investor perception of us and the telecommunications industry.

As a result of these factors, investors in our common stock may not be able to resell their shares at or above the initial offering price. These broad market and industry factors may

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materially reduce the market price of our common stock, regardless of our operating performance.

The market price of our common stock could be negatively affected by sales of substantial amounts of our common stock in the public markets.

As adjusted for this offering, there will be              shares of our common stock outstanding and              options to purchase common stock based on shares and options outstanding on                     , 2006 (including              options that will be exercisable). There will be              shares outstanding if the underwriters exercise their over-allotment option in full. Of our outstanding shares, all the shares of our common stock sold in this offering will be freely transferable, except for any shares held by our “affiliates,” as that term is defined in Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”).

Although we and our officers, directors, existing stockholders and existing option holders holding     % or more of our outstanding common stock have agreed with the underwriters that for a period of at least 180 days after the date of this prospectus, we and they will not directly or indirectly offer, pledge, sell, contract to sell, sell any option or contract to purchase or otherwise dispose of any shares of common stock or any securities convertible into or exercisable or exchangeable for shares of common stock, or in any manner transfer all or a portion of the economic consequences associated with the ownership of shares of common stock, or cause a registration statement covering any shares of common stock to be filed, without the prior written consent of Deutsche Bank Securities Inc., and Jefferies & Company, Inc., these agreements are subject to important exceptions. In addition, Deutsche Bank Securities Inc. and Jefferies & Company, Inc. may waive these restrictions at their discretion.

In addition, following the completion of this offering, we intend to file a registration statement on Form S-8 under the Securities Act to register an aggregate of              shares of our common stock reserved for issuance upon exercise of options granted under our 2006 Stock Incentive Plan. Shares registered under the registration statement on Form S-8 will be available for immediate sale into the public markets upon the exercise of any such options subject to the 180-day lock-up agreements described above and certain volume limitations applicable to our directors and executive officers.

Investors in this offering will suffer immediate and substantial dilution.

The initial public offering price of our common stock is substantially higher than the net tangible book value per share of our common stock outstanding immediately after this offering. After giving effect to the completion of our corporate reorganization, our net tangible book value deficit per share as of September 30, 2006 was approximately $             and represents the amount of our stockholders’ equity of $             million minus intangible assets of $             million and deferred finance costs of $             million, divided by the              shares of our common stock that were outstanding on September 30, 2006. After giving effect to the completion of our corporate reorganization, our net book value per share of $             as of September 30, 2006 represents the amount of our stockholders’ equity of $             million divided by the              shares of common stock that were outstanding on September 30, 2006.

Investors who purchase our common stock in this offering will pay a price per share that substantially exceeds the net tangible book value per share of our common stock. If you purchase our common stock in this offering, you will experience immediate and substantial dilution of $             in the net tangible book value per share of our common stock based on our net tangible book value as of September 30, 2006 and after giving effect to the completion of our corporate reorganization and $             per share based on our net tangible book value per

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share as of September 30, 2006 and after giving effect to the completion of our corporate reorganization, on an as-adjusted basis, based upon the initial public offering price of $             per share. Additional dilution will occur upon the exercise of outstanding options. Investors who purchase our common stock in this offering will have purchased     % of the shares outstanding immediately after the offering, but will have paid     % of the total consideration for those shares.

The issuance of additional stock in connection with acquisitions, our stock incentive plan or otherwise will dilute all other stockholdings.

After this offering, assuming the exercise in full by the underwriters of their over-allotment option, we will have an aggregate of              shares of common stock authorized but unissued and not reserved for issuance under our 2006 Stock Incentive Plan. We may issue all of these shares without any action or approval by our stockholders. We intend to continue to actively pursue strategic acquisitions. We may pay for such acquisitions, partly or in full, through the issuance of additional equity. Any issuance of shares in connection with our acquisitions, the exercise of stock options or otherwise would dilute the percentage ownership held by the investors who purchase our shares in this offering.

Your ability to influence corporate matters may be limited because a small number of stockholders beneficially own a substantial amount of our common stock.

After giving effect to this offering, assuming no exercise by the underwriters of their over-allotment option, affiliates of              will beneficially own approximately              million shares, or     %, of our common stock, affiliates of              will beneficially own approximately              million shares, or     %, of our common stock and affiliates of              will beneficially own approximately              million shares, or     %, of our common stock.              of our directors are associated with these stockholders. As a result,             ,              and              could exert significant influence over our management and policies and may have interests that are different from yours and may vote in a way with which you disagree and which may be adverse to your interests. In addition, this concentration of ownership may have the effect of preventing, discouraging or deferring a change of control, which could depress the market price of our common stock.

Our authorized but unissued common stock and preferred stock may prevent a change in our control.

Our amended and restated certificate of incorporation authorizes us to issue additional authorized but unissued shares of our common stock or preferred stock. In addition, our board of directors may classify or reclassify any unissued shares of our preferred stock and may set the preferences, rights and other terms of the classified or reclassified shares. As a result, our board may establish a series of preferred stock that could delay or prevent a transaction or a change in control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.

Anti-takeover provisions in our amended and restated certificate of incorporation and by-laws could delay a change in management and limit our share price.

Certain provisions of our amended and restated certificate of incorporation and by-laws could make it more difficult for a third party to acquire control of us or for us to acquire control of a third party even if such a change in control would increase the value of your common stock.

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We have a number of anti-takeover devices in place that will hinder takeover attempts and could reduce the market value of our common stock or prevent sale at a premium. Our anti-takeover provisions include:

• a staggered, or classified, board of directors;

• removal of directors, only for cause, by 80% of the voting interest of stockholders entitled to vote;

• blank-check preferred stock, the preference, rights and other terms of which may be set by the board of directors and could delay or prevent a transaction or a change in control that might involve a premium price for our common stock or otherwise benefit our stockholders;

• a provision denying stockholders the ability to call special meetings;

• Section 203 of the Delaware General Corporation Law, which restricts certain business combinations with interested stockholders in certain situations; and

• advance notice requirements by stockholders for director nominations and actions to be taken at annual meetings.

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FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve risks and uncertainties. We may, in some cases, use words such as “project,” “believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,” “should,” “would,” “could,” “will,” or “may,” or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements in this prospectus may include statements about:

• our financial outlook and the financial outlook of Internet dependent businesses, including telecommunications carriers, Internet service providers, online content providers and enterprises;

• our ability to compete successfully with our competitors;

• our use of our proceeds from this offering;

• our cash needs;

• implementation of our corporate strategy;

• our financial performance;

• our ability to leverage our network densities;

• our ability to grow in our top 10 markets and expand the capacity in our facilities to meet the increasing needs of our existing customers and to serve new customers;

• the availability and cost of sufficient electrical power and cooling capacity in our facilities;

• our ability to pursue and successfully integrate acquisitions;

• our ability to strengthen existing customer relationships and reach new customers;

• our ability to develop relationships with customers in emerging, bandwidth-intensive segments and to develop new sales channels;

• our ability to offer a mix of services that will develop and maintain a diverse customer base;

• our ability to design and architect facilities which proactively address the evolving needs of our customers;

• our ability to meet the service levels required by our service level agreements with our customers;

• the growth in Internet traffic;

• the stabilizing supply of network neutral interconnection and colocation capacity;

• the adoption of advanced networking technology;

• the adoption and usage of bandwidth-intensive services;

• the growing awareness of business continuity and disaster recovery planning; and

• the effect of industry consolidation on our business.

There are a number of important factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements. These important factors include those that we discuss in this prospectus under the caption “Risk Factors.” You should read these factors and the other cautionary statements made in this prospectus as being

25

applicable to all related forward-looking statements wherever they appear in this prospectus. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

You should rely only on the information contained in this prospectus. We and the selling stockholders have not authorized anyone to provide information different from that contained in this prospectus. We and the selling stockholders are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.

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USE OF PROCEEDS

We estimate that our net proceeds from the sale of the shares of common stock by us will be approximately $             million, assuming an initial public offering price of $             per share and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any of the proceeds from the sale of shares by the selling stockholders. Assuming no change in the number of shares offered by us as set forth on the cover page of this prospectus, a $1.00 increase (decrease) in the assumed initial public offering price of $             per share would increase (decrease) the net proceeds to us from this offering by $             million, or $             million if the underwriters exercise their over-allotment option in full, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

If we successfully enter into a new credit facility, we intend to use all of our net proceeds from this offering to repay a portion of the outstanding principal under our existing credit facilities. As of September 30, 2006, approximately $144.8 million of principal was outstanding under our existing credit facilities. We do not intend to use any of the proceeds from this offering to repay accrued interest under our credit facilities, which we intend to pay with working capital. We pay interest on the principal that we will repay with the proceeds of this offering at either a base rate or a Eurodollar rate, at our option, and such indebtedness has maturity dates of October 13, 2010 and October 13, 2011. Any base rate interest we pay is equal to the greater of the agent’s prime rate or 0.50% above the federal funds rate, plus a spread of 2.50% to 3.25%. Any Eurodollar rate interest we pay is based on the one-, two-, three-, or six-month Eurodollar rate plus a spread of 3.50% to 4.25%.

We intend to enter into a new credit facility. We currently intend to use funds borrowed under our new credit facility to repay in full any remaining principal amounts owed under our existing credit facilities, for capital expenditures, for working capital and other general corporate purposes. In addition, we may use a portion of the borrowings under our new credit facility to acquire or invest in businesses, products, services or technologies complementary to our current business, through mergers, acquisitions, joint ventures or otherwise. However, we have no specific agreements or commitments and are not currently engaged in any substantive negotiations with respect to these transactions. Our existing credit facilities require that we use 75% of the proceeds from this offering to repay amounts owed under such credit facilities. Although we are seeking to enter into a new credit facility, a new credit facility is not a condition of this offering. Accordingly, if we are unable to enter into a new credit facility, we will use 75% of the proceeds from this offering to repay principal amounts owed under our existing credit facilities and the remaining 25% will be used for capital expenditures, for working capital and for other general corporate purposes.

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DIVIDEND POLICY

On October 13, 2005, we paid a cash dividend of approximately $11.4 million in the aggregate to holders of our predecessor’s Series D Redeemable Preferred Stock in connection with the redemption of our predecessor’s Series D Redeemable Preferred Stock and approximately $16.0 million in the aggregate to holders of our predecessor’s Series C Redeemable Preferred Stock. We have not declared or paid any other dividends. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. Our existing credit facilities prohibit us from paying cash dividends, and any future financing agreements may prohibit us from paying any type of dividends. For more information about these restrictions, see “Secured Credit Facility.”

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CAPITALIZATION

The following table sets forth our consolidated capitalization as of September 30, 2006:

• actual, of our predecessor without giving effect to any adjustments resulting from the corporate reorganization or this offering;

• as adjusted, after giving effect to the completion of our corporate reorganization discussed in “Certain Relationships and Related Party Transactions—Corporate Reorganization”; and

• as further adjusted to give effect to the completion of our corporate reorganization and to the issuance and sale of              shares of our common stock in this offering at an assumed initial public offering price of $             per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, and the application of the net proceeds of this offering as described under “Use of Proceeds.”

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This table should be read with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

	As of September 30, 2006
	Actual(1)		As Adjusted(1)	As Further Adjusted(1)
			(unaudited)	(unaudited)
	(In thousands)
Long-term debt, less current portion	$	142,375
Series C redeemable preferred stock, $0.0001 par value per share: 32,609 shares authorized, and 32,609 shares issued and outstanding, actual; no shares authorized and no shares issued as adjusted or as further adjusted		14,376
Series B convertible preferred stock, $0.0001 par value per share: 22,100 shares authorized, and 22,100 shares issued and outstanding, actual; no shares authorized and no shares issued and outstanding, as adjusted or as further adjusted		176,322
Stockholders’ deficit
Common stock, $0.0001 par value per share: 50,000 shares authorized, and 42,295 shares issued and outstanding, actual; 200,000 shares authorized, as adjusted and as further adjusted;              shares issued and outstanding, as adjusted;              shares issued and outstanding, as further adjusted		4
Series B common stock, $0.0001 par value per share: 65,217 shares authorized, and 65,217 shares issued and outstanding, actual; no shares authorized and no shares issued and outstanding, as adjusted or as further adjusted		7
Series A special junior stock, $0.0001 par value per share: 1,141 shares authorized, and 706 shares issued and outstanding, actual; no shares authorized and no shares issued and outstanding as adjusted or as further adjusted		—
Series B special junior stock, $0.0001 par value per share: 366 shares authorized, and 265 shares issued and outstanding, actual; no shares authorized and no shares issued and outstanding, as adjusted or as further adjusted		—
Series C special junior stock, $0.0001 par value per share: 4,000 shares authorized, and 220 shares issued and outstanding, actual; no shares authorized and no shares issued and outstanding, as adjusted or as further adjusted		—

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	As of September 30, 2006
	Actual(1)			As Adjusted(1)	As Further Adjusted(1)
				(unaudited)	(unaudited)
Series D-1 preferred stock, $0.0001 par value per share: 325 shares authorized, and 325 shares issued and outstanding, actual; no shares authorized and no shares issued and outstanding, as adjusted or as further adjusted		—
Series D-2 preferred stock, $0.0001 par value per share: 3,250 shares authorized, and 198 shares issued and outstanding, actual; no shares authorized and no shares issued, as adjusted or as further adjusted		5
Deferred Stock Compensation		(201	)
Additional paid-in capital		—
Accumulated deficit		(209,834	)
Accumulated comprehensive income		1,075
Total stockholders’ deficit		(208,944	)
Total capitalization	$	124,129

(1) The financial data presented in this column are based on the audited financial statements of our predecessor.

Assuming no change in the number of shares offered by us as set forth on the cover page of this prospectus, a $1.00 increase (decrease) in the assumed initial public offering price of $         per share would increase (decrease) each of cash and cash equivalents, additional paid-in capital, total stockholders’ equity and total capitalization by $         million, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Our capitalization information represented above excludes:

• our issuance of up to              shares of common stock that the underwriters have the option to purchase from us solely to cover over-allotments; and

•              shares of common stock available for issuance upon the exercise of outstanding options, of which              shares are exercisable as of September 30, 2006 and after giving effect to the completion of our corporate reorganization.

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DILUTION

If you invest in our common stock your interest will be diluted to the extent of the difference between the public offering price per share of our common stock and the pro forma net tangible book value per share of our common stock after this offering. We calculate net tangible book value per share by dividing our net tangible book value, which equals total assets less intangible assets and total liabilities, by the number of common shares outstanding. The net tangible book value of our common stock as of September 30, 2006 was approximately $            , or $             per share of common stock. Our net tangible book value as of September 30, 2006 was              million, or $             pro forma per share, based upon              shares outstanding and after giving effect to the completion of our corporate reorganization. After giving effect to the sale of              shares of common stock by us in this offering at an initial public offering price of $             per share, after deducting the estimated underwriting discounts and commissions and offering expenses payable by us, our pro forma net tangible book value as of September 30, 2006 would have been $            , or $             per share. This represents an immediate increase in net tangible book value of $             per share to existing stockholders and an immediate dilution in net tangible book value of $             per share to investors purchasing shares in this offering. The following table illustrates this per share dilution:

Assumed initial public offering price per share		$
Net tangible book value per share as of September 30, 2006	$
Net tangible book value per share as of September 30, 2006, after giving effect to the completion of our corporate reorganization	$
Increase per share attributable to sale of common stock in this offering	$
Pro forma net tangible book value per share after this offering		$
Dilution of net tangible book value per share to new investors		$

If the underwriters exercise their over-allotment option in full, the pro forma net tangible book value per share after this offering would be $             and the dilution of net tangible book value per share to new investors would be $            .

Assuming no change in the number of shares offered by us as set forth on the cover page of this prospectus, a $1.00 increase (decrease) in the assumed initial public offering price of $         per share would increase (decrease) our net tangible book value by $         million, the net tangible book value per share, after giving effect to this offering, by $         per share and the dilution in net tangible book value per share to new investors in this offering by $         per share, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The following table shows on a pro forma basis as of September 30, 2006, after giving effect to the completion of our corporate reorganization, the total cash consideration paid to us and the average price per share paid by existing stockholders for their common stock and by new investors purchasing common stock in this offering at an assumed initial public offering price of $             per share, before deducting estimated underwriting discounts and estimated expenses payable by us.

	Shares Issued		Total Consideration		Average Price Per Share
	Number	Percent	Amount	Percent
Existing stockholders
New investors
Total

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The tables above assume no exercise of stock options outstanding as of September 30, 2006. As of September 30, 2006, there were outstanding options to purchase              shares of common stock at a weighted average exercise price of $            . Additionally, there were              options available for future grant under our 2006 Stock Incentive Plan. Assuming the exercise of all outstanding options, there will be a dilution of net tangible book value per share to new investors of $            .

Sales by the selling stockholders in this offering will cause the number of shares held by existing stockholders to be reduced to              shares, or     % of the total number of shares of our common stock outstanding after this offering, and will increase the total number of shares held by new investors to              shares, or     % of the total number of shares of our common stock outstanding after this offering.

If the underwriters exercise their over-allotment option in full, the number of shares held by new investors will increase to              shares, or     % of the total number of shares of common stock outstanding after this offering, and such investors would have paid approximately     % of the total consideration paid to us for shares of our common stock.

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SELECTED CONSOLIDATED FINANCIAL DATA

This section presents our historical financial data which are based solely on the financial data of our predecessor. The selected consolidated financial data is qualified by reference to, and should be read carefully in conjunction with, the consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. The selected consolidated financial data in this section is not intended to replace the financial statements.

We derived the financial data as of December 31, 2004 and 2005 and for the years ended December 31, 2003, 2004 and 2005 from the audited financial statements of our predecessor, Switch & Data Facilities Company, Inc., appearing elsewhere in this prospectus. We derived the financial data as of December 31, 2001, 2002 and 2003 and for the years ended December 31, 2001 and 2002 from the unaudited restated financial statements of our predecessor not included in this prospectus. The financial data as of September 30, 2006 and for the nine months ended September 30, 2006 was from our predecessor’s audited financial statements included in this prospectus. The financial data for the nine months ended September 30, 2005 was from our predecessor’s unaudited financial statements included in this prospectus. The unaudited interim consolidated financial data reflects all adjustments, including usual recurring adjustments, which, in the opinion of management, are necessary for the fair presentation of that information as of and for the periods presented. The results for the interim periods are not necessarily indicative of the results that you should expect for the full year or in the future.

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	Year Ended December 31,															Nine Months Ended September 30,
	2001(1)(2)			2002(1)			2003			2004			2005			2005			2006
	(restated)			(restated)												(unaudited)
	(In thousands, except per share data)
Revenues:	$	42,229		$	38,928		$	69,840		$	91,449		$	105,414		$	78,668		$	82,549
Costs and operating expenses:
Cost of revenues, exclusive of depreciation and amortization		32,386			22,924			32,333			43,652			54,800			39,954			45,207
Sales and marketing		6,745			4,940			6,883			10,765			9,846			7,305			9,223
General and administrative		8,657			5,662			7,090			9,768			9,568			6,235			7,907
Depreciation and amortization		13,776			13,267			18,509			27,705			30,206			24,184			17,379
Lease litigation settlements		—			—			—			6,629			—			—			—
Asset impairment		16,329			8,338			—			1,015			2,140			2,140			2,193
Total costs and operating expenses		77,893			55,131			64,815			99,534			106,560			79,818			81,909
Operating income (loss)		(35,664	)		(16,203	)		5,025			(8,085	)		(1,146	)		(1,150	)		640
Interest income		489			194			121			140			106			89			71
Interest expense		(2,801	)		(4,485	)		(3,573	)		(5,374	)		(9,356	)		(6,066	)		(10,764	)
Loss from debt extinguishment		—			—			(342	)		(409	)		(769	)		—			—
Other income (expense)		9			—			78			(192	)		166			(7	)		(6	)
Income (loss) from continuing operations before minority interest and income taxes		(37,967	)		(20,494	)		1,309			(13,920	)		(10,999	)		(7,134	)		(10,059	)
Minority interest in net income of consolidated partnership		(2,513	)		(1,878	)		(2,052	)		(380	)		—			—			—
Income taxes		—			—			(80	)		(63	)		(69	)		(140	)		—
Loss from continuing operations		(40,480	)		(22,372	)		(823	)		(14,363	)		(11,068	)		(7,274	)		(10,059	)
Income (loss) from discontinued operations		(12,058	)		(19,142	)		(2,331	)		891			(206	)		(168	)		—
Net loss		(52,538	)		(41,514	)		(3,154	)		(13,472	)		(11,274	)		(7,442	)		(10,059	)
Preferred stock accretions and dividends		(9,787	)		(10,225	)		(15,120	)		(16,938	)		(33,691	)		(9,606	)		(10,054	)
Net loss, attributable to common stockholders	$	(62,325	)	$	(51,739	)	$	(18,274	)	$	(30,410	)	$	(44,965	)	$	(17,048	)	$	(20,113	)
Income (loss) per share-basic and diluted:
Continuing operations, attributable to common stockholders	$	(1.00	)	$	(0.30	)	$	(0.15	)	$	(0.29	)	$	(0.42	)	$	(0.16	)	$	(0.19	)
Discontinued operations	$	(0.24	)	$	(0.18	)	$	(0.02	)	$	0.01		$	(0.00	)	$	(0.00	)	$	(0.00	)
Net loss, attributable to common stockholders	$	(1.24	)	$	(0.48	)	$	(0.17	)	$	(0.28	)	$	(0.42	)	$	(0.16	)	$	(0.19	)
Weighted average shares outstanding(3)		50,074			107,787			107,787			107,787			107,787			107,787			107,554

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Balance Sheet Data:

	As of December 31,															As of September 30, 2006
	2001(1)			2002(1)(2)			2003(1)			2004			2005			Actual			Pro Forma (4)			As Adjusted (4)(5)
	(restated)			(restated)			(restated)
	(In thousands)
Cash and cash equivalents	$	14,485		$	5,839		$	10,664		$	13,707		$	10,417		$	4,027		$	4,027
Total assets		147,085			103,296			132,480			152,250			163,222			155,573		$	155,573
Long-term obligations		44,852			39,883			26,620			65,291			153,602			153,221		$	153,221
Total stockholders’ deficit		(45,650	)		(97,177	)		(115,242	)		(144,866	)		(189,360	)		(208,944	)		(208,944	)

Statement of Cash Flow Data:

	Year Ended December 31,															Nine Months Ended September 30,
	2001(1)			2002(1)			2003			2004			2005			2005			2006
	(restated)			(restated)												(unaudited)
										(In thousands)
Cash Flow from:
Operating Activities	$	(9,899	)	$	(3,239	)	$	20,725		$	17,645		$	25,333		$	20,691		$	11,321
Investing Activities		(36,081	)		(2,484	)		(44,600	)		(38,530	)		(41,516	)		(37,088	)		(16,770	)
Financing Activities		45,319			(3,133	)		28,699			23,929			12,875			8,287			(958	)

(1) Amounts as of and for the years ended December 31, 2001 and 2002 and the balance sheet data as of December 31, 2003 have been restated from the amounts previously reported due to the following:

• We have term loan and revolving debt agreements with a syndicate of banks. During 2001 and 2002, several modifications were made to these debt agreements. In conjunction with the modifications, we incurred certain costs which were deferred and capitalized. We have corrected our financial statements and selected financial data tables to comply with Emerging Issue Task Force 96-19, Debtor’s Accounting for a Modification or Exchange of Debt Instruments, and 98-14, Debtor’s Accounting for Changes in Line-of-Credit or Revolving Debt Arrangements, which require an assessment as to whether the modifications of the agreements should be accounted for as debt extinguishments or debt modifications. The unamortized costs related to the original borrowings and the costs incurred at the modification date were reviewed to determine whether they should continue to be capitalized or be expensed in whole or in part. As a result of this review, certain costs incurred that were previously capitalized have now been expensed as general and administrative expenses, certain amounts previously recorded as debt extinguishments have been corrected to capitalize such costs as debt modifications and the associated amortization of debt issuance costs has been corrected. We corrected our financial statements to reflect the appropriate financing costs in the consolidated statements of operations.

• We had included certain charges within discontinued operations in the consolidated statements of operations for the years ended December 31, 2003 when those charges and expenses related to activities that did not meet the criteria for classification as discontinued operations pursuant to Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, as they did not relate to a component of us. As a result of the previous restatement relating to the presentation of discontinued operations in 2003, certain facilities were reclassified from discontinued operations to continuing operations in 2002 and 2001.

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The following table shows the effects of the restatement of debt extinguishment costs and the correction of the classification of certain facilities from continuing operations to discontinued operations due to the discontinued operations error identified as part of the restatement of the 2003 financial statements to the corresponding line items of our results of operations, balance sheets, and statements of cash flows for the years indicated (in thousands):

Statement of Operations

	Year ended December 31,
	2001, as previously reported			2001, as restated			2002, as previously reported			2002, as restated
	(In thousands)
Revenues	$	44,321		$	42,229		$	38,928		$	38,928
Cost of revenues, exclusive of depreciation and amortization	$	39,181		$	32,386		$	20,673		$	22,924
General and administrative	$	8,556		$	8,657		$	5,650		$	5,662
Depreciation and amortization	$	17,080		$	13,776		$	13,267		$	13,267
Asset impairment	$	20,368		$	16,329		$	8,260		$	8,338
Total cost and operating expenses	$	91,932		$	77,893		$	52,790		$	55,131
Operating income (loss)	$	(47,611	)	$	(35,664	)	$	(13,862	)	$	(16,203	)
Interest expense	$	(2,786	)	$	(2,801	)	$	(4,355	)	$	(4,485	)
Other income (expense)	$	—		$	9		$	—		$	—
Income (loss) from continuing operations before income taxes and minority interest	$	(49,908	)	$	(37,967	)	$	(18,023	)	$	(20,494	)
Loss from continuing operations	$	(52,421	)	$	(40,480	)	$	(19,901	)	$	(22,372	)
Income (loss) from discontinued operations	$	—		$	(12,058	)	$	(21,471	)	$	(19,142	)
Net loss	$	(52,421	)	$	(52,538	)	$	(41,371	)	$	(41,514	)
Net loss, attributable to common stockholders	$	(62,208	)	$	(62,325	)	$	(51,597	)	$	(51,739	)

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Balance Sheet

	As of December 31,
	2001, as previously reported			2001			2002, as previously reported			2002			2003, as previously reported			2003
				(restated)						(restated)						(restated)
	(In thousands)
Total assets	$	147,202		$	147,085		$	103,555		$	103,296		$	133,553		$	132,480
Total stockholders’ deficit	$	(45,533	)	$	(45,650	)	$	(96,918	)	$	(97,177	)	$	(114,169	)	$	(115,242	)

Statement of Cash flows

	Year ended December 31,
	2001, as previously reported			2001			2002, as previously reported			2002
				(restated)						(restated)
	(In thousands)
Cash flows from operating activities
Net loss	$	(52,421	)	$	(52,538	)	$	(41,371	)	$	(41,514	)
Amortization of debt issuance costs	$	541		$	557		$	642		$	785
Net cash used in operating activities	$	(9,798	)	$	(9,899	)	$	(3,239	)	$	(3,239	)
Cash flows from financing activities
Debt issuance costs	$	(3,228	)	$	(3,127	)	$	—		$	—
Net cash provided by (used in) financing activities	$	45,218		$	45,319		$	(3,133	)	$	(3,133	)

(2) Upon adoption of FAS 142, on January 1, 2002, goodwill is no longer amortized. Only intangible assets with definite lives continue to be amortized.

(3) The number of weighted average basic and diluted shares outstanding for purposes of calculating our earnings per share includes our predecessor’s Common Stock and Series B Common Stock.

(4) Adjusted to reflect the reorganization described in “Certain Relationships and Related Party Transactions—Corporate Reorganization.”

(5) Adjusted to reflect the sale of shares of our common stock offered by us in this offering at an offering price of $             per share, less the underwriting discount and estimated offering expenses payable by us, and the use of proceeds from this offering. See “Use of Proceeds.”

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of operations should be read together with “Selected Consolidated Financial Data,” and the financial statements of our predecessor and accompanying notes appearing elsewhere in this prospectus. This discussion contains forward-looking statements, based on current expectations and related to future events and our future financial performance, that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many important factors, including those set forth under “Risk Factors,” “Forward-Looking Statements” and elsewhere in this prospectus. All forward-looking statements in this document are based on information available to us as of the date hereof, and we assume no obligation to update any such forward-looking statements.

Overview

We are a leading provider of network neutral interconnection and colocation services primarily to Internet dependent businesses including telecommunications carriers, Internet service providers, online content providers and enterprises. As a network neutral provider, we do not own or operate our own network, and, as a result, our interconnection services enable our customers to exchange network traffic through direct connections with each other or through peering connections with multiple parties. Our colocation services provide space and power for customers’ networking and computing equipment allowing those customers to avoid the costs of building and maintaining their own facilities. We provide our services through 34 facilities in 23 markets, representing the broadest network neutral footprint in North America. Our footprint includes our facility in Palo Alto, one of the first commercial Internet exchanges in the world. Our high network densities, as demonstrated by approximately 17,000 interconnections between our customers, create a network effect, which provides an incentive for our existing customers to remain within our facilities and is a differentiating factor in attracting new customers. This network effect combined with our broad geographic footprint contributes to the growth of our customer base and revenue, which we believe will also increase our operating cash flow due to the fixed nature of certain of our operating costs.

Since March 2003, we have completed five acquisitions: our acquisition of the assets of PAIX in 2003, the stock of MeridianTelesis in 2004, the stock of RACO in 2004, the

limited partnership interests of the Site II partnership in 2004 and the stock of LayerOne in 2005. These acquisitions have increased our network densities, expanded our customer base and broadened our geographic footprint. They have required upfront cash payments, additional borrowings under our credit facilities, and additional capital expenditures to improve the infrastructure of the acquired facilities.

We do not own the buildings in which our facilities are located. Instead, we have chosen to lease our facilities. An important trend in our business is an increased focus on expansion in our top 10 markets, which are those markets we believe to be most important strategically to our business. We have expanded our presence in these markets by acquiring space from other telecommunications carriers or by building out existing leased space.

• In November 2005, we executed an agreement with a carrier to sublease 9,100 gross square feet of space, with an option to lease an additional 13,900 gross square feet in the same building as an existing facility in New York City. In May 2006, we exercised the option to sublease 6,600 of the 13,900 gross square feet with a commencement date of June 1, 2006. In August 2006, we exercised the balance of the option to sublease the remaining 7,300 gross square feet with a commencement date of August 1, 2006. We

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have subleased a total of 23,500 gross square feet under this agreement, representing an increase of 36% in our gross square footage in New York City.

• In July 2006, we executed an asset purchase agreement to acquire a colocation facility located in Chicago for $0.3 million in cash and to accept assignment of the facility’s lease. The facility has 13,200 gross square feet and is adjacent to one of our existing facilities in Chicago, representing an increase of 96% in our gross square footage in Chicago.

• In June 2006, we completed the expansion of our Palo Alto facility which included adding 26,300 gross square feet, representing an increase of 67% in our gross square footage in the San Francisco Bay Area.

As a result of our capacity expansions, we typically incur lease, utility and personnel related expenses prior to being able to accept customers for, and generate revenue from, the additional capacity. However, as a result of the operating leverage inherent in our business model, we believe incremental revenue from these expansions will increase operating cash flow.

We intend to continue to maintain our existing operations and look for opportunities to expand our operations in our top 10 markets. Our ability to maintain existing operations will depend in part on our ability to continue to renew the leases in the markets on favorable terms and to maintain good working relationships with our landlords. While most of our leases provide two five-year renewal options with rent set at then-prevailing market rates, 10 of our leases do not contain renewal options. Renewing these leases at favorable terms will be critical to continuing those operations in the Los Angeles, Atlanta, New York, Philadelphia and Seattle markets. Even those leases which contain renewal options do not assure long-term operations at those facilities.

As part of our increased focus on the top 10 markets, we have also exited certain markets that we deem not to be profitable. In connection with our exit from these cities and in other cities where we have experienced losses, we have incurred asset impairment and discontinuation charges. We presently intend to exit the Kansas City market within the next 9 to 12 months. We are also currently considering exiting another market which currently represents less than 1% of our revenues.

Another important factor that has impacted our business is the 2005 expiration and nonrenewal of a majority of the contracts with the company that was formerly our largest customer. On December 31, 2005, most of our contracts with this customer expired and were not renewed. This was anticipated as the customer had sold a portion of its business and was liquidating the remaining portion of its business. Our total revenue from this customer was $8.8 million for the year ended December 31, 2005, and our recurring revenue from the contracts that expired on December 31, 2005 was $5.8 million for such year. The contracts with this customer that did not expire in 2005 were assigned to one of our other customers. These contracts expired on September 30, 2006, and only a portion have been renewed. We expect to recognize $2.1 million of recurring revenue from these contracts in 2006.

Material Weaknesses in Internal Control

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

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In connection with the preparation of our 2005 consolidated financial statements as of December 31, 2005, and during the course of preparing for this offering, our independent registered public accounting firm reported the following control deficiencies, which represent material weaknesses in our internal control over financial reporting:

• We did not maintain a sufficient complement of personnel with an appropriate level of accounting knowledge, experience and training in the application of generally accepted accounting principles commensurate with our financial reporting requirements. Specifically, we had deficiencies in finance and accounting staff with sufficient depth and skill in the application of generally accepted accounting principles and the staffing of finance positions with individuals who did not have the appropriate skills, training and experience to meet the objectives that should be expected of these roles. This material weakness also contributed to the following individual material weaknesses as of December 31, 2005:

• We did not maintain effective controls over the accounting for modifications of our debt. Specifically, our controls were not effective to ensure the accuracy and completeness of the recording of debt issuance costs in accordance with generally accepted accounting principles. This control deficiency resulted in a restatement to debt issuance costs in our 2003, 2004 and 2005 annual consolidated financial statements and the interim consolidated financial statements for each of the 2005 quarters.

• We did not maintain effective controls over the completeness and accuracy of depreciation expense and accumulated depreciation. Specifically, our controls related to the preparation and review of the quarterly depreciation computations were not adequate to ensure that changes in the useful lives were appropriately accounted for in accordance with generally accepted accounting principles. This control deficiency resulted in audit adjustments to depreciation expense and accumulated depreciation in our 2005 annual consolidated financial statements and the interim consolidated financial statements for each of the 2005 quarters.

• We did not maintain effective controls over access to financial applications, programs and data. Specifically, our programmers, certain vendors and certain users with financial, accounting and reporting responsibilities also had access to financial applications, programs and data. Such access was not in compliance with segregation of duties requirements nor independently monitored. A lack of segregation of duties increases the likelihood of undetected misstatements due to error or fraud. Additionally, we did not maintain documented procedures regarding general computer controls, including change controls and related user acceptance testing. This control deficiency resulted in the aforementioned audit adjustment related to depreciation expense to our 2005 annual consolidated financial statements.

• We did not maintain effective controls over the completeness and accuracy of the accounting for a business combination. Specifically, our controls were not sufficient to ensure accuracy of the fair value allocation made in connection with this transaction. This control deficiency resulted in audit adjustments to our 2005 annual consolidated financial statements and the interim consolidated financial statements for each of the 2005 quarters.

• We did not maintain effective control over the valuation of our long-lived assets. Specifically, effective controls were not in place to ensure the impairment analysis was accurately performed for our long-lived assets. This control deficiency resulted

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in audit adjustments to our 2005 annual consolidated financial statements and the interim consolidated financial statements for each of the 2005 quarters.

• We did not maintain effective controls over the completeness and accuracy of revenue. Specifically, our controls over revenue cut-off were not adequate to ensure that revenue was reported in the proper period. This control deficiency resulted in audit adjustments to our 2005 annual consolidated financial statements and the interim consolidated financial statements for each of the 2005 quarters.

• We did not maintain effective controls over the accuracy, completeness and presentation and disclosure of stock-based employee compensation expense in conformity with generally accepted accounting principles. Specifically, we did not maintain effective controls related to the preparation and review of the stock based compensation expense calculation. This control deficiency resulted in a restatement to our 2003, 2004 and 2005 annual consolidated financial statements and the interim consolidated financial statements for each of the 2005 quarters.

• We did not maintain effective control over the accuracy, completeness and presentation and disclosure of discontinued operations. Specifically, effective controls were not in place to ensure items classified within discontinued operations qualified as discontinued operations in accordance with generally accepted accounting principles. This control deficiency resulted in a restatement of our 2003, 2004 and 2005 annual consolidated financial statements.

• We did not maintain effective control over the accuracy and presentation and disclosure of income taxes. Specifically, effective controls were not in place to ensure the appropriate calculation and disclosures of income taxes. This control deficiency resulted in audit adjustments to our 2005 annual consolidated financial statements.

In instances where adjustments were only required for the 2005 financial statements, the related material weakness existed only in that fiscal year. We have implemented several actions to address the items noted by our independent registered public accounting firm as follows:

• hired a Director of Financial Reporting, responsible for technical accounting issues, SEC reporting and improving internal controls, to work directly for the Chief Financial Officer;

• appointed a financial expert with significant public accounting experience as the Chairman of our Audit Committee;

• hired additional accounting personnel with SEC reporting expertise and public company accounting expertise, including a general accounting manager with SEC reporting experience and a staff accountant with public company experience;

• updated our existing accounting policies to enhance our processes for quarter and year end reporting to improve our revenue cutoff procedures and depreciation computation reviews;

• engaged outside personnel with significant accounting and SEC reporting experience to assist with our technical accounting research, internal financial reporting and SEC reporting until we complete the hiring of our accounting staff;

• created technical accounting policies with authoritative literature applications, operational and review procedures, and disclosure requirements to address the material weaknesses described above related to discontinued operations, long-lived assets, business combinations and debt modifications;

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• documented and implemented additional processes and controls within our information technology department to segregate duties, improve computer controls and improve testing; and

We are also taking the following action:

• completing the implementation of our asset inventory system, which will enable us to obtain real time information on all services provided to customers and provide us with the ability to improve our revenue cutoff procedures and revenue assurance.

We cannot guarantee that we will be able to complete these actions successfully. Even if we are able to complete these actions successfully, there is no assurance that these measures will address our material weaknesses effectively. In addition, it is possible that we will discover additional material weaknesses in our internal control over financial reporting.

Costs related to corrective actions have not been material through September 30, 2006. Future corrective actions for certain control deficiencies require more review and documentation of general accounting procedures. The cost to be incurred to correct these issues are estimated to be less than 1% of our total revenues (or approximately $1.0 million based upon our 2005 annual revenues), with most of the cost associated with additional staff. Corrective actions related to information technology control deficiencies and system implementations are related to on-going initiatives. We expect most of the corrective actions will be completed by the end of 2006.

Key Components of Our Results of Operations

Revenues

Our revenues consist of recurring and nonrecurring revenues. We generate recurring revenue from our network neutral interconnection and colocation services. We generate nonrecurring revenue from our TechSmart technical support services and installation services. Installation services are directly related to providing the recurring services. To review our revenue recognition policies for our recurring and nonrecurring revenues, refer to “Critical Accounting Policies and Estimates” below.

We use several primary metrics to analyze our revenues and measure our performance. These metrics include: number of customers; cabinet equivalents billed; percentage of sales from existing versus new customers; number of cross connects between our customers; and utilization rates. Our ability to license our gross square footage within each facility is limited by the space required by our existing power and cooling infrastructure and by the customer requirements for power and cooling. Power and cooling requirements continue to grow on a per unit basis. We carefully monitor the power and cooling usage in each of our facilities and plan to continue to invest in our power and cooling infrastructure in order to maximize the amount of utilizable space of our facilities.

	As of
	December 31, 2005	March 31, 2006	June 30, 2006	September 30, 2006
Number of customers	785	794	821	832
Number of cross connects	16,405	16,602	16,991	17,417
Cabinets equivalents billed*	5,075	5,127	5,393	5,526
Utilization Rate**	66%	65%	64%	64%

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	For the three months ended
	December 31, 2005		March 31, 2006		June 30, 2006		September 30, 2006
Percentage of incremental sales to existing customers	77.0	%	82.0	%	74.0	%	74.0	%
Churn as a percentage of monthly recurring revenue	3.9	%	1.8	%	1.2	%	1.7	%

* Cabinet equivalents billed is the sum of the actual cabinets billed in each facility plus the total cage square footage billed divided by 20.

** The Utilization Rate is calculated as a percentage, the numerator of which is equal to the total space licensed to our customers and the denominator of which is equal to the total licensable space taking into account existing power and cooling constraints.

We generate recurring revenues from the following services:

Interconnection Services. Our interconnection services include our cross connect and Internet exchange services. Our cross connect services enable our customers to connect directly to a telecommunications carrier, Internet service provider or other customers in our facilities. These services are typically provided for a recurring monthly fee per connection. Our Internet exchange services enable our customers to connect directly to our Internet exchange, which provides for public or private peering with other customers. Our customers license ports to connect to our Internet exchange for a recurring monthly fee per port, based on port capacity. Customers typically sign one year agreements for our Internet exchange services and month-to-month agreements for our cross connect services. We also generate recurring revenues from reselling Internet access, which we do to accommodate certain customers. We contract with certain Internet service providers and then resell their Internet access service to customers typically in 1 megabit per second to 100 megabits per second increments. Customers typically sign a one-year contract for this service and pay us a recurring monthly fee per megabits per second.

Colocation.

Space. We provide colocation space for a recurring monthly fee for a cabinet or rack, or on a per square foot basis for cage space. Our customers that license cage space typically use between 50 and 500 square feet. Customers sign a service order, governed by the terms and conditions of a master services agreement, typically for one to three years.

Power. We provide conditioned power either on a term basis for one to three years or on a month-to-month basis, for a recurring monthly fee under both arrangements. We provide both alternating current and direct current power circuits. Our customers pay for power on a per amp basis, typically in 20 to 30 amp increments.

We generate nonrecurring revenue from the following services:

TechSmart Technical Support Services. We provide technical support services to assist customers with installation, circuit testing, power cycling, equipment rebooting and other related services. Our customers pay for these services on an hourly basis or under contractual arrangements for a certain number of hours of technical support per month. We recognize revenue once the services have been provided.

Installation Services. We receive one-time installation fees related to our interconnection and colocation services. The complexity of the installation determines the amount of fees that we receive. We typically receive a one-time fee per circuit or port for the installation of our interconnection services. We normally receive a one-time fee per cabinet or rack or per linear foot of cage space for the installation of our colocation services. We typically receive a one-time fee per amp for the installation of power, depending on the size of circuit and amount of voltage provided.

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The following table presents our revenues and percentage of revenues for the periods presented:

	Year Ended December 31,												Nine Months Ended September 30,
	2003				2004				2005				2005				2006
	(In thousands)
Revenues
Colocation	$	44,030	63	%	$	54,125	59	%	$	61,406	58	%	$	45,878	58	%	$	48,039	58	%
Interconnection	$	22,535	32	%	$	32,739	36	%	$	39,361	37	%	$	29,374	38	%	$	30,986	38	%
Recurring Total	$	66,565	95	%	$	86,863	95	%	$	100,767	95	%	$	75,252	96	%	$	79,025	96	%
Non Recurring	$	3,275	5	%	$	4,586	5	%	$	4,647	5	%	$	3,416	4	%	$	3,524	4	%
Total	$	69,840	100	%	$	91,449	100	%	$	105,414	100	%	$	78,668	100	%	$	82,549	100	%

Cost of Revenues, exclusive of Depreciation and Amortization

Cost of Revenues. Cost of revenues is comprised primarily of lease, utilities, maintenance and repair, personnel related expenses, telecommunications services, security and property taxes. The components of our cost of revenues are mostly fixed in nature and do not vary significantly from period to period. However, certain components of our cost of revenues are variable in nature and are directly related to the growth of our revenues. We expect our utilities expenses to increase in the future on a per unit basis due to an increase in rates from our utility providers and increased usage of power by our customers. Further, we experience seasonality in our utilities expenses based on temperatures and seasonal rate adjustments, which causes the amount of these expenses to fluctuate during each year. As a result of our expansions, we typically incur lease, utilities and personnel related expenses prior to being able to accept customers for, and generate revenue from, the additional capacity. As we continue to expand our facilities in our top 10 markets, we expect cost of revenues to increase.

Operating Expenses

Sales and Marketing. Sales and marketing expenses consist primarily of personnel related expenses for our sales and marketing employees, including wages, benefits, bonuses and commissions, and the cost of marketing programs such as sales support, trade shows, promotional events and print advertising. We expect our sales and marketing expenses to increase in absolute dollars as we increase the headcount of our sales staff and increase our marketing and promotional efforts.

General and Administrative. General and administrative expenses include personnel related expenses as well as travel, corporate communications, rent and insurance expenses, and outside legal, accounting and consulting expenses. Personnel related expenses include wages, benefits and bonuses for our executive management as well as for our accounting, legal, facilities design and construction, information technology and human resources employees. We expect our general and administrative expenses to increase in absolute dollars as we incur additional costs associated with being a public company, including higher personnel, legal, insurance and financial reporting expenses as well as costs to comply with the Sarbanes-Oxley Act. We expect that these new expenses will be between 1% and 3% of our revenues (or approximately $1.0 million to $3.0 million based upon our 2005 annual revenues).

Depreciation and Amortization. Depreciation expense includes depreciation of our leasehold improvements, generators, uninterruptible power systems, direct current power plants, heating, ventilation and air-conditioning equipment, furniture and fixtures. Amortization expense is comprised of the amortization of our customer based intangible assets related to the acquisitions of PAIX, RACO, MeridianTelesis and LayerOne.

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Asset Impairment. Asset impairment expenses represent the write-off of capitalized facility related assets which we have determined to be impaired.

Results of Operations

The following is a more detailed discussion of our financial condition and results of operations for the periods presented. The year-to-year comparison of financial results is not necessarily indicative of future results.

The following table presents our historical costs and operating expenses as a percentage of revenues for the periods indicated.

	Year ended December 31,						Nine months ended September 30,
	2003		2004		2005		2005		2006
Revenues:	100	%	100	%	100	%	100	%	100	%
Costs and operating expenses:
Cost of revenues, exclusive of depreciation and amortization	46		48		52		51		55
Sales and marketing	10		12		9		9		11
General and administrative	10		11		9		8		10
Depreciation and amortization	27		30		29		31		21
Lease litigation settlements	—		7		—		—		—
Asset impairment	—		1		2		3		2
Total costs and operating expenses	93	%	109	%	101	%	102	%	99	%
Operating income (loss)	7	%	N/A		N/A		N/A		1	%

Nine Months Ended September 30, 2006 Compared to the Nine Months Ended September 30, 2005

Revenues

($ in thousands)

	Nine Months Ended September 30,
	2005		2006		$ Change		% Change
Revenues	$	78,668	$	82,549	$	3,881	5	%

Revenues. Revenues increased by $3.9 million, or 5%, to $82.5 million for the nine months ended September 30, 2006 compared to $78.7 million for the nine months ended September 30, 2005. Recurring revenue increased by $3.9 million from the sale of our services to new and existing customers. This increase was offset by a decrease of $4.4 million due to the expiration of contracts with the company that was formerly our largest customer on December 31, 2005, as discussed above. Excluding the decrease in revenues from this customer, revenues increased by $8.3 million, or 10%. Nonrecurring revenue increased by $0.1 million. This increase is a result of increased technical support services revenue.

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Cost of Revenues, exclusive of Depreciation and Amortization

($ in thousands)

	Nine Months Ended September 30,
	2005		2006		$ Change		% Change
Cost of Revenues, exclusive of Depreciation and Amortization	$	39,954	$	45,207	$	5,253	13	%

Cost of Revenues. Cost of revenues increased by $5.3 million, or 13%, to $45.2 million for the nine months ended September 30, 2006 compared to $39.9 million for the nine months ended September 30, 2005. Cost of revenues increased as a percentage of revenues from 51% for the nine months ended September 30, 2005 to 55% for the nine months ended September 30, 2006. The increase was primarily due to the expansion of our facilities in several markets, including the San Francisco Bay Area and New York City, which increased rent expense by $1.6 million, personnel related expenses by $0.5 million, and utilities expenses by $0.7 million. As a result of our expansions, we typically incur lease, utilities and personnel related expenses prior to being able to accept customers for, and generate revenue from, the additional capacity. In other markets, utilities expense increased by $0.6 million due to an increase in per unit power pricing and an increase in usage by our customers, personnel related expense increased by $0.2 million as a result of an increase in headcount, and general maintenance expenses increased by $0.3 million.

Sales and Marketing

($ in thousands)

	Nine Months Ended September 30,
	2005		2006		$ Change		% Change
Sales and Marketing	$	7,305	$	9,223	$	1,918	26	%

Sales and Marketing. Sales and marketing expenses increased by $1.9 million, or 26%, to $9.2 million for the nine months ended September 30, 2006 compared to $7.3 million for the nine months ended September 30, 2005. The increase was due to personnel related expenses primarily related to an increase in commissions and an increase in wage expense related to an increase in headcount.

General and Administrative

($ in thousands)

	Nine Months Ended September 30,
	2005		2006		$ Change		% Change
General and Administrative	$	6,235	$	7,907	$	1,672	27	%

General and Administrative. General and administrative expenses increased by $1.7 million, or 27%, to $7.9 million for the nine months ended September 30, 2006 compared to $6.2 million for the nine months ended September 30, 2005. The increase was primarily due to an increase in professional fees of $1.2 million. Additionally, we added personnel in our billing, accounting, facilities design and construction departments to support the growth in our revenues.

Depreciation and Amortization

($ in thousands)

	Nine Months Ended September 30,
	2005		2006		$ Change			% Change
Depreciation and Amortization	$	24,184	$	17,379	$	(6,805	)	(28	)%

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Depreciation and Amortization. Depreciation and amortization expenses decreased by $6.8 million, or 28%, to $17.4 million for the nine months ended September 30, 2006 as compared to $24.2 million for the nine months ended September 30, 2005. The decrease was due primarily to certain assets becoming fully depreciated during 2005. Also, in 2005, for one of our facilities in New York City, we were required to depreciate the remaining $3.8 million value of certain improvements over the then remaining lease term which was shorter than the expected economic life of the improvements as a new lease was not reasonably assured at the time of the improvements.

Asset Impairment

($ in thousands)

	Nine Months Ended September 30,
	2005		2006		$ Change		% Change
Asset Impairment	$	2,140	$	2,193	$	53	2	%

Asset Impairment. Asset impairment expense increased by $0.1 million for the nine months ended September 30, 2006 as compared to the nine months ended September 30, 2005. We evaluate the carrying value of our long-lived assets, consisting primarily of the assets in our colocation facilities whenever certain events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Such events or circumstances include, but are not limited to, a prolonged industry downturn, a significant loss of customers within a facility, or significant reductions in projected future cash flows. As a result of our asset impairment analysis, we determined that assets in facilities located in Indianapolis, Chicago, and Dallas had become impaired in 2006. The lease for the impaired facility in Chicago expires in February 2007 and we do not intend to renew the lease. We determined that assets of our Kansas City facility had become impaired in the first quarter of 2005.

Interest Expense

($ in thousands)

	Nine Months Ended September 30,
	2005		2006		$ Change		% Change
Interest Expense	$	6,066	$	10,764	$	4,698	77	%

Interest Expense. Interest expense increased by $4.7 million, or 77%, to $10.8 million for the nine months ended September 30, 2006 compared to $6.1 million for the nine months ended September 30, 2005. The increase was due to an increase in our average debt balance, which increased from $85.2 million for the nine months ended September 30, 2005 to $144.9 million for the nine months ended September 30, 2006, as a result of the October 13, 2005 refinancing of our senior secured credit facility and due to an increase in our average interest rate from 7.9% in the nine months ended September 30, 2005 to 9.8% in the nine months ended September 30, 2006. Total debt outstanding as of September 30, 2005 was $77.6 million compared to $144.8 million as of September 30, 2006. The additional borrowings were used to redeem our predecessor’s Series D Redeemable Preferred Stock in the amount of $43.9 million, and make a preference payment on our predecessor’s Series C Redeemable Preferred Stock in the amount of $16.0 million. The increase in interest expense for the senior credit facility was offset by an increase in the value of our derivative financial instruments. We converted approximately 50% of our outstanding debt to fixed interest rates through the use of derivative financial instruments. These instruments are marked to market value at the end of each quarter,

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with gains and losses treated as decreases or increases to interest expense. The change in value of the derivatives resulted in a decrease in interest expense of $0.4 million for the nine months ended September 30, 2006.

Loss from Discontinued Operations

($ in thousands)

	Nine Months Ended September 30,
	2005		2006		$ Change			% Change
Loss from Discontinued Operations	$	168	$	0	$	(168	)	(100	)%

Loss from Discontinued Operations. During 2005, we assigned the lease, assets, customer contracts and equipment for one of our Chicago facilities to an unrelated third party. The results of operations of this facility through the date of disposition were recorded as discontinued operations.

Net Loss

($ in thousands)

	Nine Months Ended September 30,
	2005			2006			$ Change		% Change
Net Loss	$	(7,442	)	$	(10,059	)	$	2,617	35	%

Net Loss. Net loss increased by $2.6 million, or 35%, to a loss of $10.1 million for the nine months ended September 30, 2006 compared to a loss of $7.4 million for the nine months ended September 30, 2005. The increase was primarily due to an increase of $13.1 million in expenses primarily due to the expansion of our facilities, increased headcount and interest expense related to additional borrowings. This was partially offset by an increase in revenues of $3.8 million from sales to new and existing customers and a decrease in depreciation and amortization expense of $6.8 million as a result of certain assets being fully depreciated during 2005.

Year Ended December 31, 2005 Compared to the Year Ended December 31, 2004

Revenues

($ in thousands)

	Year Ended December 31,
	2004		2005		$ Change		% Change
Revenues	$	91,449	$	105,414	$	13,965	15	%

Revenues. Revenues increased by $14.0 million, or 15%, to $105.4 million for the year ended December 31, 2005 compared to $91.4 million for the year ended December 31, 2004. Recurring revenues increased by $13.9 million and nonrecurring revenues increased by $0.1 million. Recurring revenues increased by (i) $5.1 million from sales to new and existing customers, (ii) $7.5 million from the acquisition of LayerOne in January 2005, and (iii) $1.3 million from the acquisition of RACO in March 2004, which is included in revenues for the entire year for 2005 as compared to being included in revenue for nine months in 2004.

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Cost of Revenues, exclusive of Depreciation and Amortization

($ in thousands)

	Year Ended December 31,
	2004		2005		$ Change		% Change
Cost of Revenues, exclusive of Depreciation and Amortization	$	43,652	$	54,800	$	11,148	26	%

Cost of Revenues. Cost of revenues increased by $11.1 million, or 26%, to $54.8 million for the year ended December 31, 2005 compared to $43.7 million for the year ended December 31, 2004. Cost of revenues increased as a percentage of revenues from 48% for the year ended December 31, 2004 to 52% for the year ended December 31, 2005. Cost of revenues increased primarily by (i) $5.2 million for additional rent, utilities and personnel related expenses related to expansions in the San Francisco Bay Area, New York City, Toronto and Buffalo markets, (ii) $0.9 million from an increase in bad debt expense as a result of our largest customer defaulting on its contract and not paying its invoices for October, November and December of 2005, (iii) $3.3 million for LayerOne which was acquired in January, 2005, and (iv) $1.0 million for the inclusion of the RACO facilities for the entire year in 2005.

Sales and Marketing

($ in thousands)

	Year Ended December 31,
	2004		2005		$ Change			% Change
Sales and Marketing	$	10,765	$	9,846	$	(919	)	(9	)%

Sales and Marketing. Sales and Marketing expenses decreased by $0.9 million, or 9%, to $9.8 million for the year ended December 31, 2005 compared to $10.8 million for the year ended December 31, 2004. The decrease was primarily due to a $1.0 million decrease in sales commissions as a result of a new compensation plan that was implemented as of January 1, 2005.

General and Administrative

($ in thousands)

	Year Ended December 31,
	2004		2005		$ Change			% Change
General and Administrative	$	9,768	$	9,568	$	(200	)	(2	)%

General and Administrative. General and administrative expenses decreased by $0.2 million, or 2%, to $9.6 million in the year ended December 31, 2005 compared to $9.8 million for the year ended December 31, 2004. Headcount increased over the period to support our customer growth. Since many of these employees were added at the end of the year in 2005, this resulted in only a $0.2 million increase in personnel related expenses. Travel expenses also increased $0.2 million. These increases were offset by a reduction of $0.5 million in professional fees. We incurred significant legal expenses in 2004 related to our lease litigation settlements.

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Depreciation and Amortization

($ in thousands)

	Year Ended December 31,
	2004		2005		$ Change		% Change
Depreciation and Amortization	$	27,705	$	30,206	$	2,501	9	%

Depreciation and Amortization. Depreciation and amortization expenses increased by $2.5 million, or 9%, to $30.2 million for the year ended December 31, 2005 compared to $27.7 million for the year ended December 31, 2004. Depreciation expense increased by $0.5 million, which included a $1.2 million increase as a result of the assets acquired in the LayerOne and RACO acquisitions, offset by a reduction of $0.7 million for certain assets that became fully depreciated during 2005. Amortization expense increased by $2.0 million as a result of the capitalization of customer based intangible assets related to the LayerOne acquisition in January 2005 and the RACO acquisition in March 2004.

Lease Litigation Settlements

($ in thousands)

	Year Ended December 31,
	2004		2005		$ Change			% Change
Lease Litigation Settlements	$	6,629	$	0	$	(6,629	)	(100)%

Lease Litigation Settlements. Lease litigation settlements in 2004 include: (i) $4.0 million to settle a lawsuit related to a lease in Austin, (ii) $1.8 million to settle a lawsuit related to a lease in Chicago, (iii) $0.5 million to accrue for estimated costs to settle litigation related to a lease in West Palm Beach, and (iv) $0.3 million to settle a lawsuit related to a lease in Buffalo. All of the above settlements relate to leases executed prior to 2001 for facilities that we never occupied.

Asset Impairment

($ in thousands)

	Year Ended December 31,
	2004		2005		$ Change		% Change
Asset Impairment	$	1,015	$	2,140	$	1,125	111	%

Asset Impairment. Asset impairment expense increased by $1.1 million for the year ended December 31, 2005 compared to the year ended December 31, 2004. As a result of our asset impairment analysis, we determined that the assets of our Kansas City facility became impaired in 2005 and the assets of our Phoenix and one of our Chicago facilities became impaired in 2004.

Interest Expense

($ in thousands)

	Year Ended December 31,
	2004		2005		$ Change		% Change
Interest Expense	$	5,374	$	9,356	$	3,982	74	%

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Interest Expense. Interest expense increased by $4.0 million, or 74%, to $9.4 million for the year ended December 31, 2005 compared to $5.4 million for the year ended December 31, 2004. The increase was due to an increase in our average debt balance, which increased from $64.1 million for the year ended December 31, 2004 to $100.2 million for the year ended December 31, 2005, and due to an increase in our average interest rate from 7.0% for the year ended December 31, 2004 to 8.4% for the year ended December 31, 2005. Total debt outstanding as of December 31, 2004 was $69.3 million compared to $144.9 million as of December 31, 2005. The increase in debt is primarily related to (i) $43.9 million for the redemption of our predecessor’s Series D Redeemable Preferred Stock, (ii) $16.0 million for the payment of a dividend to the holders of our predecessor’s Series C Redeemable Preferred Stock, and (iii) $22.0 million for the acquisition of LayerOne. There is no material income or expense from our derivative financial instruments for the years ended December 31, 2004 and 2005.

Loss from Debt Extinguishment

($ in thousands)

	Year Ended December 31,
	2004		2005		$ Change		% Change
Loss from Debt Extinguishment	$	409	$	769	$	360	88	%

Loss from Debt Extinguishment. Loss from debt extinguishment was $0.4 million for the year ended December 31, 2004 due to the write-off of debt issuance costs related to our debt refinancing in March 2004. Loss from debt extinguishment was $0.8 million for the year ended December 31, 2005 due to the write-off of debt issuance costs related to our debt refinancing in October 2005.

Minority Interest in Net Income of Consolidated Partnership

($ in thousands)

	Year Ended December 31,
	2004		2005		$ Change			% Change
Minority Interest in Net Income of Consolidated Partnership	$	380	$	0	$	(380	)	(100	)%

Minority Interest in Net Income of Consolidated Partnership. Prior to March 2004, we included the results of the Site II partnership in our consolidated results of operations and recorded minority interest to reflect the ownership interest of the other partners in Site II. In March 2004, we acquired the limited partnership interests in the Site II partnership, eliminating the minority interest.

Income (Loss) from Discontinued Operations

($ in thousands)

	Year Ended December 31,
	2004		2005			$ Change			% Change
Income (Loss) from Discontinued Operations	$	891	$	(206	)	$	(1,097	)	N/A

Income (Loss) from Discontinued Operations. Income (loss) from discontinued operations decreased by $1.1 million for the year ended December 31, 2005 compared to the year ended December 31, 2004. In the year ended December 31, 2005 we recognized a loss of approximately $0.2 million due to the disposal of one of our facilities in Chicago. In the year

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ended December 31, 2004, we recognized income of $0.9 million from the favorable resolution of certain contingencies associated with previously reported discontinued operations.

Net Loss

($ in thousands)

	Year Ended December 31,
	2004			2005			$ Change		% Change
Net Loss	$	(13,472	)	$	(11,274	)	$	2,198	16	%

Net Loss. Net loss decreased by approximately $2.2 million, or 16%, to $11.3 million for the year ended December 31, 2005 compared to $13.5 million for the year ended December 31, 2004. The decrease was primarily due to increased revenues of $14.0 million from acquisitions and sales to new and existing customers. This was offset by an increase of $18.4 million in expenses primarily due to the expansion of our facilities and acquisitions. Lease litigation settlement expenses were $6.6 million for the year ended December 31, 2004, and there were no such expenses for the year ended December 31, 2005.

Year Ended December 31, 2004 Compared to the Year Ended December 31, 2003

Revenues

($ in thousands)

	Year Ended December 31,
	2003		2004		$ Change		% Change
Revenues	$	69,840	$	91,449	$	21,609	31	%

Revenues. Revenues increased by $21.6 million, or 31%, to $91.4 million for the year ended December 31, 2004 compared to $69.8 million for the year ended December 31, 2003. Recurring revenues increased by $20.3 million as a result of acquisitions and customer growth. Recurring revenue increased for the following acquisitions: (i) $6.9 million from the acquisition of PAIX in March 2003, which is included in revenues for the entire year for 2004 as compared to being included for 10 months in 2003; (ii) $6.6 million from the acquisition of RACO in March 2004; and (iii) $2.1 million from the acquisition of MeridianTelesis in January 2004. In addition, recurring revenues increased by $4.7 million from sales to new and existing customers. Nonrecurring revenues increased by $1.3 million. This increase is the result of providing additional installation and TechSmart services to our customers.

Cost of Revenues, exclusive of Depreciation and Amortization

($ in thousands)

		Year Ended December 31,
	2003		2004		$ Change		% Change
Cost of Revenues, exclusive of Depreciation and Amortization	$	32,333	$	43,652	$	11,319	35	%

Cost of Revenues. Cost of revenues increased by $11.3 million, or 35%, to $43.7 million for the year ended December 31, 2005 compared to $32.3 million for the year ended December 31, 2004. Cost of revenues increased as a percentage of revenues from 46% for the year ended December 31, 2003 to 48% for the year ended December 31, 2004. Cost of revenues increased primarily for the following acquisitions: (i) $5.5 million for the acquisition of RACO in March 2004, (ii) $2.1 million for the acquisition of PAIX in March 2003, which is included in the full year of 2004 as compared to being included for 10 months in 2003, and (iii) $1.3 million for the

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acquisition of MeridianTelesis in January 2004. Additionally, cost of revenues increased by $0.8 million for expenses related to a facility acquired in Seattle.

Sales and Marketing

($ in thousands)

	Year Ended December 31,
	2003		2004		$ Change		% Change
Sales and Marketing	$	6,883	$	10,765	$	3,882	56	%

Sales and Marketing. Sales and marketing expenses increased by $3.9 million, or 56%, to $10.8 million for the year ended December 31, 2004 compared to $6.9 million for the year ended December 31, 2003. The increase was primarily due to an increase in personnel expenses of $1.8 million. In addition, commissions increased $1.4 million due to additional sales, marketing costs increased by $0.4 million and travel expenses increased by $0.3 million.

General and Administrative

($ in thousands)

	Year Ended December 31,
	2003		2004		$ Change		% Change
General and Administrative	$	7,090	$	9,768	$	2,678	38	%

General and Administrative. General and administrative expenses increased by $2.7 million, or 38%, to $9.8 million for the year ended December 31, 2004 compared to $7.1 million for the year ended December 31, 2003. The increase was primarily due to an additional $1.3 million for professional fees as a result of debt refinancing costs that did not qualify for capitalization and legal expenses for lease litigation settlements, an additional $1.0 million of personnel related expense as a result of an increase in headcount and sign-on bonuses, and $0.2 million for travel expenses.

Depreciation and Amortization

($ in thousands)

	Year Ended December 31,
	2003		2004		$ Change		% Change
Depreciation and Amortization	$	18,509	$	27,705	$	9,196	50	%

Depreciation and Amortization. Depreciation and amortization expenses increased by $9.2 million, or 50%, to $27.7 million for the year ended December 31, 2004 compared to $18.5 million for the year ended December 31, 2003. Depreciation expense increased by $2.0 million due to the following acquisitions: (i) $1.1 million related to the acquisition of PAIX which included a full year of results in 2004 compared to 10 months in 2003, (ii) $0.5 million related to the acquisition of MeridianTelesis, and (iii) $0.4 million related to the acquisition of RACO. In addition, depreciation expense increased by $1.9 million due to additional assets placed in service. Amortization expense increased by $5.3 million due to the following acquisitions: (i) $2.2 million related to the acquisition of the limited partnership interests in the Site II limited partnership, (ii) $2.1 million related to the acquisition of RACO in March 2004, (iii) $0.7 million related to the acquisition of MeridianTelesis in January 2004, and (iv) $0.2 million related to the acquisition of PAIX in March 2003, which included a full year of results in 2004 compared to 10 months in 2003.

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Lease Litigation Settlements

($ in thousands)

	Year Ended December 31,
	2003		2004		$ Change		% Change
Lease Litigation Settlements	$	0	$	6,629	$	6,629	N/A

Lease Litigation Settlements. Lease litigation settlements in 2004 included: (i) $4.0 million to settle a lawsuit related to a lease in Austin, (ii) $1.8 million to settle a lawsuit related to a lease in Chicago, (iii) $0.5 million to accrue for estimated costs to settle litigation related to a lease in West Palm Beach, and (iv) $0.4 million to settle a lawsuit related to a lease in Buffalo. All of the above settlements relate to leases executed prior to 2001 for facilities that we never occupied.

Asset Impairment

($ in thousands)

	Year Ended December 31,
	2003		2004		$ Change		% Change
Asset Impairment	$	0	$	1,015	$	1,015	N/A

Asset Impairment. Asset impairment expense was $1.0 million for the year ended December 31, 2004. We did not record any impairment expense in the year ended December 31, 2003. As a result of our asset impairment analysis, we determined that the assets of our Phoenix and one of our Chicago facilities became impaired in 2004.

Interest Expense

($ in thousands)

	Year Ended December 31,
	2003		2004		$ Change		% Change
Interest Expense	$	3,573	$	5,374	$	1,801	50	%

Interest Expense. Interest expense increased by $1.8 million, or 50%, to $5.4 million for the year ended December 31, 2004 compared to $3.6 million for the year ended December 31, 2003. The increase was due to an increase in our average debt balance, which increased from $38.9 million for the year ended December 31, 2003 to $64.1 million for the year ended December 31, 2004. The outstanding debt balance as of December 31, 2003 was $37.3 million compared to $69.3 million as of December 31, 2004. The average interest rate decreased from 7.2% in 2003 to 7.0% in 2004. Additional funds were borrowed during 2004 for the following acquisitions: (i) $13.5 million for RACO, (ii) $13.2 million for the Site II limited partnership, and (iii) $3.8 million for MeridianTelesis. There is no material income or expense from our derivative financial instruments for the years ended December 31, 2003 and 2004.

Loss from Debt Extinguishment

($ in thousands)

	Year Ended December 31,
	2003		2004		$ Change		% Change
Loss from Debt Extinguishment	$	342	$	409	$	67	20	%

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Loss from Debt Extinguishment. Loss from debt extinguishment was $0.3 million for the year ended December 31, 2003 due to the write-off of debt issuance costs related to our debt refinancing in March 2003. Loss from debt extinguishment was $0.4 million for the year ended December 31, 2004 due to the write-off of debt issuance costs related to our debt refinancing in March 2004.

Minority Interest in Net Income of Consolidated Partnership

($ in thousands)

	Year Ended December 31,
	2003		2004		$ Change			% Change
Minority Interest in Net Income of Consolidated Partnership	$	2,052	$	380	$	(1,672	)	(81	)%

Minority Interest in Net Income of Consolidated Partnership. Minority interest decreased by $1.7 million, or 81%, for the year ended December 31, 2004 compared to the year ended December 31, 2003. The decrease was due to our acquisition of the Site II limited partnership interests in March 2004. Prior to March 2004, we included the results of the Site II partnership in our consolidated results of operations and recorded minority interest which represented the ownership interest of other partners in Site II.

Income (Loss) from Discontinued Operations

($ in thousands)

	Year Ended December 31,
	2003			2004		$ Change		% Change
Income (Loss) from Discontinued Operations	$	(2,331	)	$	891	$	3,222	N/A

Income (Loss) from Discontinued Operations. Income (loss) from discontinued operations increased by $3.2 million for the year ended December 31, 2004 compared to the year ended December 31, 2003. In the year ended December 31, 2004, our results included a $0.7 million gain on the disposal of our facility in Columbus and $0.2 million from the disposal of a facility in Charlotte. We incurred a loss of $2.3 million in 2003 from the results of operations from several facilities that were discontinued.

Net Loss

($ in thousands)

	Year Ended December 31,
	2003			2004			$ Change			% Change
Net Loss	$	(3,154	)	$	(13,472	)	$	(10,318	)	327	%

Net Loss. Net loss increased by approximately $10.3 million, or 327%, to $13.5 million for the year ended December 31, 2004 compared to $3.2 million for the year ended December 31, 2003. The increase was due to $11.3 million of increased cost of revenues and $9.2 million of increased depreciation and amortization expense, both related primarily to acquisitions. In addition, $6.6 million for lease litigation settlements was incurred during 2004. These expenses were offset in part by increased revenues of $21.6 million from acquisitions and sales to new and existing customers.

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Liquidity and Capital Resources

Overview

The following table sets forth a summary of our cash flows for the periods indicated:

($ in Thousands)	Year ended December 31,									Nine months ended September 30,
	2003			2004			2005			2005			2006
Net cash provided by operating activities	$	20,725		$	17,645		$	25,333		$	20,691		$	11,321
Net cash used in investing activities	$	(44,600	)	$	(38,530	)	$	(41,516	)	$	(37,088	)	$	(16,770	)
Net cash provided by (used in) financing activities	$	28,699		$	23,929		$	12,875		$	8,287		$	(958	)

Sources and Uses of Cash. Our principal sources of cash are our cash generated from our operating activities, our balance of cash and cash equivalents and the $9.8 million available to us under our credit facilities. Simultaneous with the completion of this offering, we intend to enter into a new credit facility. If we successfully enter into a new credit facility, we intend to use all of our net proceeds from this offering to repay a portion of the outstanding principal under our existing credit facilities. This repayment will reduce our future interest expenses. We currently intend to use funds borrowed under our new facility to repay in full any remaining principal amounts owed under the existing credit facilities. We expect that the new credit facility will enable us to reduce our interest rates and will also enable us to increase our borrowing limits. Lower interest rates would reduce our annual interest expense and the new credit facility would provide access to additional cash.

Our principal cash requirements consist of debt service, capital expenditures and working capital. Since 2003, we have generated cash flow from operations, and we expect to continue to generate cash flow from operations for the remainder of 2006 and 2007. We believe our existing cash balance, available borrowings under our existing credit facilities and cash generated by operating activities will be sufficient to meet our anticipated capital expenditure, debt service and working capital requirements for at least the next twelve months.

Our capital expenditures in 2005 were approximately $17.0 million. Our capital expenditures for the nine months ended September 30, 2006 were $17.0 million. We expect our 2006 capital expenditures to be consistent with 2005; however, we expect our 2007 capital expenditures to increase significantly as we continue our expansion efforts in our top 10 markets. These investments will increase product availability in these markets which will enable us to increase revenue and potentially reduce our net losses. Once a market achieves positive cash flow from its operations, any new revenues typically generate substantial cash flow at higher operating margins. Although we will have increased costs to operate as a public company and to remediate our internal control deficiencies, we believe that increased cash flow from the sale of new services along with the expected reduction in interest expense should improve our cash flow. Although we cannot assure you that cash flow will improve, we believe that improved cash flow, along with our existing cash and cash available under our revolving credit facility, will be adequate to meet our anticipated needs for at least the next several years. See “Risk Factors—We are continuing to invest in our expansion efforts, but we may not experience sufficient customer demand in the future to realize expected returns on these investments” for a description of risk associated with our growth strategy.

Net Cash Provided by Operating Activities.

Net cash provided by operating activities for the nine months ended September 30, 2006 was $11.3 million. This was attributable to a net loss of $10.1 million and depreciation,

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amortization and other non-cash charges of $22.4 million and cash used by net operating assets and liabilities of $1.0 million. Net cash provided by operating activities for the nine months ended September 30, 2005 was $20.7 million. This was attributable to a net loss of $7.4 million, depreciation, amortization and other non-cash charges of $29.2 million and cash expended for net operating assets and liabilities of $1.1 million.

Net cash provided by operating activities for the year ended December 31, 2005 was $25.3 million. This was attributable to a net loss of $11.3 million, depreciation, amortization and other non-cash charges of $37.9 million and cash used by net operating assets and liabilities of $1.3 million.

Net cash provided by operating activities for the year ended December 31, 2004 was $17.6 million. This was attributable to a net loss of $13.5 million, depreciation, amortization and other non-cash charges of $32.6 million and cash provided by net operating assets and liabilities of $1.5 million.

Net cash provided by operating activities for the year ended December 31, 2003 was $20.7 million. This was attributable to a net loss of $3.2 million, depreciation, amortization and other non-cash charges of $24.6 million and cash used by net operating assets and liabilities of $0.7 million.

Net Cash Used in Investing Activities.

Net cash used in investing activities for the nine months ended September 30, 2006 was $16.8 million compared to $37.1 million for the nine months ended September 30, 2005. Cash used in investing activities in 2006 was primarily for capital expenditures relating to the expansion of our Palo Alto facility and the installation of additional power and cooling equipment in several of our top 10 markets. Cash used in investing activities for the nine months ended September 30, 2005 included $24.5 million for the acquisition of LayerOne and $12.6 million for capital expenditures to add power and cooling equipment in several markets.

Net cash used in investing activities for the year ended December 31, 2005 was $41.5 million compared to $38.5 million for the year ended December 31, 2004. Cash used in investing activities in 2005 was comprised of $24.5 million for the acquisition of LayerOne and $17.0 million for capital expenditures. Cash used in investing activities in 2004 was comprised of $26.8 million for the acquisitions of RACO, Meridian and the remaining interests in the Site II limited partnership and $11.8 million for capital expenditures.

Net cash used in investing activities for the year ended December 31, 2004 was $38.5 million compared to $44.6 million for the year ended December 31, 2003. Cash used in investing activities in 2004 was comprised of $26.8 million for the acquisitions of RACO, Meridian and the remaining interests in the Site II limited partnership and $11.8 million in capital expenditures. Cash used in investing activities in 2003 was primarily for the acquisition of the assets of PAIX in the amount of $40.7 million and $5.5 million for capital expenditures.

Net Cash Provided by (Used in) Financing Activities.

Net cash used in financing activities for the nine months ended September 30, 2006 was $1.0 million compared to net cash provided by financing activities of $8.3 million for the nine months ended September 30, 2005. The cash used in financing activities in 2006 was primarily the result of principal repayments under our credit facilities and capitalized costs associated with this initial public offering. The cash provided by financing activities for the nine months ended September 30, 2005 was primarily the result of borrowings in the amount of $22.0 million under our credit facilities to fund the acquisition of LayerOne less cash used of $13.6 million for principal repayments under the credit facilities.

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Net cash provided by financing activities for the year ended December 31, 2005 was $12.9 million compared to $23.9 million for the year ended December 31, 2004. The cash provided by financing activities in 2005 included cash borrowed under our credit facilities in the amount of $167.0 million. This was offset by cash used in financing activities of $91.4 million to repay debt, $43.9 million to redeem our predecessor’s Series D Redeemable Preferred Stock, $16.0 million for a preference payment for our predecessor’s Series C Redeemable Preferred Stock and $2.8 million for financing costs. The cash provided by financing activities in 2004 included cash borrowed under our credit facilities in the amount of $70.0 million. This was offset by cash used in financing activities of $41.8 million to repay debt and $3.5 million for financing costs.

Net cash provided by financing activities for the year ended December 31, 2004 was $23.9 million compared to $28.7 million for the year ended December 31, 2003. The cash provided by financing activities in 2003 included net cash proceeds from the issuance of our predecessor’s Series D Preferred Stock in the amount of $31.2 million and cash borrowed under our credit facilities in the amount of $5.0 million. This was offset by cash used in financing activities of $4.5 million to repay debt, $2.4 million for cash distributions to the minority investors of the Site II Limited Partnership and $0.5 million for financing costs.

Debt Obligations

In January 2001, we entered into a senior secured credit facility agreement under which we were permitted to borrow up to $50.0 million. The credit agreement was amended in 2001 and amended and restated in 2003, in both cases following our noncompliance with certain financial covenants in the credit agreement. In 2004, we amended and restated the credit facility, among other things, to provide for borrowings of up to $110.0 million.

On October 13, 2005, we again amended and restated the senior secured credit facility (the “First Lien Credit Facility”). Following the amendment and restatement, the First Lien Credit Facility provides for total borrowings of up to $110.0 million, comprised of a $25.0 million term loan A facility (the “Term Loan A Facility”), a $75.0 million term loan B facility (the “Term Loan B Facility”), and a $10.0 million revolving credit facility (including a $1.0 million letter of credit sub-limit) (the “Revolving Loan Facility”). On that date we also entered into a syndicated junior lien credit facility in the amount of $45.0 million (the “Second Lien Credit Facility,” and together with the First Lien Credit Facility, the “Credit Facilities”).

The Credit Facilities are secured by the stock and assets of our subsidiaries. We pay interest on borrowings under the Credit Facilities at either a base rate or a Eurodollar rate plus the applicable margin, at our option. We also pay a fee on the average daily unused portion of the Revolving Loan Facility. Repayments of principal under the Term Loan A Facility and the Term Loan B Facility are due in scheduled quarterly installments of varying percentages, with all remaining amounts due and payable on October 13, 2010 and October 13, 2011, respectively. All outstanding amounts under the Revolving Loan Facility will be due and payable on October 13, 2010 and all outstanding amounts under the Second Lien Term Loan Facility will be due and payable on April 13, 2011. Mandatory prepayments under the Credit Facilities are required in the events of issuance of debt or equity, asset sales, receipt of casualty or condemnation proceeds, and excess cash flow.

Simultaneous with the completion of this offering, we currently intend to enter into a new credit facility. If we successfully enter into a new credit facility, we intend to use all of our net proceeds from this offering to repay a portion of the outstanding principal under our existing Credit Facilities. We do not intend to use any of the proceeds from this offering to repay accrued interest under our Credit Facilities, which we intend to pay with working capital. We currently intend to use funds borrowed under our new credit facility to repay in full any remaining principal amounts owed under the existing Credit Facilities, for capital expenditures, for working capital and for other general corporate purposes. In addition, we may use a portion of the

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borrowings under our new credit facility to acquire or invest in businesses, products, services or technologies complementary to our current business, through mergers, acquisitions, joint ventures or otherwise. However, we have no specific agreements or commitments and are not currently engaged in any substantive negotiations with respect to any such transactions. If we are unable to enter into a new credit facility simultaneously with this offering, our existing Credit Facilities require that we use 75% of the proceeds from this offering to repay amounts owed under such Credit Facilities. The entry into a new credit facility is not a condition to this offering. Accordingly, if we are unable to enter into a new credit facility simultaneously with this offering, we will use 75% of the proceeds from this offering to repay principal amounts owed under such Credit Facilities and the remaining 25% will be used for capital expenditures, for working capital and for other general corporate purposes.

We were in violation of the fixed charge coverage ratio covenant in our existing Credit Facilities as of March 31, 2006. We were required to achieve a fixed charge coverage ratio of not less than 1.00 for the three months ended March 31, 2006. The actual ratio was 0.91 for the three months ended March 31, 2006. On April 28, 2006, the lenders agreed to waive such covenant violation and amended the fixed charge coverage from 1.00 to 0.90 for the second and third quarters of 2006. We were in violation of the amended fixed charge coverage ratio and also in violation of the leverage ratio covenant, and interest coverage ratio covenant, in our existing Credit Facilities as of September 30, 2006. We were required to achieve a fixed charge coverage ratio of not less than 0.90, a leverage ratio of not more than 4.50 to 1.00 and an interest coverage ratio of not less than 2.40 to 1.00 for the three months ended September 30, 2006. The actual fixed charge coverage ratio was 0.86, the actual leverage ratio was 4.71 to 1.00, and the actual interest coverage ratio was 2.34 to 1.00 for the three months ended September 30, 2006. On November 27, 2006, the lenders agreed to waive such covenants and amended the fixed charge coverage ratio from 0.90 to 0.85, the leverage ratio from 4.50 to 1.00 to 4.75 to 1.00, and the interest coverage ratio from 2.40 to 1.00 to 2.05 to 1.00, in each case for the fourth quarter of 2006. All such covenant ratios are amended through 2007. We were in compliance with the covenants of the Credit Facilities as of September 30, 2006, following the waiver and amendment of the Credit Facilities on November 27, 2006. For more information about our existing Credit Facilities, see “Secured Credit Facility”.

Contractual Obligations

The following table summarizes, as of September 30, 2006, our minimum payments for long-term debt and other obligations for the next five years and thereafter:

($ in thousands)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-Term Debt	$	144,750	$	2,375	$	20,625	$	76,750	$	45,000
Interest Expense*		68,656		15,379		28,860		21,521		2,896
Operating lease obligations		181,523		19,228		36,571		23,975		101,749
Total contractual obligations	$	394,929	$	36,982	$	86,056	$	122,246	$	149,645

* Future interest expense is based on a projected 3-month LIBOR of 5.37% for September through December 2006, then 5.62% thereafter. Interest expense was calculated by multiplying the outstanding balance by the interest rate for the given time period.

Off Balance Sheet Arrangements

As of December 31, 2004 and December 31, 2005, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities referred to as structured finance or special purpose entities, which were established for the purpose of facilitating off balance sheet arrangements.

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Quantitative and Qualitative Disclosures about Market Risk

Interest Rate. We are required by our Credit Facilities to manage the interest rate risk on our debt portfolio. In March 2005, we entered into an interest rate swap agreement on a notional amount of $15.0 million with a commencement date of July 2006 and a maturity date of July 2007. If the three-month LIBOR rate is lower than 4.48%, we will make cash payments at a rate of 4.48%. If the three-month LIBOR rate is higher than 4.48%, we will receive cash payments for the difference between actual three-month LIBOR and 3.97%. Also in March 2005, we entered into an interest rate swap agreement on a notional amount of $15.0 million with a commencement date of July 2006 and maturity date of July 2007. If the three-month LIBOR rate is lower than 4.48%, we will make cash payments at a rate of 4.48%. If the three-month LIBOR rate is higher than 4.48%, we will receive cash payments for the difference between actual three-month LIBOR and 4.48%. In November 2005, we entered into an interest rate swap agreement on a notional amount of $70.0 million with a commencement date of February 2006 and maturity date of February 2009. If the three-month LIBOR rate is lower than 4.758%, we will make cash payments at a rate of 4.758%. If the three-month LIBOR rate is higher than 4.758%, we will receive cash payments for the difference between actual three-month LIBOR and 4.758%. All three swaps required zero upfront payment. As of September 30, 2006, the three-month LIBOR rate is 5.37%, which is higher than our contracted rate for all three swaps. We will receive cash payments at the end of each quarterly period for these swaps unless LIBOR decreases below the contracted LIBOR rates. We believe any increase in the commercial lending rate or the Federal Funds rate would not materially affect our financial position or results of operations. A 1% increase or decrease in interest rates will increase or decrease annual interest expense by approximately $0.7 million. We do not believe this would materially affect our financial position or results of operations.

Foreign Currency. We have a facility located in Toronto, Ontario. We primarily receive payment for services provided at this facility in Canadian currency and pay the direct expenses of our Toronto facility in Canadian currency, which mitigates our exposure to currency exchange rate risk. We have determined that the impact of a near-term 10% appreciation or depreciation of the U.S. dollar would have an insignificant effect on our financial position, results of operations and cash flows. We do not maintain any derivative instruments to mitigate our exposure to translation and transaction risk. Our foreign exchange transaction gains and losses are included in our results of operations, and were not material for all periods presented.

Fair Value. We do not have material exposure to market risk with respect to investments, as our investments consist primarily of short-term U.S. Treasury securities. We do not use derivative financial instruments for speculative or trading purposes; however, this does not preclude our adoption of specific hedging strategies in the future.

Critical Accounting Policies and Estimates

The discussion of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. In preparing our consolidated financial statements, we make estimates and assumptions that can have a significant impact on our financial position and results of operations. The application of our critical accounting policies requires an evaluation of a number of complex criteria and significant accounting judgments by us. In applying those policies, our management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Actual results may differ significantly from these estimates under different assumptions, judgments or conditions, and these differences could be material.

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Critical accounting policies are defined as those policies that require significant judgments and assumptions about matters that are highly uncertain at the time of the estimate and could

potentially result in materially different results under different assumptions and conditions. See Note 3 of the Consolidated Financial Statements for additional information.

Revenue Recognition and Allowance for Doubtful Accounts. We generate recurring revenue from providing interconnection and colocation services. More than 90% of our revenues are provided from these recurring revenues. Our remaining revenues are nonrecurring and consist of technical support and installation services.

Colocation services are governed by the terms and conditions of a master service agreement. Customers typically execute agreements for one to three year terms. We bill customers on a monthly or quarterly basis and recognize the revenue on a straight line basis over the life of the agreement. Installation services for such long-term agreements, defined as greater than one month, are recognized on a straight-line basis over the life of the agreement, which we believe approximates the term of the customer relationship.

Interconnection services are generally provided on either a month-to-month or one year term under an arrangement separate from those services provided under colocation services. Port services are typically sold on a one year term and revenue is recognized in a manner similar to colocation services. Cross connect services are typically sold on a month-to-month basis. These interconnection services are considered as a separate earnings process that is provided and completed on a month-to-month basis. We bill customers on a monthly basis and recognize the revenue in the period the service is provided. Installation service revenue for these cross connect services is recognized in the period when the installation is complete. The earning process from cross connect installation is culminated in the month the installation is complete.

Technical support services are provided on a time and materials basis and are billed and recognized in the period provided. Cash advances are recorded as unearned revenue in the consolidated balance sheets and are recognized in the period the services are provided.

Revenue is recognized only when the service has been provided and when there is persuasive evidence of an arrangement, the fee is fixed or determinable and collection of the receivable is reasonably assured. We regularly assess collectibility of accounts receivable from customers based on a number of factors, including prior history with the customer and the credit status of the customer. If we determine that collection of revenue from a customer is not reasonably assured, we do not recognize revenue until collection becomes reasonably assured, which is generally upon receipt of cash. We also maintain an allowance for doubtful accounts for accounts receivable for which management believes such receivables are uncollectible. Management analyzes accounts receivable, bankruptcy filings, historical bad debts, customer credit-worthiness and changes in customer payment patterns when evaluating revenue recognition and the adequacy of our reserves. A specific bad debt reserve is accrued for specifically identifiable receivables that become uncollectible. A general reserve is established for all other accounts receivable based on the age of the invoices. Delinquent account balances are written-off after a determination that the likelihood of collection is not probable.

Property and Equipment. Property and equipment are stated at cost. We commence depreciation when the assets are placed in service. Equipment and furniture are depreciated on a straight-line basis over their estimated useful life of five to seven years. Useful lives are estimated based on the specific equipment, its intended use and our historical experience with the life expectancy of such equipment. Leasehold improvements are amortized on a straight-line basis over the lesser of the term of the related lease (including renewal periods which are reasonably assured) or the estimated life of the asset. Expenditures for improvements that

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significantly add to productive capacity or extend the useful life of an asset are capitalized. At the time property is retired, or otherwise disposed of, the asset and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is included in earnings. Repairs and maintenance are expensed when incurred.

If management were to determine that the actual useful lives of our property and equipment placed into service is less than originally anticipated, or if any of our property and equipment was deemed to have incurred an impairment, additional depreciation, or an impairment charge would be required, which would decrease net income in the period in which such determination was made. Conversely, if management were to determine that the actual useful lives of our property and equipment placed into service was greater than originally anticipated, less depreciation may be required, which would increase net income in the period in which such determination was made.

Impairment of Long-Lived Assets. We account for the impairment of long-lived assets in accordance with FAS 144. We evaluate the carrying value of our long-lived assets, consisting primarily of the assets in our colocation facilities, whenever certain events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Such events or circumstances include, but are not limited to, a prolonged industry downturn, a significant loss of customers within a facility or significant reductions in projected future cash flows. We prepare this analysis by assessing the future undiscounted net cash flows generated by each colocation facility over their respective useful lives and comparing this against the carrying value of that colocation facility. If the total of the undiscounted future cash flows is less than the carrying amount of the assets, we write down such assets based on the excess of the carrying amount over the fair value of the assets. Significant judgments and assumptions are required in the forecast of future operating results used in the preparation of the estimated future cash flows, including future levels of sales, long-term forecasts of the amounts and timing of overall market growth, discount rates and terminal growth rates.

Goodwill and Other Intangible Assets. We account for goodwill and other indefinite-lived intangible assets under FAS 142. This statement requires an impairment only approach to accounting for goodwill. The FAS 142 goodwill impairment model is a two-step process. First, it requires a comparison of the book value of net assets to the fair value of the related operations that have goodwill. If the fair value is determined to be less than book value, a second step is performed to compute the amount of the impairment. In this process, a fair value for goodwill is estimated, based in part on the fair value of the operations used in the first step, and is compared to its carrying value. The shortfall of the fair value below carrying value represents the amount of goodwill impairment. FAS 142 requires goodwill to be tested for impairment annually at the same time every year and when an event occurs or circumstances change such that it is reasonably possible that impairment may exist.

To estimate fair value, for purposes of completing the first step of the FAS 142 analysis, we use a market-based analysis or a discounted cash flow analysis. Significant judgments and estimates are required in the forecast of future operating results used in the preparation of the estimated future cash flows, including future level of sales, long-term forecasts of the amounts and timing of overall market growth, discount rates and terminal growth rates. Changes in judgment could cause us to either pass or fail the first step test and could result in the impairment or lack of impairment of goodwill.

Other intangible assets consist of customer-based assets recorded through acquisitions and are amortized using the straight-line method over their estimated periods of benefit, ranging from two to twelve years. No residual value is estimated for these assets. FAS 142 requires these assets to be reevaluated whenever circumstances indicate that revised estimates of useful lives or impairment may be warranted.

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Other intangible assets also include the costs related to the issuance of debt, and such costs are amortized to interest expense using the effective interest method over the life of the related debt.

Contingent Liabilities. Management estimates the amount of contingent liabilities based on the best information available at the time of determination. For litigation claims, when management with consultation from legal counsel can reasonably estimate the range of loss and an unfavorable outcome is probable, a contingent liability is recorded. As additional information becomes available, we assess the potential liability related to our pending litigation and revise our estimates. Revisions in our estimates of the potential liabilities could materially impact our results of operation and financial position.

Accounting for Income Taxes. We account for income taxes under the provisions of Statement of FAS No. 109, Accounting for Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established to reduce tax assets to the amounts more likely than not to be realized.

We currently have provided for a full valuation allowance against our net deferred tax assets. We have considered future taxable income in assessing the need for the valuation allowance. Based on the available objective evidence, management does not believe that the net deferred tax assets will be realizable. Should we determine that we would be able to realize our deferred tax assets in the foreseeable future, an adjustment to the deferred tax assets would increase income in the period such determination was made.

In preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. The determination of income taxes also involves estimating the impact of additional taxes resulting from tax examinations and uncertainties in the application of complex tax laws and regulations. Accruals for tax contingencies require management to estimate the actual outcome of any such audits and the impact of uncertainties. Actual results could vary from these estimates.

Stock-Based Compensation. On January 1, 2006, we adopted the provisions for stock-based compensation required by Statement of Financial Accounting Standard No. 123 (Revised), Share-Based Payment (“FAS 123R”). We are required to use the prospective method, under which prior periods are not revised for comparative purposes. Under the fair value recognition provisions of FAS 123R, stock-based compensation cost is measured at the grant date for all stock-based awards made to employees and directors based on the fair value of the award using an option-pricing model and is recognized as expense over the requisite service period, which is generally the vesting period.

Prior to the adoption of FAS 123R, we accounted for stock-based awards to employees and directors using the intrinsic value method in accordance with the Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”), as allowed under Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, and we continue to apply APB 25 for options granted prior to January 1, 2006. Stock-based awards to non-employees are accounted for under the provisions of Emerging Issues Task Force No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.

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We currently use the Black-Scholes option-pricing model to determine the fair value of stock options. The determination of the fair value of stock-based payment awards is based on a number of complex and subjective assumptions. These assumptions include the fair value of the underlying stock, the expected term of options, the risk-free interest rate; and expected dividends. If factors change and we employ different assumptions for estimating stock-based compensation expense in future periods, or if we decide to use a different valuation model in the future, the expense in future periods may differ significantly from what we have recorded in the current period, which could materially affect our operating results, net income or loss and net income or loss per share.

In connection with the reorganization discussed in “Certain Relationships and Related Party Transactions-Corporate Reorganization,” we plan to modify our outstanding Series D-2 Preferred Stock Options in a modification will be accounted for using the provisions of FAS 123R. The modification will be a fair value replacement of outstanding Series D-2 Preferred Stock Options with new options under our 2006 Stock Incentive Plan, and is expected to occur immediately upon the consummation of this offering. The new options will allow the purchase of our common stock on the same terms and conditions as were applicable under the predecessor stock option. The strike price and number of options will be modified only to maintain the fair value of the options before and after the modification. We may incur stock-based compensation expense for the modified options, which will be accounted for under FAS 123(R).

Recent Accounting Pronouncements

In May 2005, the FASB issued Statement of Financial Accounting Standard No. 154, Accounting Changes and Error Corrections—A Replacement of APB Opinion 20 and FASB Statement No. 3 (“FAS 154”). The new standard changes the requirements for the accounting for and reporting of a change in accounting principle. Among other changes, FAS 154 requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented on the new accounting principle, unless it is impracticable to do so. FAS 154 also provides that (1) a change in the method of depreciating or amortizing a long-lived non-financial asset be accounted for as a change in estimate (prospectively) that was effected by a change in accounting principle and (2) a correction of errors in previously reported financial statements should be termed a “restatement.” FAS 154 applies to accounting changes and error corrections that are made in fiscal years beginning after December 15, 2005. We adopted FAS 154 with no material impact on our financial statements.

In June 2005, the FASB’s Emerging Issues Task Force reached a consensus on Issue No. 05-6, Determining the Amortization Period for Leasehold Improvements Purchased after Lease Inception or Acquired in a Business Combination (“EITF 05-6”). This guidance requires that leasehold improvements acquired in a business combination or purchased subsequent to the inception of a lease be amortized over the shorter of the useful life of the assets or a term that includes required lease periods and renewals that are reasonably assured at the date of the business combination or asset purchase. The guidance is applicable only to leasehold improvements that are purchased or acquired in reporting periods beginning after June 29, 2005. We adopted EITF 05-6 with no material effect on our financial statements.

In July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), which clarifies the accounting for uncertainty in income taxes recognized in financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in

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interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. We are currently in the process of evaluating the impact that the adoption of FIN 48 will have on our financial position, results of operations and cash flows.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value under GAAP and expands disclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those years. We are currently in the process of evaluating the impact that the adoption of SFAS No. 157 will have on our financial position, results of operations and cash flows.

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SECURED CREDIT FACILITY

In January 2001, we entered into a senior secured credit facility under which we were permitted to borrow up to $50.0 million. The credit agreement was amended in 2001 and amended and restated in 2003, in both cases following our noncompliance with certain financial covenants in the credit agreement. The 2003 amendment also reduced the total amount we could borrow to $41.0 million with an additional $5.0 million available under a revolving credit facility. In 2004, we amended and restated the credit facility, among other things, to provide for borrowings of up to $110.0 million.

On October 13, 2005, we again amended and restated the senior secured credit facility (the “First Lien Credit Facility”). Following the amendment and restatement, the First Lien Credit Facility provides for total borrowings of up to $110.0 million, which is comprised of a $25.0 million term loan A facility (the “Term Loan A Facility”), a $75.0 million term loan B facility (the “Term Loan B Facility”), and a $10.0 million revolving credit facility (including a $1.0 million letter of credit sublimit)(the “Revolving Loan Facility”). On that date we also entered into a syndicated junior lien term loan facility in the amount of $45.0 million (the “Second Lien Credit Facility,” and together with the First Lien Credit Facility, the “Credit Facilities”).

The Credit Facilities are secured by the stock and assets of our subsidiaries. We pay interest on borrowings under the Credit Facilities at either a base rate or a Eurodollar rate, at our option. Any base rate interest we pay is equal to the greater of the administrative agent’s prime rate or 0.50% above the federal funds rate, plus a spread of 2.50% to 3.00% for loans made under the Term Loan A Facility and Revolving Loan Facility, a spread of 3.00% to 3.25% for loans made under the Term Loan B Facility, and a spread of 6.25% for loans made under the Second Lien Credit Facility. Any Eurodollar rate interest we pay is based on the one, two, three, or six month Eurodollar rate plus a spread of 3.50% to 4.00% for the loans made under the Revolving Loan Facility and the Term Loan A Facility, a spread of 4.00% to 4.25% for loans made under the Term Loan B Facility, and a spread of 7.25% for loans made under the Second Lien Credit Facility. The interest spread, if applicable, is determined by our consolidated leverage ratio. We also pay an unused commitment fee equal to 0.50% per annum on the average daily unused portion of the Revolving Loan Facility.

All borrowings under the Term Loan A Facility, the Term Loan B Facility, and the Second Lien Credit Facility occurred on October 13, 2005. Borrowings are available under the Revolving Loan Facility until October 13, 2010. Repayments of principal under the Term Loan A Facility and the Term Loan B Facility are due in scheduled quarterly installments of varying percentages, with all remaining amounts due and payable on October 13, 2010 in the case of the Term Loan A Facility and October 13, 2011 in the case of the Term Loan B Facility. All outstanding amounts under the Revolving Loan Facility will be due and payable on October 13, 2010, and all outstanding amounts under the Second Lien Credit Facility will be due and payable on April 13, 2011. Mandatory prepayments under the Credit Facilities are required in the events of issuance of debt or equity, asset sales, receipt of casualty or condemnation proceeds, and excess cash flow. Any such mandatory prepayments are applied to the Term Loan A Facility, then to the Term Loan B Facility, then to the Revolving Loan Facility, and finally to the Second Lien Credit Facility.

Both of the Credit Facilities require compliance with a consolidated leverage ratio covenant. The First Lien Credit Facility also requires compliance with several additional financial covenants, including a first lien consolidated leverage ratio, a consolidated interest coverage ratio, and a consolidated fixed charge coverage ratio. The Credit Facilities also require compliance with certain operating covenants, which limit, among other things, our incurrence of additional indebtedness and our ability to make dividend payments. We were in violation of the fixed charge coverage ratio covenant as of March 31, 2006. We were required to achieve a fixed

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charge coverage ratio of not less than 1.00 for the three months ended March 31, 2006. The actual ratio was 0.91 for the three months ended March 31, 2006. On April 28, 2006, the lenders agreed to waive such covenant violation and amended the fixed charge coverage ratio from 1.00 to 0.90 for the second and third quarters of 2006. We were in violation of the amended fixed charge coverage ratio covenant and also in violation of the leverage ratio and interest coverage ratio covenants as of September 30, 2006. We were required to achieve a fixed charge coverage ratio of not less than 0.90, a leverage ratio of not more than 4.50 to 1.00 and an interest coverage ratio of not less than 2.40 to 1.00 for the three months ended September 30, 2006. The actual fixed charge coverage ratio was 0.86, the actual leverage ratio was 4.71 to 1.00, and the actual interest coverage ratio was 2.34 to 1.00 for the three months ended September 30, 2006. On November 27, 2006, the lenders agreed to waive such covenants and amended the fixed charge coverage ratio from 0.90 to 0.85, the leverage ratio from 4.50 to 1.00 to 4.75 to 1.00, and the interest coverage ratio from 2.40 to 1.00 to 2.05 to 1.00, in each case for the fourth quarter of 2006. All such covenant ratios are amended through 2007. We were in compliance with the covenants of the Credit Facilities as of September 30, 2006, following the waiver and amendment of the Credit Facilities on November 27, 2006.

As of September 30, 2006, no principal amount of debt was outstanding under our Revolving Loan Facility (with $0.2 million in stated amount of letters of credit issued thereunder), $24.8 million in principal amount was outstanding under the Term Loan A Facility, $75.0 million in principal amount was outstanding under the Term Loan B Facility, and $45.0 million in principal amount was outstanding under the Second Lien Credit Facility.

Simultaneous with the completion of this offering, we intend to enter into a new credit facility. If we successfully enter into a new credit facility, we intend to use all of our net proceeds from this offering to repay a portion of the outstanding principal under our existing Credit Facilities. We do not intend to use any of the proceeds from this offering to repay accrued interest under our Credit Facilities, which we intend to pay with working capital. We currently intend to use funds borrowed under our new credit facility to repay in full any remaining principal amounts owed under the existing Credit Facilities, for capital expenditures, for working capital and for other general corporate purposes. In addition, we may use a portion of the borrowings under our new credit facility to acquire or invest in businesses, products, services or technologies complementary to our current business, through mergers, acquisitions, joint ventures or otherwise. However, we have no specific agreements or commitments and are not currently engaged in any substantive negotiations with respect to any such transactions. Our existing Credit Facilities require that we use 75% of the proceeds from this offering to repay amounts owed under our existing Credit Facilities. Entering into a new credit facility is not a condition of this offering. Accordingly, if we are unable to enter into a new credit facility, we will use 75% of the proceeds from this offering to repay principal amounts owed under the Credit Facilities and the remaining 25% will be used for capital expenditures, for working capital and for other general corporate purposes.

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BUSINESS

Company Overview

We are a leading provider of network neutral interconnection and colocation services primarily to Internet dependent businesses including telecommunications carriers, Internet service providers, online content providers and enterprises. As a network neutral provider, we do not own or operate our own network, and, as a result, our interconnection services enable our customers to exchange network traffic through direct connections with each other or through peering connections with multiple parties. Our colocation services provide space and power for customers’ networking and computing equipment allowing those customers to avoid the costs of building and maintaining their own facilities. We provide our services through 34 facilities in 23 markets, representing the broadest network neutral footprint in North America. Our footprint includes our facility in Palo Alto, one of the first commercial Internet exchanges in the world. Our high network densities, as demonstrated by approximately 17,000 interconnections between our customers, create a network effect, which provides an incentive for our existing customers to remain within our facilities and is a differentiating factor in attracting new customers. This network effect combined with our broad geographic footprint contributes to the growth of our customer base and revenue, which we believe will also increase our operating cash flow due to the fixed nature of certain of our operating costs.

We generate revenue by providing the following to our customers:

• connections to carriers or other customers;

• connections to the Internet exchange;

• space to house networking or Internet equipment;

• power and cooling to support the equipment; and

• technical support.

A typical customer would use all of the above services.

Our network neutral business model is a primary differentiating factor in the market. We do not own or operate our own network, and as a result, our customers are able to connect directly to their choice of telecommunications service providers in an open and competitive marketplace. These service providers include tier 1 network service providers, Internet service providers, tier 2 providers and international telecommunications carriers. We believe that the ability to connect directly with telecommunications service providers and each other enables our customers to reduce network transit costs, to improve the performance of their services and to reduce their time to market.

We offer interconnection services, which include cross connect and Internet exchange services, and colocation services, which include space and power for our customers’ networking and computing equipment. Our diverse customer base includes some of the world’s largest network service providers, metropolitan service operators, Internet service providers, online content providers and enterprise customers. Our North America based telecommunications carrier and Internet service provider customers include AboveNet Communications, AOL and Qwest and our international carrier customers include BT, ChungHwa Telecom, Singapore Telecommunications, Telecom Italia and VSNL. Our online content provider customers include DirecTV, Electronic Arts, Google, LimeLight Networks, Yahoo! and YouTube. Our enterprise customers consist of Internet dependent businesses, including Amazon.com and Factset, and other enterprises such as GlaxoSmithKline, Hewlett Packard, Microsoft and VeriSign. See “Business—Our Customers” for more details about our customers.

We believe our broad geographic footprint represents a competitive advantage in that we have facilities in 14 of the 15 largest metropolitan service areas in the United States and is the

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broadest of any of our network neutral competitors. Our presence in these markets enables us to serve customers in locations where Internet traffic is most concentrated and to serve customers who require a broad geographic footprint. As of September 30, 2006, of our top 100 customers, 73 utilize our services in multiple markets.

Although we have been unable to achieve profitability, since our founding in 1998, we have increased our revenue through a combination of organic growth and acquisitions. We believe our customer base of over 830 customers as of September 30, 2006 provides a platform for organic growth. Sales to existing customers in the first nine months of 2006 comprised approximately 76% of new sales. Since March 2003, we have completed five acquisitions and integrated 12 facilities into our operations. These acquisitions have increased our network densities, expanded our customer base and broadened our geographic footprint.

Several favorable trends in our industry are driving demand for our network neutral interconnection and colocation services. These trends include growth in Internet traffic driven by, among other things, increasing broadband penetration and a proliferation of broadband intensive applications, an increasing need for advanced networking technology provided through reliable and secure infrastructure and a growing awareness of business continuity and disaster recovery planning. We believe that our competitive strengths (including our network neutral business model, our high network densities, our broad network neutral geographic footprint, our robust facilities and operational excellence and our engineering and networking expertise) position us well to capitalize on the growing demand for our services. See “—Our Competitive Strengths” for more information regarding our competitive strengths.

Industry Overview

Monthly Internet traffic in the U.S. is projected to grow at a 34.4% compound annual growth rate from 2005 to 2008 according to the Telecommunications Industry Association. Growth in Internet traffic is being driven by increasing broadband penetration, the proliferation of bandwidth intensive services and the maturity of online business models, among other factors. Broadband penetration increases as the price of broadband Internet access decreases and consumers experience the benefits of broadband access (e.g., faster speeds and “always-on” connectivity). Gartner projects that broadband penetration will increase from 34.3% of U.S. households in 2005 to 53.5% in 2009. Increasing broadband penetration is enabling the proliferation of bandwidth intensive services, including Voice-over-Internet protocol, online gaming, streaming video and audio and Internet protocol television.

The various networks that constitute the Internet initially connected with each other at public network access points. The network access points were established by non-profit organizations and government entities, but eventually became owned and managed by telecommunications carriers. As Internet traffic increased, the network access points were unable to scale due to underinvestment by the telecommunications carriers that owned them. Therefore, certain network service providers left the network access points and began to connect directly by establishing fiber optic links between their facilities. However, these links were expensive to build, maintain and upgrade, and eventually led to the creation of commercial, network neutral Internet exchanges, and network neutral interconnection and colocation facilities.

Interconnection Services

Interconnection services enable businesses to exchange network traffic through direct connections with each other or through peering connections with multiple businesses. Direct connections are provided through a variety of media including fiber optic, Ethernet or coaxial cabling. Peering connections are provided over a shared switch fabric at an Internet exchange facility.

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Growth in Internet traffic is leading to increasing demand for interconnection services, as network service providers, Internet service providers and other Internet dependent businesses require additional connectivity to efficiently exchange increasing amounts of network traffic. Online content providers and providers of other bandwidth intensive services, in particular, require high densities of interconnections and scalability of a service provider’s interconnection infrastructure in order to optimize their services. For these businesses, direct interconnection with each other as well as with multiple network service providers within a facility reduces transit costs, increases the performance of their services and reduces their time to market.

Colocation Services

Growth in Internet traffic is also leading to increasing demand for colocation services. A colocation facility is typically located in close proximity to telecommunications service providers and houses networking and computing equipment such as switches, routers, fiber optic transmission gear and servers for businesses that need to connect with each other and the Internet. The highly controlled environment required for this equipment is characterized by redundant power infrastructure, reinforced floors, sophisticated security and monitoring, and reliable heating, ventilation and air-conditioning systems. Due to the high cost of building and maintaining colocation facilities, businesses often outsource these services to colocation service providers.

There are two primary types of colocation services: network neutral and network specific.

Network Neutral Colocation. Network neutral colocation services allow customers to locate their equipment in a facility which offers interconnection to multiple telecommunications service providers. Neutrality enables customers to select the most cost effective and reliable network service providers and Internet service providers at each colocation facility.

Network Specific Colocation. Network specific colocation services are typically offered by service providers who own or manage networks. These service providers typically encourage or require customers to utilize these networks.

Industry Trends

Several industry trends are leading to increasing demand for high quality network neutral interconnection and colocation services.

Growth in Internet Traffic. Growth in Internet traffic is being driven by increasing broadband penetration, the proliferation of bandwidth intensive services and the maturity of online business models, among other factors. International Data Corporation projects that from 2005 to 2009, the number of U.S. residential Voice-over-Internet protocol and Internet protocol television subscribers will grow at a 64.3% and 131.3% compound annual growth rate, respectively. International Data Corporation projects that revenue from online gaming services will increase from $1.2 billion in 2005 to $3.9 billion in 2009, representing a 34.2% compound annual growth rate. We believe the growth in demand for these bandwidth intensive services represents a significant opportunity for providers of network neutral interconnection and colocation services.

Stabilizing Supply of Network Neutral Interconnection and Colocation Capacity. From 2001 to 2004, the network neutral interconnection and colocation industry underwent a period of consolidation and rationalization. This significantly reduced the amount of capacity in many markets, including larger markets such as the San Francisco Bay Area, New York City and the Northern Virginia Area. The reduced capacity, along with increasing demand for network neutral interconnection and colocation services, has led to a stabilization in the pricing environment.

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Increasing Power and Cooling Requirements. Networking and computing equipment manufacturers are continuously reducing the size of the equipment they manufacture while increasing the speed at which this equipment can receive, process and transmit data. However, reduced size has generally not translated into reduced energy consumption or heat generation, although it has allowed customers to place more equipment in a given area. As a result, customers of colocation services are requiring more power and cooling infrastructure for their networking and computing equipment. We believe that only those interconnection and colocation service providers that have the capital, expertise and experience to scale their infrastructure will be able to meet customers’ increasing power and cooling requirements.

Adoption of Advanced Networking Technology. As broadband penetration increases and telecommunications carriers upgrade to next generation digital networks, new Internet-based services are being developed for both consumers and businesses. These services typically require more bandwidth and feature networking technologies, such as 10 Gigabit switching, that enable more efficient interconnections through higher packet transfer rates. We believe that network neutral interconnection service providers who are able to deploy advanced networking technology within their facilities will benefit from this trend.

Growing awareness of business continuity and disaster recovery planning. We believe a growing awareness of business continuity and disaster recovery planning is leading businesses to store an increasing amount of data in secure, off-site facilities that enable them to access this data in real-time. Interconnection and colocation service providers address this need through the use of highly secure and redundant facilities.

Our Competitive Strengths

We believe that our key competitive strengths position us well to capitalize on the growing demand for our services. These competitive strengths include the following:

• Network Neutral Business Model. We do not own or operate our own network, and therefore we do not compete with telecommunications service providers including network service providers and Internet service providers. As such, our customers are able to connect directly to their choice of multiple network service providers and Internet service providers in an open and competitive marketplace. We believe this enables our customers to reduce network transit costs, improve the performance of their services and reduce their time to market.

• High Network Densities. We have approximately 17,000 interconnections between our customers. These interconnections represent among the highest network densities in our industry, as measured by interconnections per cabinet. We believe our high network densities create a network effect, which provides an incentive for existing customers to remain within our facilities and for new customers to join them.

• Broad Network Neutral Geographic Footprint. Our geographic footprint includes 34 facilities in 23 markets in North America. This footprint includes facilities in 14 of the 15 largest metropolitan service areas in the U.S., more than any of our network neutral competitors. Our presence in these markets enables us to serve customers in locations where Internet traffic is most concentrated and to serve customers who require a broad geographic footprint.

• Robust Facilities and Operational Excellence. We believe our ability to meet high service levels is attributable primarily to the quality of our facilities and the capabilities of our operations personnel. Our facilities and operations personnel address our customers’ infrastructure needs, including security, cooling and redundant power. As a result, we are

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able to provide a 99.999% uptime guarantee as part of our service level agreements with our customers.

• Engineering and Networking Expertise. We have gained significant engineering and networking expertise throughout our history, including through our ownership and operation of PAIX, one of the first Internet exchanges. This expertise enables us to design and architect facilities which proactively address the evolving needs of our customers. We are also able to incrementally scale our infrastructure, including by connecting our facilities within a metro market.

Our Strategy

Our objective is to be the leading provider of network neutral interconnection and colocation services in North America. The key elements of our strategy are to:

• Focus on our Top 10 Markets. We derive the majority of our revenue from our top 10 markets, which are New York City, the Northern Virginia Area, the San Francisco Bay Area, Seattle, Dallas, Philadelphia, Toronto, Atlanta, Chicago and Los Angeles. Our top 10 markets are those markets which we believe to be most important strategically to our business. These markets are experiencing the most rapid Internet traffic and customer growth. Since January 2005, we have increased our gross square footage in these markets by 27% and have augmented the power and cooling infrastructure in many of these facilities. We intend to continue to expand capacity in our top 10 markets to meet the increasing needs of our existing customers and to serve new customers.

• Leverage Network Densities. By increasing network densities within our facilities, we are able to further enhance our value proposition to our customers. We target customers in bandwidth intensive segments such as online gaming, Voice-over-Internet protocol, Internet protocol television and others that capitalize on digital convergence. These customers require facilities with high network densities to optimize their business models and enhance the experiences of their end users. To facilitate higher network densities, we intend to continue to invest in our network infrastructure, including additional deployment of 10 Gigabit peering solutions. We believe that leveraging our network densities will enable us to continue to attract and retain customers who derive the greatest value from our interconnection services.

• Strengthen Existing Customer Relationships and Reach New Customers. We are working to strengthen relationships with our largest customers and deepen relationships with our broader customer base. We are also working to develop relationships with customers in emerging, bandwidth intensive segments and investing in new sales channels that will incorporate our services as part of a broader communications solution. We are using a combination of our national account sales managers, an inside sales group and relationships with systems integrators to implement this strategy.

• Pursue Selective Acquisitions. Our acquisitions have increased our network densities, expanded our customer base and broadened our geographic footprint. We have demonstrated the ability to identify strategic acquisitions, to improve the infrastructure of acquired facilities and to increase their revenues. We believe that industry consolidation opportunities remain, and we intend to continue to pursue selective acquisitions.

Our Services

We provide network neutral interconnection and colocation services and certain other services to our customers.

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Interconnection Services

Our interconnection services provide our customers with two primary options to exchange network traffic: through direct connections with each other, utilizing our cross connect services, or through peering connections with multiple customers, utilizing our Internet exchange services.

Cross Connect Services. Cross connect services enable one-to-one interconnections between customers within a facility, reducing network costs and network latency. These services allow customers to connect their networks through a direct physical connection in a meet-me room. Cross connect services are offered through a variety of media including fiber optic, Ethernet or coaxial cabling, for an initial installation fee and a recurring monthly fee per connection.

Internet Exchange Services. Internet exchange services enable one-to-many interconnections between customers over a shared switch fabric within a facility, further reducing network costs and network latency. We offer these services in eight of our markets including the San Francisco Bay Area, New York City, Seattle, Dallas, Atlanta and the Northern Virginia Area. We provide Internet exchange services at port capacities ranging from 100 megabits per second to 10 gigabits per second for an initial installation fee and a recurring monthly fee, based on port capacity.

SingleCNXT. Our SingleCNXT service is the resale of Internet access through Internet service providers who connect directly with customers in our facilities. We offer SingleCNXT as an accommodation to certain customers that desire a single point of contact for colocation and Internet access services. We provide SingleCNXT for an initial installation fee and a recurring monthly fee based on the amount of bandwidth committed or used.

Colocation Services

Our facilities provide our customers with a reliable, secure and climate controlled environment for their networking and computing equipment. Our colocation services include flexible space options, redundant power and cooling systems, physical security, other sophisticated systems for fire suppression and water leak detection and technical support. Each facility is staffed with highly trained and experienced technicians.

Colocation Space. Our colocation space includes secure cabinets, racks and cages. We provide colocation space for an initial installation fee and a recurring monthly fee per cabinet or rack, or for a cage per square foot of space.

Power. We provide both alternating current and direct current power circuits at various amperages. These power circuits are backed up by both batteries and electric generators. We provide power for an initial installation fee and a recurring monthly fee based on size and type of circuit.

Other Services

TechSmart^® Technical Support Services. TechSmart^® technical support services are provided by our technicians, who are available 24 hours per day, 365 days per year. These services include remote hands, equipment installation and maintenance, cabling, circuit testing, tape swaps, equipment rebooting and power cycling. We charge customers for these services on an hourly basis or under contractual arrangements for a certain number of hours of technical support per month.

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Our Customers

Our customers include telecommunications service providers, online content providers and enterprises. Our telecommunications service provider customers include tier 1 network service providers, metropolitan service operators, Internet service providers, tier 2 providers and international telecommunications carriers. Our online content provider customers consist of businesses that deliver content and content based services over the Internet. Our enterprise customers include businesses that are dependent on the Internet, as well as units or divisions of those businesses that are dependent on the Internet. For the year ended December 31, 2005 and the nine months ended September 30, 2006, no customer represented more than 10% of our total revenue. As of September 30, 2006, we had over 830 customers.

The table below is a representative list of our customers. The telecommunications service providers listed below represent approximately 10% of revenues for the nine months ended September 30, 2006. The online content providers listed below represent approximately 5.5% of revenues for the nine months ended September 30, 2006. The enterprises customers listed below represent approximately 4.6% of revenues for the nine months ended September 30, 2006.

Selected customers include:

Telecommunications Service Providers	Online Content Providers	Enterprises
AboveNet AOL BT ChungHwa Telecom Cox Communications Qwest Singapore Telecom Telecom Italia T-Systems VSNL	A9.com Akamai DirecTV Electronic Arts Google Kanoodle.com LimeLight Networks Photobucket.com Yahoo! YouTube	Amazon.com Factset GlaxoSmithKline Hewlett Packard Prophet Financial Systems Microsoft SI International Syniverse VeriSign Virgin Radio

The majority of our customer agreements are structured as master or umbrella service agreements that contain all of the general terms and conditions including, but not limited to, payment terms, termination provisions, confidentiality, notice provisions, indemnity provisions and limitation of liability. The master agreements also incorporate a “Policies and Procedures” document that contains additional customer requirements including, but not limited to, installation, insurance and security. The terms of the master agreements automatically renew for as long as there are underlying service orders for service. The master agreements do not have any specific services or associated prices or terms of specific services as those terms are all set forth in separate service orders. The service order sets forth the type of service, the length of the service term and the monthly or one-time charge for the services. Space, power and ports are generally sold for one to three year terms. Certain products, such as cross connects, are typically sold on a month-to-month basis.

Sales and Marketing

Sales. We use a multi-channel approach to sales. Our sales organization includes senior managers and sales representatives, who are organized into three sales groups: national account management, inside sales and indirect sales. Our national account management group focuses on strengthening relationships with our largest customers and penetrating new target

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accounts. Our inside sales group is responsible for deepening relationships with customers that are not covered by our national account management group. This group is the primary source of new customer leads. Our indirect sales group is responsible for developing and managing relationships with third party sales partners. These partners sell our services as part of a broader communications solution.

Marketing. Our marketing organization is focused on leading and supporting our sales efforts through a comprehensive approach, including creating service strategies and implementing channel marketing initiatives. We support new service development and delivery by providing updates on the competitive landscape including pricing, evolving customer needs, technological advancements and industry trends. We actively promote our brand in North America through targeted public relations campaigns, sponsorship of key industry forums and participation in relevant industry conferences where we can access key customer decision makers. Our channel marketing effort is responsible for developing demand generation campaigns and for creating selling tools and collateral for targeted sales campaigns.

Our Facilities

Our corporate headquarters are located in Tampa, Florida. We lease space for our facilities in buildings with a significant concentration of telecommunications carriers or buildings located near the primary telecommunications central offices within a particular market. This proximity to telecommunications carriers significantly reduces the cost and complexity of connecting their networks to our facilities. We currently operate 34 facilities in 23 markets with approximately 699,900 total gross square feet. The amount of gross square footage in each of our markets ranges from 6,800 to 87,800. The amount of gross square footage for our top 10 markets by revenue ranges from 17,900 to 87,800 square feet. The following table shows the number and gross square footage of our facilities in our top 10 markets and the number of our facilities in our other markets:

Market	Number of Our Facilities	Gross Square Footage
Top 10 Markets
New York City*	3	87,800
Northern Virginia Area*	3	68,700
San Francisco Bay Area*	2	65,300
Seattle*	2	49,000
Dallas*	3	43,700
Philadelphia*	2	41,400
Toronto	1	29,900
Atlanta*	1	28,000
Chicago	2	26,800
Los Angeles	1	17,900
Top 10 Markets Total	20	458,500
Other Markets**	14	241,400
Total	34	699,900

* Denotes market where we also provide Internet exchange services.

** Boston, Buffalo, Cleveland, Denver, Detroit, Indianapolis, Kansas City, Miami (2 facilities), Nashville, Phoenix, Pittsburgh, St. Louis and Tampa.

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Below is a table containing the material terms of all our leases in our top 10 markets.

Lease Terms - Top 10 Markets

Location	Lease Expiration Date	Approx. Sq. Ft.	Annual Rent (In Thousands)		Renewal Option
New York City	Ranges from 2/2008 to 8/2015	87,821	$	4,071	(1)
Northern Virginia Area	Ranges from 12/2006 to 9/2009	68,743	$	2,598	(2)
San Francisco Bay Area	Ranges from 8/2009 to 5/2025	65,319	$	2,403	(3)
Seattle	Ranges from 8/2009 to 4/2014	48,959	$	2,017	(4)
Dallas	Ranges from 6/2009 to 9/2015	43,678	$	1,322	(5)
Philadelphia	Ranges from 1/2008 to 10/2010	41,353	$	765	(6)
Toronto	Ranges from 4/2011 to 11/2014	29,906	$	2,352	(7)
Atlanta	Ranges from 11/2009 to 2/2010	27,998	$	627	(8)
Chicago	Ranges from 2/2007 to 11/2013	26,839	$	457	(9)
Los Angeles	2/2009	17,927	$	215	None

(1) Of our leased space in New York City, approximately 16,853 square feet is subject to a lease renewal option and approximately 70,968 square feet is not subject to a lease renewal option.

(2) As of December 2006, of our leased space in the Northern Virginia Area, approximately 43,167 is subject to a lease renewal option and approximately 25,576 square feet is not subject to a lease renewal option. On January 1, 2007, one of our leases in the Northern Virginia Area will renew for a reduced square footage and at a reduced annual rent. As of January 1, 2007, our total leased space in the Northern Virginia Area will equal approximately 63,638 square feet, our annual rent will equal $2,494,431 and the expiration dates of our leases will range from August 2009 to December 2016. In addition, as of January 1, 2007, approximately 38,062 square feet of our leased space in the Northern Virginia Area will be subject to a lease renewal option, and approximately 25,576 square feet will not be subject to a lease renewal option.

(3) Of our leased space in the San Francisco Bay Area, approximately 20,000 square feet is subject to a lease renewal option, and approximately 45,319 square feet is not subject to a lease renewal option.

(4) Of our leased space in Seattle, approximately 37,565 square feet is subject to a lease renewal option, and approximately 11,394 square feet is not subject to a lease renewal option.

(5) All of our leased space in Dallas is subject to a lease renewal option.

(6) Of our leased space in Philadelphia, approximately 20,540 square feet is subject to a lease renewal option, and approximately 20,813 square feet is not subject to a lease renewal option.

(7) All of our leased space in Toronto is subject to a lease renewal option.

(8) Of our leased space in Atlanta, approximately 11,834 square feet is subject to a lease renewal option, and approximately 16,164 square feet is not subject to a lease renewal option.

(9) Of our leased space in Chicago, a lease for approximately 5,141 square feet will terminate in February 2007 and will not be renewed, approximately 12,571 square feet is subject to a lease renewal option, and approximately 9,127 square feet is not subject to a lease renewal option.

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Competition

The market for our services is highly competitive and we compete primarily based on network density, quality of service, location and price. We are unable to estimate our market share in total or within a particular market because many of our current competitors are privately-held, or are divisions of publicly-held companies that do not segregate information specific to our industry in their publicly available disclosure. As a result, we are unable to provide market share information for our industry. Even if we were able to provide current market share information for our industry, such information may become inaccurate after a short period of time due to other entities’ exit from, and entrance into, our market. Our competitors include the following service providers:

Network Neutral Interconnection and Colocation Service Providers. These competitors, including Equinix and Terremark, offer services that are similar to ours, including cross connect services, Internet Exchange Services and colocation services.

U.S.-based Telecommunications Carriers. These telecommunications carriers, which include at&t and Level 3, typically provide interconnection services through a single owned network and generally require bandwidth capacity minimums as part of their pricing structures. We believe these competitors operate colocation facilities primarily to help sell their core telecommunications and Internet access services. They are generally regional or national, with widespread brand recognition and significant financial resources.

Managed Service Providers, Web Hosting Companies and Internet Service Providers. Managed service providers, such as AboveNet, InterNAP and Savvis, generally require that customers purchase their Internet access and managed services directly from them. Some web hosting companies and Internet service providers, such as NaviSite, also provide colocation services as part of their offerings.

Unlike some of our competitors, we do not own or operate our own network, we do not own the buildings in which we operate our business and we do not currently provide managed services such as data storage, web hosting services, network connectivity and information technology support services to our customers. In addition, relative to us, some of our competitors possess longer operating histories, greater financial resources (which enable, or may enable, such competitors to adopt aggressive pricing policies), a greater presence in our markets and other markets around the world, a greater ability to differentiate their respective facilities and services and greater brand name recognition. For further discussion of these competitive challenges, along with others, that we face, please see “Risk Factors—We may not be able to compete successfully against current and future competitors” and “Risk Factors—Our brand is not as well known as that of some of our competitors. Failure to develop and maintain brand recognition could harm our ability to compete effectively.”

Intellectual Property

We consider certain of our processes, systems, methodologies, databases, software and trademarks to be proprietary. We rely on a combination of trade secret, copyright, trademark and other laws, license agreements and nondisclosure, noncompetition and other contractual provisions and technical measures to protect our proprietary and intellectual property rights.

We consider our trademarks “SWITCH AND DATA,” “PAIX,” “TECHSMART,” “MetroPAIX” and “SINGLECNXT” to be materially important to our business and the registered trademarks are renewable for their statutory terms.

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Government Regulation

We are currently regulated by the Federal Communications Commission and the Canadian Radio Television and Telecommunications Commission regarding our provision of International Private Line Interexchange Services between Buffalo, New York and Toronto, Ontario. We are also regulated by the New York State Department of Public Service regarding the provision of Intrastate Private Line Interexchange Services between Buffalo and New York City.

These private line circuits are used as a convenience to our customers to provide long distance cross connects that would not otherwise be available for these customers to interconnect their networks through our facilities. As a Private Line Interexchange Service Provider, we currently file quarterly reports (FCC Form 499-Q) and annual reports (FCC Form 499-A) with the Federal Communications Commission reporting the total revenues generated by our International Private Line Interexchange Services between Buffalo and Toronto. Based upon the 2005 FCC Form 499-A Annual Report, total revenues for International Private Line Interexchange Services totaled $0.7 million, which represents 0.7% of our total revenues for 2005.

Due to changing technology and applications of that technology, it is uncertain whether and how existing laws or regulations or new laws or regulations will be applied by the Federal Communications Commission and other regulatory agencies to other currently unregulated services we offer, or to new services or products that we may offer in the future.

Employees

As of September 30, 2006, we employed 261 persons in the United States and 11 in Canada. Of the total employees, 62 were employed in engineering and central operations, 64 were employed in sales and marketing and 44 were employed in management, finance and IT. Additionally, we had 102 employees at our facilities.

We believe our relations with our employees are good. Our employees are not represented by a labor union and are not covered by a collective bargaining agreement.

Legal Proceedings

We are currently involved in three lawsuits with former landlords or property owners relating to our non-occupancy of plaintiffs’ facilities and subsequent withholding of rent payments. We intend to vigorously defend our position in each of these lawsuits. However, we cannot assure you that we will ultimately be successful in these matters.

In May 2002, Joseph H. Suppers, Jr. filed suit in the Circuit Court of the Fifteenth Judicial District Palm Beach County, Florida against our subsidiary, Switch & Data FL Four LLC, certain other of our subsidiaries and us. In addition to claims of breach of a lease in connection with a lease entered into for a colocation facility in West Palm Beach, Florida, the complaint alleges fraudulent misrepresentation. Plaintiffs are seeking damages of approximately $9.0 million for lost rents, $3.1 million for lost profits, $16.0 million for lost business opportunities, $0.8 million for transaction costs related to a forced sale of the building and $0.8 million for attorney’s fees. Based upon currently available information, management believes that the amount of any liability with respect to this action will not materially affect our financial position, results of operations or liquidity.

On May 31, 2006, we and our predecessor, Switch & Data Facilities Company, LLC, were served with a lawsuit alleging our failure to execute a lease in October 2000 for a building in Milwaukee, Wisconsin. Plaintiffs are claiming the rent and associated lease charges due for the entire term of the lease (10 years) of $3.7 million. Plaintiffs are also claiming a $0.75 million loss

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on the sale of the building and $0.15 million for attorney’s fees. Based upon currently available information, management is currently unable to assess the amount of any liability with respect to this action, which may materially affect our financial position, results of operations or liquidity.

One additional suit filed on October 26, 2001, Continental Poydras Corporation vs. Switch and Data LA One, LLC and our predecessor, is pending in New Orleans, Louisiana. Plaintiff is seeking approximately $3.2 million for lost rent, $0.35 million for restorative expenses and $0.02 million for paid lease commissions. This case is currently inactive.

In addition to the matters described above, we are presently involved in various legal proceedings arising in the ordinary course of our business operations, including employment matters and contractual disputes that we do not believe, based on information currently available to us, will materially adversely affect our financial position or results of operations.

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MANAGEMENT

Directors and Executive Officers

Our directors and executive officers are as follows:

Name	Age	Positions and Offices Held
Keith Olsen	50	Chief Executive Officer, President, Director
William Luby	47	Chairman of the Board of Directors
George Pollock, Jr.	39	Senior Vice President, Chief Financial Officer
William Roach	62	Senior Vice President of Sales
Charles Browning	60	Vice President of Operations
George Kelly	57	Director
Kathleen Earley	54	Director
Arthur Matin	50	Director
M. Alex White	54	Director
Ali Marashi	38	Vice President of Engineering and Chief Information Officer
Ernest Sampera	46	Senior Vice President of Marketing

Mr. Luby and Ms. Earley are Class I directors. At the annual meeting of stockholders in 2007, the term of office of the Class I directors shall expire and Class I directors shall be elected for a full term of three years. Messrs. Kelly and Matin are Class II directors. At the annual meeting of stockholders in 2008, the term of office of the Class II directors shall expire and Class II directors shall be elected for a full term of three years. Messrs. Olsen and White are Class III directors. At the annual meeting of stockholders in 2009, the term of office of the Class III directors shall expire and Class III directors shall be elected for a full term of three years. At each succeeding annual meeting of stockholders, directors shall be elected for a full term of three years to succeed the directors of the class whose terms expire at such annual meeting.

Keith Olsen, Chief Executive Officer, President and Director. Mr. Olsen was appointed as our President and Chief Executive Officer and as a member of our board of directors in February 2004. Prior to joining us, Mr. Olsen served as Vice President of at&t, where he was responsible for indirect sales and global sales channel management from May 1993 to February 2004. From 1986 to 1993, Mr. Olsen served as Vice President of Graphnet, Inc., a provider of integrated data messaging technology and services. Mr. Olsen holds a bachelor’s degree from the State University of New York, Geneseo.

William Luby, Chairman. Mr. Luby was appointed as the Chairman of our board of directors in February 1999. Since October 1996, Mr. Luby has served as the Managing Partner of Seaport Capital and its predecessor companies. Mr. Luby currently serves as a director of SirsiDynix, Elias Arts, Manadalay Baseball and several other privately held companies. Mr. Luby holds a bachelor’s degree from Trinity College and an MBA from The Fuqua School of Business at Duke University.

George Pollock, Jr., Senior Vice President and Chief Financial Officer. Mr. Pollock has served as our Chief Financial Officer since May 2001 and as Senior Vice President since January 2003. From August 1999 to May 2001, Mr. Pollock served as our Vice President of Finance. Prior to joining us, Mr. Pollock served as Chief Financial Officer of the Merchant Banking Division of Communications Equity Associates (CEA), an international investment and merchant bank specializing in the media, communications and Internet industries, from January 1997 to August 1999. Mr. Pollock holds a bachelor’s degree and a master’s degree in accounting from the University of Florida.

William Roach, Senior Vice President of Sales. Mr. Roach has served as Senior Vice President of Sales since November 2003. Prior to joining us, Mr. Roach served as Interim Chief

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Executive Officer of SonicWall, Inc., a provider of integrated Internet security appliances, from May 2002 to October 2003. From July 1999 until November 2001, Mr. Roach served as Chief Operating Officer and Chief Executive Officer of PCTEL, Inc., a provider of wireless connectivity products and test tools to cellular carriers, wireless Internet providers, personal computer original equipment manufacturers and wireless equipment manufacturers. Prior to his service at PCTEL, Inc., Mr. Roach held a variety of executive level business and sales positions at Maxtor Corporation, Wyle Corporation, Quantum Corporation and Intel Corporation. During his 13 year tenure at Intel, Mr. Roach held a variety of positions in general management, sales and marketing. Mr. Roach holds a bachelor’s degree from Purdue University.

Charles Browning, Vice President of Operations. Mr. Browning has served as Vice President of Operations since December 2000. Prior to being our Vice President of Operations, Mr. Browning served as our Director of Operations from March of 2000 to November of 2000. Before joining us, Mr. Browning served as Director, Americas Telecom Solutions for TCSI Corporation from 1999 to 2000, as Vice President, North American Operations—Communications Market Sector Group from 1997 to 1998 and Principal, Communications Market Sector from 1995 to 1997 for Unisys Corporation, and Managing Director, Manhattan Operations for NYNEX Corporation from 1991 to 1995. Mr. Browning holds a bachelor’s degree from the State University of New York.

George Kelly, Director. Mr. Kelly has served as a member of our board of directors since February 1999. Since June 1990, Mr. Kelly has served as Chairman of The CapStreet Group. Mr. Kelly currently serves as a director of Jackson Products, Inc., Sprint Industrial Holdings, LLC, Warren Alloy, Inc. and several other privately held companies. Mr. Kelly holds a bachelor’s degree from Union College and an MBA from the Amos Tuck School of Business at Dartmouth College.

Kathleen Earley, Director. Ms. Earley has been a member of our board of directors since September 2003. Since November 2004, Ms. Earley has served as President and Chief Operating Officer of TriZetto, a healthcare technology provider. From 1994 to 2001, Ms. Earley served as Senior Vice President of Enterprise Networking and Chief Marketing Officer of at&t. She currently serves as a director of Vignette Corporation and Digital Realty Trust. Ms. Earley holds a bachelor’s degree and an MBA from the University of California, Berkeley.

Arthur Matin, Director. Mr. Matin has been a member of our board of directors since November 2003. Since March 2006, Mr. Matin has served as President and Chief Executive Officer of Softricity, Inc., a provider of application virtualization and on-demand delivery services. From March 2004 to July 2005, Mr. Matin served as the Executive Vice President of Worldwide Sales for Veritas Software Corporation, a provider of storage and security software. From November 2001 to February 2004, Mr. Matin served as President of McAfee Security for Network Associates, Inc., a supplier of network security and management software. From January 2000 to November 2001, Mr. Matin served as Senior Vice President of Sales and Marketing of CrossWorlds Software, Inc., a provider of enterprise application integration software. Prior to joining CrossWorlds Software, Inc., Mr. Matin managed U.S. and international sales operations at IBM for 19 years, most recently as Vice President of the Industrial Sector for the Americas.

M. Alex White, Director. Mr. White has been a member of our board of directors since October 2006. Since February 2005, Mr. White has independently consulted with various companies regarding finance and accounting matters. From 1977 through January 2005, Mr. White was a practicing certified public accountant, and beginning in 1987, a partner with Deloitte & Touche LLP. Mr. White’s practice focused on public companies, including initial and secondary public offerings, annual and periodic public reporting, board and audit committee presentations and Sarbanes-Oxley compliance. Mr. White currently serves as a director of Coast Financial Holdings, Inc. and is Chairman of its Audit Committee.

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Ali Marashi, Vice President of Engineering and Chief Information Officer. Mr. Marashi has served as Vice President of Engineering and Chief Information Officer since August 2005. Prior to joining us, Mr. Marashi served as Chief Technology Officer of Internap Network Services, where he was responsible for technology direction and development, network operations and carrier relations from March 2000 to June 2005. From July 1997 to March 2000, Mr. Marashi served as Network Engineer for Networks and Distributed Computing at the University of Washington. Mr. Marashi holds a bachelor’s degree from the University of Washington.

Ernest Sampera, Senior Vice President of Marketing. Mr. Sampera has served as Senior Vice President of Marketing since August 2004. Prior to joining us, Mr. Sampera served as Vice President of Channel Marketing for at&t Business Services, where he was responsible for centralizing at&t’s Business Sales Channel Marketing business unit from 2000 to 2003. Prior to at&t, Mr. Sampera held executive sales, marketing and management information systems positions with IBM, UNISYS and the American Medical Association. Mr. Sampera holds a bachelor’s degree in finance from the University of Akron.

Board of Directors

Currently, there are six members of our board of directors. According to the existing investors agreement between our predecessor and its existing stockholders, holders of our predecessor’s Series D-1 preferred stock have the right to elect four directors, and the holders of all of our predecessor’s capital stock collectively, except for holders of our predecessor’s Series C redeemable preferred stock, have the right to elect three directors. Holders of our predecessor’s Series D-1 preferred stock designated George Kelly, William Luby and M. Alex White to our predecessor’s board of directors and holders of all of our capital stock collectively, except for holders of our predecessor’s Series C redeemable preferred stock and Series D redeemable preferred stock, designated Kathleen Earley, Keith Olsen and Arthur Matin. A vacancy currently exists with respect to one of the four directors the holders of our Series D-1 preferred stock are entitled to elect. The existing investors agreement will be amended and restated in connection with our corporate reorganization such that the right to elect board members, as referenced above, will no longer exist. Upon completion of this offering, our board of directors will consist of six members, a majority of whom will be independent under Nasdaq Marketplace Rules.

Board Committees

Our board of directors has established an Audit Committee, a Compensation Committee, and a Corporate Governance and Nominating Committee. The board may also establish such other committees as it deems appropriate, in accordance with applicable law and regulations and our amended and restated certificate of incorporation and by-laws.

Audit Committee

Our Audit Committee consists of M. Alex White, Arthur Matin and George Kelly. Mr. White acts as the chairman of the Audit Committee. Mr. White and Mr. Matin are “independent” as defined under and required by the federal securities laws and The Nasdaq Marketplace Rules, and our board of directors has determined that Mr. White is an “audit committee financial expert,” as defined by Item 401(h) of the Regulation S-K of the Securities Exchange Act of 1934. Within one year of the effectiveness of the registration statement of which this prospectus forms a part, we intend that the Audit Committee will be fully independent as required by the federal securities laws, and The Nasdaq Marketplace Rules. The Audit Committee has direct responsibility for the appointment, compensation, retention and oversight of the work of our

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independent registered public accounting firm, PricewaterhouseCoopers LLP. In addition, approval of the Audit Committee is required prior to our entering into any related-party transaction. It is also responsible for “whistle-blowing” procedures and certain other compliance matters.

Compensation Committee

Our Compensation Committee consists of Arthur Matin, William Luby and George Kelly, each of whom is independent within the meaning of Rule 4200(a)(15) of The Nasdaq Marketplace Rules. The Compensation Committee reviews, and makes recommendations to the board of directors regarding, the compensation and benefits of our executive officers. The Compensation Committee also administers the issuance of stock options and other awards under our stock plans and establishes and reviews policies relating to the compensation and benefits of our employees and consultants.

Corporate Governance and Nominating Committee

The Corporate Governance and Nominating Committee establishes procedures for the nominating process, recommends candidates for election to our board and nominates officers for election by our board. This Committee’s purpose is also to encourage and enhance communication among independent directors.

The current members of the Corporate Governance and Nominating Committee are Arthur Matin, Kathleen Earley, M. Alex White, George Kelly and William Luby, each of whom is independent within the meaning of Rule 4200(a)(15) of The Nasdaq Marketplace Rules. Mr. Luby acts as the chairman of the Corporate Governance and Nominating Committee. As set forth in the general guidelines established pursuant to its charter, the Corporate Governance and Nominating Committee strives for directors who will (a) bring to our board a variety of experience and backgrounds, (b) bring substantial senior management experience, financial expertise and such other skills that would enhance the board’s effectiveness, and (c) represent the balanced, best interests of our stockholders as a whole. In selecting nominees, the Corporate Governance and Nominating Committee assesses independence, character and integrity, potential conflicts of interest, experience, and the willingness to devote sufficient time to carrying out the responsibilities of a director. The Corporate Governance and Nominating Committee has the authority to retain a search firm to be used to identify director candidates and to approve the search firm’s fees and other retention terms.

The Corporate Governance and Nominating Committee will consider nominees for the board that are proposed by our stockholders. The same identifying and evaluating procedures will apply to all candidates for director nomination, including candidates submitted by stockholders. Any stockholder who wishes to recommend a prospective nominee for the Corporate Governance and Nominating Committee’s consideration may do so by providing the candidate’s name and qualifications in writing to Secretary, Switch & Data Facilities Company, Inc., 1715 North Westshore Boulevard, Suite 650, Tampa, Florida 33607. The Corporate Governance and Nominating Committee’s responsibilities are more fully set forth in a written charter that was adopted by the Corporate Governance and Nominating Committee and by the board.

Director Compensation

We currently pay an annual fee of $40,000 to the following directors: Kathleen Earley, M. Alex White and Arthur Matin. We currently do not pay an annual fee to our other directors: William Luby, George Kelly and Keith Olsen. Upon the closing of this offering, we will pay an

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annual fee of $40,000 to all of our non-employee directors: Kathleen Earley, Arthur Matin, George Kelly, William Luby and M. Alex White. Additionally, the chairman of our Audit Committee will receive an additional annual fee of $15,000, and the chairpersons of our Compensation Committee and Corporate Governance and Nominating Committee will each receive an additional annual fee of $10,000. We will also reimburse our non-employee directors for reasonable expenses they incur in attending board or committee meetings. We have in the past granted directors options to purchase shares of our predecessor’s Series D-2 Preferred Stock. Upon the completion of this offering, we will grant options to purchase 5,000 shares of our common stock to each of our non-employee directors. Additionally, Ms. Earley and Mr. Matin will receive an additional grant of 25,000 options for prior years of service as directors.

Compensation Committee Interlocks and Insider Participation

The members of our Compensation Committee do not have any interlocking relationships as defined under SEC regulations.

Executive Compensation

The following table summarizes, for the fiscal year ended December 31, 2005, the compensation paid to or earned by our Chief Executive Officer and our five other executive officers serving in such capacity as of December 31, 2005.

Summary Compensation Table

	Annual Compensation(1)							Long-Term Compensation	All Other Compensation ($)
Name and Principal Position(1)	Salary($)			Bonus($)(2)		Other Annual Compensation ($)		Securities Underlying Options (#)
Keith Olsen Director, CEO & President	$	350,000		$	141,000	$	—	—	$	18,708	(4)
George Pollock, Jr. Senior Vice President & CFO	$	210,000		$	90,000	$	—	—	$	7,162	(5)
William Roach Senior Vice President of Sales	$	238,642	(3)	$	23,972	$	—	—	$	1,188	(6)
Ernest Sampera Senior Vice President of Marketing	$	180,000		$	75,000	$	—	—	$	31,056	(7)
Charles Browning Vice President of Operations	$	193,000		$	40,000	$	—	—	$	7,774	(8)
Ali Marashi Vice President of Engineering and Chief Information Officer(9)	$	69,231		$	28,200	$	—	—	$	6,606

(1) In accordance with the rules of the SEC, the compensation described in this table does not include (a) medical, group life insurance or other benefits received by the named executive officers that are available generally to all of our salaried employees, or (b) perquisites and other personal benefits received by the named executive officers that do not exceed the lesser of $50,000 or 10% of the officer’s salary and bonus disclosed in this table.

(2) Bonus amounts represent employee performance bonuses and are reported for the year in which they were earned, though they may have been paid in the following year.

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(3) Includes $38,642 paid to Mr. Roach in the form of sales commissions.

(4) Includes $11,438 of relocation related payment, $7,000 of 401(k) plan matching contribution and $270 of life insurance premium.

(5) Includes $7,000 of 401(k) plan matching contribution and $162 of life insurance premium.

(6) Includes $1,888 of life insurance premium.

(7) Includes $23,765 of relocation related payment, $7,000 of 401(k) plan matching contribution and $291 of life insurance premium.

(8) Includes $7,000 of 401(k) plan matching contribution and $774 of life insurance premium.

(9) Mr. Marashi joined us as Vice President of Engineering and Chief Information Officer on August 29, 2005.

Option Grants in Last Fiscal Year

There were no option grants to any executive officer during the fiscal year ended December 31, 2005.

Option Exercises and Year-End Option Values

The following table sets forth information for each of the named executive officers regarding the number of shares subject to both exercisable and unexercisable stock options, as

well as the value of unexercisable in-the-money options, as of December 31, 2005. There was no public trading market for our common stock as of December 31, 2005. Accordingly, the value of the unexercised in-the-money options at year end has been calculated by determining the difference between the exercise price per share and the initial public offering price of our common stock, $             per share, being offered in this prospectus. We have prepared this table as if our corporate reorganization had already occurred at the time that options were exercised and at the time the option grants were made.

Aggregated Option Exercises in 2005

and December 31, 2005 Option Values

Name	Shares Acquired on Exercise(#)	Value Realized ($)	Number of Securities Underlying Unexercised Options at December 31, 2005(#)		Value of Unexercised In-The-Money Options at December 31, 2005($)
			Exercisable	Unexercisable	Exercisable	Unexercisable
Keith Olsen	—	—
George Pollock, Jr.
William Roach	—	—
Ernest Sampera	—	—
Charles Browning	—	—
Ali Marashi	—	—	—	—

Employment Agreements

On February 16, 2004, we entered into an employment agreement with Keith Olsen whereby Mr. Olsen agreed to serve as our President and Chief Executive Officer. The employment agreement has an initial term ending on December 31, 2006 and automatically extends for additional one-year terms unless either party provides written notice of termination at least 60 days prior to the expiration of the initial term of the agreement, or any extension thereof. The employment agreement provides for an initial base salary of $350,000 per year subject to periodic review and may be increased, but not decreased, in our discretion. The employment agreement also provides that Mr. Olsen shall be eligible for an annual bonus targeted at $200,000, subject to our achievement of certain performance goals, and that he shall be entitled to receive or participate in our employee benefits plans, policies and arrangements, including fringe benefits, on a basis that is no less favorable than those provided to other senior

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executives. The employment agreement may be terminated by us with or without cause and by Mr. Olsen with or without good reason. Pursuant to the terms of the employment agreement, a change of control constitutes good reason. If the employment agreement is terminated for good reason by Mr. Olsen or without cause by us, Mr. Olsen will be entitled to receive: (i) his base salary for a period of twelve months after such termination, (ii) the amount of his prior year’s bonus, if any, in twelve equal monthly installments and (iii) as permitted by the applicable benefit plan or policy, a continuation of benefits that were in effect as of the termination of the agreement. The employment agreement further provides that if the employment agreement is terminated for good reason by Mr. Olsen or without cause by us, and if Mr. Olsen is not employed as a corporate officer with comparable compensation as of the first anniversary date of Mr. Olsen’s termination, Mr. Olsen shall be entitled to a special monthly compensation equal to one-twelfth of his base salary, beginning the thirteenth month following termination until the earlier of (i) Mr. Olsen finding comparable employment and (ii) the end of the 24th month following termination of employment. The employment agreement provides that, during his term of employment with us, and for a period of twelve months following any termination of employment with us, Mr. Olsen may not participate, directly or indirectly, in any capacity whatsoever, in any business in those states in which we are presently doing business or intend to do business within twelve months that is directly competitive with that conducted by us or our affiliates, except that Mr. Olsen shall not be prohibited from owning 5% or less of the equity securities of any publicly held competitive operation so long as he does not serve as an employee, officer, director or consultant to such business. In addition, Mr. Olsen may not solicit our employees or customers for a period of twelve months following the expiration or termination of his employment with us.

Pursuant to the employment agreement and an incentive stock incentive agreement dated February 16, 2004, we granted stock options to Mr. Olsen on February 16, 2004 to purchase 72,222 shares of Series D-2 Preferred Stock, at an exercise price of $27.69 per share, pursuant to the 2003 Stock Incentive Plan. As of September 30, 2006, 67,708 of these stock options have vested, and the remaining 4,514 stock options will vest on December 31, 2006. The options may be exercised only while Mr. Olsen is an employee and will terminate and cease to be exercisable upon Mr. Olsen’s employment terminating, with exceptions in the event of disability, death or termination not for cause. The options will also terminate if they are not exercised within 10 years from the grant of the options. In addition, pursuant to the employment agreement and an incentive stock incentive agreement dated February 16, 2004, we granted stock options to Mr. Olsen on February 16, 2004 to purchase 54,167 shares of Series D-2 Preferred Stock, at an exercise price equal to $27.69, pursuant to the 2003 Stock Incentive Plan. As of September 30, 2006, 50,782 stock options have vested and the remaining 3,385 stock options will vest on December 31, 2006. To date, Mr. Olsen has not exercised any of his vested stock options. The options may be exercised only while Mr. Olsen is an employee and will terminate and cease to be exercisable upon Mr. Olsen’s employment terminating, with exceptions in the event of disability, death or termination not for cause. The options will also terminate if they are not exercised within 10 years from the grant of the options. See “—Treatment of Outstanding Options under Predecessor’s 2001 and 2003 Stock Incentive Plans” for information about treatment of these options in our corporate reorganization.

On June 14, 2004, we entered into an employment agreement with George Pollock, Jr. whereby Mr. Pollock agreed to serve as our Senior Vice President, Chief Financial Officer and Secretary. The employment agreement has an initial term ending on June 13, 2007 and automatically extends for additional one year terms unless either party provides written notice of termination at least 45 days prior to the expiration of the initial term of the agreement or any extension thereof. The employment agreement provides for a base salary of $210,000 per year. The employment agreement also provides that Mr. Pollock shall be eligible for an annual bonus targeted at 50% of his base salary, subject to our achievement of certain performance goals.

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Mr. Pollock is also entitled to participate in our health benefit plan and 401(k) plan. The employment agreement may be terminated by us with or without cause and by Mr. Pollock for good reason at any time. Pursuant to the terms of the employment agreement, a change of control constitutes good reason. If the agreement is terminated for good reason by Mr. Pollock or without cause by us, Mr. Pollock will be entitled to receive his base salary plus the pro rated bonus amount for that calendar year plus medical insurance premiums for a period of twelve months after such termination.

We granted stock options to Mr. Pollock, pursuant to an incentive stock option agreement dated June 11, 2001, to purchase 100,000 shares of common stock at an exercise price of $4.90

per share, pursuant to the 2001 Stock Incentive Plan. These options vested on January 1, 2005. The options may be exercised only while Mr. Pollock is an employee and will terminate and cease to be exercisable upon Mr. Pollock’s employment terminating, with exceptions in the event of disability, death, or termination not for cause. The options will also terminate if they are not exercised within 10 years from the grant of the options. To date, Mr. Pollock has not exercised any of his vested stock options that he received pursuant to the 2001 Stock Incentive Plan. See “—Treatment of Outstanding Options under Predecessor’s 2001 and 2003 Stock Incentive Plans” for information about treatment of these options in our corporate reorganization. In addition, we granted stock options to Mr. Pollock, pursuant to an incentive stock option agreement dated June 11, 2003, to purchase 35,000 shares of Series D-2 Preferred Stock at an exercise price of $0.01 per share, pursuant to the 2003 Stock Incentive Plan. These options vested on March 14, 2006. The options may be exercised only while Mr. Pollock is an employee and will terminate and cease to be exercisable upon Mr. Pollock’s employment terminating, with exceptions in the event of disability, death or termination not for cause. The options will also terminate if they are not exercised within 10 years from the grant of the options. Mr. Pollock has exercised all of the vested stock options that he received pursuant to the 2003 Stock Incentive Plan.

On July 21, 2004, we entered into an employment agreement with Ernest Sampera whereby Mr. Sampera agreed to serve as our Senior Vice President of Marketing. The employment agreement has an initial term ending on July 19, 2006 and automatically extends for additional one-year terms unless either party provides written notice of termination at least 30 days prior to the expiration of the initial term of the agreement, or any extension thereof. The employment agreement provides for a base salary of $180,000 per year. The employment agreement also provides that Mr. Sampera shall be eligible for an annual bonus targeted at 50% of his current base salary, subject to our achievement of certain performance goals. Mr. Sampera is also entitled to participate in our employee benefit plans. The employment agreement may be terminated by us with or without cause and by Mr. Sampera for good reason at any time. If the employment agreement is terminated for good reason by Mr. Sampera or without cause by us, Mr. Sampera will be entitled to receive his base salary for a period of twelve months after such termination plus the amount of the prior year’s bonus, if any, and, as permitted by the applicable benefit plan or policy, a continuation of benefits that were in effect as of the termination of the employment agreement. If Mr. Sampera is terminated without cause or for good reason upon a change of control, he shall be entitled to receive a lump sum payment equal to the sum of his base salary and his prior year’s bonus, if any, as well a continuation of benefits for twelve months.

Pursuant to the employment agreement and an incentive stock option agreement dated July 21, 2004, we granted stock options to Mr. Sampera on July 21, 2004 to purchase 20,000 shares of Series D-2 Preferred Stock at an exercise price of $27.69 per share, pursuant to the 2003 Stock Incentive Plan. As of October 21, 2006, 11,250 stock options have vested and the remaining stock options will vest in seven quarterly installments of 1,250 with the last installment on July 21, 2008. The options may be exercised only while Mr. Sampera is an

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employee and will terminate and cease to be exercisable upon Mr. Sampera’s employment terminating, with exceptions in the event of disability, death or termination not for cause. The options will also terminate if they are not exercised within 10 years from the grant of the options. To date, Mr. Sampera has not exercised any of his vested stock options that he received pursuant to the 2003 Stock Incentive Plan. See “—Treatment of Outstanding Options under Predecessor’s 2001 and 2003 Stock Incentive Plans” for information about treatment of these options in our corporate reorganization.

The employment agreements for Messrs. Pollock and Sampera provide that during their term of employment with us and for a period of twelve months following any termination of

employment with us, neither Mr. Pollock nor Mr. Sampera may participate anywhere in the United States, directly or indirectly, in any capacity whatsoever, in any business that is competitive with that conducted by us, except that Messrs. Pollock and Sampera shall not be prohibited from owning 1% or less of the equity securities of any publicly held competitive

operation so long as they do not serve as an employee, officer, director or consultant to such business. In addition, Messrs. Pollock and Sampera may not solicit our employees or customers for a period of twelve months following the expiration or termination of their employment with us.

We entered into an employment agreement with William Roach effective as of July 1, 2006. The employment agreement has a stated term ending on December 31, 2007 and shall automatically be extended for a period of one year unless either party gives written notice to the other party on or before December 1 of the preceding year. The employment agreement provides that during the term, Mr. Roach shall be entitled to a base salary of $16,667 per month plus variable compensation based upon management objectives and invoiced revenues. The employment agreement also provides that Mr. Roach shall not be entitled to a bonus unless he is specifically included by the Board in a particular bonus program. Mr. Roach is also entitled to participate in our employee benefit plans as may be in effect from time to time for other similarly situated employees, including vacations and sick leave. The employment agreement may be terminated by us with or without cause and by Mr. Roach for good reason at any time during the term of the agreement. If the employment agreement is terminated for good reason by Mr. Roach or without cause by us, Mr. Roach shall be entitled to receive his base salary for a period of six months after such termination.

Pursuant to an incentive stock option agreement dated November 17, 2003, we granted stock options to Mr. Roach to purchase 35,000 shares of Series D-2 Preferred Stock, at an exercise price of $0.01 per share, pursuant to the 2003 Stock Incentive Plan. As of August 17, 2006, 24,062 options have vested, and the remaining 10,938 options will vest in quarterly installments of 2,187 with the last installment on November 17, 2007. The options may be exercised only while Mr. Roach is an employee and will terminate and cease to be exercisable upon Mr. Roach’s employment terminating, with exceptions in the event of disability, death or termination not for cause. The options will also terminate if they are not exercised within 10 years from the grant of the options. To date, Mr. Roach has exercised 17,500 vested stock options that he received pursuant to the 2003 Stock Incentive Plan. See “—Treatment of Outstanding Options under Predecessor’s 2001 and 2003 Stock Incentive Plans” for information about treatment of these options in our corporate reorganization.

On August 8, 2005, we extended, and Ali Marashi accepted, an offer of employment whereby Mr. Marashi agreed to serve as our Vice President, Engineering/CIO. Pursuant to the terms of the offer, Mr. Marashi is entitled to a base salary of $200,000 per year, payable bi-weekly, and is eligible for an annual bonus targeted at 50% of his annual base salary. Mr. Marashi is also entitled to participate in our health benefit plan and 401(k) plan. The employment offer letter is silent as to the term of the arrangement and the circumstances under which employment may be terminated.

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In addition, in the offer letter to Mr. Marashi dated August 8, 2005, we agreed to grant, at an unspecified future date, 10,500 options to Mr. Marashi at an exercise price equal to the fair market value on the date of the grant. When granted, the options are to be exercisable ratably over a four-year period. The details of the options are to be contained in an option agreement to be entered into in connection with such grant. To date, no option agreement has been prepared or executed. We intend to grant the options and enter into a formal option agreement evidencing the grant on a future date.

2006 Stock Incentive Plan

Before completing this initial public offering, we plan to adopt a 2006 Stock Incentive Plan. Eligible participants in the 2006 Incentive Plan will include our employees, consultants and nonemployee directors. The 2006 Incentive Plan will provide for the granting of both incentive and nonqualified stock options, as well as restricted stock, stock appreciation rights and other stock-based awards. The 2006 Incentive Plan will have a total of              shares reserved for grant. Each outstanding award issued under the 2006 Incentive Plan will be subject to a time-based or performance-based vesting schedule determined at the time of grant. Generally, the exercise price of options granted under the 2006 Incentive Plan will be required to be at least equal to the fair market value of shares of our common stock on the date of grant. With respect to any participant who owns stock representing more than 10% of the voting power of all classes of our stock, the exercise price of any incentive stock option granted will be required to equal at least 110% of the fair market value on the grant date and the maximum term of the option will be required to not exceed five years. The term of all other options under the 2006 Incentive Plan will be required to not exceed ten years.

Treatment of Outstanding Options under Predecessor’s 2001 and 2003 Stock Incentive Plans

Upon the consummation of our corporate reorganization, the outstanding options to purchase our predecessor’s common stock, which were granted under our predecessor’s 2001 Stock Incentive Plan, will be cancelled and will no longer be outstanding. Outstanding options granted under our predecessor’s 2003 Stock Incentive Plan to purchase our predecessor’s Series D-2 preferred stock will be replaced by new options under our 2006 Stock Incentive Plan to purchase our common stock on the same terms and conditions as were applicable under the predecessor stock option. The strike price and number of options will be modified only to maintain the fair value of the options before and after the modification. We may incur stock-based compensation expense related to these modified options, which will be accounted for under FAS 123(R).

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PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth the beneficial ownership of our common stock before and after the completion of this offering, after giving effect to our corporate reorganization, for:

• each person known by us to beneficially own more than 5% of our common stock;

• each of our directors;

• each of our named executive officers;

• all directors and executive officers as a group; and

• each selling stockholder.

Beneficial ownership is determined in accordance with rules of the SEC and includes shares over which the indicated beneficial owner exercises voting and/or investment power. Shares of common stock subject to options currently exercisable or exercisable within 60 days are deemed outstanding for computing the percentage ownership of the person holding the options but are not deemed outstanding for computing the percentage ownership of any other person. Except as otherwise indicated, we believe the beneficial owners of the common stock listed below, based on information furnished by them, have sole voting and investment power with respect to the number of shares listed opposite their names.

Unless otherwise indicated, the address of each stockholder is Switch & Data Facilities Company, Inc., 1715 North Westshore Boulevard, Suite 650, Tampa, Florida 33607.

	Shares Beneficially Owned Before the Offering(1)		Shares Being Offered(3)	Shares Beneficially Owned After the Offering(1)
Name	Number	Percent(2)		Number	Percent
Keith Olsen
William Luby(4)
George Pollock, Jr.
William Roach
Charles Browning
George Kelly(5)
Kathleen Earley
Arthur Matin
M. Alex White
Ali Marashi
Ernest Sampera
All directors and executive officers as a group (11 persons)
The CapStreet Group(5)
Seaport Capital(4)
Tudor Ventures(6)

 * less than 1%.

(1) If a stockholder holds options or other securities that are exercisable or otherwise convertible into our common stock within 60 days of the date of this prospectus, we treat the shares of common stock underlying those securities as owned by that stockholder, and as outstanding shares when we calculate the stockholder’s percentage ownership of our common stock. However, we do not consider that common stock to be outstanding when we calculate the percentage ownership of any other stockholder. The shares shown in the table will be issued in our corporate reorganization in exchange for shares of capital stock of our predecessor, Switch & Data Facilities Company, Inc. Although the total number of              shares to be issued in the reorganization is fixed, the relative numbers to be issued with respect to each class of stock will be determined in part by references to the initial public

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offering price. Consequently, if that price is other than $            , the number of shares owned by each stockholder in the above table will change, but the change will not be material. See “Certain Relationships and Related Party Transactions—Corporate Reorganization.”

(2) The percentage of beneficial ownership prior to the completion of this offering is based on              shares of common stock outstanding as of                     , 2006, after giving effect to our corporate reorganization.

(3) Assumes no exercise of the underwriters’ over-allotment option to purchase              shares of common stock. If the underwriters exercise their over-allotment option,              and              will sell              and              additional shares, respectively, and will beneficially own     % and     % of our common stock, respectively, after this offering.

(4) The “Shares Beneficially Owned Before the Offering” by “Seaport Capital” include             shares (            %) owned of record by Seaport Capital Partners II, L.P. (“Seaport Partners”),             shares (            %) owned of record by Seaport Investments, LLC (“Seaport Investments”),             shares (            %) owned of record by CEA Capital Partners USA, LP (“CEA”) and             shares (            %) owned of record by CEA Capital Partners USA CI, LP (“CEA CI”). The “Shares Being Offered” include             shares for Seaport Partners,             shares for Seaport Investments,             shares for CEA and             shares for CEA CI. The “Shares Beneficially Owned After the Offering” include             shares (            %) owned of record by Seaport Partners,             shares (            %) owned of record by Seaport Investments,             shares (            %) owned of record by CEA and             shares (            %) owned of record by CEA CI. The general partner of Seaport Partners is CEA Investment Partners II, LLC. CEA Investment Partners II, LLC is controlled by Seaport Associates, LLC, which is controlled by William Luby. Seaport Investments is controlled by Mr. Luby. CEA and CEA CI are each controlled by Seaport Capital LLC per the terms of contractual agreements with affiliates of CEA and CEA CI. Seaport Capital LLC is controlled by Mr. Luby. Mr. Luby disclaims beneficial ownership of these shares, except to the extent of his pecuniary interest therein. Each entity has an address of c/o Seaport Capital, 199 Water Street, 20^th Floor, New York, NY 10038.

(5) The “Shares Beneficially Owned Before the Offering” by “The CapStreet Group” include             shares (            %) owned of record by CapStreet II, L.P. (“CapStreet II”),             shares (            %) owned of record by CapStreet Parallel II, L.P. (“CapStreet Parallel”) and             shares (            %) owned of record by CapStreet Co-Investment II-A, L.P. (“CapStreet Co-Investment” and collectively with CapStreet Parallel, the “CapStreet Entities”). The “Shares Being Offered” include             shares for CapStreet II,             shares for CapStreet Parallel and             shares for CapStreet Co-Investment. The “Shares Beneficially Owned After the Offering” include             shares (            %) owned of record by CapStreet II,             shares (            %) owned of record by CapStreet Parallel and             shares (            %) owned of record by CapStreet Co-Investment. The CapStreet Group, LLC, is (i) the general partner of CapStreet GP, II, L.P. which is the general partner of CapStreet II, and (ii) the general partner of each of the CapStreet Entities. Mr. Kelly, as a Managing Director of The CapStreet Group, LLC, may be deemed to be the beneficial owner of these shares. Mr. Kelly disclaims beneficial ownership of such shares, except to the extent of his pecuniary interest therein. Each entity has an address of 600 Travis Street, Suite 6110, Houston, Texas 77002.

(6) The “Shares Beneficially Owned Before the Offering” by “Tudor Ventures” include              shares (    %) owned of record by Tudor Ventures II L.P. (“Ventures”),              shares (    %) owned of record by The Raptor Global Portfolio Ltd. (“Raptor”) and              shares (    %) owned of record by The Altar Rock Fund L.P. (“Altar”). The “Shares Being Offered” include             shares for Ventures,              shares for Raptor and              shares for Altar. The “Shares Beneficially Owned After the Offering” include              shares (    %) owned of record by Ventures,              shares (    %) owned of record by Raptor and              shares (    %) owned of record by Altar. Tudor Investment Corporation (“TIC”) is the investment adviser to Ventures and Raptor and is also the general partner of Altar. Paul Tudor Jones, II (“Jones”) is the controlling stockholder of TIC. Each of TIC and Jones disclaims beneficial ownership of the shares owned by Ventures, Raptor and Altar, except to the extent of their pecuniary interest therein. Each entity has an address of c/o Tudor Investment Corporation, 50 Rowes Warf, 6th Floor, Boston, MA 02110.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Corporate Reorganization

Switch & Data Facilities Company, Inc. currently has nine classes of capital stock outstanding—Common Stock; Series B Common Stock; Series A Special Junior Stock; Series B Special Junior Stock; Series C Special Junior Stock; Series B Convertible Preferred Stock; Series C Redeemable Preferred Stock; Series D-1 Preferred Stock; and Series D-2 Preferred Stock. These classes generally differ with respect to their relative priority to distributions and other rights. Each class of capital stock has voting rights, other than Series C Redeemable Preferred Stock. The Series A Special Junior Stock, Series B Special Junior Stock and Series C Special Junior Stock were issued to certain employees pursuant to compensation arrangements established by the board of directors of Switch & Data Facilities Company, Inc. Before we complete this offering, we will complete a series of transactions to reorganize our corporate structure and to terminate or amend agreements with or among our existing stockholders. These transactions are as follows:

• Switch & Data Facilities Company, Inc., a Delaware corporation that is currently the parent holding company that indirectly owns all of the entities through which we operate our business, will be merged into a newly formed, wholly owned Delaware corporation named Switch and Data, Inc. This corporation will be the surviving corporation of the merger, which will be effective immediately prior to the closing of this offering. In connection with the merger, Switch and Data, Inc. will change its name to Switch & Data Facilities Company, Inc. Stockholders of our predecessor, Switch & Data Facilities Company, Inc., will receive an aggregate of              shares of common stock of Switch and Data, Inc. in exchange for their shares of capital stock of Switch & Data Facilities Company, Inc. The number of shares into which shares of each class of stock of our predecessor, Switch & Data Facilities Company, Inc., will be converted in the merger will depend, in part, on the value of Switch & Data Facilities Company, Inc. at the time of the merger, which will be determined by reference to the initial public offering price of our shares of common stock, although the public offering price will not affect the aggregate number of shares into which the shares will be converted. Consequently, the relative ownership of our common stock as reflected in the table under “Principal and Selling Stockholders” is subject to change based on the final initial public offering price of our shares of common stock. Any change will not be material. Shares of our common stock will be allocated as follows:

• Series D-1 Preferred Stock.

• Series D-2 Preferred Stock.

• Series C Redeemable Preferred Stock.

• Series B Convertible Preferred Stock.

• Common Stock.

• Series B Common Stock.

• Series A Special Junior Stock.

• Series B Special Junior Stock.

• Series C Special Junior Stock.

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The allocations above approximate the manner in which our assets would be distributed to stockholders in liquidation as provided in the Certificate of Incorporation of our predecessor, Switch & Data Facilities Company, Inc.

• Included in the shares of capital stock of Switch & Data Facilities Company, Inc. being converted as described in the preceding paragraphs are shares of capital stock that were awarded to certain employees, including certain executive officers, pursuant to option arrangements established by the board of directors, a portion of which are subject to time vesting.

• The investors agreement under which existing stockholders of our predecessor, Switch & Data Facilities Company, Inc. have first offer rights, tag along rights, preemptive rights, and the right to elect directors, and which contains certain restrictions on our operations, will be amended such that only certain registration rights will remain in effect, as described further below in this prospectus under “Shares Eligible for Future Sale—Amended and Restated Investors Agreement.”

George Kelly, William Luby, George Pollock, Jr., William Roach and Charles Browning, each of whom is either an officer or director, are either direct or beneficial owners of the capital stock of our predecessor and will be entitled, in their capacities as either direct or beneficial owners, to vote, along with other stockholders of our predecessor, for or against the corporate reorganization. Such officers and directors will receive either directly or beneficially, in the aggregate,                      shares of our common stock in exchange for their shares of capital stock of our predecessor. Any outstanding options held by any of our officers and directors to purchase our predecessor’s common stock which were granted under our predecessor’s 2001 Stock Incentive Plan, will be cancelled and will no longer be outstanding. Outstanding options held by any of our officers and directors granted under our predecessor’s 2003 Stock Incentive Plan to purchase our predecessor’s Series D-2 preferred stock will be replaced by new options under our 2006 Stock Incentive Plan to purchase our common stock on the same terms and conditions as were applicable under the predecessor stock option.

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DESCRIPTION OF CAPITAL STOCK

The following summarizes important provisions of our capital stock and describes the material provisions of our amended and restated certificate of incorporation and by-laws, each of which will be in effect upon the closing of this offering. This summary is qualified by our amended and restated certificate of incorporation and by-laws, copies of which have been filed as exhibits to the registration statement of which this prospectus is a part, and by the provisions of applicable law.

On the closing of this offering, our authorized capital stock will consist of 200 million shares of common stock, $0.0001 par value per share, and 25 million shares of preferred stock, $0.0001 par value per share. The following is a summary description of our capital stock. Our amended and restated certificate of incorporation and by-laws, to be effective upon the closing of this offering, provide further information about our capital stock.

Common Stock

As of             , there were             shares of common stock outstanding, held of record by approximately             stockholders. There will be             shares of common stock outstanding after giving effect to the sale of the shares of common stock to the public in this offering.

The holders of common stock are entitled to one vote per share on all matters to be voted on by the stockholders. Subject to preferences that may be applicable to any outstanding preferred stock, the holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the board of directors out of funds legally available for the payment of dividends. In the event of the liquidation, dissolution or winding up of Switch & Data, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock, if any, then outstanding. The common stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and nonassessable, and the shares of common stock to be issued on completion of this offering will be fully paid and nonassessable.

Preferred Stock

On the closing of this offering, 25 million shares of preferred stock will be authorized and no shares will be outstanding. Our board of directors has the authority, without stockholder approval, to issue the preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series or the designation of such series, without further vote or action by the stockholders. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of Switch & Data without further action by the stockholders and may adversely affect the voting and other rights of the holders of common stock. The issuance of preferred stock with voting and conversion rights may adversely affect the voting power of the holders of common stock, including the loss of voting control to others. At present, we have no plans to issue any of the preferred stock.

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Anti-takeover Effects of Provisions of the Amended and Restated Certificate of

Incorporation, Amended and Restated By-laws and Delaware Law

Provisions of our amended and restated certificate of incorporation and by-laws are intended to enhance continuity and stability in our board of directors and in our policies, but may have the effect of delaying or preventing a change in control and making it more difficult to remove incumbent management, even if such transactions could be beneficial to the interests of stockholders. A summary description of these provisions follows:

Classified Board

Pursuant to our amended and restated certificate of incorporation, we will have a staggered board of directors. Our amended and restated certificate of incorporation provides that our board of directors is divided into three classes. The term of the first class of directors expires at our 2007 annual meeting of stockholders, the term of the second class of directors expires at our 2008 annual meeting of stockholders and the term of the third class of directors expires at our 2009 annual meeting of stockholders. At each of our annual meetings of stockholders, the successors of the class of directors whose term expires at the meeting of stockholders will be elected for a three-year term, one class being elected each year by our stockholders.

Authority to Issue Preferred Stock

Our amended and restated certificate of incorporation authorizes the board of directors, without stockholder approval, to establish and to issue shares of one or more series of preferred stock, each series having the voting rights, dividend rates, liquidation, redemption, conversion and other rights as may be fixed by the board of directors which may prevent a takeover.

Other Provisions of Our Certificate of Incorporation and By-Laws

Our amended and restated certificate of incorporation also provides that directors may only be removed for cause and upon the affirmative vote of 80% of the voting interest of stockholders entitled to vote. Pursuant to our amended and restated by-laws, and except as otherwise required by law, stockholders do not have a right to call special meetings. The amended and restated by-laws also contain advance notice requirements by stockholders for director nominations and actions to be taken at annual meetings. These provisions of the amended and restated certificate of incorporation and by-laws could discourage potential acquisition proposals and could delay or prevent a change in control of Switch & Data.

These provisions are intended to enhance the likelihood of continuity and stability in the composition of the board of directors and in the policies formulated by the board of directors and to discourage certain types of transactions that may involve an actual or threatened change of control of Switch & Data. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions also are intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our shares that could result from actual or rumored takeover attempts. Such provisions also may have the effect of preventing changes in our management.

Delaware Law

Section 203 of the Delaware General Corporation Law (the “DGCL”), an anti-takeover law applicable to us, restricts certain business combinations with interested stockholders in certain situations. In general, the statute prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.

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Limitation of Liability and Indemnity

Section 102(b)(7) of the DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breach of directors’ fiduciary duty of care. Although Section 102(b) does not change directors’ duty of care, it enables corporations to limit available relief to equitable remedies such as injunction or rescission. Our amended and restated certificate of incorporation limits the liability of directors to us or our stockholders (in their capacity as directors but not in their capacity as officers) to the fullest extent permitted by Section 102(b). Specifically, our directors will not be personally liable for monetary damages for breach of a director’s fiduciary duty as a director, except for liability:

• for any breach of the director’s duty of loyalty to us or our stockholders,

• for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law,

• for unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL, or

• for any transaction from which the director derived an improper personal benefit.

To the maximum extent permitted by law, our amended and restated by-laws provide for mandatory indemnification of directors and officers and permit indemnification of our employees and agents against all expense, liability and loss to which they may become subject or which they may incur as a result of being or having been our director, officer, employee or agent. In addition, we must advance or reimburse directors and officers, and may advance or reimburse employees and agents for expenses incurred by them as a result of indemnifiable claims.

Transfer Agent and Registrar

The transfer agent and registrar for the common stock is American Stock Transfer & Trust Company.

Nasdaq Global Market

We have applied for the listing of our common stock on The Nasdaq Global Market under the symbol “SDXC”.

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SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of our common stock in the public market could adversely affect prevailing market prices of our common stock. Furthermore, since some shares of common stock will not be available for sale shortly after this offering because of the contractual and legal restrictions on resale described below, sales of substantial amounts of common stock in the public market after these restrictions lapse could adversely affect the prevailing market price and our ability to raise equity capital in the future.

Prior to this offering, there has been no public market for our common stock. Upon completion of this offering, we will have outstanding an aggregate of              shares of our common stock assuming no exercise of outstanding options, and no exercise of the underwriters’ over-allotment option. Of these shares, the              shares sold in this offering will be freely tradable without restrictions or further registration under the Securities Act, unless those shares are purchased by “affiliates” as that term is defined in Rule 144 under the Securities Act (“Rule 144”). The remaining              shares of common stock held by existing stockholders are “restricted securities” as that term is defined in Rule 144 under the Securities Act. Of these remaining securities:

•              shares which are not subject to the 180-day lock-up period described below may be sold immediately after completion of this registration statement pursuant to Rule 144 in the event our stockholders are entitled to tack their respective holding periods of sales of stock of our predecessor; however, we do not currently expect that our stockholders will be able to tack their respective holding periods and, as a result, these stockholders are not expected to be able to rely on Rule 144 for sales for a period of at least one year following the completion of our corporate reorganization;

•              additional shares which are not subject to the 180-day lock-up period described below may be sold pursuant to Rule 144 beginning 90 days after the effective date of this offering in the event our stockholders are entitled to tack their respective holding periods of shares of stock of our predecessor; however, we do not currently expect that our stockholders will be able to tack their respective holding periods and, as a result, these stockholders are not expected to be able to rely on Rule 144 for sales for a period of at least one year following the completion of our corporate reorganization;

•              additional shares may be sold pursuant to Rule 144 upon expiration of the 180-day lock-up period (subject to extension in certain circumstances) described below in the event our stockholders are entitled to tack their respective holding periods of our predecessor; however, we do not currently expect that our stockholders will be able to tack their respective holding periods and, as a result these stockholders are not expected to be able to rely on Rule 144 for sales for a period of at least one year following the completion of our corporate reorganization; and

•              additional shares may be sold pursuant to Rule 701 beginning 90 days after the effective date of this registration statement (or, if applicable, upon expiration of the 180-day lock-up period (subject to extension in certain circumstances) described below) in the event shares received in our corporate reorganization in exchange for shares received from our predecessor by employees, consultants or advisors in connection with a qualified compensatory plan or other written agreement are eligible for resale in reliance on Rule 701; however, these stockholders may not be able to rely on Rule 701 for sales of these shares and, as a result, these shares would be eligible for future sale as described in one of the prior three bullets, as applicable.

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Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 or 701 under the Securities Act, which rules are summarized below.

Rule 144

In general, under Rule 144, beginning 90 days after the date of this prospectus, a person who has beneficially owned shares of our common stock for at least one year would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:

• 1% of the number of shares of common stock then outstanding, which will equal approximately shares immediately after this offering; or

• the average weekly trading volume of our common stock on The Nasdaq Global Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us. We do not currently expect that our stockholders will be able to tack their respective holding periods of shares of stock of our predecessor and, as a result, these stockholders are not expected to be able to rely on Rule 144 for sales for a period of at least one year following the completion of our corporate reorganization.

Rule 144(k)

Shares of our common stock not held by our affiliates during the 90 days preceding the date of this prospectus may be sold immediately upon the completion of this offering pursuant to Rule 144(k) in the event our stockholders are entitled to tack their respective holding periods shares of stock of our predecessor, Switch & Data Facilities Company, Inc. However, we do not currently expect that our stockholders will be able to tack their respective holding periods, and as a result, will not be able to be made pursuant to Rule 144(k) until two years following the completion of our corporate reorganization. In general, under Rule 144(k), a person may sell shares of common stock acquired from us without regard to manner of sale, the availability of public information or volume, if:

• the person is not an affiliate of us and has not been an affiliate of us at any time during the three months preceding such a sale; and

• the person has beneficially owned the shares proposed to be sold for at least two years, including the holding period of any prior owner that is permitted to be tacked pursuant to Rule 144.

Rule 701

In general, under Rule 701 of the Securities Act, any of our employees, consultants or advisors who received shares from us in connection with a qualified compensatory stock plan or other written agreement would be eligible to resell those shares 90 days after the effective date of this offering in reliance on Rule 144, but without compliance with many of the restrictions, including the holding period, contained in Rule 144. Our “affiliates,” as that term is defined in Rule 144, would be able to resell these shares under Rule 701 without compliance with the holding period contained in Rule 144, but would have to comply with certain other restrictions, including the volume limitations, included in Rule 144. Shares received in our corporate reorganization in exchange for shares received from our predecessor by employees, consultants

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or advisors in connection with a qualified compensatory stock plan or other written agreement may not be eligible for resale in reliance on Rule 701. As a result, these stockholders may not be able to rely on Rule 701 and, in order to sell such shares in the public market would need to either register such sale or qualify for an exemption under Rule 144 or Rule 144(k) as described above. We do not currently intend to request a “no action” letter or other interpretation from the Securities and Exchange Commission regarding the eligibility of Rule 701 following our corporate reorganization.

Lock-Up Agreements

Our officers, directors and other existing stockholders and option holders beneficially owning an aggregate of              shares of our common stock have signed lock-up agreements under which they will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our common stock or securities convertible into, exchangeable or exercisable for any shares of our common stock, enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, whether any of these transactions is one to be settled by delivery of our common stock or such other securities, in cash or otherwise, or publicly disclose the intention to make any such offer, sale, pledge or disposition, or to enter into any such transaction, swap, hedge or other arrangement, without, in each case, the prior written consent of Deutsche Bank Securities Inc. and Jefferies & Company, Inc. for a period of 180 days after the date of this prospectus. However, in the event that either (1) during the last 17 days of the “lock-up” period, we release earnings results or material news or a material event relating to us occurs or (2) prior to the expiration of the “lock-up” period, we announce that we will release earnings results during the 16-day period beginning on the last day of the “lock-up” period, then in either case the expiration of the “lock-up” will be extended until the expiration of the 18-day period beginning on the date of the release of the earnings results or the occurrence of the material news or event, as applicable, unless Deutsche Bank Securities Inc. and Jefferies & Company, Inc. waive, in writing, such an extension. Any securities acquired by our officers, directors and stockholders in the open market are not subject to these “lock-up” restrictions. In addition, transfers or dispositions by our officers, directors and stockholders can be made prior to the expiration of the “lock-up” period:

• to family members; and

• to any trust;

in each case, so long as the transferee of such shares agrees to be bound by the lock-up agreement and no filing by any party (donor, donors transferor or transferee) under the Exchange Act shall be required or shall be voluntarily made in connection with such transfer (other than a filing on Form 5 made after the expiration of the “lock-up” period).

Amended and Restated Investors Agreement

We intend to enter into a fifth amended and restated investors agreement, which will become effective upon completion of this offering, with certain of our existing stockholders. The stockholders that are party to the fifth amended and restated investors agreement will have the right to require us, subject to certain terms and conditions, to register their shares of our common stock under the Securities Act, at any time following expiration of the lock-up period described above under “—Lock-up Agreements” These stockholders will have demand registration rights relating to              shares of our common stock, representing     % of our outstanding shares of common stock following completion of this offering. In addition, if we propose to register any of our capital stock under the Securities Act, our stockholders will be entitled to customary

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“piggyback” registration rights which will entitle stockholders who hold approximately              shares of our common stock, representing     % of our outstanding shares of common stock following completion of this offering, to include their shares of common stock in a registration of our securities for sale by us or by other security holders. The registration rights provided for under the fifth amended and restated investors agreement are subject to customary exceptions and qualifications and compliance with certain registration procedures.

Stock Options

As of the date of this prospectus, options to purchase a total of              shares of common stock are outstanding under the 2006 Stock Incentive Plan, of which options to purchase              shares are currently exercisable. Of the options to purchase              shares of common stock that are not currently exercisable, options to purchase              shares of common stock shall immediately vest and become exercisable upon the closing of this offering. Upon the closing of this offering, we intend to file a registration statement to register for resale the              shares of common stock reserved for issuance under the 2006 Stock Incentive Plan. That registration statement will automatically become effective upon filing. Upon the expiration of the lock-up agreements described above, at least              shares of common stock will be subject to vested options. Accordingly, shares issued upon the exercise of stock options granted under the 2006 Stock Incentive Plan, which are being registered under that registration statement, will, giving effect to vesting provisions and, with respect to our “affiliates” as that term is defined in Rule 144, in accordance with the applicable restrictions, including volume limitations contained in Rule 144, be eligible for resale in the public market from time to time immediately after the lock-up agreements referred to above expire.

Effect of Sales of Shares

Prior to this offering, there has been no public market for our common stock, and no prediction can be made as to the effect, if any, that market sales of shares of common stock or the availability of shares for sale will have on the market price of our common stock prevailing from time to time. Nevertheless, sales of significant numbers of shares of our common stock in the public market after the completion of this offering could adversely affect the market price of our common stock and could impair our future ability to raise capital through an offering of our equity securities.

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MATERIAL U.S. FEDERAL TAX CONSIDERATIONS

The following is a general discussion of material U.S. federal income and estate tax considerations relating to the purchase, ownership and disposition of our common stock that may be relevant to holders who hold shares of our common stock as capital assets. This discussion is based on currently existing provisions of the Internal Revenue Code of 1986, as amended (the “Code”), existing and proposed Treasury regulations promulgated thereunder, and administrative and judicial interpretations thereof, all as in effect or proposed on the date hereof and all of which are subject to change, possibly with retroactive effect, or different interpretations. This discussion is for general information only and does not address all of the tax considerations that may be relevant to specific holders in light of their particular circumstances or to holders subject to special treatment under U.S. federal tax laws (such as certain financial institutions, insurance companies, tax-exempt entities, retirement plans, dealers in securities, brokers, expatriates, or persons who have acquired our common stock as part of a straddle, hedge, conversion transaction or other integrated investment). This discussion does not address the U.S. state and local or non-U.S. tax considerations relating to the purchase, ownership and disposition of our common stock.

As used in this discussion, the term “U.S. holder” means a beneficial owner of our common stock that is a U.S. person. A U.S. person means a person that is for U.S. federal income tax purposes:

• an individual who is a citizen or resident of the United States;

• a corporation, entity taxable as a corporation, or partnership created or organized in or under the laws of the United States or of any state or political subdivision thereof or therein, including the District of Columbia (other than a partnership that is not treated as a U.S. person under applicable Treasury regulations);

• an estate the income of which is subject to U.S. federal income tax regardless of the source thereof; or

• a trust with respect to which a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions, or certain electing trusts that were in existence on August 19, 1996 and were treated as domestic trusts on that date.

The term “non-U.S. holder” means a beneficial owner of our common stock that is not a U.S. person.

An individual may, subject to certain exceptions, be deemed to be a resident of the United States for a calendar year by reason of being present in the United States for at least 31 days in such calendar year and for an aggregate of at least 183 days during a three-year period ending with such current calendar year (counting for such purposes all of the days present in such current calendar year, one-third of the days present in the immediately preceding calendar year, and one-sixth of the days present in the second preceding calendar year).

If a partnership holds our common stock, the tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our common stock, we suggest that you consult your tax advisor.

Prospective purchasers are urged to consult their own tax advisors as to the particular tax considerations applicable to them relating to the purchase, ownership and disposition of our common stock, including the applicability of U.S. federal, state or local tax laws or non-U.S. tax laws, any changes in applicable tax laws and any pending or proposed legislation or regulations.

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U.S. Holders

Dividends

Any dividend on our common stock paid by us out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) will be included in income by a U.S. holder of common stock when received. Any such dividend will be eligible for the dividends-received deduction, if received by a qualifying corporate U.S. holder that meets the holding period and other requirements for the dividends-received deduction.

Legislation enacted in 2003 reduces to 15% the maximum U.S. federal income tax rate for certain dividends received by individuals, so long as certain holding period requirements are met. Unless continuing legislation is enacted, dividends received by individuals after December 31, 2010 will not benefit from this reduction in U.S. federal income tax rates and will thereafter be taxed as ordinary income subject to the U.S. holder’s applicable federal income tax rate.

Sale, Exchange or Other Disposition

Upon a sale, exchange or other disposition of our common stock, a U.S. holder will recognize capital gain or loss in an amount equal to the difference between the amount realized and such U.S. holder’s adjusted tax basis in the common stock. Legislation enacted in 2003 also generally reduces to 15% the maximum U.S. federal income tax rate on capital gains recognized by individuals on the sale, exchange or other disposition of our common stock held for more than one year. The deductibility of capital losses is subject to limitations. Unless continuing legislation is enacted, sales, exchanges or other dispositions of our common stock by individuals after December 31, 2010 will not benefit from this reduction in U.S. Federal income tax rates.

Information Reporting and Backup Withholding Tax

In general, payments made to a U.S. holder on or with respect to our common stock will be subject to information reporting. Certain U.S. holders may be subject to backup withholding tax (at a rate equal to 28% from 2003 through 2010 and 31% after 2010) on payments made on or with respect to our common stock if such U.S. holder fails to supply a correct taxpayer identification number or otherwise fails to comply with applicable U.S. information reporting or certification requirements. Certain persons are exempt from backup withholding including, in certain circumstances, corporations and financial institutions. Any amounts withheld under the backup withholding rules from a payment to a U.S. holder will be allowed as a refund or a credit against such U.S. holder’s U.S. federal income tax liability, provided that the required procedures are followed.

Non-U.S. Holders

Dividends

We or a withholding agent will have to withhold U.S. federal withholding tax from the gross amount of any dividends paid to a non-U.S. holder at a rate of 30%, unless (a) an applicable income tax treaty reduces or eliminates such tax, and a non-U.S. holder claiming the benefit of such treaty provides to us or such agent proper Internal Revenue Service (“IRS”) documentation, or (b) the dividends are effectively connected with a non-U.S. holder’s conduct of a trade or business in the United States and the non-U.S. holder provides to us or such agent proper IRS documentation. In the latter case, such non-U.S. holder generally will be subject to U.S. federal income tax with respect to such dividends in the same manner as a U.S. citizen or

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corporation, as applicable, unless otherwise provided in an applicable income tax treaty. Additionally, a non-U.S. holder that is a corporation could be subject to a branch profits tax on effectively connected dividend income at a rate of 30% (or at a reduced rate under an applicable income tax treaty). In addition, where dividends are paid to a non-U.S. holder that is a partnership or other pass-through entity, persons holding an interest in the entity may need to provide certification claiming an exemption or reduction in withholding under an applicable income tax treaty. If a non-U.S. holder is eligible for a reduced rate of U.S. federal withholding tax pursuant to an income tax treaty, such non-U.S. holder may obtain a refund of any excess amount withheld by filing an appropriate claim for refund with the IRS.

Sale, Exchange or Other Disposition

Generally, a non-U.S. holder will not be subject to U.S. federal income tax on gain realized upon the sale, exchange or other disposition of our common stock unless (a) such non-U.S. holder is an individual present in the United States for 183 days or more in the taxable year of the sale, exchange or other disposition and certain other conditions are met, (b) the gain is effectively connected with such non-U.S. holder’s conduct of a trade or business in the United States or (c) we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period preceding such sale, exchange or disposition or the period that such non-U.S. holder held our common stock (which we do not believe that we have been, are currently or are likely to be) and certain other conditions are met. If the first exception applies, the non-U.S. holder generally will be subject to U.S. federal income tax at a rate of 30% (or at a reduced rate under an applicable income tax treaty) on the amount by which capital gains allocable to U.S. sources (including gains from the sale, exchange or other disposition of our common stock) exceed capital losses allocable to U.S. sources. If the second or third exception applies, the non-U.S. holder generally will be subject to U.S. federal income tax with respect to such gain in the same manner as a U.S. citizen or corporation, as applicable, unless otherwise provided in an applicable income tax treaty, and a non-U.S. holder that is a corporation could also be subject to a branch profits tax on such gain at a rate of 30% (or at a reduced rate under an applicable income tax treaty).

Federal Estate Tax

Common stock owned or treated as owned by an individual who is a non-U.S. holder at the time of his or her death generally will be included in the individual’s gross estate for U.S. federal estate tax purposes and may be subject to U.S. federal estate tax unless an applicable estate tax treaty provides otherwise.

Current U.S. federal tax law provides for reductions in U.S. federal estate tax through 2009 and the elimination of such estate tax entirely in 2010. Under this law, such estate tax would be fully reinstated, as in effect prior to the reductions, in 2011, unless further legislation is enacted.

Information Reporting and Backup Withholding Tax

Information reporting may apply to payments made to a non-U.S. holder on or with respect to our common stock. Backup withholding tax (at a rate equal to 28% from 2003 through 2010 and 31% after 2010) may also apply to payments made to a non-U.S. holder on or with respect to our common stock, unless the non-U.S. holder certifies as to its status as a non-U.S. holder under penalties of perjury or otherwise establishes an exemption, and certain other conditions are satisfied. Any amounts withheld under the backup withholding rules from a payment to a non-U.S. holder will be allowed as a refund or a credit against such non-U.S. holder’s U.S. federal income tax liability, provided that the required procedures are followed.

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UNDERWRITING

Under the terms and subject to the conditions contained in an underwriting agreement dated             , 2007, we and the selling stockholders have agreed to sell to the underwriters named below, for whom Deutsche Bank Securities Inc. and Jefferies & Company, Inc. are acting as representatives, the following respective numbers of shares of common stock:

Underwriter	Number of Shares
Deutsche Bank Securities Inc.
Jefferies & Company, Inc.
Total

The underwriting agreement provides that the underwriters are obligated to purchase all the shares of common stock in the offering if any are purchased, other than those shares covered by the over-allotment option described below.

The selling stockholders have granted to the underwriters a 30-day option to purchase on a pro rata basis up to              additional shares at the initial public offering price less the underwriting discounts and commissions. The option may be exercised only to cover any over-allotments of common stock.

The underwriters propose to offer the shares of common stock initially at the public offering price on the cover page of this prospectus and to selling group members at that price less a selling concession of $             per share. The underwriters and selling group members may allow a discount of $             per share on sales to other broker/dealers. After the initial public offering, the representatives may change the public offering price and concession and discount to broker/dealers.

The following table summarizes the compensation and estimated expenses we and the selling stockholders, will pay:

	Per Share		Total
	Without  Over-allotment	With  Over-allotment	Without  Over-allotment	With  Over-allotment
Underwriting Discounts and Commissions paid by us	$	$	$	$
Expenses payable by us	$	$	$	$
Underwriting Discounts and Commissions paid by selling stockholder	$	$	$	$

The representatives have informed us that they do not expect sales to accounts over which the underwriters have discretionary authority to exceed 5% of the shares of common stock being offered.

We and our officers, our directors, the selling stockholders and certain other existing stockholders and option holders, together owning an aggregate of              shares of our common stock, have agreed that we and they will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the Securities and Exchange Commission a registration statement under the Securities Act relating to, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership

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of our common stock, whether any of these transactions are to be settled by delivery of our common stock or other securities, in cash or otherwise, or publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the prior written consent of Deutsche Bank Securities Inc. and Jefferies & Company, Inc. for a period of 180 days after the date of this prospectus. However, in the event that either (1) during the last 17 days of the “lock-up” period, we release earnings results or material news or a material event relating to us occurs or (2) prior to the expiration of the “lock-up” period, we announce that we will release earnings results during the 16-day period beginning on the last day of the “lock-up” period, then in either case the expiration of the “lock-up” will be extended until the expiration of the 18-day period beginning on the date of the release of the earnings results or the occurrence of the material news or event, as applicable, unless Deutsche Bank Securities Inc. and Jefferies & Company, Inc waive, in writing, such an extension. Deutsche Bank Securities Inc. and Jefferies & Company, Inc. have advised us that they have no present intent to waive the 180 day lock-up period and that they will only release shares of our common stock subject to a lock-up agreement in circumstances to be determined on a case by case basis. Deutsche Bank Securities Inc. and Jefferies & Company, Inc. will consider such factors as the likelihood of a material market effect from the sale of released shares, the market price for the shares relative to the original offering price, the hardship of any person requesting a waiver and the desirability of fostering an orderly market for the shares when considering requests to release shares from lock-up agreements.

Any securities acquired by our officers, directors and stockholders in the open market are not subject to these “lock-up” restrictions. In addition, transfers or dispositions by our officers, directors and stockholders can be made prior to the expiration of the “lock-up” period to family members and to any trust, in each case so long as the transferee of such shares agrees to be bound by the lock-up restriction and no filing by any party (donor, donee, transferor or transferee) under the Exchange Act shall be required or shall be voluntarily made in connection with such transfer (other than a filing on Form 5 made after the expiration of the “lock-up” period).

The underwriters have reserved for sale at the initial public offering price up to              shares of our common stock for employees, directors and other persons associated with us who have expressed an interest in purchasing common stock in the offering. The number of shares available for sale to the general public in the offering will be reduced to the extent these persons purchase the reserved shares. Any reserved shares not so purchased will be offered by the underwriters to the general public on the same terms as the other shares.

We and the selling stockholders have agreed to indemnify the underwriters and the qualified independent underwriter, in its capacity as qualified independent underwriter, against liabilities under the Securities Act, or contribute to payments that the underwriters or the qualified independent underwriter, in its capacity as qualified independent underwriter, may be required to make in that respect.

We have applied to list our common stock on The Nasdaq Global Market.

Prior to this offering, there has been no public market for our common stock. The initial public offering price was determined by negotiations among us, the selling stockholders, the underwriters and the qualified independent underwriter, in its capacity as qualified independent underwriter. Among the factors considered in determining the initial public offering price were the future prospects of our company and our industry in general, sales, earnings and certain other financial and operating information of our company in recent periods, and the price-earnings ratios, comparable sales, market prices of our securities and certain financial and operating information of companies engaged in activities similar to those of our company.

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In connection with the offering the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids in accordance with Regulation M under the Exchange Act).

• Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.

• Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment option and/or purchasing shares in the open market.

• Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. If the underwriters sell more shares than could be covered by the over-allotment option, a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.

• Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

• In passive market making, market makers in the common stock who are underwriters or prospective underwriters may, subject to limitations, make bids for or purchases of our common stock until the time, if any, at which a stabilizing bid is made.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result the price of our common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on The Nasdaq Global Market or otherwise and, if commenced, may be discontinued at any time.

A prospectus in electronic format may be made available on the websites maintained by one or more of the underwriters, or selling group members, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute prospectuses electronically. The representatives may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make Internet distributions on the same basis as other allocations.

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), each Underwriter represents and agrees that with effect from and including the date on which the Prospectus Directive is

107

implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of Securities to the public in that Relevant Member State prior to the publication of a prospectus in relation to the Securities which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of Securities to the public in that Relevant Member State at any time,

(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year, (2) a total balance sheet of more than €43 million and (3) an annual net turnover of more than €50 million, as shown in its last annual or consolidated accounts;

(c) to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the manager for any such offer; or

(d) in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of Shares to the public” in relation to any Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Shares to be offered so as to enable an investor to decide to purchase or subscribe for the Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

Each of the underwriters severally represents, warrants and agrees as follows:

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (the “FSMA”) to persons who have professional experience in matters relating to investments falling within Article 19(5) of the FSMA (Financial Promotion) Order 2005 or in circumstances in which section 21 of the FSMA does not apply to the company; and

(b) it has complied with, and will comply with, all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.

Certain of the underwriters and their affiliates have provided in the past to us and our affiliates and may provide from time to time in the future certain commercial banking, financial advisory, investment banking and other services for us and our affiliates in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. For example, an affiliate of Deutsche Bank Securities Inc. is an agent and lender under our existing credit facilities and certain other underwriters or their affiliates are or may become lenders under our existing credit facilities and, as such, will receive a portion of the proceeds of this initial public offering. As a result of these payments, underwriters or their affiliates may receive more than 10% of the net proceeds in this offering, not including

108

underwriting compensation, and may be deemed to have a “conflict of interest” under Rule 2710(h) of the Conduct Rules of the National Association of Securities Dealers, Inc. Accordingly, this offering will be made in compliance with the applicable provisions of Rule 2720 of the Conduct Rules. Rule 2720 requires that the initial public offering price can be no higher than that recommended by a “qualified independent underwriter,” as defined by the National Association of Securities Dealers, Inc. Jefferies & Company, Inc. has served in that capacity and performed due diligence investigations and reviewed and participated in the preparation of the registration statement of which this prospectus forms a part.

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NOTICE TO CANADIAN RESIDENTS

Resale Restrictions

The distribution of the common stock in Canada is being made only on a private placement basis exempt from the requirement that we and the selling stockholders prepare and file a prospectus with the securities regulatory authorities in each province where trades of common stock are made. Any resale of the common stock in Canada must be made under applicable securities laws which will vary depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the common stock.

Representations of Purchasers

By purchasing common stock in Canada and accepting a purchase confirmation a purchaser is representing to us, the selling stockholders and the dealer from whom the purchase confirmation is received that:

• the purchaser is entitled under applicable provincial securities laws to purchase the common stock without the benefit of a prospectus qualified under those securities laws,

• where required by law, that the purchaser is purchasing as principal and not as agent,

• the purchaser has reviewed the text above under Resale Restrictions, and

• the purchaser acknowledges and consents to the provision of specified information concerning its purchase of the common stock to the regulatory authority that by law is entitled to collect the information.

Further details concerning the legal authority for this information is available on request.

Rights of Action—Ontario Purchasers Only

Under Ontario securities legislation, certain purchasers who purchase a security offered by this prospectus during the period of distribution will have a statutory right of action for damages, or while still the owner of the common stock, for rescission against us and the selling stockholders in the event that this prospectus contains a misrepresentation without regard to whether the purchaser relied on the misrepresentation. The right of action for damages is exercisable not later than the earlier of 180 days from the date the purchaser first had knowledge of the facts giving rise to the cause of action and three years from the date on which payment is made for the common stock. The right of action for rescission is exercisable not later than 180 days from the date on which payment is made for the common stock. If a purchaser elects to exercise the right of action for rescission, the purchaser will have no right of action for damages against us or the selling stockholders. In no case will the amount recoverable in any action exceed the price at which the shares of common stock were offered to the purchaser and if the purchaser is shown to have purchased the securities with knowledge of the misrepresentation, we and the selling stockholders will have no liability. In the case of an action for damages, we and the selling stockholders will not be liable for all or any portion of the damages that are proven to not represent the depreciation in value of the common stock as a result of the misrepresentation relied upon. These rights are in addition to, and without derogation from, any other rights or remedies available at law to an Ontario purchaser. The foregoing is a summary of the rights available to an Ontario purchaser. Ontario purchasers should refer to the complete text of the relevant statutory provisions.

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Enforcement of Legal Rights

All of our directors and officers as well as the experts named herein and the selling stockholders may be located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process within Canada upon us or those persons. All or a substantial portion of our assets and the assets of those persons may be located outside of Canada and, as a result, it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or those persons outside of Canada.

Taxation and Eligibility for Investment

Canadian purchasers of common stock should consult their own legal and tax advisors with respect to the tax consequences of an investment in the common stock in their particular circumstances and about the eligibility of the common stock for investment by the purchaser under relevant Canadian legislation.

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LEGAL MATTERS

Certain legal matters with respect to the validity of the shares of common stock offered hereby will be passed upon for us by Holland & Knight LLP, Tampa, Florida. The underwriters are being represented in connection with this offering by Cravath, Swaine & Moore LLP, New York, New York.

EXPERTS

The financial statements of Switch & Data Facilities Company, Inc. as of December 31, 2004 and 2005 and September 30, 2006, and for each of the three years in the period ended December 31, 2005 and the nine months ended September 30, 2006, included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered certified public accounting firm, given on the authority of such firm as experts in auditing and accounting.

The balance sheet of Switch and Data, Inc., as of July 31, 2006 included in this prospectus has been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered certified public accounting firm, given on the authority of such firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-1 with the SEC for the common stock we are offering by this prospectus. This prospectus does not include all of the information contained in the registration statement. You should refer to the registration statement and its exhibits for additional information. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents, the references are not necessarily complete and you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement or other document. When we complete this offering, we will also be required to file annual, quarterly and special reports, proxy statements and other information with the SEC. We anticipate making these documents publicly available free of charge on our website at www.switchanddata.com as soon as practicable after filing such documents with the SEC. Information contained on our website is not incorporated by reference into this prospectus and should not be considered to be a part of this prospectus. Our website address is included here only as an inactive technical reference.

You can also read our SEC filings, including the registration statement, over the Internet at the SEC’s website at www.sec.gov. You may also read and copy any document we file with the SEC at its Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Room of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room.

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INDEX TO FINANCIAL STATEMENTS

Switch & Data Facilities Company, Inc.

Report of Independent Registered Certified Public Accounting Firm	F-2
Financial Statements
Consolidated Balance Sheets as of December 31, 2004 and 2005 and September 30, 2006	F-3
Consolidated Statements of Operations for the years ended December 31, 2003, 2004 and 2005 and for the nine months ended September 30, 2005 (unaudited) and 2006	F-4
Consolidated Statements of Stockholders’ Deficit and Comprehensive Income for the years ended December 31, 2003, 2004 and 2005 and for the nine months ended September 30, 2006	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2004 and 2005 and for the nine months ended September 30, 2005 (unaudited) and 2006	F-7
Notes to Consolidated Financial Statements	F-8
Schedule II: Valuation and Qualifying Accounts for the years ended December 31, 2003, 2004 and 2005	F-39
Switch and Data, Inc.
Report of Independent Registered Certified Public Accounting Firm	F-40
Financial Statements
Balance Sheet	F-41
Notes to Financial Statement	F-42

F-1

REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Switch & Data Facilities Company, Inc.

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Switch & Data Facilities Company, Inc. and its subsidiaries at December 31, 2004 and 2005 and September 30, 2006 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005 and the nine months period ended September 30, 2006 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/    PricewaterhouseCoopers LLP

        Tampa, Florida

December 19, 2006

F-2

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of December 31, 2004, December 31, 2005

and September 30, 2006

In Thousands, Except Per Share Amounts

	December 31,						September 30, 2006			Pro forma Switch and Data, Inc. September 30, 2006
	2004			2005
										(unaudited) (NOTE 1)
Assets
Current assets
Cash and cash equivalents	$	13,707		$	10,417		$	4,027		$	4,027
Accounts receivable, net of allowance for bad debts of approximately $419, $736 and $513, respectively		5,625			6,927			8,007			8,007
Prepaids and other assets		1,291			1,070			1,464			1,464
Total current assets		20,623			18,414			13,498			13,498
Property and equipment, net		66,717			64,763			66,543			66,543
Derivative asset		—			101			524			524
Goodwill		26,273			36,023			36,023			36,023
Other intangible assets, net		33,911			38,231			32,121			32,121
Other long-term assets, net		4,726			5,690			6,864			6,864
Total assets	$	152,250		$	163,222		$	155,573		$	155,573
Liabilities, Preferred Stock and Stockholders’ Deficit
Current liabilities
Accounts payable and accrued expenses	$	11,083		$	15,345		$	15,457		$	15,457
Current portion of unearned revenue		1,188			1,064			1,563			1,563
Current portion of deferred rent		162			230			317			317
Current portion of customer security deposits		929			916			886			886
Current portion of long-term debt		11,588			781			2,375			2,375
Total current liabilities		24,950			18,336			20,598			20,598
Derivative liability		39			8			—			—
Unearned revenue, less current portion		528			560			746			746
Deferred rent, less current portion		6,611			8,596			9,906			9,906
Customer security deposits, less current portion		401			282			194			194
Long-term debt, less current portion		57,712			144,156			142,375			142,375
Total liabilities		90,241			171,938			173,819			173,819
Series D redeemable preferred stock, $0.0001 par value, 33 shares authorized, issued and outstanding at December 31, 2004, 12% cumulative preference, $39,998 liquidation preference at December 31, 2004		39,052			—			—			—
Series C redeemable preferred stock, $0.0001 par value, 32,609 shares authorized, issued and outstanding, 12.5% cumulative preference, $51,898, $38,492 and $39,921 liquidation preference at December 31, 2004 and 2005 and September 30, 2006, respectively		14,376			14,376			14,376			14,376
Series B convertible preferred stock, $0.0001 par value, 22,100 shares authorized, issued and outstanding, 8% cumulative preference, $153,757, $166,268 and $176,322 liquidation preference at December 31, 2004 and 2005 and September 30, 2006, respectively		153,447			166,268			176,322			176,322
Commitments and contingencies
Stockholders’ deficit
Common stock, $0.0001 par value, authorized 50,000 shares; issued and outstanding 42,569 shares as of December 31, 2004 and 2005 and 42,295 shares as of September 30, 2006		4			4			4			—
Common stock, $0.0001 par value, authorized 200,000 shares; no shares issued and outstanding as of September 30, 2006		—			—			—			*
Series B common stock, $0.0001 par value, authorized 65,217 shares; issued and outstanding 65,217 shares as of December 31, 2004 and 2005 and September 30, 2006		7			7			7			—
Special junior stock, $0.0001 par value, authorized 6,902 shares; issued and outstanding 1,191 shares as of December 31, 2004 and 2005 and September 30, 2006		—			—			—			—
Series D-1 preferred stock, $0.0001 par value, authorized 325 shares; issued and outstanding 325 shares as of December 31, 2004 and 2005 and September 30, 2006		—			—			—			—
Series D-2 preferred stock, $0.0001 par value, authorized 3,250 shares; issued and outstanding 119 shares, 156 shares and 198 shares as of December 31, 2004 and 2005 and September 30, 2006		2			2			5			—
Preferred stock, $0.0001 par value, authorized 25,000 shares; no shares issued and outstanding as of September 30, 2006		—			—			—			—
Unearned stock compensation		(506	)		(403	)		(201	)		(201	)
Additional paid in capital		—			—			—			*
Accumulated deficit		(144,992	)		(189,721	)		(209,834	)		(209,834	)
Accumulated other comprehensive income		619			751			1,075			1,075
Total stockholders’ deficit		(144,866	)		(189,360	)		(208,944	)		(208,944	)
Total liabilities, preferred stock and stockholders’ deficit	$	152,250		$	163,222		$	155,573		$	155,573

* To be determined immediately prior to the registration statement being deemed effective and will be based on the reorganization merger.

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

F-3

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

In Thousands, Except Per Share Amounts

	For the years ended December 31,									For the nine months ended September 30,
	2003			2004			2005			2005			2006
										(unaudited)
Revenues	$	69,840		$	91,449		$	105,414		$	78,668		$	82,549
Costs and operating expenses:
Cost of revenues, exclusive of depreciation and amortization		32,333			43,652			54,800			39,954			45,207
Sales and marketing		6,883			10,765			9,846			7,305			9,223
General and administrative		7,090			9,768			9,568			6,235			7,907
Depreciation and amortization		18,509			27,705			30,206			24,184			17,379
Lease litigation settlement		—			6,629			—			—			—
Asset impairment		—			1,015			2,140			2,140			2,193
Total costs and operating expenses		64,815			99,534			106,560			79,818			81,909
Operating income (loss)		5,025			(8,085	)		(1,146	)		(1,150	)		640
Interest income		121			140			106			89			71
Interest expense		(3,573	)		(5,374	)		(9,356	)		(6,066	)		(10,764	)
Loss from debt extinguishment		(342	)		(409	)		(769	)		—			—
Other income (expense), net		78			(192	)		166			(7	)		(6	)
Income (loss) from continuing operations before minority interest and income taxes		1,309			(13,920	)		(10,999	)		(7,134	)		(10,059	)
Minority interest in net income of consolidated partnership		(2,052	)		(380	)		—			—			—
Provision for income taxes		(80	)		(63	)		(69	)		(140	)		—
Loss from continuing operations		(823	)		(14,363	)		(11,068	)		(7,274	)		(10,059	)
Income (loss) from discontinued operations		(2,331	)		891			(206	)		(168	)		—
Net loss		(3,154	)		(13,472	)		(11,274	)		(7,442	)		(10,059	)
Preferred stock accretions and dividends		(15,120	)		(16,938	)		(33,691	)		(9,606	)		(10,054	)
Net loss, attributable to common stockholders	$	(18,274	)	$	(30,410	)	$	(44,965	)	$	(17,048	)	$	(20,113	)
Income (loss) per share—basic and diluted:
Continuing operations, attributable to common stockholders	$	(0.15	)	$	(0.29	)	$	(0.42	)	$	(0.16	)	$	(0.19	)
Discontinued operations	$	(0.02	)	$	0.01		$	(0.00	)	$	(0.00	)	$	—
Net loss, attributable to common stockholders	$	(0.17	)	$	(0.28	)	$	(0.42	)	$	(0.16	)	$	(0.19	)
Weighted average shares outstanding		107,787			107,787			107,787			107,787			107,554
Pro forma (unaudited) loss per share—basic and diluted (NOTE 1):
Continuing operations, attributable to common stockholders									*						*
Discontinued operations									*						*
Net loss, attributable to common stockholders									*						*

* To be determined immediately prior to the registration statement being deemed effective and will be based on the reorganization merger.

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

F-4

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT AND COMPREHENSIVE INCOME

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2006

In Thousands, Except Per Share Amounts

	Common Stock			Series B Common Stock			Special Junior Stock			Series D-1 and D-2 Preferred Stock			Additional Paid-In Capital			Unearned Comp- ensation			Accumulated Other Compre- hensive Income		Accumul- ated Deficit			Total Stockholders’ Deficit
	Shares	Amount		Units	Amount		Units	Amount		Units	Amount
Balance as of January 1, 2003	42,569	$	4	65,217	$	7	1,191	$	—	—	$	—	$	26,062		$	—		$	67	$	(123,317	)		$(97,177	)
Accretion of Series B convertible preferred stock	—		—	—		—	—		—	—		—		(11,654	)		—			—		—			(11,654	)
Accretion of Series D redeemable preferred stock	—		—	—		—	—		—	—		—		(3,466	)		—			—		—			(3,466	)
Issuance of Series D-1 and D-2 preferred shares	—		—	—		—	—		—	334	$	—		—			—			—		—			—
Issuance of stock options, net of forfeitures	—		—	—		—	—		—	—		—		976			(976	)		—		—			—
Amortization of unearned compensation	—		—	—		—	—		—	—		—		—			209			—		—			209
Comprehensive loss
Net loss	—		—	—		—	—		—	—		—		—			—			—		(3,154	)		(3,154	)
Currency translation adjustments	—		—	—		—	—		—	—		—		—			—			—		—			—
Comprehensive loss																									(3,154	)
Balance as of December 31, 2003	42,569	$	4	65,217	$	7	1,191	$	—	334	$	—	$	11,918		$	(767	)	$	67	$	(126,471	)	$	(115,242	)
Accretion of Series B convertible preferred stock	—		—	—		—	—		—	—		—		(7,199	)		—			—		(5,020	)		(12,219	)
Accretion of Series D redeemable preferred stock	—		—	—		—	—		—	—		—		(4,719	)		—			—		—			(4,719	)
Issuance of Series D-2 preferred shares	—		—	—		—	—		—	110		2		—			—			—		—			2
Stock option forfeitures	—		—	—		—	—		—	—		—		—			29			—		(29	)		—
Amortization of unearned compensation	—		—	—		—	—		—	—		—		—			232			—		—			232
Comprehensive loss
Net loss	—		—	—		—	—		—	—		—		—			—			—		(13,472	)		(13,472	)
Currency translation adjustments	—		—	—		—	—		—	—		—		—			—			552		—			552
Comprehensive loss																									(12,920	)
Balance as of December 31, 2004	42,569	$	4	65,217	$	7	1,191	$	—	444	$	2		—		$	(506	)	$	619	$	(144,992	)	$	(144,866	)

F-5

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT AND COMPREHENSIVE INCOME—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2006

In Thousands, Except Per Share Amounts

	Common Stock				Series B Common Stock			Special Junior Stock			Series D-1 and D-2 Preferred Stock			Additional Paid-In Capital		Unearned Comp- ensation			Accumulated Other Compre- hensive Income		Accumul- ated Deficit			Total Stockholders’ Deficit
	Shares		Amount		Units	Amount		Units	Amount		Units	Amount
Balance as of December 31, 2004	42,569		$	4	65,217	$	7	1,191	$	—	444	$	2	$	—	$	(506	)	$	619	$	(144,992	)		(144,866	)
Accretion of Series B convertible preferred stock	—			—	—		—	—		—	—		—		—		—			—		(12,821	)		(12,821	)
Accretion of Series D redeemable preferred stock	—			—	—		—	—		—	—		—		—		—			—		(4,870	)		(4,870	)
Issuance of Series D-2 preferred shares	—			—	—		—	—		—	37		—		—		—			—		—			—
Issuance of stock options, net of forfeitures	—			—	—		—	—		—	—		—		—		(236	)		—		236			—
Amortization of unearned compensation	—			—	—		—	—		—	—		—		—		339			—		—			339
Accretion of series C preference payment	—			—	—		—	—		—	—		—				—			—		(16,000	)		(16,000	)
Comprehensive loss
Net loss	—			—	—		—	—		—	—		—		—		—			—		(11,274	)		(11,274	)
Currency translation adjustments	—			—	—		—	—		—	—		—		—		—			132		—			132
Comprehensive loss																									(11,142	)
Balance as of December 31, 2005	42,569		$	4	65,217	$	7	1,191	$	—	481	$	2	$	—	$	(403	)	$	751	$	(189,721	)	$	(189,360	)
Accretion of Series B convertible preferred stock	—			—	—		—	—		—	—		—		—		—			—		(10,054	)		(10,054	)
Issuance of Series D-2 preferred shares	—			—	—		—	—		—	42		3		—		—			—		—			3
Stock compensation	—			—	—		—	—		—	—		—		—		202			—		—			202
Purchase and retirement of stock	(274	)		—	—		—	—		—	—		—		—		—			—		—			—
Comprehensive loss
Net loss	—			—	—		—	—		—	—		—		—		—			—		(10,059	)		(10,059	)
Currency translation adjustments	—			—	—		—	—		—	—		—		—		—			324		—			324
Comprehensive loss																									(9,735	)
Balance as of September 30, 2006	42,295		$	4	65,217	$	7	1,191	$	—	523	$	5	$	—	$	(201	)	$	1,075	$	(209,834	)	$	(208,944	)

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

F-6

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

	For the years ended December 31,									For the nine months ended September 30,
	2003			2004			2005			2005			2006
										(unaudited)
Cash flows from operating activities
Net loss	$	(3,154	)	$	(13,472	)	$	(11,274	)	$	(7,442	)	$	(10,059	)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation		17,457			21,032			21,521			17,630			11,379
Amortization of debt issuance costs		863			989			1,100			881			630
Amortization of other intangible assets		1,386			6,673			8,686			6,553			6,000
Minority interest in net income of consolidated partnership		2,052			380			—			—			—
Stock compensation expense		209			232			339			265			202
Realized gain on foreign currency		—			—			(68	)		(24	)		—
Loss on debt extinguishment		342			409			769			—			—
Provision for bad debts		537			555			1,483			363			889
Deferred rent		675			1,579			1,943			1,495			1,376
Change in fair value of derivative asset and derivative liability		(127	)		(248	)		(131	)		(78	)		(431	)
Asset impairment		—			1,015			2,140			2,140			2,193
Loss on disposal of fixed assets		1,231			21			99			6			181
Changes in operating assets and liabilities, net of acquired amounts
(Increase) decrease in accounts receivable		(933	)		(1,433	)		(1,468	)		642			(1,943	)
(Increase) decrease in prepaids and other assets		72			(212	)		222			(93	)		(393	)
(Increase) decrease in other long-term assets		453			(254	)		301			(387	)		12
Increase (decrease) in accounts payable, accrued expenses and other liabilities		569			2,075			484			(581	)		613
Increase (decrease) in unearned revenue		(907	)		(1,696	)		(813	)		(679	)		672
Net cash provided by operating activities		20,725			17,645			25,333			20,691			11,321
Cash flows from investing activities
Purchase of property and equipment		(5,539	)		(11,791	)		(16,996	)		(12,568	)		(17,006	)
Proceeds from sale of property and equipment		576			—			—			—			236
Acquisitions, net of cash acquired		(40,742	)		(26,839	)		(24,520	)		(24,520	)		—
Decrease in restricted cash		1,105			100			—			—			—
Net cash used in investing activities		(44,600	)		(38,530	)		(41,516	)		(37,088	)		(16,770	)
Cash flows from financing activities
Principal payments under short-term debt		—			(3,776	)		—			—			—
Principal payments under long-term debt		(4,500	)		(38,034	)		(91,363	)		(13,663	)		(188	)
Proceeds from long-term debt		5,000			70,000			167,000			22,000			—
Proceeds from issuance and sale of Series D redeemable and Series D-1 preferred stock, net of issuance costs		43,904			(190	)		—			—			3
Repurchase of Series D redeemable preferred stock		(12,740	)		—			(43,922	)		—			—
Payment of Series C redeemable preferred stock liquidation preference		—			—			(16,000	)		—			—
Distributions to minority interest holders in consolidated partnership		(2,381	)		(585	)		—			—			—
Principal payments under capital lease		(132	)		—			—			—			—
Public offering costs		—			—			—			—			(636	)
Debt issuance costs		(452	)		(3,486	)		(2,840	)		(50	)		(137	)
Net cash provided by (used in) financing activities		28,699			23,929			12,875			8,287			(958	)
Net increase (decrease) in cash and cash equivalents		4,824			3,044			(3,308	)		(8,110	)		(6,407	)
Effect of exchange rate changes on cash		1			(1	)		18			21			17
Cash and cash equivalents
Beginning of the period		5,839			10,664			13,707			13,707			10,417
End of the period	$	10,664		$	13,707		$	10,417		$	5,618		$	4,027
Supplemental disclosure of cash flow information
Cash paid for interest	$	2,862		$	4,393		$	7,098		$	4,975		$	11,019
Cash paid for taxes	$	—		$	—		$	88		$	—		$	14
Supplemental schedule of non-cash investing and financing activities
Purchase of property and equipment included in accounts payable	$	965		$	658		$	3,537		$	817		$	1,993
Issuance of note payable for acquisition	$	—		$	3,776		$	—			—			—
Issuance of note payable for accreted dividends on preferred stock	$	106		$	—		$	—			—			—
Liabilities assumed in connection with acquisitions	$	206		$	1,895		$	1,456		$	1,456			—
Public offering costs included in accounts payable	$	—		$	—		$	—		$	—		$	1,042

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

F-7

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

1.    Organization

Description of Business

Switch & Data Facilities Company, Inc. and Subsidiaries (hereafter “the Company”) was incorporated in Delaware in March 2000. The initial parent company, Switch & Data Facilities Company, LLC (“LLC”), was formed in March of 1998 as a Delaware Limited Liability Company. In March 2000, the members of the LLC exchanged their interests for shares in the Company. The Company is a leading provider of network neutral interconnection and colocation services primarily to Internet dependent businesses including telecommunications carriers, Internet service providers, online content providers and enterprises. As of September 30, 2006, the Company provides services through 34 facilities in 23 markets.

Reorganization Merger (Unaudited)

Immediately prior to the effectiveness of the Registration Statement, a reorganization merger will occur whereby Switch & Data Facilities Company, Inc. will merge with and into its wholly owned subsidiary Switch and Data, Inc. Upon such merger, the holders of Series D-1 Preferred Stock, Series D-2 Preferred Stock, Series C Redeemable Preferred Stock and Series B Convertible Preferred Stock of Switch & Data Facilities Company, Inc. will receive common shares in Switch and Data Inc. equal to their respective liquidation preferences contemplated by the Fourth Amended and Restated Investors Agreement dated March 13, 2003, as amended. Holders of Series D-2 Preferred Stock Options of Switch & Data Facilities Company, Inc. are expected to receive common stock options of Switch and Data, Inc. of equal fair value at the date of the merger. The existing Common Stock, Series B Common Stock, Special Junior Stock and common stock options of Switch & Data Facilities Company, Inc. are expected to be cancelled by operation of the merger agreement and holders of those instruments are not expected to receive any consideration for their ownership interests.

The merger will be reflected in the accompanying financial statements as a fair value exchange at the date of the merger with the difference between the fair value of the equity instruments and their respective book values being recorded as a deemed dividend. The unaudited pro forma information in the accompanying balance sheets and statements of operations assumes the consummation of the merger agreement as described.

Unaudited Pro Forma Net Loss per Share

Pro forma basic and diluted net loss per share is computed by dividing net loss by the weighted average number of common shares giving retroactive effect to any changes in the Company’s capital structure in connection with the reorganization merger discussed above which includes: i) the conversion of the outstanding preferred stock into common stock of the surviving corporation in the merger; ii) the elimination of accretion and dividends on existing preferred shares; and iii) the cancellation of the shares of existing common stock.

F-8

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

2.    Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Switch & Data Facilities Company, Inc., its wholly owned subsidiaries and a controlled partnership. The partnership was consolidated by the Company because it exercised unilateral control over the activities of the partnership pursuant to the terms of the partnership agreement. The Company purchased all minority ownership interests in the partnership in February 2004. All significant intercompany balances and transactions were eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. Cash equivalents consist primarily of money market instruments.

Property and Equipment

Property and equipment are stated at original cost. The Company commences depreciation when the assets are placed in service. Equipment and furniture are depreciated on a straight-line basis over their estimated useful life of five to seven years. Leasehold improvements are amortized on a straight-line basis over the lesser of the term of the related lease (including renewal periods which are reasonably assured) or the estimated life of the asset. Expenditures for improvements that significantly add to productive capacity or extend the useful life of an asset are capitalized. At the time property is retired, or otherwise disposed of, the asset and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in earnings. Repairs and maintenance are expensed when incurred. Prepaid maintenance contracts for property and equipment are amortized over the appropriate service period.

Capitalization of Interest

The Company capitalizes interest on projects that qualify for interest capitalization under Statement of Financial Accounting Standards No. 34, Capitalization of Interest Costs, as amended (“FAS 34”). Capitalized interest is included within construction in progress and is depreciated over the useful life of the assets once the project is complete.

Goodwill, Intangible Assets and Other Long-Term Assets

Goodwill represents the purchase price, including acquisition related costs, in excess of the fair values of identifiable tangible and intangible acquired assets and liabilities in business combinations accounted for as purchases. The Company accounts for its goodwill and other intangible assets under Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (“FAS 142”). Under FAS 142 goodwill is not amortized, but it is tested for impairment at least annually. Each year, during the third quarter, the Company tests for impairment of goodwill according to a two-step approach. In the first step, the Company tests for impairment of goodwill by estimating the fair values of each facility using the present value of future cash flows approach. If the carrying amount exceeds the fair value, the second step of

F-9

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

the goodwill impairment test is performed to measure the amount of the impairment loss, if any. In the second step, the implied fair value of the goodwill is estimated as the fair value of the facility in the first step less the fair values of all other net tangible and intangible assets of the facility. If the carrying amount of the goodwill exceeds its implied fair market value, an impairment loss is recognized in an amount equal to that excess, not to exceed the carrying amount of goodwill. Goodwill of a facility is also tested for impairment, between annual tests, if an event occurs or circumstances change that would more likely than not reduce the fair value of a facility below its carrying value. The Company completed its review of goodwill reported for each facility during each of 2003, 2004, 2005 and 2006, and no impairment was recorded.

Other intangible assets consist of contract-based and customer-based assets recorded through acquisitions or other purchases and are unique to the acquired facility. These assets are amortized using the straight-line method over the shorter of their estimated periods of benefit or the lease term of the acquired facility, ranging from two to twelve years. No residual value is estimated for these assets. Assets are reevaluated whenever circumstances indicate that revised estimates of useful lives or impairment may be warranted.

Other long-term assets consist of security deposits, costs related to the issuance of debt, and public offering costs. Costs related to the issuance of debt are capitalized and amortized to interest expense using the effective interest method over the life of the related debt. Public offering costs will be offset against the gross proceeds of the offering.

Impairment of Long-Lived Assets

The Company reviews all long-lived assets, which consist primarily of property and equipment and intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future net undiscounted cash flows to be generated by the asset. Impairment is measured by the amount by which the carrying amount of the assets exceeds their fair value.

Derivative Financial Instruments

Derivative instruments are recorded in the balance sheet as either assets or liabilities, measured at fair value. Changes in fair value are recognized in earnings. The Company utilizes interest rate derivatives to convert a portion of its floating rate debt to fixed rate debt and did not qualify to apply hedge accounting. The interest rate differentials to be paid or received under such derivatives and the changes in the fair value of the instruments are recognized over the life of the agreements are recorded as adjustments to interest expense. The principle objectives of the derivative instruments are to minimize the risks and reduce the expenses associated with financing activities. The Company does not use financial instruments for trading purposes.

Customer Security Deposits

The Company collects security deposits from certain customers based on a credit review of the customer. Security deposits are classified as short term when the underlying customer contract is scheduled to renew within the next twelve months or the customer contract has a month to month term.

F-10

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

Foreign Currency Translation

The financial statements of the Company’s foreign subsidiaries are measured using the local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average rates of exchange in effect during the year. The resulting cumulative translation adjustments have been recorded as a separate component of stockholders’ deficit in other comprehensive income.

Stock-Based Compensation

On January 1, 2006, the Company adopted the provisions for stock-based compensation required by Statement of Financial Accounting Standards No. 123 (Revised), Share-Based Payment (“FAS 123R”). The Company is required to utilize the prospective method, under which prior periods are not revised for comparative purposes. Under the fair value recognition provisions of FAS 123R, stock-based compensation cost is measured at the grant date for all stock-based awards made to employees and directors based on the fair value of the award using an option-pricing model and is recognized as expense over the requisite service period, which is generally the vesting period.

Prior to the adoption of FAS 123R, the Company accounted for stock-based awards to employees and directors using the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”), as allowed under Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“FAS 123”). The total intrinsic value of stock options exercised during the nine months ended September 30, 2006 was approximately $1,717. As of September 30, 2006, there was approximately $201 of unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Company’s stock based compensation plans; that cost is to be recognized over a weighted average period of less than one year.

Stock-based awards to non-employees are accounted for under the provisions of Emerging Issues Task Force Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.

The Company currently uses the Black-Scholes option-pricing model to determine the fair value of stock options. The determination of the fair value of stock-based payment awards is based on number of complex assumptions. These assumptions include the fair value of the underlying stock, the expected term of options, the risk-free interest rate and expected dividends. If factors change and the Company employs different assumptions for estimating stock-based compensation expense in future periods or if it decides to use a different valuation model in the future, the expense in future periods may differ significantly from what the Company has recorded in the current period, which could materially affect its operating results, net income or loss and net income or loss per share.

F-11

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

Through December 31, 2005, the fair value of each option grant was based on the minimum value method with the following assumptions used for options granted during the years ended December 31, 2003, 2004 and 2005:

	For the years ended December 31,
	2003		2004		2005
Risk-free interest rate	2.62	%	4.00	%	No grants
Expected life of the options	4 years		7.25 years		No grants
Expected stock price volatility	—		—		No grants
Expected dividend yield	None		None		No grants

The weighted-average estimated fair value of stock options granted was $3.09 per share for the year ended December 31, 2003 and $6.20 per share for the year ended December 31, 2004. No options were granted in 2005 or in the first nine months of 2006.

Redeemable and Convertible Preferred Stock

The Company has issued various classes of preferred stock. The carrying value of the Series B Convertible Preferred Stock and the Series D Redeemable Preferred Stock (the Series D Stock was redeemed on October 13, 2005) are increased by periodic accretions so that the carrying amounts will equal the redemption amount at the redemption date, which is determined pursuant to various agreements underlying the Company’s share issuances. Since the Series C Preferred shares do not become redeemable until a liquidation event occurs, the Company does not periodically accrete the cumulative dividends on these shares. The Company made a $16,000 preference payment to the holders of the Series C Preferred Stock on October 13, 2005 and concurrently recorded the accretion to such date. The accreted amounts are recorded to additional paid-in capital or accumulated deficit.

Earnings Per Share

The Company computes net income (loss) per share in accordance with Statement of Financial Accounting Standards No. 128, Earnings per Share (“FAS 128”), and SEC Staff Accounting Bulletin No. 98 (“SAB 98”). Under the provisions of FAS 128 and SAB 98, basic net loss per share is computed by dividing the net loss available to common stockholders, including both net loss and dividends on preferred instruments, for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the number of common and potential common shares outstanding during the period. During any period when they would be anti-dilutive, potential common shares are not considered in the computations.

F-12

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

Revenue Recognition

The Company generates recurring revenue from providing interconnection and colocation services. More than 90% of its revenues are provided from these recurring revenues. The Company’s remaining revenues are nonrecurring and consist of technical support and installation services.

Colocation services are governed by the terms and conditions of a master service agreement. Customers typically execute agreements for one to three year terms. The Company bills customers on a monthly or quarterly basis and recognizes the revenue on a straight line basis over the life of the agreement. Installation services for such long-term agreements, defined as greater than one month, are recognized on a straight-line basis over the life of the agreement, which the Company believes approximates the term of the customer relationship.

Interconnection services are generally provided on either a month-to-month or one year term under an arrangement separate from those services provided under colocation services. Port services are typically sold on a one year term and revenue is recognized in a manner similar to colocation services. Cross connect services are typically sold on a month-to-month basis. These interconnection services are considered as a separate earnings process that is provided and completed on a month-to-month basis. The Company bills customers on a monthly basis and recognizes the revenue in the period the service is provided. Installation service revenue for these cross connect services is recognized in the period when the installation is complete. The earning process from cross connect installation is culminated in the month the installation is complete.

Technical support services are provided on a time and materials basis and are billed and recognized in the period provided. Cash advances are recorded as unearned revenue in the consolidated balance sheets and are recognized in the period the services are provided.

The Company guarantees certain service levels, such as uptime, as outlined in customer contracts. To the extent these service levels are not achieved, the Company reduces revenue for any credits given to the customer. There have been no significant service level credits recorded in the periods presented.

Revenue is recognized only when the service has been provided and when there is persuasive evidence of an arrangement, the fee is fixed or determinable and collection of the receivable is reasonably assured. The Company regularly assesses collectibility of accounts receivable from customers based on a number of factors, including prior history with the customer and the credit status of the customer. If the Company determines that collection of revenue from a customer is not reasonably assured, the Company does not recognize revenue until collection becomes reasonably assured, which is generally upon receipt of cash. The Company also maintains an allowance for doubtful accounts for accounts receivable for which management believes such receivables are uncollectible. Management analyzes accounts receivable, bankruptcy filings, historical bad debts, customer credit-worthiness and changes in customer payment patterns when evaluating revenue recognition and the adequacy of the Company’s reserves. A specific bad debt reserve is accrued for specifically identifiable receivables that become uncollectible. A general reserve is established for all other accounts based on the age of the invoices. Delinquent account balances are written-off after a determination that the likelihood of collection is not probable.

F-13

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at year-end using enacted tax rates in effect for the period in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that is expected to more likely than not be realized. Income tax expense is the tax payable for the period and the change during the period in deferred tax assets and liabilities.

Advertising, Promotion and Marketing Expenses

All costs associated with advertising, promotion and marketing are expensed when the related activities occur. Advertising, promotion and marketing expenses for the years ended December 31, 2003, 2004 and 2005 and the nine months ended September 30, 2005 and 2006 were approximately $400, $812, $837, $591 (unaudited), and $740 respectively, and are included in sales and marketing expenses.

Lease Expense

Lease expense for the Company’s real estate leases, which generally have escalating lease payments over the term of the lease, is recorded on a straight-line basis over the lease term, as defined in Statement of Financial Accounting Standards No. 13, Accounting for Leases. Certain leases include renewal options that, at the inception of the lease, are considered reasonably assured of being renewed. The lease term begins when the Company has the right to control the use of the leased property, which is typically before lease payments are due under the terms of the lease. The difference between the expense recorded in the consolidated statements of operations and the amount paid is recorded as deferred rent and is included in the consolidated balance sheets.

Segment Information

The Company manages its business as one reportable segment. Although the Company provides colocation services in several markets, these operations have been aggregated into one reportable segment based on the similar economic characteristics among all markets, including the nature of the services provided and the type of customers purchasing such services.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of

F-14

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

revenues and expenses during the reporting period. Actual results may differ from those estimates and such differences may be material to the consolidated financial statements.

Concentrations of Credit Risk

Concentrations of credit risk generally arise from accounts receivable and cash balances. The Company provides interconnection and colocation services to customers ranging in size from small entrepreneurial entities to national and international corporations. The Company’s facilities are located throughout the United States of America and in Toronto, Ontario, which management believes provides diversification with respect to the Company’s exposure to economic risks in any particular location.

The Company attempts to limit its credit risk associated with cash and cash equivalents by keeping deposits in major financial institutions. Management believes the financial institutions that hold the Company’s cash balances are financially stable and, therefore, minimal credit risk exists with respect to these cash balances. At period-end, cash balances were in excess of Federal Deposit Insurance Corporation (FDIC) insured limits.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable net of the allowance for doubtful accounts, other current assets, accounts payable, accrued expenses and other liabilities approximate fair value due to their short-term nature.

The fair value of long-term debt is estimated based on the current rates offered to the Company for similar debt. Due to the variable nature of the interest rates, the carrying amounts of the Company’s long-term debt approximate fair value. The fair value of financial hedge instruments are stated at their estimated fair value based on market prices from brokers for those or similar instruments.

Recent Accounting Pronouncements

In May 2005, the FASB issued Statement of Financial Accounting Standards No. 154, Accounting Changes and Error Corrections—A Replacement of APB Opinion No. 20 and FASB Statement No. 3 (“FAS 154”). The new standard changes the requirements for the accounting for and reporting of a change in accounting principle. Among other changes, FAS 154 requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented on the new accounting principle, unless it is impracticable to do so. FAS 154 also provides that (1) a change in method of depreciating or amortizing a long-lived non-financial asset be accounted for as a change in estimate (prospectively) that was effected by a change in accounting principle and (2) correction of errors in previously reported financial statements should be termed a “restatement.” FAS 154 applies to accounting changes and error corrections that are made in fiscal years beginning after December 15, 2005.

F-15

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

In June 2005, the FASB’s Emerging Issues Task Force reached a consensus on Issue No. 05-6, Determining the Amortization Period for Leasehold Improvements Purchased after Lease Inception or Acquired in a Business Combination (“EITF 05-6”). This guidance requires that leasehold improvements acquired in a business combination or purchased subsequent to the inception of a lease be amortized over the shorter of the useful life of the assets or a term that includes required lease periods and renewals that are reasonably assured at the date of the business combination or asset purchase. The guidance is applicable only to leasehold improvements that are purchased or acquired in reporting periods beginning after June 29, 2005.

In July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), which clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently in the process of evaluating the impact that the adoption of FIN 48 will have on its financial position, results of operations and cash flows.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after December 15, 2007. The Company is currently in the process of evaluating the impact that the adoption of SFAS No. 157 will have on its financial position, results of operations and cash flows.

F-16

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

3.    Acquisitions

On January 1, 2005, the Company purchased all of the outstanding stock of LayerOne, Inc. (“LayerOne”), which operated three colocation facilities in the United States. The purchase price was approximately $25,976, net of cash received, assumed liabilities of $1,456 and expenses of the transaction of $563. Approximately $1,250 of the purchase price was placed in an escrow account for future contingencies. The weighted average amortization period of the amortizable intangible assets acquired is approximately 10.9 years. The purchase price was allocated to property and equipment, other tangible assets, contract-based and customer-based intangible assets and goodwill based on their estimated fair value pursuant to the provisions of Statement of Financial Accounting Standards No. 141, Business Combinations (“FAS 141”). Goodwill is associated with the value of network density and the acquired workforce. No deduction for tax purposes is expected for the goodwill associated with the acquisition of LayerOne. The transaction was financed as a term loan drawn under the amended bank credit facility and with cash on hand.

On March 11, 2004, the Company purchased all of the outstanding stock of RACO Group, Inc. (“RACO”), which operated four colocation facilities in the United States and Canada. The purchase price was approximately $14,511, net of cash received, assumed liabilities of $1,259 and expenses of the transaction of $187. The weighted average amortization period of the amortizable intangible assets acquired is approximately 5.6 years. The purchase price was allocated to property and equipment, other tangible assets and contract-based and customer-based intangible assets based on their estimated fair value pursuant to the provisions of FAS 141. No goodwill was recorded as a result of this acquisition. The transaction was financed as a part of the term loan drawn under the amended bank credit facility, with the balance from existing working capital.

On February 28, 2004, the Company purchased all of the limited partnership interests in Switch & Data Facilities Site Two, LP (“Site Two”). Site Two was already included in the consolidated financial statements of the Company. The purchase price was approximately $13,200. There were no expenses capitalized in connection with this transaction. The purchase price in excess of the minority interest of approximately $10,715 was allocated to customer-based intangible assets based on the estimated fair value pursuant to the provisions of FAS 141. The amortization period of the amortizable intangible assets acquired is 4 years. No goodwill was recorded as a result of this acquisition. The transaction was financed as a part of the term loan drawn under the amended bank credit facility, with the balance from existing working capital.

On January 15, 2004, the Company purchased all of the outstanding stock of Meridian Telesis, Inc. (“Meridian”), a colocation facility in Philadelphia. The purchase price was approximately $4,799, which included a $3,776 note payable, $100 cash consideration, assumed liabilities of approximately $636 and expenses of the transaction of $287. The weighted average amortization period of the amortizable intangible assets acquired is approximately 6 years. The purchase price was allocated to property and equipment, other tangible assets and contract-based and customer-based intangible assets based on their estimated fair value pursuant to the provisions of FAS 141. No goodwill was recorded as a result of this acquisition. Subsequent to the transaction, a $5,000 term loan drawn under the expanded bank credit facility satisfied the existing note payable.

F-17

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

On March 31, 2003, the Company purchased the assets and assumed certain liabilities of PAIX.net, Inc. (“PAIX”), including six internet exchanges. The total purchase price was approximately $42,448, which includes assumed liabilities of approximately $206 and expenses of the transaction of approximately $1,842. Approximately $1,500 of the total purchase price was paid during 2002 as a deposit, with the remainder paid in 2003. The purchase price was allocated to property and equipment, other tangible assets and contract-based and customer-based intangible assets based on their estimated fair value pursuant to the provisions of FAS 141. No goodwill was recorded as a result of this acquisition. The transaction was financed through the issuance of $32,500 of new preferred stock and a $5,000 term loan drawn under the expanded bank credit facility, with the balance from existing working capital.

Acquired assets and liabilities are as follows:

	PAIX.net, Inc.			Meridian Telesis, Inc.			RACO Group, Inc.			LayerOne, Inc.
Cash	$	—		$	—		$	435		$	1,198
Accounts receivable		2,031			57			1,127			1,300
Security deposits		341			—			101			69
Property and equipment		23,308			2,485			1,596			1,819
Intangible assets		16,768			2,220			11,650			13,038
Goodwill		—			—			—			9,750
Other assets		—			37			37			—
Accounts payable and accrued expenses		(206	)		(41	)		(230	)		(697	)
Deferred revenues		—			(432	)		(798	)		(759	)
Security deposits		—			(163	)		(89	)		—
Other liabilities		—			—			(142	)		—
Net assets acquired	$	42,242		$	4,163		$	13,687		$	25,718

The results of LayerOne, RACO, Meridian and PAIX have been included in the consolidated financial statements since their respective acquisition dates. The following unaudited pro forma financial information of the Company for the twelve months ended December 31, 2004 is presented as if the acquisitions of LayerOne and RACO had occurred as of January 1, 2004. The following unaudited pro forma financial information of the Company for the twelve months ended December 31, 2003 is presented as if the acquisitions of RACO, Meridian and PAIX had occurred as of January 1, 2003. The unaudited pro forma information is provided for informational purposes only. These pro forma results are based upon the respective historical financial statements of the respective companies, and do not incorporate, nor do they assume, any benefits from cost savings or synergies of operations of the combined company. This pro forma information does not necessarily reflect the results of operations if the business had been managed by the Company during these periods and is not indicative of results that may be obtained in the future.

F-18

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

The pro forma combined results are as follows:

	For the year ended December 31, 2003			For the year ended December 31, 2004
	(unaudited)			(unaudited)
Revenue	$	85,572		$	100,378
Income (loss) from continuing operations	$	(3,873	)	$	(16,565	)
Net loss	$	(6,203	)	$	(15,673	)
Net loss, attributable to common stockholders	$	(21,323	)	$	(32,611	)
Basic and diluted loss per share attributable to common stockholders	$	(0.20	)	$	(0.30	)

4.    Property and Equipment, Net

Property and equipment consisted of the following:

	December 31,						September 30,
	2004			2005			2006
Equipment	$	62,832		$	70,379		$	74,715
Leasehold improvements		70,072			76,557			90,194
Furniture		1,007			1,563			1,540
Construction in progress		356			5,270			201
		134,267			153,769			166,650
Less: accumulated depreciation		(67,550	)		(89,006	)		(100,107	)
	$	66,717		$	64,763		$	66,543

During 2004, 2005 and 2006 the Company determined that property and equipment in certain facilities was impaired. Asset impairment charges, based on the fair value of the asset group impaired, of approximately $0, $1,015 and $2,140 for the years ended December 31, 2003, 2004 and 2005, respectively, and approximately $2,140 (unaudited) and $2,193 for the nine months ended September 30, 2005 and 2006, respectively, are reflected in the consolidated statements of operations.

The Company capitalized approximately $164 and $463 of interest related to an expansion project at its Palo Alto facility during the year ended December 31, 2005 and the nine months ended September 30, 2006, respectively, as part of construction in progress.

Depreciation included in continuing operations for the years ended December 31, 2003, 2004 and 2005 and the nine months ended September 30, 2005 and 2006 was approximately $17,457, $21,032, $21,521, $17,630 (unaudited) and $11,379, respectively.

5.    Goodwill, Intangible Assets and Other Long-Term Assets

Goodwill, net of accumulated amortization was $26,273, $36,023, and $36,023 at December 31, 2004 and 2005, and September 30, 2006 respectively.

F-19

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

During 2005, the Company acquired three colocation facilities from LayerOne, Inc. and recorded approximately $13,038 of other intangible assets and approximately $9,750 of goodwill in connection with the acquisition.

During 2004, the Company acquired five colocation facilities from various acquisitions and recorded approximately $24,585 of intangible assets in connection with those acquisitions.

During 2003, the Company acquired six internet exchange facilities and recorded approximately $16,768 of intangible assets.

At December 31, 2004, intangible assets were as follows:

	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Contract-based	$	1,294	$	(813	)	$	481
Customer-based		40,648		(7,218	)		33,430
Total intangible assets	$	41,942	$	(8,031	)	$	33,911

At December 31, 2005, intangible assets were as follows:

	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Contract-based	$	1,483	$	(1,358	)	$	125
Customer-based		53,564		(15,456	)		38,106
Total intangible assets	$	55,047	$	(16,815	)	$	38,231

At September 30, 2006, intangible assets were as follows:

	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Contract-based	$	354	$	(354	)	$	—
Customer-based		53,416		(21,295	)		32,121
Total intangible assets	$	53,770	$	(21,649	)	$	32,121

Future amortization expense on intangible assets is estimated to be approximately $2,022 for the remaining three months of 2006, $7,256 for fiscal year 2007, $4,052 for fiscal year 2008, $3,627 for fiscal year 2009, $3,372 for fiscal year 2010, $3,146 for fiscal year 2011 and $8,646 thereafter.

Included in other long-term assets, net, on the consolidated balance sheets are debt issuance costs, net, totaling $3,113, $4,086 and $3,597 as of December 31, 2004 and 2005 and September 30, 2006, respectively. Also included are public offering costs of $1,678 as of September 30, 2006.

Amortization expense, included as a component of interest expense, was approximately $863, $989, $1,100, $881 (unaudited) and $630 for the years ended December 31, 2003, 2004 and 2005 and the nine months ended September 30, 2005 and 2006, respectively.

F-20

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

6.    Long-Term Debt

The Company’s long-term debt consisted of the following:

	December 31,						September 30,
	2004			2005			2006
Senior notes, interest (at the option of the Company at inception of each loan) at the Base Rate (Prime), plus the applicable margin (3.00% for Term Loan A, 3.25% for Term Loan B and 6.25% for 2nd Lien) or the Eurodollar Rate, as defined, plus the applicable margin (4.00% for Term Loan A, 4.25% for Term Loan B and 7.25% for 2nd Lien). The total cost of outstanding debt was 9.51% and 10.55% at December 31, 2005 and September 30, 2006, respectively.	$	—		$	144,937		$	144,750
Senior notes, interest (at the option of the Company at inception of each loan) at the Base Rate (Prime), plus the applicable margin (3.75% for Term Loan B) or the Eurodollar Rate, as defined, plus the applicable margin (4.75% for Term Loan B). The total cost of outstanding debt was 6.83% at December 31, 2004.		69,300			—			—
Total debt		69,300			144,937			144,750
Less current portion		(11,588	)		(781	)		(2,375	)
Long-term debt	$	57,712		$	144,156		$	142,375

On January 26, 2001, the Company entered into a senior credit facility which originally included the ability to borrow up to $50,000 in the form of (i) a five year term loan in the amount of $36,500 and (ii) a five year revolving loan in the amount of $13,500, which included letters of credit available up to $5,000 (collectively, the “Original Credit Facility”). The Original Credit Facility was amended and restated in March 2003 to provide for total availability under the facility of $46,000. Total fees incurred for this amendment were $1,035, of which $452 were capitalized and $583 were expensed. Additionally, as a result of a reduction in borrowing capacity under the revolving loan, $342 of prior debt issue costs were written off as a loss from debt extinguishment.

On March 4, 2004, the Company amended and restated the March 2003 credit facility to provide for total availability of $110,000 in the form of (i) a four year “Term Loan B” in the amount of $70,000 that was completely drawn on March 4, 2004, (ii) a four year “Term Loan A” with $35,000 available to be drawn through March 2005, $22,000 of which was drawn down in January 2005 for the LayerOne acquisition, and (iii) a four year “Revolving Term Loan” (“2004 Revolving Loan”) in the amount of $5,000 that was drawn down by approximately $153 to back letters of credit as required by a lease agreement (collectively, the “2004 Credit Facility”). In connection with this financing activity, $409 of the remaining capitalized debt issue costs incurred with the previous credit facility associated with a former lender were expensed and have been reported as debt extinguishment loss in the consolidated statement of operations. In addition, the Company incurred $3,486 in deferred financing costs which have been capitalized, and $92 in transaction fees, which have been expensed.

F-21

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

On October 13, 2005, the Company further amended and restated the 2004 Credit Facility to provide for total availability of $155,000 in the form of (i) a five year “Term Loan A” in the amount of $25,000 that was completely drawn at closing, (ii) a six year “Term Loan B” in the amount of $75,000 that was completely drawn at closing, (iii) a six-and-a-half year “Second Lien Term Loan” in the amount of $45,000 that was completely drawn at closing, and (iv) a five year “Revolving Term Loan” (“2005 Revolving Loan”) in the amount of $10,000 that was drawn down by approximately $153 to back letters of credit (collectively, the “2005 Credit Facility”). In connection with this financing, the Company incurred $2,840 in deferred financing costs which have been capitalized, and $155 in transaction fees, which have been expensed. Additionally, as a result of paying down amounts from certain lenders in the facility, $769 of debt issue costs were written off as a loss from debt extinguishment. Available capacity under the 2005 Credit Facility at September 30, 2006 was approximately $9,847.

A commitment fee of 0.5% per annum on the unused portion of the 2005 Revolving Loan is payable quarterly and each letter of credit requires a fee of 0.125% of the initial face amount, plus 4.50% per annum for interest cost payable quarterly. Mandatory principal payments, which would reduce the total capacity, are required upon issuance of new debt or equity, asset sale or receipt of casualty proceeds and with 50% of any excess cash flow, as defined, in any year after December 31, 2005. For Eurodollar based loans, interest is paid as the loans are renewed. Principal payments are based on the amortization schedule contained in the 2005 Credit Facility. Eurodollar based loans are renewed in three or six month increments, at the Company’s discretion. Interest on base rate loans is paid at the time of the loan renewal. Base rate loans are renewed quarterly. Accrued interest included in accounts payable and accrued expenses in the accompanying consolidated balance sheets is approximately $353, $1,706 and $1,697 at December 31, 2004 and 2005 and September 30, 2006, respectively.

Substantially all of the assets of the Company are pledged as collateral for the 2005 Credit Facility. The 2005 Credit Facility contains financial covenants which, among other restrictions, require the maintenance of certain financial ratios and restrict asset purchases and dividend payments. The Company was in compliance with these covenants at December 31, 2005.

At March 31, 2006, the Company was in violation of the fixed charge coverage ratio covenant. On April 28, 2006, the lenders agreed to waive such covenant violation and amended the fixed charge coverage ratio for the remainder of 2006. After this amendment the Company was in compliance as of March 31, 2006. The Company was in violation of the amended fixed charge coverage ratio, consolidated leverage ratio, and consolidated interest coverage ratio covenants as of September 30, 2006. On November 27, 2006, the lenders agreed to waive these covenant violations and amended these covenants through 2007. After this waiver and amendment, the Company was in compliance with the financial covenants of the 2005 Credit Facility as of September 30, 2006. The Company expects to be in compliance for at least the next twelve months.

F-22

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

As of September 30, 2006, scheduled maturities of the 2005 Credit Facility, exclusive of potential excess cash flow payments, for the remainder of 2006 and the next five years and thereafter are as follows:

Year	Amount
2006	$	594
2007		4,125
2008		9,844
2009		12,812
2010		27,938
2011		44,437
Thereafter		45,000
Total	$	144,750

As of December 31, 2004 and 2005 and September 30, 2006, the Company also had issued (but not drawn upon) letters of credit of approximately $153 in connection with a lease agreement.

Interest Rate Derivatives

In December 2001, the Company purchased an interest rate cap on a notional amount of $9,000 that expired in January 2004. The Company paid approximately $27 to lock in a maximum LIBOR interest rate of 7.0% that could be charged on the notional amount during the term of the agreement.

In December 2001, the Company also entered into an interest rate collar agreement (the “Collar”) on a notional amount of $10,000 that expired in January 2005. Every three months, the actual three-month LIBOR interest rate was reviewed and the Collar had the following impact on the Company’s interest payments for the notional amount: 1) if the three month LIBOR was less than 5.5%, the Company paid 3.65% for that three month period; 2) if the three month LIBOR was greater than or equal to 5.5% and less than 7.5%, the Company paid the actual interest rate for that three month period; 3) if the three month LIBOR was greater than or equal to 7.5%, the Company paid 7.5% for that three month period. The Company had no up-front cost for the Collar.

In May 2004, the Company purchased an interest rate cap on a notional amount of $25,000 that expired in December 2005. The Company paid approximately $60 to lock in a maximum LIBOR interest rate of 3.45% that could be charged through December 2004 and 4.45% that could be charged through December 2005.

In March 2005, the Company entered into an interest rate swap agreement on a notional value of $15,000. There was no up-front cost for this agreement. The contract states that the Company pays 3.97% from July 2005 through June 2006 and 4.48% from July 2006 through June 2007. The counterparty either pays to the Company or receives from the Company the difference between actual LIBOR and the contracted rate.

In November 2005, the company entered into an interest rate swap agreement on a notional value of $70,000. There was no upfront cost for this agreement. The contract states that the Company pays 4.758% from February 2006 through February 2009. The counterparty either

F-23

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

pays to the Company or receives from the Company the difference between actual LIBOR and the contracted rate.

The fair value of interest rate derivatives represents the estimated receipts or payments that would be made to terminate the agreements prior to expiration. As of December 31, 2004 and 2005 and September 30, 2006, the Company recorded interest rate derivative fair values to their balance sheet of approximately ($39), $93 and $524, respectively. The change in fair value of approximately $127, $248, $131, $78 (unaudited) and $431 is recorded as a decrease (increase) in interest expense in the consolidated statements of operations for the years ended December 31, 2003, 2004 and 2005 and the nine months ended September 30, 2005 and 2006, respectively.

7.    Income Taxes

For 2003, the current provision for income taxes was approximately $80, which consists entirely of state income taxes. For 2004, the current provision for income taxes was approximately $63, which consists entirely of state income taxes. For 2005, the current provision for income taxes was approximately $69, which consists entirely of federal income taxes. For the nine months ended September 30, 2005, the current provision for income taxes was approximately $140 (unaudited), which consists entirely of federal income taxes. For the nine months ended September 30, 2006, there is no provision for income taxes. There was no net deferred income tax provision for the years ended December 31, 2003, 2004 and 2005 or the nine months ended September 30, 2005 and 2006 as the Company recorded a full valuation allowance against all deferred tax assets.

As of December 31, 2005, the Company had a United States net operating loss carry forward (“NOL”) of approximately $64,307 and an alternative minimum tax credit of approximately $14 available to reduce future federal income taxes. The NOL will begin to expire in 2021. Management believes the Company has resolved the contingency related to the utilization of its NOLs by determining that the Series C financing caused an ownership change as defined in Internal Revenue Code Section (“IRC”) 382. As a result, the NOL generated prior to November 21, 2001 has been eliminated.

F-24

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

The components of the Company’s deferred tax assets and liabilities as of December 31, 2004 and 2005 and September 30, 2006 are as follows:

	December 31, 2004			December 31, 2005			September 30, 2006
Current deferred tax assets
Deferred rent	$	61		$	83		$	96
Unearned revenue		448			394			572
Accrued expenses		1,788			986			694
Other		1			73			14
	$	2,298		$	1,536		$	1,376
Less: Valuation allowance		2,298			1,536			1,376
Net current deferred tax asset	$	—		$	—		$	—
Non-current deferred tax assets
Net operating loss carryforwards	$	25,630		$	23,731		$	24,197
Foreign net operating loss		635			1,862			2,106
Property and equipment		—			998			2,152
Deferred rent		2,477			3,109			3,572
Unearned revenue		199			208			301
	$	28,941		$	29,908		$	32,328
Less: Valuation allowance		25,745			25,785			29,896
Net non-current deferred tax assets	$	3,196		$	4,123		$	2,432
Non-current deferred tax liabilities
Property and equipment	$	(2,464	)	$	—		$	—
Intangible assets		(732	)		(4,123	)		(2,432	)
	$	(3,196	)	$	(4,123	)	$	(2,432	)
Net non-current deferred taxes	$	—		$	—		$	—

The Company provides a valuation allowance against net deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The net deferred tax assets as of December 31, 2004 and 2005, and September 30, 2006 are fully offset by a valuation allowance.

The changes in the valuation allowance account for the deferred tax assets are as follows, after giving affect to the IRC 382 limitation discussed above:

	For the years ended December 31,								For the nine months ended September 30,
	2003		2004			2005			2006
Balance at January 1	$	25,246	$	25,313		$	28,043		$	27,321
Additions charged to costs and expenses		67		5,095			4,233			3,951
Other subtractions (1)		—		(2,365	)		(4,955	)		—
Balance at December 31	$	25,313	$	28,043		$	27,321		$	31,272

(1) Decrease to the Company’s valuation allowance upon acquisition of deferred tax liabilities from the purchase of RACO in 2004 and the purchase of LayerOne in 2005.

F-25

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

The following table accounts for the differences between the actual tax benefit and amounts obtained by applying the statutory U.S. federal income tax rate of 35% to the loss from continuing operations for the years ended December 31, 2003, 2004 and 2005 and the nine months ended September 30, 2006:

	For the years ended December 31,									For the nine months ended September 30,
	2003			2004			2005			2006
Statutory benefit	$	(260	)	$	(5,005	)	$	(3,849	)	$	(3,537	)
State taxes net of federal benefit		(22	)		(429	)		(330	)		(303	)
Foreign statutory rate difference		—			28			56			74
Non-deductible expenses		295			374			(41	)		(184	)
		13			(5,032	)		(4,164	)		(3,950	)
Change in valuation allowance		67			5,095			4,233			(3,950	)
Provision for income taxes	$	80		$	63		$	69		$	0

8.    Loss Per Share

The following table provides the detail for the computation of basic and diluted loss per share attributable to common stockholders:

	For the years ended December 31,									For the nine months ended September 30,
	2003			2004			2005			2005			2006
										(unaudited)
Numerator:
Loss from continuing operations	$	(823	)	$	(14,363	)	$	(11,068	)	$	(7,274	)	$	(10,059	)
Less preferred stock accretions and dividends		(15,120	)		(16,938	)		(33,691	)		(9,606	)		(10,054	)
Loss from continuing operations, attributable to common stockholders	$	(15,943	)	$	(31,301	)	$	(44,759	)	$	(16,880	)	$	(20,113	)
Income (loss) from discontinued operations		(2,331	)		891			(206	)		(168	)		—
Loss attributable to common stockholders	$	(18,274	)	$	(30,410	)	$	(44,965	)	$	(17,048	)	$	(20,113	)
Denominator:
Weighted average shares		107,787			107,787			107,787			107,787			107,554
Net income (loss) per share-basic and diluted:
Continuing operations, attributable to common stockholders	$	(0.15	)	$	(0.29	)	$	(0.42	)	$	(0.16	)	$	(0.19	)
Discontinued operations	$	(0.02	)	$	0.01		$	—		$	—		$	—
Net loss, attributable to common stockholders	$	(0.17	)	$	(0.28	)	$	(0.42	)	$	(0.16	)	$	(0.19	)

F-26

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

The following table provides the detail of potential common shares that are not included in the diluted net loss per share calculation because these shares are antidilutive:

	For the years ended December 31,			For the nine months ended September 30,
	2003	2004	2005	2005	2006
				(unaudited)
Common Stock Options	2,435	1,063	1,032	1,063	1,028
Series B Convertible Preferred Stock	49,674	49,674	49,674	49,674	49,674

Potential common shares should include the Series A Special Junior Stock, the Series B Special Junior Stock and the Series C Special Junior Stock (collectively referred to herein as the “Junior Stock”). However, pursuant to an investors agreement entered into between the Company and virtually all of its stockholders in March 2003 and under the Company’s certificate of incorporation that was amended and restated in March 2003, a formula was set forth establishing the amount of shares of common stock that the holders of each class of the Company’s securities is to receive in connection with a corporate reorganization or an initial public offering of the Company. The result of the application of this formula is that it would be highly unlikely that holders of the Company’s Junior Stock would receive any common stock or any other consideration in connection with a corporate reorganization or an initial public offering. As a result, management believes the fair value of the common shares and the Junior Stock is zero.

F-27

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

9.    Common Stock, Series B Common Stock, Special Junior Stock and Preferred Stock

The Company has 180,436 shares authorized which have been designated and issued as follows at December 31, 2004 and 2005 and September 30, 2006:

		Issued
	Authorized	December 31,		September 30,
		2004	2005	2006
Common Stock, $0.0001 par value	50,000	42,569	42,569	42,295
Series B Common Stock, $0.0001 par value	65,217	65,217	65,217	65,217
Special Junior Stock
Series A, $0.0001 par value	1,141	706	706	706
Series B, $0.0001 par value	366	265	265	265
Series C, $0.0001 par value	4,000	220	220	220
Unallocated	1,395	—	—	—
	6,902	1,191	1,191	1,191
Redeemable Preferred Stock and Preferred Stock
Series B convertible, $0.0001 par value, 8% cumulative preference, $153,757, $166,268 and $176,322 liquidation preference at December 31, 2004 and 2005 and September 30, 2006, respectively	22,100	22,100	22,100	22,100
Series C redeemable, $0.0001 par value, 12.5% cumulative preference, $51,898, $38,492, and $39,921 liquidation preference at December 31, 2004 and 2005 and September 30, 2006, respectively	32,609	32,609	32,609	32,609
Series D redeemable, $0.0001 par value, 12% cumulative preference, $39,998 liquidation preference at December 31, 2004	33	33	—	—
Series D-1 preferred, $0.0001 par value	325	325	325	325
Series D-2 preferred, $0.0001 par value	3,250	119	156	198
Total redeemable and preferred stock	58,317	55,186	55,190	55,232
Total authorized and issued	180,436	164,163	164,167	163,935

Common Stock

The holders of Common Stock are entitled to one vote per share on matters submitted to stockholders. The Common Stock carries dividends as declared by the Board. Any dividends declared are subordinate to unpaid liquidation preferences on the Company’s outstanding

F-28

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

preferred stock. Dividends declared for the Common Stock must be declared at the same rate for holders of the Series B Common Stock (“Series B Common”) and Special Junior Stock (both discussed below). Through September 30, 2006, the Company had not declared any dividends for the holders of its Common Stock. During February 2006, the Company acquired 274 shares of common stock from a stockholder for one dollar, and those shares were retired.

Series B Common Stock

The Series B Common Stock was issued concurrently with the issuance of the Series C Redeemable Preferred Stock in November 2001 and conveys a right to one vote per share, on an as-if converted basis, in all matters submitted to stockholders. The holders of the Series B Common Stock are entitled to dividends as declared by the Board. The Series B Common Stock automatically converts to Common Stock upon the occurrence of a qualified public offering or upon the redemption of all the Series C Redeemable Preferred Stock at a rate of $0.23 per share divided by the Benchmark Price, as defined, which is currently $0.23 per share. The Benchmark Price is subject to adjustment for certain issuances of common stock, warrants and options and in the event of a stock split, reverse stock split, reorganization or dividend of Common Stock.

In liquidation, the Series B Common Stock is subordinate to all of the Company’s outstanding series of preferred stock and has equal standing with the Company’s Common Stock and Special Junior Stock. Payment of any dividends declared by the Board would be subordinate to the accrued, unpaid liquidation preferences on the Company’s outstanding preferred stock.

Special Junior Stock

During 2000, the Board established the 2000 Restricted Stock Plan through which employees could be granted shares of Special Junior Stock. Series A, B and C have been authorized and have identical rights; however, such series have different threshold values, as indicated below. The grants vest immediately; however, such grants are subject to a risk of forfeiture and expire when employment with the Company ceases. The holders of shares of Special Junior Stock are entitled to one vote per share. Shares carry dividends when and if declared by the Board and in the same amount as those declared for Common Stock. In the event of a liquidation event, as defined, outstanding shares will be converted to Common Stock; conversion occurs at a ratio of the excess of fair value over the threshold amount, as defined, at the date of the liquidation in the event of a public offering of the Company’s common stock involving aggregate proceeds of at least $75,000 and a per share price of at least 175% of the then applicable conversion price (as defined below) of the Series B Convertible Preferred Stock and, if any Series B Convertible Preferred Stock is outstanding, the Special Junior Stock will be automatically converted to Common Stock. If no Series B Convertible Preferred Stock is outstanding, conversion to Common Stock occurs upon an initial public offering. The shares may also be converted to Common Stock at the option of the Company, with the number of shares determined at the time of conversion. Changes to the provisions of Special Junior Stock on conversion at the option of the Company require consents of certain other stockholders. The Company will recognize compensation expense equal to the excess of fair value over the threshold amount or conversion amount when the occurrence of a conversion event becomes probable.

F-29

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

The following table summarizes activity of the Company’s 2000 Restricted Stock Plan for the years ended December 31, 2004 and 2005 and the nine months ended September 30, 2006:

	Special Junior Stock
	Series A		Series B		Series C		Total
Threshold value	$	0.146	$	0.238	$	4.90
Special junior stock at January 1, 2004		706		265		220	1,191
Forfeitures during 2004		—		—		—	—
Special junior stock at December 31, 2004		706		265		220	1,191
Forfeitures during 2005		—		—		—	—
Special junior stock at December 31, 2005		706		265		220	1,191
Forfeitures during the nine months ended September 30, 2006		—		—		—	—
Special junior stock at September 30, 2006		706		265		220	1,191

Preferred Stock

Series B Convertible Preferred Stock

During July 2000, the Company authorized and issued 22,100 shares of Series B Convertible Preferred Stock (“Series B”) for proceeds of approximately $84,341, net of issuance costs, and the conversion of outstanding notes payable and accrued interest of approximately $20,854. The Series B carries a cumulative preference of eight percent, compounded semi-annually, which is accreted through adjustments to stockholders’ deficit. In liquidation, the Series B is senior to Common Stock, Series B Common Stock and all Special Junior Stock and is subordinate to all other shares outstanding. Each share of Series B is convertible into shares of Common Stock at the option of the holder based on a conversion price, currently $2.18 per share, which is subject to certain anti-dilution adjustments. Upon such a conversion, any accumulated unpaid dividends are required to be paid by the Company. The Series B will automatically convert to common stock upon the closing of a public offering of the Company’s Common Stock involving aggregate proceeds to the Company of at least $75,000 and a per share price of at least 175% of the then applicable conversion price for each share of Series B. In addition, the Series B will automatically convert to common stock upon the written request of the holders of not less than 70% of the then outstanding Series B; a merger of the Company with a public company having at least a $75,000 float and where the consideration exceeds 175% of the then applicable conversion price for each share of Series B Preferred Stock; or a merger or sale of substantially all of the capital stock of the Company where the aggregate consideration to be received by the Series B holders is at least 175% of the then applicable conversion price for each share of Series B and the cash portion of such aggregate consideration is at least 125% of the then applicable conversion price for each share of Series B.

Series C Redeemable Preferred Stock

During November 2001, the Company authorized and issued 32,609 shares of Series C Redeemable Preferred Stock Units for gross proceeds of approximately $15,000, less issuance

F-30

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

costs of approximately $610. Each Series C Unit is comprised of one share of Series C Preferred Stock (“Series C”) and two shares of Series B Common Stock, and was issued at a purchase price equivalent to $0.46 per Series C share and $0.0001 per Series B Common share, respectively. Series C shares carry cumulative dividends of 12.5%, compounded semi-annually. Once an event causing liquidation is known or becomes probable, the Company will be required to begin accretion of the cumulative preferred dividend. In liquidation, Series C holders are entitled to $16,000 after the Company pays the full liquidation preference of the Series D Preferred Stock. In October 2005, the Company paid the $16,000 interim preference. Any remaining proceeds available for distribution by the Company would be paid pari passu as follows: (I) 35% (as diluted by the Series D-2 preferred stock) to the holders of Series C redeemable preferred until the Series C liquidation preferences are paid, with any remaining proceeds distributed to the holders of the Series B convertible preferred stock if such stock has not been converted into common stock, until such holders have been paid the full liquidation preference and with the remaining proceeds going to the holders of common stock, Series B common stock and restricted Junior Stock, pursuant to their respective ownership interests; (II) 65% (as diluted by the Series D-2 preferred stock) would go to the holders of Series D-1 preferred stock; and (III) up to 17.5% to the holders of the Series D-2 preferred stock. The Series C does not convey voting rights but does carry certain protective rights.

Series D Redeemable Preferred Stock; Series D-1 Preferred Stock

During March 2003, the Company authorized and issued 32.5 shares of Series D Redeemable Preferred Stock (“Series D”) and 325 shares of Series D-1 Preferred Stock (“Series D-1”) for approximately $32,500, less issuance costs of approximately $1,335. Series D and D-1 shares each have a par value of $0.0001 per share. Such shares were sold as a unit. Series D shares carry dividends of 12% per year, compounded semi-annually. Series D-1 shares bear dividends if declared by the Board but could not be paid until the Company had paid the $16,000 due under Series C. During October 2005, the Company redeemed the Series D shares for approximately $43,922 and made the $16,000 interim preference payment to the Series C stockholders.

Series D-2 Preferred Stock

During March 2003, the Company authorized Series D-2 Preferred Stock (the “Series D-2”). The Series D-2 carry dividends when and if declared by the Board and holders of Series D-2 may vote (with the number of votes determined based on a formula at the time of the vote) in all matters submitted to the common stockholders and while any Series C stock is outstanding.

F-31

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

A summary of the activity in preferred stock is as follows:

	Series B		Series C			Series D, D-1 and D-2
Balance as of January 1, 2004	$	141,228	$	14,376		$	34,525
Accretion of Preferred Stock		12,219		—			4,719
Issuance Costs, net		—		—			(190	)
Balance as of December 31, 2004		153,447		14,376			39,054
Accretion of Preferred Stock		12,821		16,000			4,870
Repurchase of Preferred Stock		—		—			(43,922	)
Payment of Liquidation Preference		—		(16,000	)		—
Balance as of December 31, 2005		166,268		14,376			2
Accretion of Preferred Stock		10,054		—			—
Issuance of Preferred Stock		—		—			3
Balance as of September 30, 2006	$	176,322	$	14,376		$	5

10.    Stock Based Compensation

Series D-2 Preferred Stock Options

The Company granted Series D-2 options to employees in 2003 and 2004. The Company granted options to two directors in 2003. The exercise price of the options granted in 2003 was $0.01 per option, and the exercise price of the options granted in 2004 was $27.69 per option. No options were granted in 2005 or the first nine months of 2006.

The options vest at the rate of 25% on the first anniversary of the grant date and 6.25% for each three month period thereafter until the options are fully vested. Certain members of senior management received options that vested 25% immediately at the date of grant and 6.25% for each three month period thereafter until the options are fully vested. These vesting periods were established by the Board at the date of grant. Options expire ten years after the date of grant or when an individual ceases to be an employee of the Company.

F-32

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

A summary of the activity related to Series D-2 options for the years ended December 31, 2003, 2004 and 2005 and the nine months ended September 30, 2006 is as follows:

	Number of Shares		Weighted Average Exercise Price
Outstanding as of January 1, 2003	—		$	—
Options granted	322		$	0.01
Options exercised	(9	)	$	0.01
Options cancelled	(21	)	$	0.01
Outstanding as of December 31, 2003	292		$	0.01
Options granted	169		$	27.69
Options exercised	(110	)	$	0.01
Options cancelled	(34	)	$	0.01
Outstanding as of December 31, 2004	317		$	14.76
Options granted	—		$	—
Options exercised	(37	)	$	0.01
Options cancelled	(19	)	$	19.11
Outstanding as of December 31, 2005	261		$	16.57
Options granted	—		$	—
Options exercised	(42	)	$	0.08
Options cancelled	(6	)	$	18.46
Outstanding as of September 30, 2006	213		$	19.75

The following table summarizes information about stock options outstanding at December 31, 2005:

Exercise Price		Number of Options Outstanding	Weighted Average Remaining Contractual Life	Number of Options Exercisable
$	.01	105	7.48	54
$	27.69	156	8.25	105
	Total	261		159

The following table summarizes information about stock options outstanding at September 30, 2006:

Exercise Price	Number of Options Outstanding	Weighted Average Remaining Contractual Life	Number of Options Exercisable
$    .01	61	6.84	38
$27.69	152	7.56	134
	213		172

F-33

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

The aggregate intrinsic value of options outstanding at September 30, 2006 was $9,734. The aggregate intrinsic value of options exercisable at September 30, 2006 was $2,416 and $5,162 for options with exercise prices of $0.01 and $27.69, respectively.

Common Stock Options

In January 2001, the Board of Directors approved the 2001 Stock Incentive Plan (the “Plan”) and authorized 5,430 shares of the Company’s common stock to be reserved for issuance to employees, consultants or directors pursuant to the terms of the Plan. Options granted under the Plan may be incentive stock options or non-statutory stock options. Subsequent to 2001, no options have been awarded under this plan, and no options have ever been exercised.

In November 2001, the Company granted 750 non-statutory stock options with an exercise price of $0.23 per share to three former employees; 281 of these options replaced an existing grant of 250 options. As a result, the Company will be required to remeasure the fair value of the 281 options at each reporting period prior to a final measurement upon exercise, forfeiture or expiration. Changes in the estimated fair value of these options will be recognized as compensation expense in the period of the change. An immaterial value was ascribed to the remaining 469 new options and, accordingly, no compensation expense has been recorded.

The weighted average fair value of options granted in 2001 was $0.33. The fair value for the 2001 options were estimated at the date of grant using the minimum value method, which takes into account (1) the fair value of the underlying stock at the grant date, (2) the exercise price, (3) average expected option life of 6 years, (4) no dividends, and (5) risk-free interest rates ranging between 4.37% and 5.48%.

A summary of the stock option activity of the Plan is presented below:

	Number of Shares		Weighted Average Exercise Price
Outstanding as of January 1, 2003	2,622		$	3.56
Options granted	—		$	—
Options forfeited	(187	)	$	4.90
Outstanding as of December 31, 2003	2,435		$	3.46
Options granted	—		$	—
Options forfeited	(1,372	)	$	4.90
Outstanding as of December 31, 2004	1,063		$	3.46
Options granted	—		$	—
Options forfeited	(31	)	$	4.90
Outstanding as of December 31, 2005	1,032		$	1.51
Options granted	—		$	—
Options forfeited	(4	)	$	4.90
Outstanding as of September 30, 2006	1,028		$	1.49

F-34

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

The following table summarizes information about stock options outstanding under the Plan at December 31, 2005:

Exercise Price		Number of Options Outstanding	Weighted Average Remaining Contractual Life	Number of Options Exercisable
$	4.90	282	4.97	282
$	.23	750	5.89	750
		1,032		1,032

The following table summarizes information about stock options outstanding under the Plan at September 30, 2006:

Exercise Price		Number of Options Outstanding	Weighted Average Remaining Contractual Life	Number of Options Exercisable
$	4.90	278	4.22	278
$	.23	750	5.14	750
		1,028		1,028

At September 30, 2006, the total intrinsic value of common stock options outstanding and exercisable was zero.

11.    Discontinued Operations and Other Dispositions

As a result of our conclusion to sell or abandon certain facilities during the periods in the table included below, these facilities met the criteria for classification as discontinued operations pursuant to FAS 144. As such, the loss associated with the operation of these discontinued facilities and the gain (loss) of the initial write down of these facilities to fair value and the ultimate disposal of the facilities are reflected as discontinued operations in the Company’s results of operations for the years ended December 31, 2003, 2004 and 2005 and the nine months ended September 30, 2005 and 2006 as follows:

	For the years ended December 31,								For the nine months ended September 30,
	2003 (1)			2004		2005 (2)			2005 (2)			2006
									(unaudited)
Income (loss) from operations of discontinued facilities	$	(421	)	$	—	$	(206	)	$	(168	)	$	—
Gain (loss) from disposal of discontinued facilities		(1,144	)		—		—			—			—
Adjustments to amounts previously reported (3)		(766	)		891		—			—			—
	$	(2,331	)	$	891	$	(206	)	$	(168	)		—

(1) Losses in 2003 are related to the San Diego facility. The facility has no carrying value on the consolidated balance sheets.

(2) Losses in 2005 are related to a facility in Chicago. The facility had no operating results in prior year financial statements requiring reclassification. The facility has no carrying value on the consolidated balance sheets.

(3) Adjustments to amounts previously recorded are related to the resolution of certain contingencies associated with previously reported discontinued operations.

F-35

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

12.    Commitments and Contingencies

Lease Payments

The Company and its subsidiaries are engaged in the operation of colocation facilities, which are held under noncancelable operating leases expiring at various dates through 2025. Certain of these noncancelable operating leases provide for renewal options.

As of September 30, 2006, minimum future lease payments under these noncancelable operating leases for the remainder of fiscal year 2006 and the next five years and thereafter are approximately as follows:

Year	Amount
2006	$	5,075
2007		18,915
2008		18,342
2009		17,019
2010		12,342
2011		10,652
Thereafter		99,178
Total minimum lease payments	$	181,523

Legal Proceedings

On May 31, 2006, the Company and Switch & Data Facilities Company, LLC, a subsidiary of the Company, were served with a lawsuit alleging a failure by the Company or its subsidiary to execute a lease in October 2000 for a building in Milwaukee, Wisconsin. Plaintiffs are claiming the rent and associated lease charges due for the entire term of the lease (10 years) of $3,666. Plaintiffs are also claiming a $750 loss on the sale of the building. Based upon currently available information, management is currently unable to assess the amount of any liability with respect to this action.

The Company is involved in an ongoing lawsuit related to a real estate lease in West Palm Beach, Florida. In May 2002, TQ West Palm Beach LLC and Node.com Inc. filed suit in the Circuit Court in Palm Beach County, Florida against the Company and certain subsidiaries. In addition to claims of breach of a lease, the complaint alleges fraudulent misrepresentation of the financial resources of a subsidiary. The plaintiffs are seeking damages in excess of $15,000. Management believes there is a range of likely outcomes and has accrued an amount at the low end of the range in accordance with Financial Accounting Standards No. 5, Accounting for Contingencies (“FAS 5”). The Company has accrued $500 as of each of December 31, 2004, December 31, 2005 and September 30, 2006 and such amount is included within other expenses in the consolidated statement of operations for the year ended December 31, 2004. In the event of a settlement or trial, the ultimate expense to the Company may be materially different than the amount accrued.

F-36

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

During December 2004, the Company settled a lawsuit regarding its Austin, Texas lease for approximately $4,000, which is included in the consolidated statement of operations for the year ended December 31, 2004.

During May 2005, the Company settled a lawsuit for $2,750 regarding a lease in Chicago, Illinois which was fully accrued for at December 31, 2004. Approximately $1,850 was included in the consolidated statement of operations for the Chicago settlement for the year ended December 31, 2004, while the remaining $900 was accrued for in 2002.

One additional suit filed on October 26, 2001, Continental Poydras Corporation vs. Switch and Data LA One, LLC and the Company’s predecessor, is pending in New Orleans, Louisiana. Plaintiff is seeking over $3.2 million in connection with the Company’s alleged default of a lease agreement. This case is currently inactive.

The Company is subject to other legal proceedings and claims which arise in the ordinary course of business. Based upon currently available information, management believes that the amounts accrued in the balance sheet are adequate for the aforementioned claims and the amount of any additional liability with respect to these actions will not materially affect the financial position, results of operations or liquidity of the Company.

Taxes

During 2005, the State of Washington performed an excise tax audit on three of our subsidiaries and assessed additional business and occupation taxes of approximately $377. The Company has responded and is vigorously challenging these assessments. An unfavorable ruling was given on one of the subsidiaries, but the ruling is being appealed. The other cases are awaiting review by a Washington State Administrative Law Judge. The Company has accrued zero for these assessments, in accordance with FAS 5, as it believes the likelihood of unfavorable outcomes to the Company is not probable. In the event of a settlements or trials, the ultimate expense to the Company may be materially different than the amount accrued.

13.    Employee Benefit Plan

During 1999, the Company adopted the Switch & Data Facilities Company 401(k) Plan (the “401(k) Plan”). During 2003, the plan name was changed to the Switch and Data Management Company 401(k), without amending the plan features. All employees located in the United States are eligible to participate on the first day of the next month following their first month of employment. Under the 401(k) Plan, eligible employees are entitled to make tax deferred contributions, which the Company matches at a rate of 50% up to the maximum allowable statutory contribution. The Company contributed approximately $454, $571 and $514 for the years ended December 31, 2003, 2004 and 2005, respectively, and $417 (unaudited) and $558 for the nine months ended September 30, 2005 and 2006 respectively, to the 401(k) Plan.

14.    Related Party Transactions

In 2003, the Company engaged a consulting firm for certain real estate advisory services. This firm is owned by a stockholder of the Company. The Company paid approximately $100, $20 and $30, respectively, for those services for the years ended December 31, 2003, 2004 and

F-37

SWITCH & DATA FACILITIES COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended December 31, 2003, 2004 and 2005 and

Nine Months Ended September 30, 2005 (unaudited) and 2006

Dollars in Thousands, Except Per Share Amounts

2005. Amounts are included in general and administrative costs in the consolidated statements of operations. There was $30 and $0 payable to the firm as of December 31, 2004 and 2005, respectively.

In 2005, the Company engaged another consulting firm for certain real estate advisory services. A stockholder of the Company owns this firm. The agreement provides for a payment of $75 for these services. There was $50 payable to the firm as of December 31, 2005.

There were no related party transactions for the nine months ended September 30, 2006.

15. Segment Information

The Company manages its business as one reportable segment. Although the Company provides colocation services in several markets, these operations have been aggregated into one reportable segment based on the similar economic characteristics among all markets, including the nature of the services provided and the type of customers purchasing such services.

The Company’s geographic revenues are as follows:

	For the years ended December 31,						For the nine months ended September 30,
	2003		2004		2005		2005		2006
							(unaudited)
Revenues
United States	$	69,840	$	87,653	$	100,091	$	74,771	$	78,051
Canada		—		3,796		5,323		3,897		4,498
	$	69,840	$	91,449	$	105,414	$	78,668	$	82,549

Canadian operations were acquired in 2004 and as such no revenues were generated from Canada during 2003.

The Company’s long-lived assets are located in the following geographic regions:

	December 31,				September 30,
	2004		2005		2006
Long-Lived Assets
United States	$	120,080	$	131,742	$	127,361
Canada		6,821		7,275		7,326
	$	126,901	$	139,017	$	134,687

Revenues from a single customer were 18.8% and 10.4% of total revenues, or $13,160 and $9,512, for the years ended December 31, 2003 and 2004, respectively. The Company had no customers that represented more than 10% of total revenues for the year ended December 31, 2005 and for the nine months ended September 30, 2006.

F-38

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

(In thousands)

The table below presents valuation and qualifying accounts for the periods presented.

Description	Balance at beginning of Period		Charged to costs and expenses(1)		Deductions(2)			Balance at end of period
Year ended December 31, 2003:
Allowance for uncollectible accounts receivable	$	210	$	537	$	(369	)	$	378
Year ended December 31, 2004:
Allowance for uncollectible accounts receivable	$	378	$	555	$	(514	)	$	419
Year ended December 31, 2005:
Allowance for uncollectible accounts receivable	$	419	$	1,483	$	(1,167	)	$	736

(1) Represents the provision for allowance for uncollectible accounts receivable.

(2) Represents the amounts written off against the reserve.

All other schedules are omitted because they are not required or because the information is included in the financial statements or notes thereto.

F-39

REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of

Switch and Data, Inc.

In our opinion, the accompanying balance sheet presents fairly, in all material respects, the financial position of Switch and Data, Inc. (the Company) at July 31, 2006, in conformity with accounting principles generally accepted in the United States of America. This financial statement is the responsibility of the Company’s management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit of this statement in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet, assessing the accounting principles used and significant estimates made by management, and evaluating the overall balance sheet presentation. We believe that our audit provides a reasonable basis for our opinion.

/s/  PricewaterhouseCoopers LLP

Tampa, Florida

September 25, 2006

F-40

SWITCH AND DATA, INC.

Balance Sheet

July 31, 2006

Assets
Current assets
Cash and cash equivalents	$	—
Total current assets		—
Total assets	$	—
Liabilities and Stockholder’s Equity
Commitments and contingencies
Stockholder’s equity
Common stock, $0.0001 par value, authorized 200,000,000 shares; 100 shares issued and outstanding at July 31, 2006		—
Preferred stock, $0.0001 par value, authorized 25,000,000 shares; no shares issued and outstanding at July 31, 2006
Additional paid in capital		—
Accumulated deficit		—
Total stockholder’s equity		—
Total liabilities and stockholder’s equity	$	—

The accompanying notes are an integral part of these financial statement.

F-41

SWITCH AND DATA, INC.

NOTES TO FINANCIAL STATEMENT

July 31, 2006

1.    Organization

Description of Business

Switch and Data, Inc. (hereafter “the Company”) was incorporated in Delaware on July 31, 2006. The Company is a wholly-owned subsidiary of Switch & Data Facilities Company, Inc. The Company has no operations and has been created for the purpose of effecting a reorganization merger with its parent, Switch & Data Facilities Company, Inc., as described below.

Reorganization Merger (Unaudited)

Immediately prior to the effectiveness of the Registration Statement, a reorganization merger will occur whereby Switch & Data Facilities Company, Inc. will merge into its wholly-owned subsidiary Switch and Data, Inc. Upon such merger, the holders of Series D-1 Preferred Stock, Series D-2 Preferred Stock, Series C Redeemable Preferred Stock and Series B Convertible Preferred Stock of Switch & Data Facilities Company, Inc. will receive common shares in Switch and Data, Inc. equal to their respective liquidation preferences as contemplated by the existing investors agreement between Switch & Data Facilities Company, Inc. and its stockholders. Holders of Series D-2 Preferred Stock Options of Switch & Data Facilities Company, Inc. are expected to receive Common Stock Options of Switch and Data, Inc. of equal fair value at the date of the merger. The existing Common Stock, Series B Common Stock, Special Junior Stock, and Common Stock options of Switch & Data Facilities Company, Inc. will be cancelled by operation of the merger agreement and holders of those instruments are not expected to receive any consideration for their ownership interests.

There has been no activity other than the initial capitalization, and, therefore, the statement of operations, the statement of stockholders equity, and the statement of cash flows are not presented.

F-42

             Shares

Common Stock

Deutsche Bank Securities

Jefferies & Company

Prospectus

                    , 2007

You should rely only on the information contained in this document or to which we have referred you. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document.

TABLE OF CONTENTS

	Page
Prospectus Summary	1
Risk Factors	9
Forward-Looking Statements	25
Use of Proceeds	27
Dividend Policy	28
Capitalization	29
Dilution	32
Selected Consolidated Financial Data	34
Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Secured Credit Facility	67
Business	69
Management	81
Principal and Selling Stockholders	91
Certain Relationships and Related Party Transactions	93
Description of Capital Stock	95
Shares Eligible for Future Sale	98
Material U.S. Federal Tax Considerations	102
Underwriting	105
Notice to Canadian Residents	110
Legal Matters	112
Experts	112
Where You Can Find More Information	112
Index to Financial Statements	F-1

Until                     , 2007 (25 days after commencement of the offering), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.    OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses, other than the underwriting discount, payable by the registrant in connection with the sale of the common stock being registered. All amounts are estimates except the SEC registration fee, the NASD filing fees and The Nasdaq Global Market listing fee.

SEC registration fee	$	16,050
NASD filing fee		15,500
Nasdaq Global Market listing fee		100,000
Printing and engraving costs		*
Legal fees and expenses		*
Accounting fees and expenses		*
Transfer agent and registrar fees and expenses		*
Miscellaneous		*
Total	$	*

* To be completed by amendment.

ITEM 14.    INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Our amended and restated certificate of incorporation provides that, except to the extent prohibited by the Delaware General Corporation Law, as amended (the “DGCL”), our directors shall not be personally liable to the registrant or its stockholders for monetary damages for any breach of fiduciary duty as directors of the registrant. Under the DGCL, the directors have a fiduciary duty to the registrant which is not eliminated by this provision of the amended and restated certificate of incorporation and, in appropriate circumstances, equitable remedies such as injunctive or other forms of nonmonetary relief will remain available. In addition, each director will continue to be subject to liability under the DGCL for breach of the director’s duty of loyalty to the registrant, for acts or omissions which are found by a court of competent jurisdiction to be not in good faith or involving intentional misconduct, for knowing violations of law, for actions leading to improper personal benefit to the director, and for payment of dividends or approval of stock repurchases or redemptions that are prohibited by the DGCL. This provision also does not affect the directors’ responsibilities under any other laws, such as the Federal securities laws or state or Federal environmental laws. The registrant intends to maintain liability insurance for its officers and directors, if available on reasonable terms. Section 145 of the DGCL empowers a corporation to indemnify its directors and officers and to purchase insurance with respect to liability arising out of their capacity or status as directors and officers, provided that this provision shall not eliminate or limit the liability of a director: (1) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) arising under Section 174 of the DGCL, or (4) for any transaction from which the director derived an improper personal benefit. The DGCL provides further that the indemnification permitted thereunder shall not be deemed exclusive of any other rights to which the directors and officers may be entitled under the corporation’s bylaws, any agreement, a vote of stockholders or otherwise. The amended and restated certificate of incorporation eliminates the personal liability of directors to the fullest extent permitted by Section 102(b)(7) of the DGCL and provides that the registrant may fully indemnify any person who was or is a

II-1

party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) by reason of the fact that such person is or was a director or officer of the registrant, or is or was serving at the request of the registrant as a director or officer of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorney’s fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed action, suit or proceeding.

At present, there is no pending litigation or proceeding involving any director, officer, employee or agent as to which indemnification will be required or permitted under the certificate.

ITEM 15.    RECENT SALES OF UNREGISTERED SECURITIES.

During the last three years, we have sold and issued unregistered securities to a limited number of persons, as described below.

1. From time to time during the last three years, our predecessor granted and issued options to purchase an aggregate of 222,439 shares of our predecessor’s Series D-2 Preferred Stock with a weighted-average exercise price of $21.09 to a number of our employees, officers and directors pursuant to our 2003 Stock Incentive Plan. Among those receiving options were the following officers and directors: Keith Olsen, Ernest Sampera, Arthur Matin, Kathleen Earley and William Roach. These issuances were exempt from registration under the Securities Act in reliance upon Rule 701 promulgated under the Securities Act, as transactions occurring under compensatory benefit plans.

2. From time to time during the last three years, our predecessor issued an aggregate of 212,208 shares of our predecessor’s Series D-2 Preferred Stock to employees, directors and consultants upon exercise of options granted pursuant to our 2003 Stock Incentive Plan, with a weighted-average exercise price of $0.02 per share, for an aggregate of $4,890. These issuances were exempt from registration under the Securities Act in reliance upon Rule 701 promulgated under the Securities Act, as transactions occurring under compensatory benefit plans.

3. In August 2006, upon our incorporation, we issued 100 shares of common stock to our predecessor in exchange for $0.01 in the aggregate. This issuance was exempt from registration under the Securities Act in reliance upon Section 4(2) of the Securities Act, as an issuance by an issuer not involving a public offering.

The recipients of securities in each of the above transactions represented to us their intentions to acquire the securities for investment purposes only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and warrants issued in such transactions. All recipients had adequate access, through their relationships with us and otherwise, to information about us. No underwriters were involved nor were any commissions paid as part of these sales.

4. Pursuant to an investors agreement between our predecessor and virtually all of its stockholders, our predecessor will merge into us in a corporate reorganization immediately prior to the closing of the offering contemplated by this registration statement. In this reorganization, we will issue in the aggregate              shares of our common stock to our predecessor’s stockholders. The allocation of this fixed amount of our common shares among the different classes of our predecessor’s stock will be determined according to a formula set forth in the investors agreement that is based on the initial public offering price of our shares of common stock. As a result of the application of this formula, it is highly unlikely that the holders

II-2

of our predecessor’s Common Stock, Series B Common Stock and Series A, B and C Special Junior Stock will receive any of our common stock or any other consideration in connection with our corporate reorganization. All outstanding options issued by our predecessor will automatically be converted into options to acquire shares of our common stock. These issuances will be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act, or Regulation D promulgated thereunder, as issuances by an issuer not involving a public offering. For more detail regarding our corporate reorganization, see “Risk Factors—Risks Related to the Offering—We may face litigation with certain of our stockholders” and “Certain Relationships and Related Party Transactions—Corporate Reorganization.”

II-3

ITEM 16.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits.

1.1	**	Form of Underwriting Agreement
2.1	**	Form of Agreement and Plan of Merger
3.1	**	Form of Amended and Restated Certificate of Incorporation (to be filed with the Delaware Secretary of State immediately prior to the closing of this offering)
3.2	**	Form of Amended and Restated By-Laws (to be adopted immediately prior to the closing of this offering)
3.3	**	Form of Certificate of Merger
4.1	**	Form of Specimen Common Stock Certificate
4.2	**	Form of Fifth Amended and Restated Investors Agreement
5.1	**	Opinion of Holland & Knight LLP
10.1	***	Employment Agreement, dated February 16, 2004, between Switch & Data Facilities Company, Inc. and Keith Olsen
10.2	***	Employment Agreement, dated June 16, 2004, effective as of June 14, 2004, between Switch & Data Facilities Company, Inc. and George Pollock, Jr.
10.3	***	Employment Agreement, dated July 21, 2004, between Switch & Data Facilities Company, Inc. and Ernest Sampera
10.4	***	Employment Agreement, effective as of July 1, 2006, between Switch and Data Management Company LLC and William Roach
10.5	***	Offer Letter, dated August 8, 2005, between Switch and Data Management Company LLC and Ali Marashi
10.6	***	Third Amended and Restated Credit Agreement, dated as of October 13, 2005, among Switch & Data Holdings, Inc., as the Borrower, the institutions party thereto from time to time as Lenders, as the Lenders, Deutsche Bank AG New York Branch, as the Administrative Agent, Canadian Imperial Bank of Commerce and Royal Bank of Canada, as the Co-Documentation Agents, CIT Lending Services Corporation and BNP Paribas, as the Co-Syndication Agents, and Deutsche Bank Securities, Inc. and BNP Paribas, as Joint Lead Arrangers
10.7	***	First Amendment to Third Amended and Restated Credit Agreement, dated as of April 28, 2006, among Switch & Data Holdings, Inc., as the Borrower, the institutions party thereto from time to time as Lenders, as the Lenders, Deutsche Bank AG New York Branch, as the Administrative Agent, Canadian Imperial Bank of Commerce and Royal Bank of Canada, as the Co-Documentation Agents, CIT Lending Services Corporation and BNP Paribas, as the Co-Syndication Agents
10.8	***	Credit Agreement, dated as of October 13, 2005, among Switch & Data Holdings, Inc., as the Borrower, the institutions party thereto from time to time as Lenders, as the Term Loan Lenders, Deutsche Bank AG New York Branch, as the Administrative Agent, Canadian Imperial Bank of Commerce and Royal Bank of Canada, as the Co-Documentation Agents, CIT Lending Services Corporation and BNP Paribas, as the Co-Syndication Agents, and Deutsche Bank Securities, Inc. and BNP Paribas, as Joint Lead Arrangers
10.9	**	2006 Stock Incentive Plan
10.10	*	Agreement of Lease with 111 Eighth Avenue LLC, dated as of June 30, 1998.
10.11	*	First Amendment of Lease with 111 Eighth Avenue LLC, dated as of August 3, 2005.
10.12	*	Sublease with Global Crossing Telecommunications, Inc., dated as of November 21, 2005.

II-4

10.13	*	First Amendment to Sublease with Global Crossing Telecommunications, Inc., dated as of May 4, 2006.
10.14	***	Second Amendment to Sublease with Global Crossing Telecommunications, Inc., dated as of August 10, 2006.
10.15	*	Sublease Agreement with Abovenet Communications, Inc., dated as of March 13, 2003.
10.16	*	Lease with 529 Bryant Street Partners, LLC, dated as of January 31, 2005.
10.17	***	Amendment to Lease with 529 Bryant Street Partners, LLC, dated as of January 31, 2005.
10.18	*	Waiver and Second Amendment to Third Amended and Restated Credit Agreement, dated as of November 27, 2006, among Switch & Data Holdings, Inc., as the Borrower, the institutions party thereto from time to time as Lenders, as the Lenders, Deutsche Bank AG New York Branch, as the Administrative Agent, Canadian Imperial Bank of Commerce and Royal Bank of Canada, as the Co-Documentation Agents, and CIT Lending Services Corporation and BNP Paribas, as the Co-Syndication Agents
21.1	***	Subsidiaries of the Registrant.
23.1	*	Consent of PricewaterhouseCoopers LLP
23.2	*	Consent of PricewaterhouseCoopers LLP
23.3	**	Consent of Holland & Knight LLP (included in Exhibit 5.1)
24.1	***	Powers of Attorney (included in this Part II of the registration statement)

* Filed herewith.

** To be filed by amendment.

*** Previously filed.

(b) Financial Statement Schedules.

See Schedule II—“Valuation and Qualifying Accounts” contained on page F-39. All other schedules are omitted as the information is not required or is included in the Registrant’s financial statements and related notes.

ITEM 17.    UNDERTAKINGS.

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission this indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. If a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-5

The undersigned registrant hereby undertakes that:

1. For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

2. For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and this offering of these securities at that time shall be deemed to be the initial bona fide offering thereof.

II-6

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Tampa, State of Florida, on this 20th day of December, 2006.

SWITCH AND DATA, INC.
By:	/s/    KEITH OLSEN
Name:	Keith Olsen
Title:	Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities indicated:

Signature	Title	Date
* William Luby	Chairman of the Board	December 20, 2006
/s/    KEITH OLSEN         Keith Olsen	President, Chief Executive Officer and Director (principal executive officer)	December 20, 2006
/s/    George Pollock, Jr.         George Pollock, Jr.	Senior Vice President and Chief Financial Officer (principal financial and accounting officer)	December 20, 2006
* George Kelly	Director	December 20, 2006
* Kathleen Earley	Director	December 20, 2006
* Arthur Matin	Director	December 20, 2006
* M. Alex White	Director	December 20, 2006

*By:	/s/    KEITH OLSEN
	Keith Olsen Attorney-in-fact

II-7

EXHIBITS

10.10	Agreement of Lease with 111 Eighth Avenue LLC, dated as of June 30, 1998.
10.11	First Amendment of Lease with 111 Eighth Avenue LLC, dated as of August 3, 2005.
10.12	Sublease with Global Crossing Telecommunications, Inc., dated as of November 21, 2005.
10.13	First Amendment to Sublease with Global Crossing Telecommunications, Inc., dated as of May 4, 2006.
10.15	Sublease Agreement with Abovenet Communications, Inc., dated as of March 13, 2003.
10.16	Lease with 529 Bryant Street Partners, LLC, dated as of January 31, 2005.
10.18	Waiver and Second Amendment to Third Amended and Restated Credit Agreement, dated as of November 27, 2006, among Switch & Data Holdings, Inc., as the Borrower, the institutions party thereto from time to time as Lenders, as the Lenders, Deutsche Bank AG New York Branch, as the Administrative Agent, Canadian Imperial Bank of Commerce and Royal Bank of Canada, as the Co-Documentation Agents, and CIT Lending Services Corporation and BNP Paribas, as the Co-Syndication Agents
23.1	Consent of PricewaterhouseCoopers LLP
23.2	Consent of PricewaterhouseCoopers LLP

EX-10.10

EXHIBIT 10.10

AGREEMENT OF LEASE

111 EIGHTH AVENUE LLC

LANDLORD

AND

EXTRANET TELECOMMUNICATIONS, INC.

TENANT

Premises:	Portions of the Fifth (5th) and
	Fifteenth (15th) Floors
	111 Eighth Avenue
	New York, New York 10011
Dated:	June 30, 1998

TABLE Of CONTENTS

DEFINITIONS		1
ARTICLE 1.	DEMISE, PREMISES, TERM, RENT	4
ARTICLE 2.	USE AND OCCUPANCY	6
ARTICLE 3.	ALTERATIONS	7
ARTICLE 4.	CONDITION OF THE PREMISES; LANDLORD’S WORK	9
ARTICLE 5.	REPAIRS; FLOOR LOAD	10
ARTICLE 6.	REAL ESTATE TAXES AND LABOR	11
ARTICLE 7.	LEGAL REQUIREMENTS	16
ARTICLE 8.	SUBORDINATION AND NON-DISTURBANCE; ESTOPPEL CERTIFICATES	17
ARTICLE 9.	SERVICES	19
ARTICLE 10.	INSURANCE	27
ARTICLE 11.	DESTRUCTION OF THE PREMISES: PROPERTY LOSS OR DAMAGE	28
ARTICLE 12.	EMINENT DOMAIN	30
ARTICLE 13.	ASSIGNMENT AND SUBLETTING	30
ARTICLE 14.	ACCESS TO PREMISES	38
ARTICLE 15.	CERTIFICATE OF OCCUPANCY	38
ARTICLE 16.	DEFAULT	39
ARTICLE 17.	REMEDIES AND DAMAGES	41
ARTICLE 18.	FEES AND EXPENSES	43
ARTICLE 19.	NO REPRESENTATIONS BY LANDLORD	44
ARTICLE 20.	END OF TERM	44
ARTICLE 21.	QUIET ENJOYMENT	45
ARTICLE 22.	NO WAIVER; NON-LIABILITY	45
ARTICLE 23.	WAIVER OF TRIAL BY JURY	46
ARTICLE 24.	INABILITY TO PERFORM	46
ARTICLE 25.	BILLS AND NOTICES	47
ARTICLE 26.	RULES AND REGULATIONS	47
ARTICLE 27.	BROKER	47
ARTICLE 28.	INDEMNITY	48
ARTICLE 29.	LANDLORD’S CONTRIBUTION	49
ARTICLE 30.	SECURITY, DEPOSIT	51
ARTICLE 31.	REDUCED PREMISES	53
ARTICLE 32.	MISCELLANEOUS	53
Exhibit A:	Floor Plans of the Premises
Exhibit B:	Rules and Regulations
Exhibit C:	Approved Contractors
Exhibit D:	Form of Letter of Credit

AGREEMENT OF LEASE, made as of June 30, 1998, between 111 EIGHTH AVENUE INC, a Delaware limited liability company with an address c/o TACONIC INVESTMENT PARTNERS LLC, 1500 Broadway, New York, New York 10036 (“Landlord”), and EXTRANET TELECOMMUNICATIONS, INC., a New York corporation with an address at 111 Eighth Avenue, New York, New York 10011 (“Tenant”).

WITNESSETH:

The parties hereto, for themselves, their legal representatives, successors and assigns, hereby covenant as follows.

DEFINITIONS

“Additional Rent” means Tenant’s Tax Payment, Tenant’s Labor Rate Payment, and any and all other sums, other than Fixed Rent, payable by Tenant to Landlord under this Lease.

“Affiliate” means, with respect, to any Person, any other Person that, directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such first Person.

“Alterations” means alterations, installations, improvements, additions or other physical changes (other than decorations, movable fixtures and equipment) in or about the Premises.

“Base Rate” means the annual rate of interest publicly announced from time to time by Citibank, N.A., New York, New York (or any successor thereto) as its “base rate”, or such other term as may be used by Citibank, N.A. from time to time for the rate presently referred to as its base rate.

“Building” means all the buildings, equipment and other improvements and appurtenances of every kind and description now located or hereafter erected, constructed or placed upon the land and any and all alterations, renewals, replacements, additions and substitutions thereto, presently known by the address of 111 Eighth Avenue, New York, New York.

“Building Systems” means the mechanical, electrical, heating, ventilating, air conditioning, elevator, plumbing, sanitary, life-safety and other service systems of the Building, but shall not include the portions of such systems installed in the Premises by Tenant.

“Business Days” means all days, excluding Saturdays, Sundays, and all days observed by either the State of New York, the Federal Government or by the labor unions servicing the Building as legal holidays.

“Commencement Date” means July 1, 1998.

“Control” means: (i) the ownership, directly or indirectly, of more than fifty percent (50%) of the voting stock of a corporation, or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person.

“Default Rate” means a rate at all times four (4) percentage points above the Base Rate.

“Environmental Laws” means any Legal Requirements now or hereafter in effect relating to the environment, health, safety or Hazardous Materials.

“Expiration Date” means August 31, 2005.

“Governmental Authority” means any of the United States of America, the State of New York, the City of New York, any political subdivision thereof and any agency, department, commission, board, bureau or instrumentality of any of the foregoing, now existing or hereafter created, having jurisdiction over the Real Property or any portion thereof or the curbs, sidewalks, and areas adjacent thereto.

“Hazardous Materials” means any substances, materials or wastes regulated by any Governmental Authority or deemed or defined as a “hazardous substance”, “hazardous material”, “toxic substance”, “toxic pollutant”, “contaminant”, “pollutant”, “solid waste”, “hazardous waste” or words of similar import under applicable Legal Requirements, including oil and petroleum products, natural or synthetic gas, polychlorinated biphenyls, asbestos in any form, urea, formaldehyde, radon gas, or the emission of non-ionizing radiation, microwave radiation or electromagnetic fields at levels in excess of those (if any) specified by any Governmental Authority or which may cause a health hazard or danger to property, or the emission of any form of ionizing radiation.

“Initial Alterations” are defined in Section 4.2.

“Legal Requirements” means all present and future laws, rules, orders, ordinances, regulations, statutes, requirements, codes, executive orders, rules of common law, and any judicial interpretations thereof, extraordinary as well as ordinary, of all Governmental Authorities, including the Americans with Disabilities Act (42 U.S.C. §12,101 et seq.), New York City Local Law 58 of 1987, and any law of like import, and all rules, regulations and government orders with respect thereto, and any of the foregoing relating to environmental matters, Hazardous Materials, public health and safety matters, and of any applicable fire rating bureau, or other body exercising similar functions, affecting the Real Property or the maintenance, use or occupation thereof, or any street or sidewalk comprising a part of or in front thereof or any vault in or under the same.

“Mortgage” means any mortgage or trust indenture which may now or hereafter affect the Real Property, the Building or any Superior Lease and the leasehold interest created thereby, and all renewals, extensions, supplements, amendments, modifications, consolidations and replacements thereof or thereto, substitutions therefor, and advances made thereunder; “Mortgagee” means any mortgagee, trustee or other holder of a Mortgage.

“Permitted Use” means the use of the Premises by Tenant as a telecommunications switching center and colocation facility, with incidental technical equipment and storage, and other uses normally related thereto, and office and support facilities in connection therewith, and for no other purpose.

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“Person” means any individual, corporation, partnership, limited liability company, limited liability partnership, joint venture, estate, trust, unincorporated association, business trust, tenancy-in-common or other entity, or any Governmental Authority.

“Premises” means (i) a portion of the fifteenth (15th) floor known as Suite 1532, and the portions of the fifth (5th) floor known as Suites 518 and 536 (collectively, the “Existing Premises”); and (ii) the portions of the fifth (5th) floor known as Suites 519, 534A and 535A (collectively, the “New Premises”) of the Building, as shown on the floor plans attached to this Lease as Exhibit A and made a part hereof.

“Premises Area” is agreed to mean and is deemed to be the rentable area of the Premises, consisting of a total of 24,904 rentable square feet, as follows: (i) 6,612 rentable square feet of space in Suite 1532, (ii) 9,055 rentable square feet of space in Suite 518, (iii) 1,792 rentable square feet of space in Suite 536 (for a total of 17,459 rentable square feet in the “Existing Premises”), (iv) 5,567 rentable square feet of space in Suite 519, (v) 1,124 rentable square feet of space in Suite 536A, and (vi) 754 rentable square feet of space in Suite 534A (for a total of 7,445 rentable square feet in the New Premises). The Premises Area has been computed on the basis of the current standard employed by Landlord with respect to the calculation of the deemed rentable square foot area of the Building; provided, however, that in no event shall such deemed rentable square footage constitute or imply any representation or warranty by Landlord as to the actual size of the Premises or any other portion of the Building.

“Real Property” means the Building, together with the plot of land upon which it stands.

“Rules and Regulations” means the rules and regulations annexed hereto and made a part hereof as Exhibit B, and such other and further rules and regulations as Landlord may from time to time adopt.

“Substantial Completion” means, as to any construction performed by any party in the Premises, including the Initial Alterations, any other Alterations, that such work has been completed substantially in accordance with (i) the provisions of this Lease applicable thereto, (ii) the plans and specifications for such work, and (iii) all applicable Legal Requirements and Insurance Requirements, except for minor details of construction, decoration and mechanical adjustments, if any, the noncompletion of which does not materially interfere with Tenant’s use of the Premises, or which, in accordance with good construction practice, should be completed after the completion of other work to be performed in the Premises.

“Superior Lease(s)” means any ground or underlying lease of the Real Property or any part thereof heretofore or hereafter made by Landlord and all renewals, extensions, supplements, amendments and modifications thereof; “Lessor” means a lessor under a Superior Lease.

“Tenant’s Alterations” means all Alterations, including the Initial Alterations, in and to the Premises which may be made by or on behalf of Tenant prior to and during the Term, or any renewal thereof.

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“Tenant’s Property” means Tenant’s movable fixtures and movable partitions, telephone and other communications equipment, computer systems, furniture, trade fixtures, Tenant’s HVAC System, furnishings and other items of personal property which are removable without material damage to the Premises or Building.

“Tenant’s HVAC System” is defined in Section 9.3(d).

“Term” means the term of this Lease, which shall commence on the Commencement Date and shall expire on the Expiration Date.

“Unavoidable Delays” are defined in Article 24.

ARTICLE 1. DEMISE, PREMISES, TERM, RENT

Section 1.1 Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord, the Premises, for the Term to commence on the Commencement Date and to end on the Expiration Date, at an annual rent (“Fixed Rent”) as follows:

(a) Two Hundred Fifty-Seven Thousand One Hundred Thirty-Six and 37/100 Dollars ($257,136.37) per annum ($21,428.03 per month) for the period commencing on the Commencement Date and ending on September 30, 1998;

(b) Four Hundred Twenty-Eight Thousand Three Hundred Seventy-One and 37/100 Dollars ($428,371 .37) per annum ($35,697.61 per month) for the period commencing on the October 1, 1998 and ending on December 31, 1998;

(c) Four Hundred Thirty-Four Thousand Nine Hundred Eighty-Three and 37/100 Dollars ($434,983.37) per annum ($36,248.61 per month) for the period commencing on the January 1, 1999 and ending on March 31, 1999;

(d) Four Hundred Thirty-Eight Thousand Five Hundred Sixty-Seven and 37/100 Dollars ($438,567.37) per annum ($36,547.28 per month) for the period commencing on April 1, 1999 and ending on August 31, 1999;

(e) Four Hundred Fifty-Six Thousand Six Hundred Seventy-Seven and 37/100 Dollars ($456,677.37) per annum ($38,056.45 per month) for the period commencing on September 1, 1999 and ending on June 30, 2000;

(f) Five Hundred Twenty-Five Thousand Seven Hundred Six and 65/100 Dollars ($525,706.65) per annum ($43,808.89 per month) for the period commencing on July 1, 2000 and ending on February 28, 2002;

(g) Five Hundred Sixty-Seven Thousand Eight Hundred Seventy-Seven and 65/100 Dollars ($567,877.65) per annum ($47,323.14 per month) for the period commencing on March 1, 2002 and ending on August 31, 2002;

(h) Six Hundred Thirty-Three Thousand Five Hundred Twenty-Six and 40/100 Dollars ($633,526.40) per annum ($52,793.87 per month) for the period commencing on September 1, 2002 and ending on October 31, 2002; and

(i) Six Hundred Forty-Seven Thousand Five Hundred Four and 00/100 Dollars ($647,504.00) per annum ($53,958.67 per month) for the period commencing on November 1, 2002 and ending on the Expiration Date;

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which Tenant agrees to pay to Landlord, without notice or demand, in lawful money of the United, States, in monthly installments in advance on the first (1st) day of each calendar month during the Term, at the office of Landlord or such other place as Landlord may designate, without any set-off, offset, abatement or deduction whatsoever. Fixed Rent and Additional Rent shall be payable by check drawn upon a bank which is a member of the New York Clearinghouse Association or by wire transfer of immediately available funds.

Section 1.2 Notwithstanding anything to the contrary contained herein, upon execution and delivery of this Lease, Tenant shall pay to Landlord the sum of Thirty-Five Thousand Five Hundred Seventy and 78/100 Dollars ($35,570.00) representing the installment of Fixed Rent for the first (1st) full calendar month of the Term after the Commencement Date. If the Commencement Date shall occur on a date other than the first (1st) day of any calendar month, Tenant shall also pay to Landlord, on the Commencement Date, a sum equal to One Thousand One Hundred Eighty-Five and 69/100 Dollars ($1,185.69), multiplied by the number of calendar days in the period from the Commencement Date to the last day of the month in which the Commencement Date shall occur, both inclusive.

Section 1.3 Notwithstanding anything to the contrary set forth in Section 1.1, so long as Tenant is not in default beyond applicable grace or notice periods under any of the terms, covenants or conditions of the Lease on Tenant’s part to be observed or performed, Tenant shall receive a rent credit in the total amount of Forty-Two Thousand Four Hundred Twenty-Eight and 25/100 Dollars ($42,428.25) to be credited on account of Fixed Rent for the New Premises at the rate of Fourteen Thousand One Hundred Forty-Two and 75/100 Dollars ($14,142.75) per month for each of the months of June, July and August 1998. Nothing contained herein shall affect Tenant’s obligation to make any other payment under this Lease during the aforementioned period.

Section 1.4 (a) Tenant presently occupies the Existing Premises under three (3) separate leases (the “Existing Leases”) between Landlord’s predecessor-in-interest, P.A. Building Company, as landlord and Tenant, as follows: (i) Lease, dated as of December 14, 1994, demising Suite 1532, for a term expiring on June 30, 2000, (ii) Lease, dated as of October 1, 1995, demising Suite 536, for a term expiring on October 31, 2002, and (iii) Lease, dated as of April 1, 1997, demising Suite 518, for a term expiring on August 31, 2002. Notwithstanding anything to the contrary set forth in the Existing Leases, Landlord and Tenant acknowledge and agree that the Existing Leases shall terminate and come to an end on the day immediately preceding the Commencement Date, unless sooner terminated pursuant to any of the terms, covenants or conditions of the Existing Leases or pursuant to Legal Requirements, with the same force and effect as if the day immediately preceding the Commencement Date of this Lease were the expiration date set forth in each of the Existing Leases. Tenant shall remain in possession of the Existing Premises commencing on the Commencement Date under the terms and conditions of this Lease.

(b) Upon Landlord’s request, Tenant shall execute and deliver to Landlord a further agreement, in form and substance reasonably satisfactory to Landlord, evidencing the termination of the Existing Leases as set forth herein; provided, however, that neither Landlord’s failure to request such execution of such instrument nor Tenant’s failure to execute and deliver such instrument shall vitiate the provisions of this Section 1.4.

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(c) Tenant shall be released from its obligations under the Existing Leases accruing after the Commencement Date; provided, however, that Tenant’s obligations to pay annual rent, additional rent and any and all sums and charges payable under the Existing Leases attributable to the period up to the Commencement Date, and to perform all of the obligations on Tenant’s part to be performed thereunder attributable to such period (collectively, the “Existing Obligations”) shall survive the expiration of the terms of the Existing Leases, and from and after the Commencement Date of this Lease, the payment and performance of the Existing Obligations shall constitute and be deemed to be the obligations of Tenant under this Lease.

(d) Tenant represents, warrants, covenants and agrees that: (i) Tenant is not in default under any of the terms, covenants or conditions of the Existing Leases, (ii) Tenant has not done or permitted, and will not do or permit, any action whereby the Existing Leases or the term or estate thereby granted, or the Existing Premises, or any part thereof, or any fixtures, alterations, installations, additions and improvements in and to the Existing Premises or any part thereof, have or will become encumbered in any way whatsoever, (iii) Tenant owns and will own the Existing Leases and has and will have good right to surrender the Existing Premises, and (iv) no one other than Tenant has acquired or will acquire through or under Tenant, any right, title or interest in or to the Existing Leases or the Existing Premises, or any part thereof, or in or to any alterations, installations, additions or improvements therein, or any part thereof.

ARTICLE 2. USE AND OCCUPANCY

Section 2.1 Tenant shall use and occupy the Premises for the Permitted Use and for no other purpose. Tenant shall not use or occupy or permit the use or occupancy of any part of the Premises in any manner not permitted hereunder, or which in Landlord’s judgment would adversely affect (a) the proper and economical rendition of any service required to be furnished to any tenant or other occupant of the Building, (b) the use or enjoyment of any part of the Building by any other tenant or other occupant, or (c) the appearance, character or reputation of the Building.

Section 2.2 Tenant shall not use or permit the Premises or any part thereof to be used: (a) for the business of printing or other manufacturing of any kind, (b) as a retail branch of a bank or savings and loan association, or as a retail loan company, as a retail stock broker’s or dealer’s office, (c) for the storage of merchandise, (d) for the distribution, by mail-order or otherwise, of merchandise, (e) as a restaurant or bar or for the sale of food or beverages, (f) as a news or cigar stand, (g) as an employment agency, labor union office, school, physician’s or dentist’s office, dance or music studio, (h) as a barber shop or beauty salon, (i) for the sale, at retail or otherwise, of any goods or products, (j) by the United States Government, the City or State of New York, any Governmental Authority, any foreign government, the United Nations or any agency or department of any of the foregoing or any Person having sovereign or diplomatic immunity, (k) for the rendition of medical, dental or other therapeutic or diagnostic services, or (1) for the conduct of an auction.

Section 2.3 Landlord shall not be subject to any liability for failure to give possession of the Premises on the Commencement Date and the validity of this Lease shall not be impaired under such circumstances, nor shall the same be construed to extend the term of this Lease, except that Fixed Rent and Additional Rent shall be abated until possession of the Premises shall be delivered to Tenant. The foregoing shall constitute an express negation of Section 223-a of the New York Real Property Law or any successor law or ordinance, which shall be inapplicable hereto, and Tenant hereby waives any right to rescind this Lease which Tenant might otherwise have thereunder.

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ARTICLE 3. ALTERATIONS

Section 3.1 Tenant shall not make any Alterations without Landlord’s prior written consent in each instance, provided that Tenant’s changing of wall coverings, carpeting or paint shall not be deemed to be Alterations requiring such consent. Landlord’s consent shall be granted or denied in Landlord’s sole discretion; provided, however, that Landlord shall not unreasonably withhold or delay its consent to Alterations proposed to be made by Tenant, provided that such Alterations (a) are non-structural and do not adversely affect the Building Systems or services, (b) are performed only by contractors approved in writing by Landlord, (c) do not affect any part of the Building other than the Premises, (d) do not adversely affect any service required to be furnished by Landlord to Tenant or to any other tenant or occupant of the Building, and (e) do not reduce the value or utility of the Building.

Section 3.2 (a) Prior to making any Alterations, Tenant shall (i) submit to Landlord, for Landlord’s written approval, detailed plans and specifications therefor in form satisfactory to Landlord, (ii) if such Alterations require a filing with Governmental Authority or require the consent of such authority, then such plans and specifications shall (A) be prepared and certified by a registered architect or licensed engineer, and (B) comply with all Legal Requirements to the extent necessary for such governmental filing or consent, (iii) at its expense, obtain all required permits, approvals and certificates, (iv) furnish to Landlord duplicate original policies or certificates of worker’s compensation (covering all persons to be employed by Tenant, and all contractors and subcontractors supplying materials or performing work in connection with such Alterations) and comprehensive public liability (including property damage coverage) insurance and Builder’s Risk coverage (issued on a completed value basis) all in such form, with such companies, for such periods and in such amounts as Landlord may require, naming Landlord and its employees and agents, and any Lessor and any Mortgagee as additional insureds, and (v) with respect to any Alteration costing more than $50,000.00 to complete, furnish to Landlord such evidence of Tenant’s ability to complete and to fully and completely pay for such Alteration as is satisfactory to Landlord. All Alterations shall be performed by Tenant at Tenant’s sole cost and expense (A) in a good and workmanlike manner using new materials of first class quality, (B) in compliance with all Legal Requirements, and (C) in accordance with the plans and specifications previously approved by Landlord. Tenant shall at its cost and expense obtain all approvals, consents and permits from every Governmental Authority having or claiming jurisdiction prior to, during and upon completion of such Alterations. Tenant shall promptly reimburse Landlord, as Additional Rent and upon demand, for any and all costs and expenses incurred by Landlord in connection with Landlord’s review of Tenant’s plans and specifications for any such Alteration.

(b) Landlord shall not unreasonably withhold, condition or delay its approval of the contractors proposed to be used by Tenant for Tenant’s Alterations, provided that in the case of the mechanical, electrical, plumbing and fire safety trades, Tenant shall select its contractors and sub-contractors from Landlord’s list of approved contractors. Attached hereto as Exhibit C is a list of contractors currently approved by Landlord for the performance of work in the Building, which list may be modified by Landlord from time to time.

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(c) Notwithstanding the foregoing provisions of this Article 3, Tenant shall be permitted to make minor, non-structural alterations to the Premises (“Minor Alterations”) upon prior notice to Landlord, but without the necessity of procuring Landlord’s consent thereto, provided that the estimated cost of each such Minor Alteration does not exceed $25,000.00 in any one instance. The provisions of subsections 3.2(a) and (b) shall be applicable to Minor Alterations. Prior to commencing any Minor Alteration, Tenant shall furnish Landlord with (i) working drawings or plans for such Minor Alteration in sufficient detail to permit Landlord to determine that such Alteration complies with the requirements hereof, and (ii) the names of the contractors proposed to be used by Tenant for such Minor Alteration.

(d) Upon completion of any Alterations, Tenant, at its expense, shall promptly obtain certificates of final approval of such Alterations as may be required by any Governmental Authority, and shall furnish Landlord with copies thereof, together with “as-built” plans and specifications for such Alterations prepared on an Autocad Computer Assisted Drafting and Design System (or such other system or medium as Landlord may accept) using naming conventions issued by the American Institute of Architects in June, 1990 (or such other naming convention as Landlord may accept) and magnetic computer media of such record drawings and specifications, translated into DXF format or another format acceptable to Landlord.

(e) Landlord agrees to respond to any written request for approval of plans and specifications for Alterations proposed to be made by Tenant within ten (10) Business Days after receipt by Landlord of complete and detailed architectural, structural, mechanical and engineering plans and specifications as required for such Alteration (collectively, “Tenant’s Plans”). In addition, Landlord agrees to respond to any resubmission of Tenant’s Plans within seven (7) Business Days after written resubmission, unless substantial revisions are required to Tenant’s Plans, in which event Landlord shall respond to Tenant within a reasonable time thereafter. In the event that Landlord disapproves all or any portion of Tenant’s Plans, Landlord shall notify Tenant of the grounds for such disapproval with reasonable specificity. If Landlord fails to approve or disapprove Tenant’s Plans on or before the end of the applicable review period set forth herein, Tenant shall have the right to provide Landlord with a second written request for approval (a “Second Request”), which shall specifically identify Tenant’s Plans to which such request relates, and set forth in bold capital letters the following statement: IF LANDLORD FAILS TO RESPOND WITHIN FIVE (5) BUSINESS DAYS AFTER RECEIPT OF THIS NOTICE, THEN TENANT SHALL BE ENTITLED TO COMMENCE CONSTRUCTION IN ACCORDANCE WITH THE PLANS AND SPECIFICATIONS PREVIOUSLY SUBMITTED TO LANDLORD AND TO WHICH LANDLORD HAS FAILED TO TIMELY RESPOND. In the event that Landlord fails to respond to a Second Request within five (5) Business Days after receipt by Landlord, Tenant’s Plans or revisions thereto for which the Second Request is submitted shall be deemed to be approved by Landlord, and Tenant shall be entitled to commence construction of the Alteration or portion thereof to which Tenant’s Plans relate, provided that Tenant’s Plans have been appropriately filed in accordance with applicable Legal Requirements, all permits and approvals required to be issued by any Governmental Authority shall have been duly issued, and Tenant shall otherwise have complied with all provisions of this Lease applicable to Alterations.

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Section 3.3 All Alterations in and to the Premises which may be made by or on behalf of Tenant, prior to and during the Term or any renewal thereof, shall become the property of Landlord upon the expiration or sooner termination of this Lease, and upon the Expiration Date or earlier termination of the Term or any renewal thereof (a) Tenant shall remove Tenant’s Property from the Premises, and (b) unless Landlord notifies Tenant no later than twenty (20) days prior to the Expiration Date that any or all items of Tenant’s Alterations shall not be removed from the Premises, Tenant shall remove Tenant’s Alterations from the Premises, at Tenant’s sole cost and expense. Tenant shall repair and restore in a good and workmanlike manner (reasonable wear and tear excepted) any damage to the Premises and the Building caused by such removal of Tenant’s Property and Tenant’s Alterations. Any of Tenant’s Alterations or Tenant’s Property not so removed by Tenant at or prior to the Expiration Date or earlier termination of the Term shall be deemed abandoned and may, at the election of Landlord, either be retained as Landlord’s property or be removed from the Premises by Landlord at Tenant’s expense. The covenants and agreements set forth in this Section 3.3 shall survive the expiration or earlier termination of this Lease.

Section 3.4 If, because of any act or omission of Tenant, its employees, agents, contractors, or subcontractors, any mechanic’s lien, U.C.C. financing statement or other lien, charge or order for the payment of money shall be filed against Landlord, or against all or any portion of the Premises, the Building or the Real Property, Tenant shall, at its own cost and expense, cause the same to be discharged of record, by bonding or otherwise, within thirty (30) days after the filing thereof, and Tenant shall indemnify, defend and save Landlord harmless against and from all costs, expenses, liabilities, suits, penalties, claims and demands (including reasonable attorneys’ fees and disbursements) resulting therefrom.

Section 3.5 Tenant shall not, at any time prior to or during the Term, directly or indirectly employ, or permit the employment of, any contractor, mechanic or laborer in the Premises, whether in connection with any Alteration or otherwise, if in Landlord’s sole judgment such employment will interfere or cause any conflict with other contractors, mechanics, or laborers engaged in the construction, maintenance or operation of the Building by Landlord, Tenant or others, or the use and enjoyment of other tenants or occupants of the Building.

ARTICLE 4. CONDITION OF THE PREMISES; LANDLORD’S WORK

Section 4.1 Tenant has examined the Premises and agrees to accept possession of the Premises in their “as is” condition on the Commencement Date, and further agrees that, except for the making of Landlord’s Contribution as expressly set forth in this Article 4, Landlord shall have no obligation to perform any work, supply any materials, incur any expenses or make any installations in order to prepare the Premises for Tenant’s occupancy. The taking of possession of the Premises by Tenant shall be conclusive evidence as against Tenant that at the time such possession was so taken, the Premises were in good and satisfactory condition, provided that if Tenant shall subsequently become aware of any latent defects existing in the Premises at the time such possession was so taken, which latent defects are the responsibility of Landlord to repair pursuant to Article 5 of this Lease (but excluding any latent defects in Tenant’s Alterations or arising from the negligence or misconduct of Tenant or any Tenant Party), Tenant shall give Landlord notice of any such latent defects promptly upon Tenant’s becoming aware thereof, and Landlord shall repair the same in accordance with the provisions of Article 5 of this Lease.

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Section 4.2 Landlord acknowledges that Tenant intends to perform certain Alterations in order to prepare the New Premises for its occupancy, which alterations shall include the installation of a sprinkler system or other fire suppression system satisfactory to Landlord and which complies with applicable Legal Requirements (the “Initial Alterations”). Notwithstanding anything set forth in this Article 4, Landlord agrees to make Landlord’s Contribution toward the cost of the Initial Alterations, subject to and in accordance with Article 29 of this Lease.

Section 4.3 Upon the request of Tenant, Landlord, at Tenant’s cost and expense, shall join in any applications for any permits, approvals or certificates from any Governmental Authority required to be obtained by Tenant, and shall sign such applications reasonably promptly after request by Tenant (provided that (i) the provisions of the applicable Legal Requirement shall require that Landlord join in such application, and (ii) such application is acceptable to Landlord) and shall otherwise cooperate with Tenant in connection therewith, provided that Landlord shall not be obligated to incur any cost or expense, including attorneys’ fees and disbursements, or suffer or incur any liability, in connection therewith.

ARTICLE 5. REPAIRS; FLOOR LOAD

Section 5.1 Landlord shall maintain and repair the Building Systems and the public portions of the Building, both exterior and interior, and the structural elements thereof, including the roof, foundation and curtain wall. Tenant, at Tenant’s expense, shall take good care of the Premises and the fixtures, systems, equipment and appurtenances therein, and make all non-structural repairs thereto as and when needed to preserve them in good working order and condition, except for reasonable wear and tear, obsolescence and damage for which Tenant is not responsible pursuant to the provisions of Articles 10 and 11 hereof. Notwithstanding the foregoing, all damage or injury to the Premises or to any other part of the Building, or to its fixtures, equipment and appurtenances, caused by or resulting from carelessness, omission, neglect or improper conduct of, or Alterations made by Tenant, Tenant’s agents, employees or licensees, shall be repaired at Tenant’s expense, (a) by Tenant to the satisfaction of Landlord (if the required repairs are non-structural and do not affect any Building System), or (b) by Landlord (if the required repairs are structural or affect any Building System). Tenant also shall repair all damage to the Building and the Premises caused by the making of any Alterations by Tenant or by the moving of Tenant’s Property. All of such repairs shall be of quality or class equal to the original work or construction. If Tenant fails after fifteen (15) days notice to proceed with due diligence to make repairs required to be made by Tenant, Landlord may make such repairs at the expense of Tenant, and Tenant shall pay the costs and expenses thereof incurred by Landlord, with interest at the Default Rate, as Additional Rent within ten (10) days after rendition of a bill or statement therefor.

Section 5.2 Tenant shall not place a load upon any floor of the Premises exceeding the floor load per square foot which such floor was designed to carry and which is allowed by law. Tenant shall not move any safe, heavy equipment, business machines, freight, bulky matter or fixtures into or out of the Building without Landlord’s prior consent. If such safe, equipment, freight, bulky matter or fixtures requires special handling, Tenant shall employ only persons holding a Master Rigger’s license to do such work.

Section 5.3 There shall be no allowance to Tenant for a diminution of rental value, no constructive eviction of Tenant and no liability on the part of Landlord by reason of inconvenience, annoyance or injury to business arising from Landlord making, or failing to

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make, any repairs, alterations, additions or improvements in or to any portion of the Building or the Premises, or in or to fixtures, appurtenances or equipment thereof. Landlord shall use reasonable efforts to minimize interference with Tenant’s access to and use and occupancy of the Premises in making any repairs, alterations, additions or improvements; provided, however, that Landlord shall have no obligation to employ contractors or labor at overtime or other premium pay rates or to incur any other overtime costs or additional expenses whatsoever.

Section 5.4 Tenant shall not require, permit, suffer or allow the cleaning of any window in the Premises from the outside in violation of Section 202 of the New York Labor Law or any successor statute thereto, or of any other Legal Requirement.

ARTICLE 6. REAL ESTATE TAXES AND LABOR RATE INCREASES

Section 6.1 The following terms shall have the meanings set forth below:

(a) “Taxes” shall include the aggregate amount of (i) all real estate taxes, assessments (special or otherwise), sewer and water rents, rates and charges and any other governmental levies, impositions or charges, whether general, special, ordinary, extraordinary, foreseen or unforeseen, which may be assessed, levied or imposed upon all or any part of the Real Property, and (ii) any expenses (including attorneys’ fees and disbursements and experts’ and other witness’ fees) incurred in contesting any of the foregoing or the Assessed Valuation (as defined in Section 6.1 (d)) of all or any part of the Real Property. If at any time after the date hereof the methods of taxation prevailing at the date hereof shall be altered so that in lieu of or as an addition to or as a substitute for the whole or any part of the taxes, assessments, rents, rates, charges, levies or impositions now assessed, levied or imposed upon all or any part of the Real Property, there shall be assessed, levied or imposed (A) a tax, assessment, levy, imposition or charge based on the rents received therefrom whether or not wholly or partially as a capital levy or otherwise, (B) a tax, assessment, levy, imposition or charge measured by or based in whole or in part upon all or any part of the Real Property and imposed upon Landlord, (C) a license fee measured by the rents or (D) any other tax, assessment, levy, imposition, charges or license fee however described or imposed, then all such taxes, assessments, levies, impositions, charges or license fees or the part thereof so measured or based shall be deemed to be Taxes. Taxes shall not include franchise, gift, inheritance, estate, sales, income or profit taxes imposed upon Landlord, any Lessor or any Mortgagee by any Governmental Authority.

(b) “Tenant’s Share” means One and 083/1000 percent (1.083%).

(c) “Base Taxes” means an amount equal to the sum of (i) one-half (1/2) of the Taxes payable for the Tax Year commencing on July 1, 1997 and ending June 30, 1998, plus (ii) one-half (1/2) of the Taxes payable for the Tax Year commending on July 1, 1998 and ending June 30, 1999.

(d) “Assessed Valuation” means the amount for which the Real Property is assessed pursuant to applicable provisions of the New York City Charter and of the Administrative Code of the City of New York for the purpose of imposition of Taxes.

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(e) “Tax Year” means the period July I through June 30 (or such other period as may be duly adopted by the City of New York as its fiscal year for real estate tax purposes).

(f) “Comparison Year” means (i) with respect to Taxes, any Tax Year commencing subsequent to the 1997/1998 Tax Year, and (ii) with respect to Labor Rates, any calendar year commencing subsequent to the Base Labor Year.

(g) “Landlord’s Statement” means an instrument or instruments containing a comparison of either (i) the Base Taxes and the Taxes payable for any Comparison Year, or (ii) the Base Labor Rates and the Labor Rates applicable to any Comparison Year.

(h) “Tenant’s Projected Share of Taxes” means Tenant’s Tax Payment (as defined in Section 6.1 (i)), if any, made by Tenant for the prior Comparison Year, plus an amount equal to Landlord’s estimate of the amount of increase in Tenant’s Tax Payment for the then current Comparison Year, divided by twelve (12) and payable monthly by Tenant to Landlord as Additional Rent.

(i) “Tenant’s Tax Payment” means Tenant’s Share of the excess of the Taxes payable for any Comparison Year over the Base Taxes.

Section 6.2 (a) If the Taxes payable for any Comparison Year (any part or all of which falls within the Term) shall exceed the Base Taxes, Tenant shall pay Tenant’s Tax Payment to Landlord, as Additional Rent, within ten (10) business days after demand from Landlord therefor, which demand shall be accompanied by Landlord’s Statement. Before or after the start of each Comparison Year, Landlord shall furnish to Tenant a Landlord’s Statement in respect of Taxes. If there shall be any increase in Taxes payable for any Comparison Year, whether during or after such Comparison Year or if there shall be any decrease in the Taxes payable for any Comparison Year during such Comparison Year, Landlord may furnish a revised Landlord’s Statement for such Comparison Year, and Tenant’s Tax Payment for such Comparison Year shall be adjusted and, within ten (10) business days after Tenant’s receipt of such revised Landlord’s Statement, Tenant shall (i) with respect to any increase in Taxes payable for such Comparison Year, pay such increase in Tenant’s Tax Payment to Landlord, or (ii) with respect to any decrease in Taxes payable for such Comparison Year, Landlord shall credit such decrease in Tenant’s Tax Payment against the next installment of Tenant’s Share of Taxes payable by Tenant pursuant to this Section 6.2(a), provided that if such decrease in Taxes is attributable to the final Comparison Year of the Term, Landlord shall pay the amount of such decrease in Tenant’s Tax Payment to Tenant. If, during the Term, Landlord shall elect to collect Tenant’s Tax Payments in full or in quarterly or bi-annual or other installments on any other date or dates than as presently required, then following Landlord’s notice to Tenant, Tenant’s Tax Payments shall be correspondingly revised. The benefit of any discount for any early payment or prepayment of Taxes relating to all or any part of the Real Property shall accrue solely to the benefit of Landlord and Taxes shall be computed without subtracting such discount.

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(b) With respect to each Comparison Year, on account of which Landlord shall (or anticipates that it may) be entitled to receive Tenant’s Tax Payment, Tenant shall pay to Landlord, as Additional Rent for the then current Tax Year, Tenant’s Projected Share of Taxes. Upon each date that a Tax Payment or an installment on account thereof shall be due from Tenant pursuant to the terms of this Section 6.2, Landlord shall apply the aggregate of the installments of Tenant’s Projected Share of Taxes then on account with Landlord against Tenant’s Tax Payment or installment thereof then due from Tenant. In the event that such aggregate amount shall not be sufficient to discharge such Tax Payment or installment, Landlord shall so notify Tenant, and the amount of Tenant’s payment obligation with respect to such Tax Payment or installment pursuant to this Section 6.2, shall be equal to the amount of the insufficiency and shall be payable within ten (10) business days of demand by Landlord. If, however, such aggregate amount shall be greater than the Tax Payment or installment, Landlord shall credit the amount of such excess against the next payment of Tenant’s Projected Share of Taxes due hereunder.

(c) Only Landlord shall be eligible to institute Tax reduction or other proceedings to reduce the Assessed Valuation of the Real Property, and the filings of any such proceeding by Tenant without Landlord’s prior written consent shall constitute a default hereunder. If the Taxes payable for either the 1997/1998 Tax Year or the 1998/1999 Tax Year are reduced by final determination of legal proceedings, settlement or otherwise, then Base Taxes shall be correspondingly revised, the Additional Rent theretofore paid or payable on account of Tenant’s Tax Payment hereunder for all Comparison Years shall be recomputed on the basis of such reduction, and Tenant shall pay to Landlord, as Additional Rent within ten (10) business days after being billed therefor, any deficiency between the amount of such Additional Rent theretofore computed and paid by Tenant to Landlord and the amount thereof due as a result of such recomputations. If the Base Taxes are increased by such final determination of legal proceedings, settlement or otherwise, then, Landlord shall either pay to Tenant, or at Landlord’s election, credit against subsequent payments due under this Section 6.2, an amount equal to the excess of the amounts of such Additional Rent theretofore paid by Tenant over the amount thereof actually due as a result of such recomputations. If Landlord shall receive a refund or reduction of Taxes for any Comparison Year, Landlord shall, within a reasonable time after such refund is actually received or such credit is actually applied against Taxes then due and payable, either pay to Tenant, or, at Landlord’s election, credit against subsequent payments under this Section 6.2, an amount equal to Tenant’s Share of the refund or reduction, provided that such amount shall not exceed Tenant’s Tax Payment paid for such Comparison Year. Nothing herein contained shall obligate Landlord to file any application or institute any proceeding seeking a reduction in Taxes or Assessed Valuation.

(d) Tenant’s Tax Payment shall be made as provided in this Section 6.2 regardless of the fact that Tenant may be exempt, in whole or in part, from the payment of any taxes by reason of Tenant’s diplomatic or other tax exempt status or for any other reason whatsoever.

(e) Tenant shall pay to Landlord, as Additional Rent upon demand, any occupancy tax or rent tax now in effect or hereafter enacted, if payable by Landlord in the first instance or hereafter required to be paid by Landlord.

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(f) If the Commencement Date or the Expiration Date shall occur on a date other than July 1 or June 30, respectively, any Additional Rent payable by Tenant to Landlord under this Section 6.2 for the Comparison Year in which such Commencement Date or Expiration Date shall occur, shall be apportioned in that percentage which the number of days in the period from the Commencement Date to June 30 or from July 1 to the Expiration Date, as the case may be, both inclusive, shall bear to the total number of days in such Comparison Year. In the event of a termination of this Lease, any Additional Rent under this Section 6.2 shall be paid or adjusted within thirty (30) days after submission of Landlord’s Statement. In no event shall Fixed Rent ever be reduced by operation of this Section 6.2 and the rights and obligations of Landlord and Tenant under the provisions of this Section 6.2 with respect to any Additional Rent shall survive the expiration or earlier termination of this Lease.

Section 6.3 The following terms shall have the meanings set forth below:

(a) “Comparison Year” shall mean any calendar year subsequent to the Base Labor Year.

(b) “R.A.B.” shall mean the Realty Advisory Board on Labor Relations, Incorporated, or its successor.

(c) “Local 32B-32J” shall mean Local 32B-32J of the Building Service Employees International Union, AFL-CIO, or its successor.

(d) “Class A Office Buildings” shall mean office buildings so categorized under any agreement between R.A.B. and Local 32B-32J, regardless of the designation given to such office buildings in any such agreement.

(e) “Labor Rates” shall mean a sum equal to the regular hourly wage rate required to be paid to Others (hereinafter defined) employed in Class A Office Buildings pursuant to an agreement between R.A.B. and Local 32B-32J; provided, however, that:

(i) if, as of October 1st of any Comparison Year, any such agreement shall require Others in Class A Office Buildings to be regularly employed on days or during hours when overtime or other premium pay rates are in effect pursuant to such agreement, then the term “regular hourly wage rate”, as used in this Section 6.3 shall mean the average hourly wage rate for the hours in a calendar week during which Others are required to be regularly employed;

(ii) if no such agreement is in effect as of October 1st of any Comparison Year with respect to Others, then the term “regular hourly wage rate”, as used in this Section 6.3 shall mean the regular hourly wage rate actually paid to Others employed in the Building by Landlord or by an independent contractor engaged by Landlord; and

(iii) the term “regular hourly wage rate” in all events shall exclude all benefits of any kind, including those payable directly to taxing authorities or others on account of the employment and all welfare, pension and fringe employee benefits and payments of any kind paid or given pursuant to such agreement.

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(f) “Others” shall mean that classification of employee engaged in the general maintenance and operation of Class A Office Buildings most nearly comparable to the classification now-applicable to “others” in the current agreement between R.A.B. and Local 32B-32J.

(g) “Base Labor Year” shall mean the calendar year 1998.

(h) “Base Labor Rates” shall mean the Labor Rates in effect for the Base Labor Year.

(i) “Tenant’s Labor Rate Payment” is defined in Section 6.4(a).

Section 6.4 (a) If the Labor Rates in effect for any Comparison Year (any part or all of which falls within the Term) shall be greater than the Base Labor Rates, then Tenant shall pay, as Additional Rent for such Comparison Year and continuing thereafter until a new Landlord’s Statement is rendered to Tenant, an amount (“Tenant’s Labor Rate Payment”) equal to (i) 24,904 multiplied by, (ii) the number of cents (inclusive of any fractions of a cent) by which the Labor Rates in effect for such Comparison Year exceed the Base Labor Rates.

(b) At any time prior to, during or after any Comparison Year Landlord shall render to Tenant a Landlord’s Statement showing (i) a comparison of the Labor Rates for the Comparison Year with the Base Labor Rates, and (ii) the amount of Tenant’s Labor Rate Payment resulting from such comparison. Landlord’s failure to render a Landlord’s Statement during or with respect to any Comparison Year shall not prejudice Landlord’s right to render a Landlord’s Statement during or with respect to any subsequent Comparison Year and shall not eliminate or reduce Tenant’s obligation to pay Tenant’s Labor Rate Payment pursuant to this Article 6 for such Comparison Year.

(c) Tenant’s Labor Rate Payment shall be payable by Tenant on the first day of the month following the furnishing to Tenant of a Landlord’s Statement, in equal monthly installments, each such installment to be equal to 1/12th of Tenant’s Labor Rate Payment for such Comparison Year multiplied by the number of months (and any fraction thereof) of the Term then elapsed since the commencement of such Comparison Year, continuing monthly thereafter until rendition of the next succeeding Landlord’s Statement.

(d) The provisions of this Section 6.4 shall be effective irrespective of whether or not (i) the Building is classified as a Class A office building from time to time, or (ii) any Building employees are members of Local 32B-32J. Tenant acknowledges and agrees that the computation of Labor Rates hereunder is intended to serve solely as a formula for an agreed rental adjustment, rather than an actual operating expense calculation, and is not intended to reflect the actual cost to Landlord of wages at the Building or any increases or decreases in such cost.

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Section 6.5 (a) If the Commencement Date or the Expiration Date shall occur on a date other than January 1 or December 31, respectively, any Additional Rent under this Article 6 for the Comparison Year in which such Commencement Date or Expiration Date shall occur shall be apportioned in that percentage which the number of days in the period from the Commencement Date to December 31 or from January 1 to the Expiration Date, as the case may be, both inclusive, shall bear to the total number of days in such Comparison Year. In the event of a termination of this Lease, any Additional Rent under this Article shall be paid or adjusted within thirty (30) days after submission of a Landlord’s Statement. In no event shall Fixed Rent ever be reduced by operation of this Section 6.5 and the rights and obligations of Landlord and Tenant under the provisions of this Article 6 with respect to any Additional Rent shall survive the expiration or earlier termination of this Lease.

(b) The computations of Additional Rent under this Article 6 are intended to constitute a formula for an agreed rental adjustment and may or may not constitute an actual reimbursement to Landlord for costs and expenses paid by Landlord with respect to the Building.

Section 6.6 Landlord’s failure to render a Landlord’s Statement with respect to any Comparison Year shall not prejudice Landlord’s right to thereafter render a Landlord’s Statement with respect thereto or with respect to any subsequent Comparison Year, nor shall the rendering of a Landlord’s Statement prejudice Landlord’s right to thereafter render a corrected Landlord’s Statement for that Comparison Year. Nothing herein contained shall restrict Landlord from issuing a Landlord’s Statement at any time there is an increase in Taxes or Labor Rates during any Comparison Year or any time thereafter.

Section 6.7 If any capital improvement is made to the Real Property during any calendar year during the Term in compliance with any Legal Requirements, then Tenant shall pay to Landlord, immediately upon demand therefor, Tenant’s Proportionate Share of the reasonable annual amortization, with interest, of the cost of such improvement in each calendar year during the Term during which such amortization occurs.

ARTICLE 7. LEGAL REQUIREMENTS

Section 7.1 (a) Tenant, at its sole expense, shall comply with all Legal Requirements applicable to the Premises or the use and occupancy thereof by Tenant, and make all repairs or Alterations required thereby, whether structural or nonstructural, ordinary or extraordinary, unless otherwise expressly provided herein; provided, however, that Tenant shall not be obligated to comply with any Requirement requiring any structural alteration to the Premises unless the application of such Requirement arises from (i) Tenant’s manner of use or occupancy of the Premises (as distinguished from the use or occupancy of the Premises for office purposes generally), (ii) any cause or condition created by or on behalf of any Tenant Party (including any Alterations), (iii) the breach of any of Tenant’s obligations under this Lease, (iv) any Hazardous Materials having been brought into the Building by any Tenant Party, or (v) the enforcement, by any Governmental Authority or as a consequence of private action, of the Americans With Disabilities Act, 42 U.S.C. §12101 (et seq.) or New York City Local Law 58 of 1987. Tenant shall not do or permit to be done any act or thing upon the Premises which will invalidate or be in conflict with Landlord’s insurance policies, and shall not do or permit anything to be done in or upon the Premises, or use the Premises in a manner, or bring or keep anything therein, which shall increase the rates for casualty or liability insurance applicable to the Building. If, as a result of any act or omission by Tenant or by reason of Tenant’s failure to

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comply with the provisions of this Article, the insurance rates for the Building shall be increased, then Tenant shall desist from doing or permitting to be done any such act or thing and shall reimburse Landlord, as Additional Rent hereunder, for that part of all insurance premiums thereafter paid by Landlord which shall have been charged because of such act, omission or failure by Tenant, and shall make such reimbursement upon demand by Landlord.

(b) Landlord shall comply with (i) all Legal Requirements applicable to the Premises which Tenant is not obligated to comply with pursuant to Section 7.1 (a), and (ii) all Legal Requirements applicable to the Building (exclusive of the Premises) which if not complied with will materially and adversely (A) restrict Tenant’s use and occupancy of the Premises, (B) restrict Tenant’s access to the Premises, or (C) affect the provision of Building services to the Premises, in each case subject to Landlord’s right to contest the applicability or legality of such Legal Requirements.

Section 7.2 Tenant, at its expense, shall comply with all Environmental Laws and with any directive of any Governmental Authority which shall impose any violation, order or duty upon Landlord or Tenant under any Environmental Laws with respect to the Premises or the use or occupation thereof. Tenant’s obligations hereunder with respect to Hazardous Materials and Environmental Laws shall extend only to those matters directly or indirectly based on, or arising or resulting from (a) the actual or alleged presence of Hazardous Materials on the Premises or in the Building which is caused or permitted by Tenant, and (b) any Environmental Claim (defined below) relating in any way to Tenant’s manner of operation or use of the Premises or the Building.

Section 7.3 Tenant shall provide Landlord with copies of all communications and related materials regarding the Premises which Tenant shall receive from or send to (a) any Governmental Authority relating in any way to any Environmental Laws, or (b) any Person, with respect to any claim based upon any Environmental Laws or relating in any way to Hazardous Materials (any such claim, an “Environmental Claim”) Landlord or its agents may perform an environmental inspection of the Premises at any time during the Term, upon prior notice to Tenant except in an emergency.

ARTICLE 8. SUBORDINATION AND NON-DISTURBANCE; ESTOPPEL CERTIFICATES

Section 8.1 This Lease, and all rights of Tenant hereunder, are and shall be subject and subordinate in all respects to all Mortgages and Superior Leases. This Section 8.1 shall be self-operative and no further instrument of subordination shall be required. In confirmation of such subordination, Tenant shall promptly execute and deliver any instrument that Landlord or any Lessor or Mortgagee may reasonably request to evidence such subordination.

Section 8.2 In the event of any act or omission of Landlord which would give Tenant the right, immediately or after lapse of a period of time, to cancel or terminate this lease, or to claim a partial or total eviction, Tenant shall not exercise such right (a) until it has given written notice of such act or omission to each Mortgagee and Lessor whose name and address shall previously have been furnished to Tenant in writing, and (b) unless such act or omission shall be one which is not capable of being remedied by Landlord or such Mortgagee or Lessor within a reasonable period of time, until a reasonable period for remedying such act or omission shall have elapsed following the giving of such notice and following the time when such

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Mortgagee or Lessor shall have become entitled under such Mortgage or Superior Lease, as the case may be, to remedy the same (which reasonable period shall in no event be less than the period to which Landlord would be entitled under this Lease or otherwise, after similar notice, to effect such remedy), provided such Mortgagee or Lessor shall with due diligence give Tenant written notice of its intention to remedy such act or omission, and such Mortgagee or Lessor shall commence and thereafter continue with reasonable diligence to remedy such act or omission. If more than one Mortgagee or Superior Lessor shall become entitled to any additional cure period under this Section 8.2, such cure periods shall run concurrently, not consecutively.

Section 8.3 If a Mortgagee or Lessor shall succeed to the rights of Landlord under this Lease, whether through possession or foreclosure action or delivery of a new lease or deed, then at the request of such party so succeeding to Landlord’s rights (“Successor Landlord”) and upon Successor Landlord’s written agreement to accept Tenant’s attornment, Tenant shall attorn to and recognize Successor Landlord as Tenant’s landlord under this Lease, and shall promptly execute and deliver any instrument that Successor Landlord may reasonably request to evidence such attornment. Upon such attornment this Lease shall continue in full force and effect as, or as if it were, a direct lease between Successor Landlord and Tenant upon all of the terms, conditions and covenants as are set forth in this Lease and shall be applicable after such attornment except that Successor Landlord shall not:

(a) be liable for any previous act or omission of Landlord under this Lease;

(b) be subject to any offset, not expressly provided for in this Lease, which shall have theretofore accrued to Tenant against Landlord; or

(c) be bound by any previous modification of this Lease, not expressly provided for in this Lease, or by any previous prepayment of more than one month’s fixed rent, unless such modification or prepayment shall have been expressly approved in writing by such Mortgagee or Lessor.

Section 8.4 Each party agrees, at any time and from time to time, as requested by the other party, upon not less than ten (10) days’ prior notice, to execute and deliver to the other a written statement executed and acknowledged by such party (a) stating that this Lease is then in full force and effect and has not been modified (or if modified, setting forth all modifications), (b) setting forth the then annual Fixed Rent, (c) setting forth the date to which the Fixed Rent and Additional Rent have been paid, (d) stating whether or not, to the best knowledge of the signatory, the other party is in default under this Lease, and if so, setting forth the specific nature of all such defaults, (e) stating the amount of the Security Deposit, (f) stating whether there are any subleases affecting the Premises, (g) stating the address of the signatory to which all notices and communication under the Lease shall be sent, the Commencement Date and the Expiration Date, and (i) as to any other matters reasonably requested by the party requesting such certificate. The parties acknowledge that any statement delivered pursuant to this Section 8.5 may be relied upon by others with whom the party requesting such certificate may be dealing, including any purchaser or owner of the Real Property or the Building, or of Landlord’s interest in the Real Property or the Building or any Superior Lease, or by any Mortgagee or Lessor, or by any prospective or actual sublessee of the Premises or assignee of this Lease, or permitted transferee of or successor to Tenant.

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ARTICLE 9. SERVICES

Section 9.1 Landlord shall provide, at Landlord’s expense, except as otherwise set forth herein, the following services:

Section 9.2 Electricity. (a) Landlord, at Landlord’s expense, subject to the provisions of this Article 9, shall furnish alternating current electrical energy to Tenant (i) for use in the Existing Premises at the levels provided under the Existing Leases, and (ii) for use in the New Premises at a level of not less than 1200 amperes, 480 volts, 3-phase, 4-wire, dedicated to Tenant. Tenant shall pay Landlord a one-time fee for the installation of such electrical capacity of $125.00 per ampere for each ampere provided to the New Premises above an amount equal to twelve (12) watts per Rentable Square Foot of space in the New Premises. Tenant covenants that Tenant’s use and consumption of electric current in the Premises shall not at any lime exceed the foregoing amount, nor exceed the capacity of any of the electrical facilities and installations in or otherwise serving or being used in the Premises. Tenant shall pay Landlord, as Additional Rent, at any time and from time to time, but no more frequently than monthly, for its consumption of electrical energy at the Premises, as provided herein.

(b) In the event that Tenant’s total power requirements at the New Premises, based on an annual review of Tenant’s consumption following the second (2nd) anniversary of the Commencement Date, shall be less than the 1200 ampere, 480 volt service described above, Tenant shall pay to Landlord an annual sum equal to the fee, if any, which Landlord is obligated to pay to the Electricity Provider (as hereinafter defined), commonly known as a “use it or lose it” fee, for the availability of such capacity, presently payable by Landlord to the Electricity Provider at the rate of $12.50 per unused ampere per annum. Further, if as of the third (3rd) anniversary of the Commencement Date, Tenant shall continue to require less than the 1200 ampere, 480 volt service described above in the New Premises, then Landlord shall have the right to reduce the level of electric power supplied to the New Premises to Tenant’s actual power requirements.

(c) The calculations and determinations of the charges for electric energy consumed by Tenant shall be based on the readings of one or more submeters to be installed by Landlord at Tenant’s sole expense, applied to Landlord’s Electricity Cost, as defined in Section 9.2(d). Tenant shall pay for electricity consumed as determined thereunder as measured and calculated from time to time by such submeter or submeters, such payment to be equal to the amount Tenant would pay for such consumption of electricity if it purchased that amount of electricity from the public utility servicing the Building under the rate structure and/or classification as set forth in this Section 9.2(c) pursuant to which Landlord would purchase that quantity of electricity for the entire Building, plus Landlord’s charge for overhead and supervision, which charge shall not exceed five percent (5%) of such payment by Tenant. In addition, Tenant shall pay to Landlord, as Additional Rent (i) the fees and expenses of Landlord’s electrical contractor for services rendered by such contractor in the maintenance and repair of such submeter(s), and (if) the amount of any taxes imposed by any Governmental Authority on Landlord’s receipts from the sale of electricity to Tenant. In the event that more than one submeter is used to measure Tenant’s consumption of electricity in the Premises, Tenant shall be billed only on the basis of the “totalized” demand, i.e., as though a single meter were measuring such usage.

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(d) “Landlord’s Electricity Cost” means the cost per kilowatt hour and cost per kilowatt demand, adjusted by time of day factors, fuel adjustment charges and other applicable rate adjustments, to Landlord for the purchase of electricity from the public utility or other electricity provider furnishing electricity service to the Building from time to time (the “Electricity Provider”), including sales and other taxes imposed by any Governmental Authority on Landlord’s purchase of electricity. If at any time during the Term the cost elements comprising Landlord’s Electricity Cost shall be increased by the Electricity Provider, or Landlord’s Electricity Cost shall be increased for any other reason, then effective as of the date of such increase, Tenant’s payment for submetered electricity under this Section 9.2 shall be proportionately increased. Landlord reserves the right to contract with different Electricity Providers from time to time in its sole judgment, and without reference to whether any Electricity Provider selected by Landlord provides lower rates than any other electricity supplier. Currently, Landlord’s Electricity Cost is based upon Consolidated Edison Company’s Service Classification rate schedule S.C. #4 Rate 1 as in effect on the Commencement Date.

(e) During the period beginning on the Commencement Date and ending on the date upon which the submeters to be installed by Landlord in the New Premises become operational, Tenant shall pay to Landlord a fixed fee for electric energy supplied to the New Premises of (i) during the period prior to the date upon which Tenant first occupies all or any portion of the New Premises for the conduct of its business, an amount per annum equal to One and 00/100 Dollar ($1.00) multiplied by the Premises Area of the New Premises, in equal monthly installments on the first (1st) day of each month during such period, and (ii) from and after the date upon which Tenant first occupies all or any portion of the New Premises for the conduct of its business, an amount per annum equal to Four and 00/100 Dollars ($4.00) multiplied by the Premises Area of the New Premises, in equal monthly installments on the first (1st) day of each month during such sentence, through the date upon which such submeters become operational.

(f) Tenant covenants that Tenant’s use and consumption of electric current shall not at any time exceed the capacity of any of the electrical facilities and installations in or otherwise serving or being used in the Premises and Tenant shall, upon the submission by Landlord to Tenant of written notice, promptly cease the use of any of Tenant’s electrical equipment which Landlord believes will cause Tenant to exceed such capacity. Any additional feeders, risers, electrical facilities and other such installations required for electric service to the Premises will be supplied by Landlord, at Tenant’s expense, upon Landlord’s prior consent in each instance, provided that, in Landlord’s judgment, such additional electrical facilities and installations, feeders or risers are necessary and are permissible under Legal Requirements (including the New York State Energy Conservation Construction Code) and insurance regulations and the installation of such feeders or risers will not cause permanent damage or injury to the Building or the Premises or cause or create a dangerous or hazardous condition or entail excessive or unreasonable alterations or repairs or interfere with, or disturb, other tenants or occupants of the Building. In addition, Landlord shall have no obligation to consent to such additional feeders, risers, electrical facilities and installations if in Landlord’s judgment, the same would give Tenant a disproportionate amount of the electrical current supplied to the Building at the expense of, or in derogation of the needs of other tenants or occupants of the Building.

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(g) Landlord shall not in any way be liable or responsible to Tenant for any loss, damage or expense which Tenant may sustain or incur as a result of the unavailability of or interruption in the supply of electric current to the Premises or a change in the quantity or character or nature of such current and such change, interruption or unavailability shall not constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent (except that Tenant’s liability to pay Landlord for electricity under this Section 9.2 shall cease as of the date of such disturbance), or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Landlord, or its agents, by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant’s business, or otherwise.

(h) Landlord reserves the right to discontinue furnishing electricity to Tenant in the Premises on not less than one hundred twenty (120) days’ notice to Tenant. If Landlord exercises such right to discontinue, or is compelled to discontinue furnishing electricity to Tenant, this Lease shall continue in full force and effect and shall be unaffected thereby, except only that from and after the effective date of such discontinuance, Landlord shall not be obligated to furnish electricity to Tenant, and Tenant shall have no further obligation to pay Landlord for electricity supplied to the Premises. If Landlord so discontinues furnishing electricity to Tenant, Tenant shall arrange to obtain electricity directly from the Electricity Provider. Such electricity may be furnished to Tenant by means of the then existing electrical facilities serving the Premises to the extent that the same are available, suitable and safe for such purposes. All meters and all additional panel boards, feeders, risers, wiring and other equipment which may be required by Tenant to obtain electricity directly from the public utility shall be installed by Landlord, at Tenant’s sole cost and expense, provided that Tenant may continue to use all existing electrical equipment then serving the Premises, to the extent available, suitable and safe for such purposes.

(i) If submetering of electricity in the Building is hereafter prohibited by any Legal Requirement, or by any order or ruling of the Public Service Commission of the State of New York, then Tenant shall apply, within ten (10) days of Tenant’s receiving notice thereof, to the Electricity Provider in order to obtain direct electric service, and Tenant shall bear all costs and expenses, as set forth in Section 9.2(h), necessary to comply with all rules and regulations of the Electricity Provider pertinent thereto, and from and after the date upon which Tenant procures direct electric service, Landlord shall be relieved of any further obligation to furnish electricity to Tenant pursuant to this Section 9.2. Such electricity may be furnished to Tenant by means of the then existing electrical facilities serving the Premises, including Building feeders and risers, to the extent that the same are suitable and safe for such purposes.

Section 9.3 Heat. (a) Provided that no Event of Default shall have occurred and be continuing, Landlord shall provide heat to the Premises on Business Days from 8:00 A.M. to 6:00 P.M., when required in Landlord’s judgment for the comfortable use and occupancy of the Premises, through use of the Building standard heating system (the “Building Heating System”).

(b) Anything in this Section 9.3 to the contrary notwithstanding, Landlord shall not be responsible if the normal operation of the Building Heating System shall fail to provide heat at reasonable temperatures. Tenant at all times shall cooperate fully with Landlord and shall abide by the regulations and requirements which Landlord may prescribe for the proper functioning and protection of the Building Heating System.

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(c) Landlord shall not be required to furnish heat during periods other than the hours and days set forth in this Section 9.3 for the furnishing and distributing of such services (“Overtime Periods”), unless Landlord has received advance notice from Tenant requesting such service not less than twenty-four (24) hours prior to the time when such service shall be required. Accordingly, if Landlord shall furnish heat to the Premises at the request of Tenant during Overtime Periods, Tenant shall pay Landlord, as Additional Rent within ten (10) days after demand, for such services at the standard rate then fixed by Landlord for the Building, which rate as of the date of this Lease is $250.00 per hour, subject to increase during the Term due to increases in Landlord’s costs. Failure by Landlord to furnish or distribute heat or any other services during Overtime Periods shall not constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of Fixed Rent or Additional Rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Landlord or its agents by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant’s business or otherwise.

(d) Landlord shall have no obligation to provide air-conditioning or ventilation services to the Premises, Landlord agrees that if Tenant desires to install a supplemental air-conditioning system, as part of the Initial Alterations or otherwise, and if Landlord shall approve such an Alteration pursuant to Article 3 hereof, then Tenant may install an air-cooled package air-conditioning unit, having a capacity not to exceed 1,800,000 BTUs, at a location to be designated by Landlord (“Tenant’s HVAC System”). Upon the expiration or sooner termination of the Term of this Lease, at Landlord’s request, Tenant shall remove Tenant’s HVAC System and restore any damage to the Building and the Premises resulting from such removal.

Section 9.4 Elevators. Landlord shall provide passenger elevator service to the Premises on Business Days from 8:00 A.M. to 6:00 P.M. and freight elevator facilities on a non-exclusive basis, on Business Days from 8:00 A.M. to 4:45 P.M., and shall have one passenger elevator available at all other times. Such elevator service shall be subject to such rules and regulations as Landlord may promulgate from time to time with respect thereto. Landlord shall have the right to change the operation or manner of operation of any of the elevators in the Building and/or to discontinue, temporarily or permanently, the use of any one or more cars in any of the passenger, freight or truck elevator banks.

Section 9.5 Cleaning. Tenant shall, at Tenant’s sole cost, provide cleaning services at the Premises pursuant to reasonable rules and regulations established by Landlord from time to time, and use a cleaning contractor approved by Landlord. Tenant shall cause all refuse and rubbish removed from the Premises by Tenant’s contractor to be brought to an area of the Building designated from time to time by Landlord, and Landlord shall cause such refuse and rubbish to be removed from such designated area. Tenant shall reimburse Landlord, as Additional Rent, within twenty (20) days of delivery of Landlord’s statement therefor, for Landlord’s out-of-pocket costs in removing Tenant’s refuse and rubbish from the Building.

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Section 9.6 Emergency Generator.

(a) Landlord shall provide 800 amperes of emergency electric power service “EPS”) to Tenant for use in the Premises from the Building emergency electric generator (the “Generator”) as provided in this Section 9.6. Landlord shall install, within sixty (60) days after the complete execution and delivery of this Lease by Landlord and Tenant, at Tenant’s sole cost and expense (i) an automatic transfer switch (the “Transfer Switch”), in the Premises at a location to be designated by Landlord, sufficient to supply a total connected load of up to 800 amperes of EPS at 460 volts to the Premises, and (ii) a connection from the Generator to the Transfer Switch. Tenant shall pay to Landlord the actual out-of-pocket costs incurred by Landlord for the installation of the Transfer Switch and the connection from the Generator to the Transfer Switch.

(b) Tenant shall pay to Landlord an annual fee (the “EPS fee”) for the period commencing on the date on which Landlord makes EPS available to the Premises through the Expiration Date of this Lease, irrespective of whether or not emergency power is ever required or used by Tenant, in the amount of $100.00 per ampere per year, subject to increase pursuant to Section 9.6(c) below. The EPS Fee shall be payable by Tenant to Landlord as Additional Rent in advance in equal monthly installments on the first day of each month during the Term. Tenant shall be responsible for the payment of any occupancy tax, or any other tax (other than Landlord’s income tax) imposed upon the Additional Rent paid by Tenant pursuant to this Section 9.6.

(c) For purposes of this Lease, (i) the term “CPI” means the Consumer Price Index for All Urban Consumers, New York, N.Y. - Northeastern, N.J., 1982-84=100; provided, however, that if the CPI or any successor index shall cease to be published, Landlord shall substitute therefor such other comparable index as Landlord shall reasonably determine, and (ii) the term “CPI Fraction” means, as of each January 1st during the Term (an “Adjustment Date”), a fraction (A) the numerator of which is the sum of (I) the CPI in effect on the immediately previous Adjustment Date (the “Base Index”) plus (2) the amount by which the CPI in effect on the Adjustment Date exceeds the Base Index, and (B) the denominator of which is the Base Index. If, as of each Adjustment Date, the CPI then in effect is greater than the Base Index, then the EPS Fee shall be increased as of such Adjustment Date to an amount equal to the product of (I) the EPS Fee then in effect for the immediately previous calendar year, multiplied by (II) the CPI Fraction. In no event shall the EPS Fee ever be reduced pursuant to this Section 9.6(c).

(d) Tenant understands and agrees that EPS will be supplied to Tenant only if there is an interruption or failure in the supply of electric current to the Premises, and under no other circumstances.

(e) The privilege of using the EPS service described in this Section 9.6 cannot be transferred or assigned by Tenant except with the express written consent of Landlord, which may be withheld in Landlord’s sole discretion, and under no circumstances can this privilege be transferred or assigned to any party who is not a tenant under this Lease; provided, however, that nothing set forth herein shall restrict Tenant from providing emergency electric power service to telecommunications equipment located in the Premises pursuant to colocation agreements.

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(f) Landlord shall have the right, in Landlord’s sole discretion, at any time and from time to time during the term of this Lease, upon not less than thirty (30) days prior written notice to Tenant, to relocate the Generator to another area of the Building, and/or to substitute another Building generator in lieu of the Generator, provided that there shall be no interruption in the availability of EPS to Tenant at the level provided in Section 9.6(a). Tenant shall cooperate with Landlord to effectuate any such relocation or substitution of the Generator. All costs involved in such relocation or substitution shall be borne by Landlord.

(g) Tenant acknowledges that the Generator (and any replacement or substitute therefor), the Transfer Switch, and all connections thereto, are and shall remain the sole property of Landlord and may not be removed by Tenant.

(h) Upon and subject to the provisions of this Lease, Landlord shall maintain and repair the Generator. Landlord shall maintain all service contracts and take such other actions as may be necessary to keep the Generator in good working order. Landlord shall not be liable in any way to Tenant for any delay, interruption, failure, variation or defect in or with regard to the Generator and/or EPS, and in no event shall Landlord be liable to Tenant for special, indirect or consequential damages which may result from any such delay, interruption, failure, variation or defect.

Section 9.7 Water. Landlord shall furnish hot and cold water in such quantities as Landlord deems sufficient for ordinary drinking, lavatory and cleaning purposes to the Premises. If Tenant requires, uses or consumes water for any purpose in addition to ordinary lavatory, cleaning and drinking purposes, Landlord may install a hot water meter and a cold water meter and thereby measure Tenant’s consumption of water for all purposes. Tenant shall (a) pay to Landlord the cost of any such meters and their installation, (b) at Tenant’s sole cost and expense, keep any such meters and any such installation equipment in good working order and repair, and (c) pay to Landlord, as Additional Rent, as and when billed therefor for water consumed, together with a charge for any required pumping or heating thereof, all sewer rents, charges or any other taxes, rents, levies or charges which now or hereafter are assessed, imposed or shall become a lien upon the Premises or the Real Property pursuant to law, order or regulation made or issued in connection with any such metered use, consumption, maintenance or supply of water, water system, or sewage or sewage connection or system, and in default in making such payment Landlord may pay such charges and collect the same from Tenant.

Section 9.8 Rubbish and Removal. Tenant shall, at Tenant’s sole cost, provide refuse and rubbish removal service at the Premises at times, and pursuant to regulations, established by Landlord from time to time.

Section 9.9 Antenna System.

(a) Tenant has installed and currently operates two (2) parapet-mounted ten (10)-foot antenna masts on the roof of the Building, together with a conduit riser connecting the Existing Premises to such antennas (collectively, the “Existing Antenna System”). Tenant shall not be required to pay a license fee to Landlord for the Existing Antenna System.

(b) Subject to the provisions of this Section 9.9, Tenant may install, operate and use, solely for communication services in connection with the operation of Tenant’s business, up to four (4) parapet-mounted ten (10)-foot antenna masts (collectively, the “New Antenna System”; together with the Existing Antenna System, collectively, the “Antenna

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System”) on the roof of the Building, and, subject to the rights of other tenants in the Building, Landlord will grant to Tenant, for Tenant’s own use and not for resale purposes, a non-exclusive license of sufficient space on the roof of the Building for the New Antenna System, at a location designated by Landlord and reasonably satisfactory to Tenant.

(c) The installation of the New Antenna System shall constitute an Alteration and shall be performed at Tenant’s sole cost and expense (including any costs and expenses in connection with reinforcing the roof of the Building, if required) in accordance with and subject to the provisions of Article 3 of this Lease. Tenant shall pay a license fee to Landlord for the New Antenna System, as Additional Rent, in advance on the first day of each month during the Term, to the amount of Two Hundred Fifty and 00/100 Dollars ($250.00) per month for each antenna mast, from the date of installation of the New Antenna System through and including the date of removal of the New Antenna System and restoration of the roof to its condition prior to the installation of the New Antenna System. All of the provisions of this Lease shall apply to the installation, use and maintenance of the Antenna System, including all provisions relating to compliance with Legal Requirements, insurance, indemnity, repairs and maintenance. The license granted to Tenant under this Section 9.9 shall not be assignable by Tenant separately from this Lease. The Antenna System shall be treated for all purposes of this Lease as Tenant’s Property.

(d) Landlord retains the right to use the portion of the roof on which the Antenna System is located for any purpose whatsoever, provided that Landlord shall not interfere with the use of the Antenna System so as to cause the transmission or reception of communication signals to be materially interrupted or impaired. Tenant shall use the Antenna System so as not to cause any interference to Landlord’s use of the roof, including the use by Landlord or other tenants or occupants of the Building of data transmission equipment or other equipment thereon, or damage to or interference with the operation of the Building or the Building Systems. If the Antenna System interferes with or disturbs the reception or transmission or communication signals by or from any antennas, satellite dishes or similar equipment installed by Landlord or any other tenant in the Building prior to the installation of the Antenna System, or interferes with the operation of the Building or the Building Systems, then Tenant, at its sole cost and expense, shall relocate the Antenna System to another area on the roof designated by Landlord. If such interference or disturbance continues despite such relocation, or if Landlord shall determine that the operation of the Antenna System (i) may cause a health hazard or danger to property, or (ii) may not be in accordance with governmental or quasi- governmental standards for non-ionizing radiation for occupational or general public health levels, then Tenant, at its sole cost and expense, shall promptly remove the Antenna System from the roof of the Building and restore the roof to its condition prior to the installation of the Antenna System. If Tenant fails to so relocate or remove the Antenna System, Landlord may do so, and Tenant shall promptly reimburse Landlord for all costs and expenses incurred by Landlord in connection therewith.

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(e) If Tenant fails to comply with any of the conditions set forth in this Section 9.9 then, at Landlord’s option and without limiting the rights and remedies Landlord may otherwise have under the Lease, upon notice from Landlord, shall immediately discontinue its use of the Antenna System, and either (i) remove the Antenna System, or (ii) reposition the Antenna System to a location designated by Landlord, all at Tenant’s sole cost and expense. Notwithstanding the foregoing, Landlord may at its option, at any time during the Term after reasonable prior notice to Tenant (except in the event of an emergency) relocate the Antenna System to another area on the roof designated by Landlord, provided that such relocation of the Antenna System does not cause the transmission or reception of communication signals to be materially interrupted or impaired other than temporarily, and except as set forth in Section 9.9(c) with respect to interference or disturbance with the reception or transmission of communication signals to or from existing antennas, satellite dishes or similar equipment, such relocation is performed at Landlord’s sole cost and expense.

(f) Landlord shall not have any obligations with respect to the Antenna System or compliance with any Legal Requirements (including the obtaining of any required permits or licenses, or the maintenance thereof) relating thereto, nor shall Landlord be responsible for any damage that may be caused to Tenant or the Antenna System by any other tenant or occupant of the Building. Landlord makes no representation that the Antenna System will be able to receive or transmit communication signals without interference or disturbance (whether or not by reason of the installation or use of similar equipment by others on the roof) and Tenant agrees that Landlord shall not be liable to Tenant therefor.

(g) Tenant shall (i) be solely responsible for any damage or liability arising from the installation, operation, repair and replacement of the Antenna System, (ii) promptly pay any tax, license permit or other fees or charges imposed pursuant to any Legal Requirements relating to the Antenna System, (iii) promptly comply with all precautions and safeguards recommended by Landlord’s insurance company and all Governmental Authorities, and (iv) perform all necessary repairs or replacements to and maintenance of the Antenna System. If Tenant fails after notice from Landlord to comply with Tenant’s obligations under this Section 9.9(f) Landlord may, at Landlord’s option, elect to perform such obligations, and Tenant shall promptly reimburse Landlord for all costs and expenses incurred by Landlord in connection therewith.

(h) The privileges granted Tenant under this Section 9.9 merely constitute a license and shall not, now or at any time after the installation of the Antenna System, be deemed to grant Tenant a leasehold or other real property interest in the Building or any portion thereof, including the Building’s roof. The license granted to Tenant in this Section 9.9 shall automatically terminate and expire upon the expiration or earlier termination of the Lease and the termination of such license shall be self-operative and no further instrument shall be required to effect such termination. Notwithstanding the foregoing, upon request by Landlord, Tenant, at Tenant’s sole cost and expense, shall promptly execute and deliver to Landlord, in recordable form, any certificate or other document required by Landlord confirming the termination of Tenant’s right to use the roof of the Building.

Section 9.10 No Warranty of Landlord. Landlord does not warrant that any of the services to be provided by Landlord to Tenant hereunder, or any other services which Landlord may supply (a) will be adequate for Tenant’s particular purposes or as to any other particular need of Tenant or (b) will be free from interruption, and Tenant acknowledges that any one or more such services may be interrupted or suspended by reason of Unavoidable Delays. In

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addition, Landlord reserves the right to stop, interrupt or reduce service of the Building Systems by reason of Unavoidable Delays, or for repairs, additions, alterations, replacements, decorations or improvements which are, in the judgment of Landlord, necessary to be made, until said repairs, alterations, replacements or improvements shall have been completed. Any such interruption or discontinuance of service, or the exercise of such right by Landlord to suspend or interrupt such service shall not (i) constitute an actual or constructive eviction, or disturbance of Tenant’s use and possession of the Premises, in whole or in part, (ii) entitle Tenant to any compensation or to any abatement or diminution of Fixed Rent or Additional Rent, (iii) relieve Tenant from any of its obligations under this Lease, or (iv) impose any responsibility or liability upon Landlord or its agents by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant’s business, or otherwise. Landlord shall use reasonable efforts to minimize interference with Tenant’s access to and use and occupancy of the Premises in making any repairs, alterations, additions, replacements, decorations or improvements; provided, however, that Landlord shall have no obligation to employ contractors or labor at “overtime” or other premium pay rates or to incur any other “overtime” costs or additional expenses whatsoever. Landlord shall not be required to furnish any services except as expressly provided in this Article 9.

ARTICLE 10. INSURANCE

Section 10.1 Tenant, at its expense, shall obtain and keep in full force and effect a policy of commercial general liability insurance under which Tenant is named as the insured and Landlord, Landlord’s managing agent for the Building, and any Lessors and any Mortgagees (whose names shall have been furnished to Tenant) are named as additional insureds, which insurance shall provide primary coverage without contribution from any other insurance carried by or for the benefit of Landlord, Landlord’s managing agent or any Lessors or Mortgagees named as additional insureds. Tenant’s primary commercial general liability policy shall contain a provision that the policy shall be noncancellable unless twenty (20) days’ written notice shall have been given to Landlord and Landlord shall similarly receive twenty (20) days’ notice of any material change hi coverage. The minimum limits of liability shall be a combined single limit with respect to each occurrence in an amount of not less than $5,000,000 per location general aggregate limit; provided, however, that Landlord shall retain the right to require Tenant to increase said coverage to that amount of insurance which in Landlord’s reasonable judgment is then being customarily required by prudent landlords of comparable buildings in the City of New York, and provided further that Landlord shall require similar increases of other tenants of space in the Building comparable to the Premises, to the extent Landlord shall then have the right to do so under applicable leases. Tenant shall also obtain and keep in full force and effect during the Term, (a) insurance against loss or damage by fire, and such other risks and hazards as are insurable under then available standard forms of “all risk” insurance policies with extended coverage, to Tenant’s Property and Tenant’s Alterations for the full insurable value thereof or on a replacement cost basis; (b) Workers’ Compensation Insurance, as required by law; (c) New York Disability Benefits Law Policy; and (d) such other insurance in such amounts as Landlord, any Mortgagee or Lessor may reasonably require from time to time. All insurance required to be carried by Tenant pursuant to the terms of this Lease shall be effected under valid and enforceable policies issued by reputable and independent insurers permitted to do business in the State of New York, and rated in Best’s Insurance Guide, or any successor thereto (or if there be none, an organization having a national reputation) as having a Best’s Rating” of “A-” and a “Financial Size Category” of at least “XI” or if such ratings are not then in effect, the equivalent thereof.

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Section 10.2 (a) The parties hereto hereby waive any and all rights of recovery against the other, or against the officers, employees, partners, agents and representatives of the other, for loss of or damage to the property of the waiving party to the extent such loss or damage is insured against under any insurance policy carried by Landlord or Tenant hereunder. In addition, the parties hereto shall procure an appropriate clause in, or endorsement on, any fire or extended coverage insurance covering the Premises, the Building and personal property, fixtures and equipment located thereon or therein, pursuant to which the insurance companies waive Subrogation or consent to a waiver of right of recovery and subject to obtaining such clauses or endorsements of waiver of subrogation or consent to a waiver of right of recovery, hereby agree not to make any claim, against or seek to recover from the other for any loss or damage to its property or the property of others resulting from fire or other hazards covered by such fire and extended coverage insurance; provided, however, that the release, discharge, exoneration and covenant not to sue herein contained shall be limited by and coextensive with the terms and provisions of the waiver of subrogation clause or endorsements or clauses or endorsements consenting to a waiver of right of recovery. If the payment of an additional premium is required for the inclusion of such waiver of subrogation or consent to waiver provision, each party shall advise the other of the amount of any such additional premiums and the other party at its own election may, but shall not be obligated to, pay the same. If such other party shall not elect to pay such additional premium, the first party shall not be required to obtain such waiver of subrogation or consent to waiver provision. Tenant acknowledges that Landlord shall not carry insurance on and shall not be responsible for damage to, Tenant’s Alterations (if any) or Tenant’s Property, and that Landlord shall not carry insurance against, or be responsible for any loss suffered by Tenant due to, interruption of Tenant’s business.

(b) As to each party hereto, provided such party’s right of full recovery under the applicable insurance policy is not adversely affected, such party hereby releases the other (its servants, agents, contractors, employees and invitees) with respect to any claim (including a claim for negligence) which it might otherwise have against the other party for loss, damages or destruction of the type covered by such insurance with respect to its property by fire or other casualty i.e. in the case of Landlord, as to the Building, and, in the case of Tenant, as to Tenant’s Property and Tenant’s Alterations (including rental value or business interruption, as the case may be) occurring during the Term of this Lease.

Section 10.3 On or prior to the Commencement Date, Tenant shall deliver to Landlord appropriate certificates of insurance required to be carried by Tenant pursuant to this Article 10, including evidence of waivers of subrogation required pursuant to Section 10.2. Evidence of each renewal or replacement of a policy shall be delivered by Tenant to Landlord at least twenty (20) days prior to the expiration of such policy.

ARTICLE 11. DESTRUCTION OF THE PREMISES: PROPERTY LOSS OR DAMAGE

Section 11.1 (a) If the Premises shall be damaged by fire or other casualty, or if the Building shall be so damaged that Tenant shall be deprived of reasonable access to the Premises, Tenant shall give prompt notice thereof to Landlord, and the damage shall be repaired by and at the expense of Landlord to substantially the condition prior to the damage, including Tenant’s Alterations, but excluding Tenant’s Properly. Until such repairs shall be substantially completed, Fixed Rent and Additional Rent shall, so long as Tenant shall not be in default beyond applicable grace or notice provisions in the payment or performance of its obligations under this Section 11.1, be reduced in the proportion which the area of the part of the Premises

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which is neither usable nor used by Tenant bears to the total area of the Premises. Tenant shall pay to Landlord all proceeds of insurance policies covering Tenant’s Alterations, and such proceeds shall be used by Landlord in the repair of Tenant’s Alterations. Landlord shall have no obligation to repair any damage to, or to replace, any of Tenant’s Property.

(b) Concurrently with the collection of any insurance proceeds attributable to damage to Tenant’s Alterations (or the payment by the Tenant to Landlord of an amount equal to such insurance proceeds, pending collection of such proceeds from its insurer), and as a condition precedent to Landlord’s obligation to commence those repairs to Tenant’s Alterations required to be performed by Landlord pursuant to this Section 11.1, Tenant shall pay to Landlord (i) the amount of any deductible under the policy insuring Tenant’s Alterations, and (ii) the amount, if any, by which the cost of repairing and restoring Tenant’s Alterations, as estimated by a reputable independent contractor designated by Landlord, exceeds the available insurance proceeds therefor. The amounts due in accordance with the preceding sentence constitute Additional Rent under this Lease and shall be payable by Tenant to Landlord upon demand.

Section 11.2 (a) Anything contained in Section 11.1 to the contrary notwithstanding, if the Premises are totally damaged or are rendered wholly untenantable, and if Landlord shall decide not to restore the Premises, or if the Building shall be so damaged by fire or other casualty that, in Landlord’s opinion, substantial alteration, demolition, or reconstruction of the Building shall be required (whether or not the Premises shall have been damaged or rendered untenantable), then in any of such events, Landlord may, not later than sixty (60) days following the date of the damage, give Tenant a notice in writing terminating this Lease. If this Lease is so terminated, the Term shall expire upon the tenth (10th) day after such notice is given, and Tenant shall vacate the Premises and surrender the same to Landlord. Upon the termination of this Lease under the conditions provided for in this Section 11.2, Tenant’s liability for Fixed Rent and Additional Rent shall cease as of the date of such fire or other casualty, and any prepaid portion of Fixed Rent or Additional Rent for any period after such date shall be refunded by Landlord to Tenant.

(b) If this Lease is terminated pursuant to the provisions of this Article 11, then Landlord shall collect the insurance proceeds of policies providing coverage for Tenant’s Alterations as provided in Section 11.1(a) hereof. Landlord shall retain such proceeds to the extent of sums, if any, advanced by Landlord to Tenant with respect to any of Tenant’s Alterations. The balance of such proceeds, if any, shall be paid to Tenant.

Section 11.3 If the Premises are damaged by fire or other casualty and are rendered wholly untenantable thereby, or if the Building shall be so damaged that Tenant shall be deprived of reasonable access to the Premises, and if Landlord shall elect to restore the Premises, Landlord shall, within sixty (60) days following the date of the damage, cause a contractor or architect selected by Landlord to give notice (the “Restoration Notice”) to Tenant of the date by which such contractor or architect believes the restoration of the Premises shall be substantially completed. If the Restoration Notice shall indicate that the restoration shall not be substantially completed on or before the date which shall be twelve (12) months following the date of such damage or destruction, Tenant shall have the right to terminate this Lease by giving written notice (the “Termination Notice”) to Landlord not later than thirty (30) days following receipt of the Restoration Notice. If Tenant gives a Termination Notice, this Lease shall be deemed cancelled and terminated as of the date of the giving of the Termination Notice as if such date were the Expiration Date, and Fixed Rent and Additional Rent shall be apportioned and shall be paid or refunded, as the case may be up to and including the date of such damage or destruction.

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Notwithstanding anything set forth to the contrary in this Article 11, in the event that a fire or other casualty rendering the Premises wholly untenantable shall occur during the final year of the Term, either Landlord or Tenant may terminate this Lease by giving the other party a Termination Notice as set forth herein.

Section 11.4 This Article 11 constitutes an express agreement governing any case of damage or destruction of the Premises or the Building by fire or other casualty, and Section 227 of the Real Property Law of the State of New York, which provides for such contingency in the absence of an express agreement, and any other law of like nature and purpose now or hereafter in force shall have no application in any such case.

ARTICLE 12. EMINENT DOMAIN

Section 12.1 If (a) all of the floor area of the Premises, or so much thereof as shall render the Premises wholly untenantable, shall be acquired or condemned for any public or quasi-public use or purpose, or (b) a portion of the Real Property, not including the Premises, shall be so acquired or condemned, but by reason of such acquisition or condemnation, Tenant no longer has means of access to the Premises, then this Lease and the Term shall end as of the date of the vesting of title with the same effect as if that date were the Expiration Date. In the event of any termination of this Lease and the Term pursuant to the provisions of this Article 12, Fixed Rent and Additional Rent shall be apportioned as of the date of sooner termination and any prepaid portion of Fixed Rent or Additional Rent for any period after such date shall be refunded by Landlord to Tenant.

Section 12.2 In the event of any such acquisition or condemnation of all or any part of the Real Property, Landlord shall be entitled to receive the entire award for any such acquisition or condemnation. Tenant shall have no claim against Landlord or the condemning authority for the value of any unexpired portion of the Term or Tenant’s Alterations, and Tenant hereby expressly assigns to Landlord all of its right in and to any such award. Nothing contained in this Section 12.2 shall be deemed to prevent Tenant from making a separate claim in any condemnation proceedings for the then value of any Tenant’s Property included in such taking and for any moving expenses, provided such award shall be made by the condemning authority in addition to, and shall not result in a reduction of, the award made by it to Landlord.

Section 12.3 If only a part of the Real Property shall be so acquired or condemned then, subject to Section 12.1, this Lease and the Term shall continue in force and effect. If a part of the Premises shall be so acquired or condemned and this Lease and the Term shall not be terminated, Landlord, at Landlord’s expense, shall restore that part of the Premises not so acquired or condemned so as to constitute tenantable Premises. From and after the date of the vesting of title, Fixed Rent and Additional Rent shall be reduced in the proportion which the area of the part of the Premises so acquired or condemned bears to the total area of the Premises immediately prior to such acquisition or condemnation.

ARTICLE 13. ASSIGNMENT AND SUBLETTING

Section 13.1 Except as otherwise expressly provided herein, Tenant, for itself, its heirs, distributees, executors, administrators, legal representatives, successors and assigns, expressly covenants that it shall not assign, mortgage, pledge, encumber, or otherwise transfer this Lease, nor sublet (nor underlet), nor suffer, nor permit the Premises or any part thereof to be used or occupied by others (whether for desk space, mailing privileges or otherwise), without the

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prior written consent of Landlord in each instance. If this Lease is assigned, or if the Premises or any part thereof are sublet or occupied by anybody other than Tenant, or if this Lease or the Premises or Tenant’s personal property are encumbered (whether by operation of law or otherwise) without Landlord’s consent, then Landlord may, after default by Tenant, collect rent from the assignee, subtenant or occupant, and apply the net amount collected to Fixed Rent and Additional Rent, but no assignment, subletting, occupancy or collection shall be deemed a waiver by Landlord of the provisions hereof, the acceptance by Landlord of the assignee, subtenant or occupant as a tenant, or a release by Landlord of Tenant from the further performance by Tenant its obligations under this Lease, and Tenant shall remain fully liable therefor. The consent by Landlord to any assignment or subletting shall not in any way be construed to relieve Tenant from obtaining the express consent in writing of Landlord to any further assignment or subletting. In no event shall any permitted subtenant assign or encumber its sublease or further sublet all or any portion of its sublet space, or otherwise suffer or permit the sublet space or any part thereof to be used or occupied by others, without Landlord’s prior written consent in each instance. Any assignment, sublease, mortgage, pledge, encumbrance or transfer in contravention of the provisions of this Article 13 shall be void.

Section 13.2 If Tenant shall, at any time or from time to time, during the Term desire to assign this Lease or sublet all or part of the Premises, Tenant shall give notice (a “Tenant’s Notice”) thereof to Landlord, which Tenant’s Notice shall set forth: (a) with respect to an assignment of this Lease, the date Tenant desires the assignment to be effective and any consideration Tenant would receive under such assignment, (b) with respect to a sublet of all or a part of the Premises (i) the dates upon which Tenant desires the sublease term to commence and expire, (ii) the rental rate and other material business terms upon which Tenant would sublet such premises, and (iii) a description of the Premises showing the portion to be sublet, the effective or commencement date of which shall be not less than thirty (30) nor more than one hundred and eighty (180) days after the giving of such notice, (c) a statement setting forth in reasonable detail the identity of the proposed assignee or subtenant, the nature of its business and its proposed use of the Premises, (d) current financial information with respect to the proposed assignee or subtenant, including its most recent financial report, (e) a true and complete copy of the proposed assignment or sublease and any other agreements relating thereto, and (f) an agreement by Tenant to indemnify Landlord against liability resulting from any claims that may be made against Landlord by the proposed assignee or subtenant or by any brokers or other Persons claiming a commission or similar compensation in connection with the proposed assignment or sublease. Tenant’s Notice shall be deemed an offer from Tenant to Landlord whereby Landlord (or Landlord’s designee) may, at its option, (I) sublease such space (the “Leaseback Space”) from Tenant upon the terms and conditions set forth in Section 13.4, or terminate the Lease with respect to only the Leaseback Space, or (II) if the proposed transaction is (1) an assignment of this Lease or (2) a subletting of fifty percent (50%) or more of the rentable area of the Premises, terminate this Lease. Said options may be exercised by Landlord by notice given to Tenant at any time within thirty (30) days after Tenant’s Notice has been given by Tenant to Landlord, and during such thirty-day period, Tenant shall not assign this Lease nor sublet such space to any Person other than Landlord.

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Section 13.3 If Landlord exercises its option to terminate this Lease with respect to all or a portion of the Premises pursuant to Section 13.2 hereof, then this Lease shall end and expire on the date that such assignment or sublease was to be effective or commence, as the case may be, and the Fixed Rent and Additional Rent due hereunder shall be paid and apportioned to such date. In such event, Landlord and Tenant, upon request of either party, shall enter into an amendment of this Lease ratifying and confirming such total or partial termination, and setting forth appropriate modifications, if any, to the terms and provisions hereof. Following such termination, Landlord shall be free to and shall have no liability to Tenant if Landlord should lease the Premises (or any part thereof) to Tenant’s prospective assignee or subtenant

Section 13.4 If Landlord exercises its option to sublet the Leaseback Space, such sublease to Landlord or its designee (as subtenant) shall be at a rental rate equal to the product of (i) the lesser of (A) the rental rate per rentable square foot of Fixed Rent and Additional Rent then payable pursuant to this Lease, or (B) the rental rate per rentable square foot of rent and additional rent set forth in Tenant’s Notice, multiplied by (ii) the number of rentable square feet of the Leaseback Space, and shall be for the same term as that of the proposed subletting, and such sublease shall:

(a) be upon such other terms and conditions as are contained in Tenant’s Notice, and be expressly subject to all of the covenants, agreements, terms, provisions and conditions of this Lease, except such as are irrelevant or inapplicable, and except as expressly set forth in this Article 13 to the contrary;

(b) give the subtenant the unqualified and unrestricted right, without Tenant’s permission, to assign such sublease or any interest therein and/or to sublet the space covered by such sublease or any part or parts of such space and to make any and all changes, alterations and improvements in the space covered by such sublease, and if the proposed sublease will result in all or substantially all of the Premises being sublet, grant Landlord or its designee the option to extend the term of such sublease for the balance of the Term of this Lease less one day;

(c) provide that any assignee or further subtenant of Landlord or its designee, may, at Landlord’s option, be permitted to make alterations, decorations and installations in such space or any part thereof and shall also provide in substance that any such alterations, decorations and installations in such space therein made by any assignee or subtenant of Landlord or its designee may be removed, in whole or in part, by such assignee or subtenant, at its option, prior to or upon the expiration or other termination of such sublease; provided, however, that such assignee or subtenant shall, at its sole cost and expense, repair any damage and injury caused by such removal; and

(d) provide that (i) the parties to such sublease expressly negate any intention that any estate created under such sublease be merged with any other estate held by either of said parties, (ii) any assignment or sublease by Landlord or its designee (as the subtenant) may be for any purpose or purposes that Landlord, in Landlord’s uncontrolled discretion, shall deem suitable or appropriate, (iii) Tenant shall, at Tenant’s sole cost and expense, at all times provide and permit reasonably appropriate means of ingress to and egress from such space so sublet by Tenant to Landlord or its designee, (iv) Landlord may, at Tenant’s sole cost and expense, make such alterations as may be required or deemed necessary by Landlord to physically separate the subleased space from the balance of the Premises and to comply with any legal or insurance requirements relating to such separation, and (v) that at the expiration of the term of such sublease, Tenant will accept the space covered by such sublease in its then existing condition, subject to the obligations of the subtenant to make such repairs thereto as may be necessary to preserve the premises demised by such sublease in good order and condition.

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Section 13.5 (a) If Landlord exercises its option to sublet the Leaseback Space, Landlord shall indemnify and save Tenant harmless from all obligations under this Lease as to the Leaseback Space during the period of time it is so sublet to Landlord, except as to any obligation which arises out of or results from the negligence or willful misconduct of Tenant, or any of its agents, servants or employees.

(b) Performance by Landlord, or its designee, under a sublease of the Leaseback Space shall be deemed performance by Tenant of any similar obligation under this Lease and any default under any such sublease shall not give rise to a default under a similar obligation contained in this Lease nor shall Tenant be liable for any default under this Lease or deemed to be in default hereunder if such default is occasioned by or arises from any act or omission of the tenant under such sublease or is occasioned by or arises from any act or omission of any occupant holding under or pursuant to any such sublease.

(c) Tenant shall have no obligation, at the expiration or earlier termination of the Term, to remove any alteration, installation or improvement made in the Leaseback Space by Landlord (or Landlord’s designee).

(d) Any consent required of Tenant, as landlord under the sublease, shall be deemed granted if consent with respect thereto is granted by Landlord under this Lease, and any failure of Landlord (or its designee) to comply with the provisions of the sublease other than with respect to the payment of Fixed Rent and Additional Rent to Tenant, shall not constitute a default thereunder or hereunder if Landlord shall have consented to such non-compliance.

Section 13.6 In the event Landlord does not exercise either option provided to it pursuant to Section 13.2 hereof, and provided that no Event of Default shall have occurred and be continuing under this Lease as of the time Landlord’s consent is requested by Tenant, Landlord’s consent (which must be in writing and in form and substance satisfactory to Landlord) to the proposed assignment or sublease shall not be unreasonably withheld or delayed; provided, however that:

(a) Tenant shall have complied with the provisions of Section 13.2 hereof and Landlord shall not have exercised any of its options thereunder within the time permitted therefor;

(b) In Landlord’s judgment, the proposed assignee or subtenant is engaged in a business or activity, and the Premises, or the relevant part thereof, will be used in a manner, which (i) is in keeping with the then standards of the Building, and (ii) does not violate the restrictions set forth in Article 2 hereof;

(c) The proposed assignee or subtenant is a reputable Person with sufficient financial worth considering the responsibility involved, and Landlord has been furnished with evidence thereof,

(d) In the event Landlord has space in the Building available for lease, then (i) neither the proposed assignee or subtenant nor any Person which, directly or indirectly, controls, is controlled by, or is under common control with, the proposed assignee or subtenant,

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is then an occupant of any part of the Building, and (ii) the proposed assignee or subtenant is not a Person (or Affiliate of a Person) with whom Landlord or Landlord’s agent is then, or has been within the previous six (6) month period, negotiating in connection with rental of space in the Building;

(e) The form of the proposed sublease or instrument of assignment shall be satisfactory to Landlord and shall comply with the applicable provisions of this Article 13, and Tenant shall deliver a true and complete original, fully executed counterpart of such sublease or other instrument to Landlord promptly upon the execution and delivery thereof;

(f) Tenant and its proposed subtenant or assignee, as the case may be, shall execute and deliver to Landlord an agreement, in form and substance satisfactory to Landlord, setting forth the terms and conditions upon which Landlord shall have granted its consent to such assignment or subletting, and the agreement of Tenant and such subtenant or assignee, as the case may be, to be bound by the provisions of this Article 13;

(g) There shall not be more than four (4) subtenants of the Premises;

(h) The amount of the aggregate rent to be paid by the proposed subtenant shall not be less than the then current market rent per rentable square foot for the comparable space to Premises, determined as though the Premises were vacant and unimproved, for a term comparable to that of the proposed sublease, and the rental and other terms and conditions of the sublease shall be substantially the same as those contained in Tenant’s Notice;

(i) Tenant shall reimburse Landlord, as Additional Rent upon demand, for (A) the costs and expenses incurred by Landlord in connection with the assignment or sublease, including the costs of making investigations as to the acceptability of the proposed assignee or subtenant and the cost of reviewing plans and specifications proposed to be made in connection therewith, and (B) Landlord’s legal fees and disbursements incurred in connection with the granting of any requested consent and the preparation of Landlord’s written consent to the sublease or assignment;

(j) Tenant shall not have (i) advertised or publicized in any way the availability of the Premises without prior notice of and approval by Landlord, or (ii) listed the Premises for sublease or assignment with a broker, agent or otherwise at a rental rate less than the fixed rent and additional rent at which Landlord is then offering to lease comparable space in the Building;

(k) The proposed occupancy shall not impose an extra burden upon services to be supplied by Landlord to Tenant, unless Tenant and such proposed subtenant or assignee shall agree with Landlord in writing to pay the costs of such additional services; and

(l) The proposed subtenant or assignee shall not be entitled, directly or indirectly, to diplomatic or sovereign immunity and shall be subject to the service of process in, and the jurisdiction of the courts of New York State.

Except for any sublease by Tenant to Landlord or its designee pursuant to this Article 13, each sublease pursuant to this Section 13.6 shall be subject to all of the covenants, agreements, terms, provisions and conditions contained in this Lease. Notwithstanding any such sublease to Landlord or any such sublease to any other subtenant, or any acceptance of Fixed Rent or

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Additional Rent by Landlord from any subtenant, Tenant will remain fully liable for the payment of the Fixed Rent and Additional Rent due and to become due hereunder and for the performance of all the covenants, agreements, terms, provisions and conditions contained in this Lease on Tenant’s part to be observed and performed, and for all acts and omissions of any licensee or subtenant or anyone claiming under or through any subtenant which shall be in violation of any of the obligations of this Lease, and any such violation shall be deemed to be a violation by Tenant. If Landlord shall decline to give its consent to any proposed assignment or sublease, or if Landlord shall exercise either of its options under Section 13.2 hereof, Tenant shall indemnity, defend and hold harmless Landlord against and from any and all losses, liabilities, damages, costs, and expenses (including attorneys’ fees and disbursements) resulting from any claims that may be made against Landlord by the proposed assignee or subtenant arising from or in connection with such proposed assignment or subletting, or by any brokers or other Persons (with whom Tenant or its proposed assignee or subtenant may have dealt) claiming a commission or similar compensation in connection with the proposed assignment or sublease.

Section 13.7 In the event that (a) Landlord fails to exercise either of its options under Section 13.2 hereof and consents to a proposed assignment or sublease, and (b) Tenant fails to execute and deliver the assignment or sublease to which Landlord consented within one hundred twenty (120) days after the giving of Such consent, then, Tenant shall again comply with all of the provisions and conditions of Section 13.2 hereof before assigning this Lease or subletting all or part of the Premises.

Section 13.8 With respect to each and every sublease authorized by Landlord under the provisions of this Lease, it is further agreed that:

(a) No sublease shall be for a term ending later than one day prior to the Expiration Date of this Lease;

(b) No sublease shall be delivered, and no subtenant shall take possession of the Premises or any part thereof, until an executed counterpart of such sublease has been delivered to Landlord and approved in writing by Landlord; and

(c) Each sublease shall be subject and subordinate to this Lease and to the matters to which this Lease is or shall be subordinate, and each subtenant by entering into a sublease is deemed to have agreed that in the event of termination, re-entry or dispossession by Landlord under this Lease, Landlord may, at its option, take over all of the right, title and interest of Tenant, as sublandlord, under such sublease, and such subtenant shall, at Landlord’s option, attorn to Landlord pursuant to the then executory provisions of such sublease, except that Landlord shall not (i) be liable for any previous act or omission of Tenant under such sublease, (ii) be subject to any counterclaim, offset or defense, not expressly provided in such sublease, which theretofore accrued to such subtenant against Tenant, (iii) be bound by any previous modification of such sublease or by any previous prepayment of more than one month’s Fixed Rent or of any Additional Rent, or (iv) be obligated to perform any work in the subleased space or to prepare it for occupancy, and in connection with such attornment, the subtenant shall execute and deliver to Landlord any instruments Landlord may reasonably request to evidence and confirm such attornment. Each subtenant or licensee of Tenant shall be deemed, automatically upon and as a condition of its occupying or using the Premises or any part thereof, to have agreed to be bound by the terms and conditions set forth in this Article 13. The provisions of this Article 13 shall be self-operative and no further instrument shall be required to give effect to this provision.

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Section 13.9 If Landlord shall consent to any assignment of this Lease or to any sublease, or if Tenant shall enter into any other assignment or sublease permitted hereunder, Tenant shall, in consideration therefor, pay to Landlord, as Additional Rent:

(a) In the case of an assignment, on the effective date of the assignment, an amount equal to (i) all sums and other consideration paid to Tenant by the, assignee for or by reason of such assignment (including sums paid for Tenant’s Property, less, in the case of a sale thereof, the then net unamortized or undepreciated cost thereof, determined on the basis of Tenant’s federal income tax returns) less (ii) all expenses reasonably and actually incurred by Tenant on account of brokerage commissions and attorneys’ fees in connection with such assignment; or

(b) In the case of a sublease, an amount equal to (i) all rents, additional charges or other consideration payable to Tenant under the sublease in excess of the Fixed Rent and Additional Rent accruing during the term of the sublease in respect of the subleased space (at the rate per square foot payable by Tenant hereunder) pursuant to the terms hereof (including sums paid for the sale or rental of Tenant’s Property, less, in the case of the sale thereof, the then net unamortized or undepreciated cost thereof, determined on the basis of Tenant’s federal income tax returns) less (ii) all expenses reasonably and actually incurred by Tenant on account of brokerage commissions and attorneys’ fees in connection with such sublease. The sums payable under this clause shall be paid by Tenant to Landlord as Additional Rent as and when payable by the subtenant to Tenant.

Section 13.10 (a) If Tenant is a corporation (but not a public corporation), the provisions of Section 13.1 hereof shall apply to a transfer (by one or more transfer(s)), of a majority of the stock of Tenant as if such transfer of a majority of the stock of Tenant were an assignment of this Lease. It is expressly understood that the term “transfer(s)” shall be deemed to include the issuance of new stock which results in a majority of the stock of Tenant being held by Persons which do not hold a majority of the stock of Tenant on the date hereof. The foregoing shall not apply to public offerings of Tenant’s stock, or to transactions with a corporation into or with which Tenant is merged or consolidated or to which substantially all of Tenant’s assets are transferred; provided, however, that (i) such transfer shall have been made for a legitimate independent business purpose and not for the principal purpose of transferring this Lease, (ii) the successor to Tenant shall have a net worth, computed in accordance with generally accepted accounting principles, at least equal to the greater of (A) the net worth of Tenant immediately prior to such merger, consolidation or transfer, or (B) the net worth of Tenant herein named on the date of this Lease, and (iii) proof satisfactory to Landlord of such net worth shall have been delivered to Landlord at least ten (10) days prior to the effective date of any such transaction.

(b) If Tenant is a partnership, the provisions of Section 13.1 hereof shall apply to a transfer (by one or more transfers) of a majority interest in the partnership, as if such transfer were an assignment of this Lease.

(c) The limitations set forth in this Section 13.10 shall be deemed to apply to subtenant(s), assignee(s) and guarantor(s) of this Lease, if any, and any transfer by any such Person in violation of this Section 13.10 shall be deemed to be a transfer in violation of Section 13.1.

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(d) A modification, amendment or extension of a sublease shall be deemed a sublease for the purposes of Section 13.1 hereof, and a takeover agreement shall be deemed a transfer of this Lease for the purposes of Section 13.1 hereof.

Section 13.11 Tenant may, without Landlord’s consent, but upon not less than ten (10) days’ prior notice to Landlord, permit any Affiliate of Tenant to sublet all or part of the Premises for any Permitted Use, or assign this Lease to any Affiliate, subject however to compliance with Tenant’s obligations under this Lease. Such sublease shall not be deemed to vest in any such Affiliate any right or interest in this Lease or the Premises nor shall it relieve, release, impair or discharge any of Tenant’s obligations hereunder.

Section 13.12 (a) Any assignment or transfer, whether made with Landlord’s consent pursuant to Section 13.1 hereof or without Landlord’s consent to the extent permitted under Sections 13.10 and 13.11 hereof, shall be made only if, and shall not be effective until, the assignee shall execute, acknowledge and deliver to Landlord an agreement in form and substance satisfactory to Landlord whereby the assignee shall assume the obligations of this Lease on the part of Tenant to be performed or observed from and after the effective date of such assignment or transfer, and whereby the assignee shall agree that the provisions in Section 13.1 hereof shall, notwithstanding such assignment or transfer, continue to be binding upon it in respect of all future assignments and transfers.

(b) The joint and several liability of Tenant and any immediate or remote successor in interest of Tenant and the due performance of the obligations of this Lease on Tenant’s part to be performed or observed shall not be discharged, released or impaired in any respect by any agreement or stipulation made by Landlord, or any grantee or assignee of Landlord by way of mortgage or otherwise, extending the time, or modifying any of the obligations of this Lease, or by any waiver or failure of Landlord, or any grantee or assignee of Landlord by way of mortgage or otherwise, to enforce any of the obligations of this Lease.

(c) The listing of any name other than that of Tenant, whether on the doors of the Premises or the Building directory, or otherwise, shall not operate to vest any right or interest in this Lease or in the Premises, nor shall it be deemed to be the consent of Landlord to any assignment or transfer of this Lease or to any sublease of Premises or to the use or occupancy thereof by others. Any such listing shall constitute a privilege extended by Landlord, revocable at Landlord’s will by notice to Tenant, provided that Landlord shall not unreasonably revoke such privilege as to any Affiliate of Tenant, or any subtenant of Tenant or assignee of this Lease approved by Landlord pursuant to this Article 13.

Section 13.13 Landlord acknowledges that the colocation of communications equipment not owned by Tenant at the Premises shall not constitute an assignment or sublease requiring the consent of Landlord hereunder. For purposes of this Lease, “colocation” means the installation by Tenant’s customers of telecommunications equipment in Tenant’s facilities therefor pursuant to license agreements, in the ordinary course of Tenant’s business, for which such customers pay fees based upon access to such facilities, as distinct from the renting of floor area. In no event shall any colocation arrangement entered into by Tenant entail the construction of a separate entrance to the Premises from the Building common corridor for any party thereto other than Tenant.

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ARTICLE 14. ACCESS TO PREMISES

Section 14.1 Tenant shall permit Landlord, Landlord’s agents and public utilities servicing the Building to erect, use and maintain concealed ducts, pipes and conduits in and through the Premises. Landlord or Landlord’s agents shall have the right to enter the Premises at all reasonable times upon reasonable prior notice (except; no such prior notice shall be required in case of emergency), which notice may be oral, to examine the same, to show them to prospective purchasers, Mortgagees, Lessors or lessees of the Building and their respective agents and representatives or prospective tenants of the Premises, and to make such repairs, alterations, improvements or additions (a) as Landlord may deem necessary or desirable to the Premises or to any other portion of the Building, or (b) which Landlord may elect to perform following Tenant’s failure to make repairs or perform any work which Tenant is obligated to make or perform under this Lease, or (c) for the purpose of complying with Legal Requirements, and Landlord shall be allowed to take all material into and upon the Premises that may be required therefor without the same constituting an eviction or constructive eviction of Tenant in whole or in part and Fixed Rent and Additional Rent will not be abated while said repairs, alterations, improvements or additions are being made, by reason of loss or interruption of business of Tenant, or otherwise. Landlord shall use reasonable efforts to minimize interference with Tenant’s access to and use and occupancy of the Premises in making any repairs, alterations, additions or improvements pursuant to this Section 14.1, provided that Landlord shall have no obligation to employ contractors or labor at overtime or other premium pay rates or to incur any other overtime costs or additional expenses whatsoever.

Section 14.2 If Tenant shall not be present when for any reason entry into the Premises shall be necessary or permissible, Landlord or Landlord’s agents may enter the same without rendering Landlord or such agents liable therefor (if during such entry Landlord or Landlord’s agents shall accord reasonable care to Tenant’s property), and without in any manner affecting this Lease. Nothing herein contained, however, shall be deemed or construed to impose upon Landlord any obligation, responsibility or liability whatsoever for the care, supervision or repair of the Building or any part thereof, other than as herein provided.

Section 14.3 Landlord shall have the right from time to time to alter the Building and, without the same constituting an actual or constructive eviction and without incurring any liability to Tenant therefor, to change the arrangement or location of entrances or passageways, doors and doorways, and corridors, elevators, stairs, toilets, or other public parts of the Building and to change the name, number or designation by which the Building is commonly known. All parts (except surfaces facing the interior of the Premises) of all walls, windows and doors bounding the Premises (including exterior Building walls, exterior core corridor walls, exterior doors and entrances other than doors and entrances solely servicing the Premises), all balconies, terraces and roofs adjacent to the Premises, all space in or adjacent to the Premises used for shafts, stacks, stairways, chutes, pipes, conduits, ducts, fan rooms, heating, air cooling, plumbing and other mechanical facilities, service closets and other Building facilities are not part of the Premises, and Landlord shall have the use thereof, as well as access thereto through the Premises for the purposes of operation, maintenance, alteration and repair.

ARTICLE 15. CERTIFICATE OF OCCUPANCY

Tenant shall not at any time use or occupy the Premises in violation of the certificate of occupancy at such time issued for the Premises or for the Building and in the event that any department of the City or State of New York shall hereafter contend or declare by

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notice, violation, order or in any other manner whatsoever that the Premises are used for a purpose which is a violation of such certificate of occupancy, Tenant, shall, upon five (5) days’ written notice from Landlord or any Governmental Authority, immediately discontinue such use of the Premises. Failure by Tenant to discontinue such use after such notice shall be considered a default in the fulfillment of a material covenant of this Lease and Landlord shall have the right to terminate this Lease immediately, and in addition thereto shall have the right to exercise any and all rights and privileges and remedies given to Landlord by and pursuant to the provisions of Articles 16 and 17 hereof.

ARTICLE 16. DEFAULT

Section 16.1 Each of the following events shall be an “Event of Default” hereunder:

(a) if Tenant defaults in the payment when due of any installment of Fixed Rent or Additional Rent, and such default continues for a period of five (5) days after notice thereof from Landlord; provided, however, that if Tenant shall default in the timely payment of Fixed Rent or Additional Rent, and any such default shall occur more than four (4) times in any period of twelve (12) consecutive months, then, notwithstanding that such defaults shall have each been cured within the applicable period provided above, upon any further similar default, Landlord may serve a three days’ notice of termination upon Tenant without affording to Tenant an opportunity to cure such further default; or

(b) if Tenant’s interest in this Lease is transferred in violation of Article 13 hereof; or

(c) if the Premises or a substantial portion thereof becomes vacant or abandoned; or

(d) (i) if Tenant admits in writing its inability to pay its debts as they become due; or

(ii) if Tenant commences or institutes any case, proceeding or other action (A) seeking relief as a debtor, or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property; or

(iii) if Tenant makes a general assignment for the benefit of creditors; or

(iv) if any case, proceeding or other action is commenced or instituted against Tenant (A) seeking to have an order for relief entered against it as debtor or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property, which either (1) results in any such entry of an order for relief,

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adjudication of bankruptcy or insolvency or such an appointment or the issuance or entry of any other order having a similar effect, or (2) remains undismissed for a period of ninety (90) days; or

(v) if any case, proceeding or other action is commenced or instituted against Tenant seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its property which results in the entry of an order for any such relief which has not been vacated, discharged, or stayed or bonded pending appeal within ninety (90) days from the entry thereof; or

(vi) if Tenant takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clauses (ii), (iii), (iv) or (v) of this subsection 16.1(d); or

(vii) if a trustee, receiver or other custodian is appointed for any substantial part of the assets of Tenant, which appointment is not vacated or effectively stayed within seven (7) Business Days, or if any such vacating or stay does not thereafter remain in effect; or

(e) if Tenant defaults in the observance or performance of any other term, covenant or condition of this Lease on Tenant’s part to be observed or performed and Tenant fails to remedy such default within thirty (30) days after notice by Landlord to Tenant of such default, or, if such default is of such a nature that it cannot be completely remedied within said period of thirty (30) days, if Tenant fails to commence to remedy such default within such thirty-day period, or fails thereafter to diligently prosecute to completion all steps necessary to remedy such default; or

(f) if Tenant or any Affiliate of Tenant defaults beyond applicable grace and notice periods in the payment of any fixed rent or additional rent under any other lease of space in the Building, or if any such lease is terminated by Landlord as a result of a default by the tenant thereunder.

Section 16.2 (a) If an Event of Default occurs, Landlord may at any time thereafter give written notice to Tenant stating that this Lease and the Term shall expire and terminate on the date specified in such notice, which date shall not be less than seven (7) days after the giving of such notice. If Landlord gives such notice, and Tenant fails to cure such Event of Default within such seven-day period, this Lease and the Term and all rights of Tenant under this Lease shall expire and terminate as if the date set forth in such notice were the Fixed Expiration Date and Tenant immediately shall quit and surrender the Premises, but Tenant shall remain liable as hereinafter provided. Anything contained herein to the contrary notwithstanding, if such termination shall be stayed by order of any court having jurisdiction over any proceeding described in Section 16.1(d), or by federal or state statute, then, following the expiration of any such stay, or if the trustee appointed in any such proceeding, Tenant or Tenant as debtor-in-possession shall fail to assume Tenant’s obligations under this Lease within the period prescribed therefor by law or within one hundred twenty (120) days after entry of the order for relief or as may be allowed by the court, or if said trustee, Tenant or Tenant as debtor-in-possession shall fail to provide adequate protection of Landlord’s right, title and interest in and to the Premises or adequate assurance of the complete and continuous future performance of Tenant’s obligations under this Lease, Landlord, to the extent permitted by law or by leave of the court having jurisdiction over such proceeding, shall have the right, at its election, to terminate

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this Lease on seven (7) days’ notice to Tenant, Tenant as debtor-in-possession or said trustee and upon the expiration of said seven (7) day period this Lease shall cease and expire as set forth above and Tenant, Tenant as debtor-in-possession or said trustee shall immediately quit and surrender the Premises as aforesaid.

Section 16.3 If, at any time, (a) Tenant shall comprise two (2) or more Persons, (b) Tenant’s obligations under this Lease shall have been guaranteed by any Person other than Tenant, or (c) Tenant’s interest in this Lease shall have been assigned, the word “Tenant,” as used in Section 16.1(d), shall be deemed to mean any one or more of the Persons primarily or secondarily liable for Tenant’s obligations under this Lease. Any monies received by Landlord from or on behalf of Tenant during the pendency of any proceeding of the types referred to in Section 16.1(d) shall be deemed paid as compensation for the use and occupation of the Premises and the acceptance of any such compensation by Landlord shall not be deemed an acceptance of Fixed Rent and/or Additional Rent or a waiver on the part of Landlord of any rights under this Lease.

ARTICLE 17. REMEDIES AND DAMAGES

Section 17.1 (a) If an Event of Default shall occur, and this Lease and the Term shall expire and come to an end as provided in Article 16:

(i) Tenant shall quit and peacefully surrender the Premises to Landlord, and Landlord and its agents may immediately, or at any time after such Event of Default or after the date upon which this Lease and the Term shall expire and come to an end, re-enter the Premises or any part thereof, without notice, either by summary proceedings, or by any other applicable action or proceeding, or by legal force or other legal means (without being liable to indictment, prosecution or damages therefor), and may repossess the Premises and dispossess Tenant and any other Persons from the Premises and remove any and all of their property and effects from the Premises; and

(ii) Landlord, at Landlord’s option, may relet the whole or any part or parts of the Premises from time to time, either in the name of Landlord or otherwise, to such tenant or tenants, for such term or terms ending before, on or after the Expiration Date, at such rental or rentals and upon such other conditions, which may include concessions and free rent periods, as Landlord, in its sole discretion, may determine; provided, however, that Landlord shall have no obligation to relet the Premises or any part thereof and shall in no event be liable for refusal or failure to relet the Premises or any part thereof, or, in the event of any such reletting, for refusal or failure to collect any rent due upon any such reletting, and no such refusal or failure shall operate to relieve Tenant of any liability under this Lease or otherwise affect any such liability, and Landlord, at Landlord’s option, may make such repairs, replacements, alterations, additions, improvements, decorations and other physical changes in and to the Premises as Landlord, in its sole discretion, considers advisable or necessary in connection with, any such reletting or proposed reletting, without relieving Tenant of any liability under this Lease or otherwise affecting any such liability.

(b) Tenant hereby waives the service of any notice of intention to re-enter or to institute legal proceedings to that end which may otherwise be required to be given under any present or future law. Tenant, on its own behalf and on behalf of all Persons claiming through or under Tenant, including all creditors, does further hereby waive any and all rights which Tenant

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and all such Persons might otherwise have under any present or future law to redeem the Premises, or to re-enter or repossess the Premises, or to restore the operation of this Lease, after (i) Tenant shall have been dispossessed by a judgment or by warrant of any court or judge, (ii) any re-entry by Landlord, or (iii) any expiration or termination of this Lease and the Term, whether such dispossess, re-entry, expiration or termination shall be by operation of law or pursuant to the provisions of this Lease. The words “re-enter,” re-entry” and “re-entered” as used in this Lease shall not be deemed to be restricted to their technical legal meanings. In the event of a breach or threatened breach by Tenant, or any Persons claiming through or under Tenant, of any term, covenant or condition of this Lease, Landlord shall have the right to enjoin such breach and the right to invoke any other remedy allowed by law or in equity as if re-entry, summary proceedings and other special remedies were not provided in this Lease for such breach. The rights to invoke the remedies hereinbefore set forth are cumulative and shall not preclude Landlord from invoking any other remedy allowed at law or in equity.

Section 17.2 (a) If this Lease and the Terra shall expire and come to an end as provided in Article 16, or by or under any summary proceeding or any other action or proceeding, or if Landlord shall re-enter the Premises as provided in Section 17.1, or by or under any summary proceeding or any other action or proceeding, then, in any of such events:

(i) Tenant shall pay to Landlord all Fixed Rent and Additional Rent payable under this Lease by Tenant to Landlord to the date upon which this Lease and the Term shall have expired and come to an end or to the date of re-entry upon the Premises by Landlord, as the case may be;

(ii) Tenant also shall be liable for and shall pay to Landlord, as damages, any deficiency (the “Deficiency”) between (A) Fixed Rent and Additional Rent for the period which otherwise would have constituted the unexpired portion of the Term (conclusively presuming the Additional Rent for each year thereof to be the same as was payable for the year immediately preceding such termination or re-entry), and (B) the net amount, if any, of rents collected under any reletting effected pursuant to the provisions of Section 17.1(a)(ii) for any part of such period (first deducting from the rents collected under any such reletting all of Landlord’s expenses in connection with the termination of this Lease, Landlord’s re-entry upon the Premises and with such reletting including all repossession costs, brokerage commissions, legal expenses, attorneys’ fees and disbursements, alteration costs and other expenses of preparing the Premises for such reletting). Tenant shall pay the Deficiency in monthly installments on the days specified in this Lease for payment of installments of Fixed Rent, and Landlord shall be entitled to recover from Tenant each monthly Deficiency as the same shall arise. No suit to collect the amount of the Deficiency for any month shall prejudice Landlord’s right to collect the Deficiency for any subsequent month by a similar proceeding; and

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(iii) whether or not Landlord shall have collected any monthly Deficiency as aforesaid, Landlord shall be entitled to recover from Tenant, and Tenant shall pay to Landlord, on demand, in lieu of any further Deficiency as and for liquidated and agreed final damages, a sum equal (A) to the amount by which the Fixed Rent and Additional Rent for the period which otherwise would have constituted the unexpired portion of the Term (conclusively presuming the Additional Rent for each year thereof to be the same as was payable for the year immediately preceding such termination or re-entry) exceeds (B) the then fair and reasonable rental value of the Premises, including Additional Rent for the same period, both discounted to present value at the rate of four percent (4%) per annum less (C) the aggregate amount of Deficiencies previously collected by Landlord pursuant to the provisions of Section 17.2(a)(ii) for the same period. If, before presentation of proof of such liquidated damages to any court, commission or tribunal, Landlord shall have relet the Premises or any part thereof for the period which otherwise would have constituted the unexpired portion of the Term, or any part thereof, the amount of net rents collected in connection with such reletting shall be deemed, prima facie, to be the fair and reasonable rental value for the part or the whole of the Premises so relet during the term of the reletting.

(b) If Landlord shall relet the Premises, or any part thereof, together with other space in the Building, the net rents collected under any such reletting and the expenses of any such reletting shall be equitably apportioned for the purposes of this Section 17.2. Tenant shall in no event be entitled to any rents collected or payable under any reletting, whether or not such rents shall exceed the Fixed Rent reserved in this Lease. Nothing contained in Article 16 or this Article 17 shall be deemed to limit or preclude the recovery by Landlord from Tenant of the maximum amount allowed to be obtained as damages by any statute or rule of law, or of any sums or damages to which Landlord may be entitled in addition to the damages set forth in this Section 17.2.

ARTICLE 18. FEES AND EXPENSES

Section 18.1 If an Event of Default shall occur under this Lease or if Tenant shall do or permit to be done any act or thing upon the Premises which would cause Landlord to be in default under any Superior Lease or Mortgage, or if Tenant shall fail to comply with its obligations under this Lease and the preservation of property or the safety of any tenant, occupant or other person is threatened, Landlord may, after reasonable prior notice to Tenant except in an emergency, perform the same for the account of Tenant or make any expenditure or incur any obligation for the payment of money for the account of Tenant. All amounts expended by Landlord in connection with the foregoing, including reasonable attorneys’ fees and disbursements in instituting, prosecuting or defending any action or proceeding or recovering possession, and the cost thereof, with interest thereon at the Default Rate, shall be deemed to be Additional Rent hereunder and shall be paid by Tenant to Landlord within ten (10) days of rendition of any bill or statement to Tenant therefor.

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Section 18.2 If Tenant shall fail to pay any installment of Fixed Rent and/or Additional Rent when due, Tenant shall pay to Landlord, in addition to such installment of Fixed Rent and/or Additional Rent, as the case may be, as a late charge and as Additional Rent, a sum equal to interest at the Default Rate on the amount unpaid, computed from the date such payment was due to and including the date of payment.

ARTICLE 19. NO REPRESENTATIONS BY LANDLORD

Landlord and Landlord’s agents have made no warranties, representations, statements or promises with respect to (a) the rentable and usable areas of the Premises or the Building, (b) the amount of any current or future Labor Rates or Taxes, (c) the compliance with applicable Requirements of the Premises or the Building, or (d) the suitability of the Premises for any particular use or purpose. No rights, easements or licenses are acquired by Tenant under this Lease, by implication or otherwise, except as expressly set forth herein. This Lease (including any Exhibits referred to herein and all supplementary agreements provided for herein) contains the entire agreement between the parties and all understandings and agreements previously made between Landlord and Tenant are merged in this Lease, which alone fully and completely expresses their agreement. Tenant is entering into this Lease after full investigation, and is not relying upon any statement or representation made by Landlord not embodied in this Lease.

ARTICLE 20. END OF TERM

Section 20.1 Upon the expiration or other termination of this Lease, Tenant shall quit and surrender to Landlord the Premises, vacant, broom clean, in good order and condition, ordinary wear and tear and damage for which Tenant is not responsible under the terms of this Lease excepted, and Tenant shall remove all of Tenant’s Property from the Premises, and this obligation shall survive the expiration or sooner termination of the Term. If the last day of the Term or any renewal thereof falls on Saturday or Sunday, this Lease shall expire on the Business Day immediately preceding. Tenant expressly waives, for itself and for any Person claiming through or under Tenant, any rights which Tenant or any such Person may have under the provisions of Section 2201 of the New York Civil Practice Law and Rules and of any successor law of like import then in force in connection with any holdover summary proceedings which Landlord may institute to enforce the foregoing provisions of this Article 20.

Section 20.2 Tenant acknowledges that Tenant or any subtenant of Tenant remaining in possession of the Premises after the expiration or earlier termination of this Lease would create an unusual hardship for Landlord and for any prospective tenant. Tenant, therefore, covenants that if for any reason Tenant or any subtenant of Tenant shall fail to vacate and surrender possession of the Premises or any part thereof on or before, the expiration or earlier termination of this Lease and the Term, then Tenant’s continued possession of the Premises shall be as a “month-to-month” tenant, during which time, without prejudice and in addition to any other rights and remedies Landlord may have hereunder or at law, Tenant shall pay to Landlord for each month and for each portion of any month during which Tenant holds over, an amount equal to two (2) times the total monthly amount of Fixed Rent and Additional Rent payable hereunder. The provisions of this Section 20.2 shall not in any way be deemed to (a) permit Tenant to remain in possession of the Premises after the Expiration Date or sooner termination of this Lease or (b) imply any right of Tenant to use or occupy the Premises upon expiration or termination of this Lease and the Term, and no acceptance by Landlord of payments from Tenant after the Expiration Date or sooner termination of the Term shall be deemed to be other than on account of the amount to be paid by Tenant in accordance with the provisions of this Article 20. Tenant’s obligations under this Article shall survive the expiration or earlier termination of this Lease.

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ARTICLE 21. QUIET ENJOYMENT

Provided no Event of Default has occurred and is continuing, Tenant may peaceably and quietly enjoy the Premises without hindrance by Landlord or any Person lawfully claiming through or under Landlord, subject, nevertheless, to the terms and conditions of this Lease.

ARTICLE 22. NO WAIVER; NON-LIABILITY

Section 22.1 No act or thing done by Landlord or Landlord’s agents during the Term shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept such surrender shall be valid unless in writing and signed by Landlord. No employee of Landlord or of Landlord’s agents shall have any power to accept the keys of the Premises prior to the termination of this Lease. The delivery of keys to any employee of Landlord or of Landlord’s agents shall not operate as a termination of this Lease or a surrender of the Premises. Any Building employee to whom any property shall be entrusted by or on behalf of Tenant shall be deemed to be acting as Tenant’s agent with respect to such property and neither Landlord nor its agents shall be liable for any damage to property of Tenant or of others entrusted to employees of the Building, nor for the loss of or damage to any property of Tenant by theft or otherwise.

Section 22.2 The failure of Landlord to seek redress for violation of, or to insist upon the strict performance of, any covenant or condition of this Lease, or any of the Rules and Regulations set forth or hereafter adopted by Landlord, shall not prevent a subsequent act, which would have originally constituted a violation, from having all of the force and effect of an original violation. The receipt by Landlord of Fixed Rent and/or Additional Rent with knowledge of the breach of any covenant of this Lease shall not be deemed a waiver of such breach. The failure of Landlord to enforce any of the Rules and Regulations set forth, or hereafter adopted, against Tenant or any other tenant in the Building shall not be deemed a waiver of any such Rules and Regulations. Landlord shall not enforce the Rules and Regulations against Tenant in a discriminatory manner. No provision of this Lease shall be deemed to have been waived by Landlord, unless such waiver be in writing signed by Landlord. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly Fixed Rent or any Additional Rent shall be deemed to be other than on account of the next installment of Fixed Rent or Additional Rent, as the case may be, or as Landlord may elect to apply same, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as Fixed Rent or Additional Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Fixed Rent or Additional Rent or pursue any other remedy in this Lease provided. Any executory agreement hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of this Lease in whole or in part unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification, discharge or abandonment is sought. All references in this Lease to the consent or approval of Landlord shall be deemed to mean the written consent or approval of Landlord and no consent or approval of landlord shall be effective for any purpose unless such consent or approval is set forth in a written instrument executed by Landlord.

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Section 22.3 (a) Neither Landlord nor its agents shall be liable for any injury or damage to persons or property or interruption of Tenant’s business resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or snow or leaks from any part of the Building or from the pipes, appliances or plumbing works or from the roof, street or subsurface or from any other place or by dampness or by any other cause of whatsoever nature; nor shall Landlord or its agents be liable for any such damage caused by other tenants or persons in the Building or caused by construction of any private, public or quasi-public work; nor shall Landlord be liable for any latent defect in the Premises or in the Building (except that Landlord shall be required to repair the same to the extent provided in Article 5). Nothing in the foregoing shall affect any right of Landlord to the indemnity from Tenant to which Landlord may be entitled under Article 28 in order to recoup for payments made to compensate for losses of third parties.

(b) If, at any time or from time to time, any windows of the Premises are temporarily closed, darkened or bricked-up for any reason whatsoever, or any of such windows are permanently closed, darkened or bricked-up if required by any Legal Requirement or related to any construction upon property adjacent to the Real Property by parties other than Landlord, Landlord shall not be liable for any damage Tenant may sustain thereby and Tenant shall not be entitled to any compensation therefor nor abatement of Fixed Rent or Additional Rent nor shall the same release Tenant from its obligations hereunder nor constitute an eviction or constructive eviction of Tenant from the Premises.

ARTICLE 23. WAIVER OF TRIAL BY JURY

The respective parties hereto shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other (except for personal injury or property damage) on any matters whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy of the Premises, or for the enforcement of any remedy under any statute, emergency or otherwise. If Landlord commences any summary proceeding against Tenant, Tenant will not interpose any counterclaim of whatever nature or description in any such proceeding (unless failure to impose such counterclaim would preclude Tenant from asserting in a separate action the claim which is the subject of such counterclaim), and will not seek to consolidate such proceeding with any other action which may have been or will be brought in any other court by Tenant.

ARTICLE 24. INABILITY TO PERFORM

This Lease and the obligation of Tenant to pay Fixed Rent and Additional Rent hereunder and perform all of the other covenants and agreements hereunder on the part of Tenant to be performed will not be affected, impaired or excused because Landlord is unable to fulfill any of its obligations under this Lease expressly or impliedly to be performed by Landlord or because Landlord is unable to make, or is delayed in making any repairs, additions, alterations, improvements or decorations or is unable to supply or is delayed in supplying any equipment or fixtures, if Landlord is prevented or delayed from so doing by reason of strikes or labor troubles or by accident, or by any cause whatsoever reasonably beyond Landlord’s control, including laws, governmental preemption in connection with a national emergency or by reason of any Legal Requirements or by reason of the conditions of supply and demand which have been or are affected by war or other emergency (“Unavoidable Delays”).

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ARTICLE 25. BILLS AND NOTICES

Except as otherwise expressly provided in this Lease, any bills, statements, consents, notices, demands, requests or other communications given or required to be given under this Lease shall be in writing and shall be deemed sufficiently given or rendered if delivered by hand (against a signed receipt), sent by a nationally recognized overnight courier service, or sent by registered or certified mail (return receipt requested) and addressed:

if to Tenant, (a) at Tenant’s address at the Premises, or (b) at any place where Tenant or any agent or employee or Tenant may be found if mailed subsequent to Tenant’s abandoning or surrendering the Premises; or

if to Landlord, as follows: 111 Eighth Avenue LLC, c/o Taconic Investment Partners LLC, 1500 Broadway, New York, New York 10036, Attention: Mr. Paul Pariser, with a copy to: Schulte Roth & Zabel LLP, 900 Third Avenue, New York, New York 10022, Attention: Robert S. Nash, Esq.

Any such bill, statement, consent, notice, demand, request or other communication given as provided in this Article 25 shall be deemed to have been rendered or given (i) on the date when it shall have been hand delivered, (ii) three (3) Business Days from the date when it shall have been mailed, or (iii) one (1) Business Day from the date when it shall have been sent by overnight courier service.

ARTICLE 26. RULES AND REGULATIONS

Landlord reserves the right, from time to time, to adopt additional reasonable and non-discriminatory Rules and Regulations and to amend the Rules and Regulations then in effect. Tenant and Tenant’s contractors, employees, agents, and licensees shall comply with the Rules and Regulations, as so supplemented or amended. Nothing contained in this Lease shall be construed to impose upon Landlord any duty or obligation to enforce the Rules and Regulations or terms, covenants or conditions in any other lease against any other tenant, and Landlord shall not be liable to Tenant for violation of the same by any other tenant, its employees, agents, visitors or licensees. If there shall be any inconsistencies between this Lease and the Rules and Regulations, the provisions of this Lease shall prevail.

ARTICLE 27. BROKER

Section 27.1 Each of Landlord and Tenant represents and warrants to the other that it has not dealt with any broker in connection with this Lease other than Insignia/Edward S. Gordon Company, Inc. (“Broker”) and that to the best of its knowledge and belief, no other broker, finder or similar Person procured or negotiated this Lease or is entitled to any fee or commission in connection herewith. Landlord has agreed to pay a commission to Broker in connection with this Lease pursuant to a separate written agreement. Notwithstanding the foregoing: (a) Tenant has advised Landlord that prior to Landlord’s acquisition of the Building, Tenant discussed certain matters, including the possibility of leasing the New Premises, with Sylvan Lawrence Company, Inc., as agent for the then owner of the Building, and (b) Landlord agrees that Tenant’s indemnity hereunder shall not apply to, and that Tenant shall have no liability to Landlord with respect to, such prior discussions with Sylvan Lawrence Company, Inc.

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Section 27.2 Each of Landlord and Tenant shall indemnify, defend, protect and hold the other party harmless from and against any and all losses, liabilities, damages, claims, judgments, fines, suits, demands, costs, interest and expenses of any kind or nature (including reasonable attorneys’ fees and disbursements) which the indemnified party may incur by reason of any claim of or liability to any broker, finder or like agent (other than Broker) arising out of any dealings claimed to have occurred between the indemnifying party and the claimant in connection with this Lease, or the above representation being false. The provisions of this Article 27 shall survive the expiration or earlier termination of the Term of this Lease.

ARTICLE 28. INDEMNITY

Section 28.1 Tenant shall not do or permit any act or thing to be done upon the Premises which may subject Landlord to any liability or responsibility for injury, damages to persons or property or to any liability by reason of any violation of law or of any Legal Requirement, but shall exercise such control over the Premises as to fully protect Landlord against any such liability. Tenant shall defend, indemnify and save harmless Landlord from and against (a) all claims of whatever nature against Landlord arising from any act, omission or negligence of Tenant, its contractors, licensees, agents, servants, employees, invitees or visitors, (b) all claims against Landlord arising from any accident, injury or damage, whatsoever caused to any person or to the property of any person and occurring during the Term in or about the Premises, (c) all claims against Landlord arising from any accident, injury or damage occurring outside of the Premises but anywhere within or about the Real Property, where such accident, injury or damage results or is claimed to have resulted from an act, omission or negligence of Tenant or Tenant’s agents, employees, and (d) any breach, violation or nonperformance of any covenant, condition or agreement in this Lease set forth and contained on the part of Tenant to be fulfilled, kept, observed and performed. This indemnity and hold harmless agreement shall include indemnity from and against any and all liability, fines, suits, demands, costs and expenses of any kind or nature (including attorneys’ fees and disbursements) incurred in or in connection with any such claim or proceeding brought thereon, and the defense thereof.

Section 28.2 Tenant agrees to defend, indemnify and hold harmless Landlord and any partner, shareholder, director, officer, principal, employee or agent, directly and indirectly, of Landlord, from and against all obligations (including removal and remedial actions), losses, claims, suits, judgments, liabilities, penalties, damages (including consequential and punitive damages), costs and expenses (including attorneys’ and consultants’ fees and expenses) of any kind or nature whatsoever that may at any time be incurred by, imposed on or asserted against Landlord or any such party directly or indirectly based on; or arising or resulting from (a) the actual or alleged presence of Hazardous Materials on the Premises or in the Building which is caused or permitted by Tenant, and (b) any Environmental Claim relating in any way to Tenant’s operation or use of the Premises or the Building. The provisions of this Section 28.2 shall survive the expiration or sooner termination of this Lease.

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ARTICLE 29. LANDLORD’S CONTRIBUTION

Section 29.1 (a) With respect to the New Premises, Landlord shall contribute toward the actual cost of the Initial Alterations in the New Premises (including carpeting, wall covering, furniture, furnishing, movable fixtures, telephone and computer-installations, and “soft costs” incurred in connection with such alterations, including architectural, consulting, engineering and legal fees, provided that such “soft costs” shall not exceed ten percent (10%) of Landlord’s Contribution) an amount (“Landlord’s Contribution”) equal to the lesser of (a) One Hundred Forty-Eight Thousand Nine Hundred and 00/100 Dollars ($148,900.00), or (b) the aggregate amount of all costs and expenses actually incurred by Tenant in connection with the Initial Alterations in the New Premises; provided, however, that this Lease shall be in full force and effect and no Event of Default shall have occurred and be continuing hereunder.

(b) Any cost of the Initial Alterations in excess of Landlord’s Contribution shall be paid by Tenant. Tenant shall not be entitled to receive any portion of Landlord’s Contribution not actually expended by Tenant in the performance of the Initial Alterations in the New Premises, nor shall Tenant have any right to apply any unexpended portion of Landlord’s Contribution as a credit against Fixed Rent, Additional Rent or any other obligation of Tenant hereunder. No part of Landlord’s Contribution may be assigned by Tenant prior to actual payment thereof by Landlord to Tenant.

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Section 29.2 Landlord shall make progress payments to Tenant on a monthly basis, for the work performed during the previous month, less a retainage of 10% of each progress payment (the “Retainage”). Each of Landlord’s progress payments will be limited to an amount equal to (a) the aggregate amounts (reduced by the Retainage) theretofore paid by Tenant (as certified by an authorized officer of Tenant and by Tenant’s independent, licensed architect) to Tenant’s contractors, subcontractors and material suppliers (excluding any payments for which Tenant has previously been reimbursed out of previous disbursements from Landlord’s Contribution), multiplied by (b) a fraction, the numerator of which is the amount of Landlord’s Contribution, and the denominator of which is the total contract price (or, if there is no specified or fixed contract price for the Initial Alterations, then Landlord’s estimate thereof) for the performance of all of the Initial Alterations shown on all plans and specifications approved by Landlord. Provided that Tenant delivers requisitions to Landlord on or prior to the first (1st) day of any month, such progress payments shall be made within thirty (30) days next following the delivery to Landlord of requisitions therefor, signed by a financial officer of Tenant, which requisitions shall set forth the names of each contractor and subcontractor to whom payment is due, and the amount thereof, and shall be accompanied by (i) with the exception of the first requisition, copies of partial waivers of lien from all contractors, subcontractors and material suppliers covering all work and materials which were the subject of previous progress payments by Landlord and Tenant, (ii) a written certification from Tenant’s architect that the work for which the requisition is being made has been completed substantially in accordance with the plans and specifications approved by Landlord, and (iii) such other documents and information as Landlord may reasonably request. Any requisitions made following the first (1st) day of any month shall be paid no later than the last day of the month following the month in which such requisitions are made. Landlord shall disburse the Retainage upon submission by Tenant to Landlord of a requisition therefore, accompanied by all documentation, required under this Section 29.2, together with (A) proof of the satisfactory completion of all required inspections and issuance of any required approvals, permits and sign-offs for the Initial Alterations by all Governmental Authorities having jurisdiction thereover, (B) final “as-built” plans and specifications for the Initial Alterations as required pursuant to Section 3.2(d), and (C) the issuance of final lien waivers by all contractors, subcontractors and material suppliers covering all of the Initial Alterations. Notwithstanding anything to the contrary set forth in this Section 29.2, if Tenant fails to pay when due any sums due and payable to any of Tenant’s contractors or material suppliers, Landlord shall have the right, but not the obligation, to promptly pay to such contractor or supplier all sums so due from Tenant, and sums so paid by Landlord shall be deemed Additional Rent and shall be paid by Tenant within ten (10) days after Landlord delivers to Tenant an invoice therefor.

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ARTICLE 30. SECURITY, DEPOSIT.

Section 30.1 Tenant has deposited with Landlord the sum of Forty-Eight Thousand Twelve and 00/100 Dollars ($48,012.00) with respect to the New Premises, together with the sum of Seventy-Four Thousand Four Hundred Forty-Three and 00/100 Dollars ($73,443.00) currently held by Landlord with respect to the Existing Premises, constitute security for the full and faithful performance of every provision of this Lease to be performed by Tenant (all or any part of such amount, the “Security Deposit”). If an Event of Default shall have occurred with respect to any provision of this Lease, including but not limited to the provisions relating to the payment of Fixed Rent and Additional Rent, Landlord may use, apply or retain all or any part of this Security Deposit for the payment of any Fixed or Additional Rent or any other sum in default or for the payment of any other amount which Landlord may spend or become obligated to spend by reason of such Event of Default, or to compensate Landlord for any other loss, cost or damage which Landlord may suffer by reason of such Event of Default. Landlord shall give Tenant notice contemporaneously with such use or application of any portion of the Security Deposit. Tenant shall, within five (5) days after the giving of such notice, deposit with Landlord cash in an amount sufficient to restore the Security Deposit to the amount then required pursuant to the terms of this Article 30 (Tenant’s obligation to make such payment shall be deemed a requirement that Tenant pay an item of Additional Rent) and Tenant’s failure to do so shall be a breach of this Lease. Landlord shall not, unless otherwise required by Legal Requirements, pay interest to Tenant on the Security Deposit, and if Landlord is required to maintain the Security Deposit in an interest bearing account, Landlord will retain the maximum amount permitted under Legal Requirements as a bookkeeping and administrative charge. Tenant shall not assign or encumber any part of the Security Deposit, and no assignment or encumbrance by Tenant of all of any part of the Security Deposit shall be binding upon Landlord, whether made prior to, during, or after the Term. Landlord shall not be required to exhaust its remedies against Tenant or against the Security Deposit before having recourse to any other form of security held by Landlord and recourse by Landlord to any Security Deposit shall not affect any remedies of Landlord which are provided in this Lease or which are available to Landlord in law or in equity. If Tenant shall fully and faithfully perform every covenant and provision of this Lease to be performed and observed by Tenant, the Security Deposit or any balance thereof shall be returned to Tenant reasonably promptly after the expiration or sooner termination (other than a termination pursuant to Article 16 hereof) of the Term and Tenant’s surrender to Landlord of the Premises. In the event the Building is sold, Landlord shall transfer the Security Deposit to the new owner and Landlord shall thereupon be released by Tenant from all liability for the return of said Security Deposit; and Tenant agrees to look to the new owner solely for the return of the Security Deposit, A lease of the entire Building shall be deemed a transfer within the meaning of the foregoing sentence. Landlord shall use reasonable efforts to notify or cause Tenant to be notified in the event of any transfer of the Building.

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Section 30.2 In lieu of a cash deposit, Tenant may deliver to Landlord a clean, irrevocable, non-documentary and unconditional Letter of Credit issued by and drawn upon any commercial bank, trust company, national banking association or savings and loan association having offices for banking purposes in the City of New York and which is a member of the New York Clearinghouse Association (the “Issuing Bank”) and which (or the parent company of which) shall have outstanding unsecured, uninsured and unguaranteed indebtedness, or shall have issued a letter of credit or other credit facility that constitutes the primary security for any outstanding indebtedness (which is otherwise uninsured and unguaranteed), that is then rated, without regard to qualification of such rating by symbols such as “+” or “-” or numerical notation, “Aa” or better by Moody’s Investors Service and “AA” or better by Standard & Poor’s Corporation, and has combined capital, surplus and undivided profits of not less than $500,000,000.00, which Letter of Credit shall have a term of not less than one year, be in form and content satisfactory to Landlord (and substantially as shown on Exhibit D annexed hereto and made a part hereof), be for the account of Landlord, be in the amount of the Security Deposit then required to be deposited hereunder, and be fully transferable by Landlord to successor owners of the Building without the payment of any fees or charges, it being agreed that if any such fees or charges shall be so imposed, then such fees or charges, shall be paid by Tenant. The Letter of Credit shall provide that it shall be deemed automatically renewed, without amendment, for consecutive periods of one year each thereafter during the term of this Lease, unless the Issuing Bank sends notice (the “Non-Renewal Notice”) to Landlord by certified mail, return receipt requested, not less than thirty (30) days next preceding the then expiration date of the Letter of Credit that it elects not to have such Letter of Credit renewed. Additionally, the Letter of Credit shall provide that Landlord shall have the right, exercisable within twenty (20) days of its receipt of the Non-Renewal Notice, by sight draft on the Issuing Bank, to receive the monies represented by the existing Letter of Credit and to hold such proceeds pursuant to the terms of this Section 30.2 as a cash security pending the replacement of such Letter of Credit. If an Event of Default shall have occurred and be continuing with respect to any provision of this Lease, including but not limited to the provisions relating to the payment of Fixed Rent and Additional Rent, Landlord may apply or retain the whole or any part of the cash security so deposited or may notify the Issuing Bank and thereupon receive all the monies represented by the Letter of Credit and use, apply, or retain the whole or any part of such proceeds, as provided in this Section 30.2. Any portion of the cash proceeds of the Letter of Credit not so used or applied by Landlord in satisfaction of the obligations of Tenant as to which such Event of Default shall have occurred shall be deposited by Landlord and retained in an interest-bearing account as provided in Section 30.1. If Landlord applies or retains any part of the cash security or proceeds of the Letter of Credit, as the case may be, Tenant shall, within five (5) days after written demand therefor, deposit with Landlord the amount so applied or retained so that Landlord shall have the full Security Deposit required pursuant to Section 30.1 hereof on hand at all times during the Term. If Tenant shall fully and faithfully comply with all of the terms, provisions, covenants and conditions of this Lease, the Letter of Credit shall be returned to Tenant after the Expiration Date and after delivery of possession of the Premises to Landlord. In the event of a sale of Landlord’s interest in the Premises, within thirty (30) days of notice of such sale or leasing, Tenant, at Tenant’s sole cost and expense, shall arrange for the transfer of the Letter of Credit to the new landlord, as designated by Landlord, or have the Letter of Credit reissued in the name of the new landlord and Landlord shall thereupon be released by Tenant from all liability for the return of the Letter of Credit; provided, however, that if the Letter of Credit is reissued, Landlord shall return the original Letter of Credit issued in Landlord’s name to Tenant.

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ARTICLE 31. REDUCED PREMISES.

Throughout the Term of this Lease, including renewals and extensions, Tenant agrees that Landlord shall have the right, upon Landlord’s giving Tenant not less than thirty (30) days prior written notice, to recapture a portion or portions of the Premises solely for the purpose of (a) installing additional elevator(s) in the Building, together with such space as may be required for lobbies and other common areas, (b) improving the Building Systems, or (c) constructing public corridors to create access to rentable space now existing or to be constructed in the future on the floor on which the Premises are located (any or all of the foregoing work, “Building Improvements”). The amount of such recaptured space which may be taken by Landlord pursuant to this Section 31.2 shall be limited to such space as is reasonably and actually required for the proper installation, access and operation of such Building Improvements, provided that if any portion of the Premises is reduced in area pursuant to this Section 31.2 to the extent that Tenant is unable to beneficially use and occupy the affected portion of the Premises following such reduction, as determined by Tenant in its reasonable judgment, then Tenant shall have the right to terminate this Lease as to the affected portion of the Premises only, by notice to Landlord given at any time from and after the date of such reduction in area. If Tenant shall duly give such notice, this Lease shall end and expire as to the affected portion of the Premises on the date which is ten (10) days following the giving of such notice, Fixed Rent and Additional Rent due hereunder with respect to such portion of the Premises shall be paid and apportioned to such date, and Landlord and Tenant, upon request of either party, shall enter into an amendment of this Lease ratifying and confirming such partial termination, and setting forth appropriate modifications, if any, to the terms and provisions hereof. Tenant shall provide Landlord with access to the Premises to perform the work to install and maintain the Building Improvements, including the right to take all necessary materials and equipment into the Premises, without the same constituting an eviction, and Tenant shall not be entitled to any abatement of rent while such work is in progress or any damages by reason of loss or interruption of business or otherwise. Landlord shall use reasonable efforts to minimize interference with Tenant’s access to and use and occupancy of the Premises in making any Building Improvements; provided, however, that Landlord shall have no obligation to employ contractors or labor at overtime or other premium pay rates or to incur any other overtime costs or additional expenses whatsoever. Promptly following the completion of any Building Improvements, Landlord shall make such repairs to and restoration of the Premises as may be reasonably required as a direct result thereof. Upon the date set forth for such recapture in Landlord’s notice described above, the Lease shall be deemed automatically amended by the deletion of such recaptured space from the Premises, Fixed Rent and Additional Rent shall be reduced in the proportion which the area of the part of the Premises so recaptured bears to the, total area of the Premises immediately prior thereto, and Tenant shall promptly vacate and surrender such portion of the Premises to Landlord, and except as otherwise specifically set forth in this Article 31, the terms and conditions of this Lease shall not be modified by reason of any such Building Improvements or the maintenance thereof.

ARTICLE 32. MISCELLANEOUS

Section 32.1 (a) The obligations of Landlord under this Lease shall not be binding upon Landlord named herein after the sale, conveyance, assignment or transfer by such Landlord (or upon any subsequent landlord after the sale, conveyance, assignment or transfer by such subsequent landlord) of its interest in the Building or the Real Property, as the case may be, and in the event of any such sale, conveyance, assignment or transfer, Landlord shall be and

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hereby is entirely freed and relieved of all covenants and obligations of Landlord hereunder, and the transferee of Landlord’s interest in the Building or the Real Property, as the case may be, shall be deemed to have assumed all obligations under this Lease. Prior to any such sale, conveyance, assignment or transfer, the liability of Landlord for Landlord’s obligations under this Lease shall be limited to Landlord’s interest in the Real Property and Tenant shall not look to any other property or assets of Landlord or the property or assets of any of the Exculpated Parties (defined below) in seeking either to enforce Landlord’s obligations under this Lease or to satisfy a judgment for Landlord’s failure to perform such obligations.

(b) Notwithstanding anything contained herein to the contrary, Tenant shall look solely to Landlord to enforce Landlord’s obligations hereunder and no partner, shareholder, director, officer, principal, employee or agent, directly and indirectly, of Landlord (collectively, the “Exculpated Parties”) shall be personally liable for the performance of Landlord’s obligations under this Lease. Tenant shall not seek any damages against any of the Exculpated Parties.

Section 32.2 Wherever in this Lease Landlord’s consent or approval is required, if Landlord shall refuse such consent or approval, Tenant in no event shall be entitled to make, nor shall Tenant make, any claim, and Tenant hereby waives any claim, for money damages (nor shall Tenant claim any money damages by way of set-off, counterclaim or defense) based upon any claim or assertion by Tenant that Landlord unreasonably withheld or unreasonably delayed its consent or approval. Tenant’s sole remedy shall be an action or proceeding to enforce any such provision, for specific performance, injunction or declaratory judgment.

Section 32.3 (a) All of the Exhibits attached to this Lease are incorporated in and made a part of this Lease, but, in the event of any inconsistency between the terms and provisions of this Lease and the terms and provisions of the Exhibits hereto, the terms and provisions of this Lease shall control. This Lease may not be changed, modified, terminated or discharged, in whole or in part, except by a writing, executed by the party against whom enforcement of the change, modification, termination or discharge is to be sought. Wherever appropriate in this Lease, personal pronouns shall be deemed to include the other genders and the singular to include the plural. The captions hereof are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this Lease nor the intent of any provision thereof. All Article and Section references set forth herein shall, unless the context otherwise specifically requires, be deemed references to the Articles and Sections of this Lease. Whenever the words “include”, “includes”, or “including” are used in this Lease, they shall be deemed to be followed by the words “without limitation”.

(b) This Lease shall be governed in all respects by the laws of the State of New York applicable to agreements executed in and to be performed wholly within said State.

(c) If any term, covenant, condition or provision of this Lease, or the application thereof to any person or circumstance, shall ever be held to be invalid or unenforceable, then in each such event the remainder of this Lease or the application of such term, covenant, condition or provision to any other person or any other circumstance (other than those as to which it shall be invalid or unenforceable) shall not be thereby affected, and each term, covenant, condition and provision hereof shall remain valid and enforceable to the fullest extent permitted by law.

(d) If at the commencement of, or at any time or times during the Term of this Lease, the Fixed Rent and Additional Rent reserved in this Lease shall not be fully collectible by

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reason of any Legal Requirement, Tenant shall enter into such agreements and take such other steps (without additional expense to Tenant) as Landlord may request and as may be legally permissible to permit Landlord to collect the maximum rents which may from time to time during the continuance of such legal rent restriction be legally permissible (and not in excess of the amounts reserved therefor under this Lease). Upon the termination of such legal rent restriction prior to the expiration of the Term, (i) Fixed Rent and Additional Rent shall become and thereafter be payable hereunder in accordance with the amounts reserved in this Lease for the periods following such termination, and (ii) Tenant shall pay to Landlord, if legally permissible, an amount equal to (A) the items of Fixed Rent and Additional Rent which would have been paid pursuant to this Lease but for such legal rent restriction less (B) the rents paid by Tenant to Landlord during the period or periods such legal rent restriction was in effect.

(e) The covenants, conditions and agreements contained in this Lease shall bind and inure to the benefit of Landlord and Tenant and their respective legal representatives, successors, and, except as otherwise provided in this Lease, their assigns.

Section 32.4 Except as expressly provided to the contrary in this Lease, Tenant agrees that all disputes arising, directly or indirectly, out of or relating to this Lease, and all actions to enforce this Lease, shall be dealt with and adjudicated in the state courts of New York or the Federal courts sitting in New York City; and for that purpose hereby expressly and irrevocably submits itself to the jurisdiction of such courts. Tenant hereby irrevocably appoints the Secretary of the State of New York as its authorized agent upon which process may be served in any such action or proceeding.

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IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this Lease as of the day and year first above written.

111 EIGHTH AVENUE LLC, Landlord
By:	Taconic Investment Partners LLC,
	Authorized Signatory
	By:	/s/ Paul Pariser
	Name:	Paul Pariser
	Title:
EXTRANET TELECOMMUNICATIONS, INC., Tenant
By:	/s/ Michael A. Collado
Name:	Michael A. Collado
Title:	CEO

Tenant’s Federal Tax Identification Number:

13-3503638

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EXHIBIT A

Floor Plans of the Premises

The floor plans which follow are intended solely to identify the general outline of the Premises, and should not be used for any other purpose. All areas, dimensions and locations are approximate, and any physical conditions indicated may not exist as shown.

[DEPICTION OF FLOOR PLANS]

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EXHIBIT B

RULES AND REGULATIONS

1. The sidewalks, entrances, passages, courts, elevators, vestibules, stairways, corridors, or halls shall not be obstructed or encumbered by any Tenant or used for any purpose other than ingress and egress to and from the Premises.

2. No awnings, air-conditioning units, fans or other projections shall be attached to the outside walls of the Building. No curtains, blinds, shades, or screens shall be attached to or hung in, or used in connection with, any exterior window or entry door of the Premises, without the prior written consent of Landlord. Such awnings, projections, curtains, blinds, shades, screens or other fixtures must be of a quality, type, design and color, and attached in the manner approved by Landlord. All electrical fixtures hung in offices or spaces along the perimeter of the demised premises must be fluorescent, of a quality, type, design and bulb color approved by Landlord.

3. No sign, advertisement, notice or other lettering shall be exhibited, inscribed, painted or affixed by any Tenant on any part of the Building without the prior written consent of Landlord except that the name of Tenant may appear on the entrance door of the Premises. In the event of the violation of the foregoing by Tenant, Landlord may remove same without any liability, and may charge the expense incurred by such removal to the Tenant or Tenants violating this rule. Interior signs on doors and directory tablets shall be inscribed, painted or affixed for each Tenant by Landlord at the expense of such Tenant, and shall be of a size, color and style acceptable to Landlord. Landlord will provide directory listings in the directory maintained by Landlord in the lobby of the Building for Tenant and each partner and professional employee of Tenant, not to exceed six (6) such listings.

4. The sashes, sash doors, skylights, windows, and doors that reflect or admit light and air into the halls, passageways or other public places in the Building, shall not be covered or obstructed by any Tenant, nor shall any bottles, parcels, or other articles be placed on the windowsills.

5. No show cases or other articles shall be put in front of or affixed to any part of the exterior of the Building, nor placed in the halls, corridors or vestibules without the prior written consent of Landlord.

6. The water and wash closets and other plumbing fixtures shall not be used for any purposes other than those for which they were constructed, and no sweepings, rubbish, rags, acids or other substances shall be deposited therein. All damages resulting from any misuse of the fixtures shall be borne by the Tenant who, or whose servants, employees, agents, visitors or licensees, shall have caused the same.

7. No space in the Building shall be used for manufacturing, for the storage of merchandise, or for the storage of merchandise, or for the sale of merchandise, goods or property of any kind at auction or otherwise.

8. No Tenant shall make, or permit to be made, any unseemly or disturbing noises or disturb or interfere with occupants of this or neighboring buildings or premises or those having business with them whether by the use of any musical instrument, radio, television, stereo system, unmusical noise, whistling, singing, or in any other way. No Tenant shall throw anything out of the doors, windows or skylights or down the passageways.

9. No Tenant, or any of Tenant’s servants, employees, agents, visitors or licensees, shall at any time bring or keep upon the Premises any inflammable, combustible or explosive fluid, chemical or substance.

10. Each Tenant must, upon the termination of its tenancy, return to Landlord all keys of stores, offices and toilet rooms, either furnished to, or otherwise procured by such Tenant, and in the event of the loss of any keys, so furnished, such Tenant shall pay to Landlord the cost thereof.

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11. All removals, or the carrying in or out of any safes, freight, furniture or bulky matter of any description must take place in the manner and during the hours which Landlord or its agent may determine from time to time. Landlord reserves the right to inspect all safes, freight or other bulky articles to be brought into the Building and to exclude from the Building all safes, freight or other bulky articles which violate any of these Rules and Regulations or the lease of which these Rules and Regulations are a part. Landlord shall have the exclusive right to prescribe the hours of operation of the freight elevator and Tenant shall pay, as Additional Rent Landlord’s standard fee for operating the freight elevator after normal hours. No bicycles, vehicles, animals, birds or fish of any kind shall be brought into or kept by any Tenant in or about the Premises or the Building.

12. No Tenant shall occupy or permit any portion of the Premises demised to it to be occupied as an office for a public stenographer or public typist, or for the possession, storage, manufacture, or sale of narcotics, dope, tobacco in any form, or as a barber or manicure shop, or as an employment bureau. No Tenant shall engage or pay any employees on the Premises, except those actually working for such Tenant on the Premises, nor advertise for labor giving an address at the Premises.

13. No Tenant shall purchase spring water, ice, towels or other like service from any company or persons not approved by Landlord.

14. Landlord shall have the right to prohibit any advertising by any Tenant which, in Landlord’s opinion, tends to impair the reputation of the Building or its desirability as a building for offices, and upon written notice from Landlord, Tenant shall refrain from or discontinue such advertising.

15. Landlord reserves the right to exclude from the Building between the hours of 6 P.M. and 8 A.M. and at all hours on Sundays and legal holidays all persons who do not present a pass to the Building signed by Landlord. Landlord will furnish passes to persons for whom any Tenant requests the same in writing. Each Tenant shall be responsible for all persons for whom it requests such pass and shall be liable to Landlord for all acts of such persons.

16. Each Tenant shall, at its expense, provide artificial light for the employees of Landlord while doing janitor service or other cleaning, and in making repairs or alterations in the Premises.

17. The requirements of Tenants will be attended to only upon written application at the office of the Building. Employees shall not perform any work or do anything outside of the regular duties, unless under special instructions from the office of Landlord.

18. Canvassing, soliciting and peddling in the Building is prohibited and each Tenant shall co-operate to prevent the same.

19. There shall not be used in any space, or in the public halls of the Building, either by any Tenant or by jobbers or others, in the delivery or receipt of merchandise, any hand trucks, except those equipped with rubber tires and side guards.

20. Tenant shall not do any cooking, conduct any restaurant, luncheonette or cafeteria for the sale or service of food or beverages to its employees or to others, or cause or permit any orders of cooking or other processes or any unusual or objectionable odors to emanate from the demised premises. Tenant shall not install or permit the installation or use of any food, beverage, cigarette, cigar or stamp dispensing machine; or permit the delivery of any food or beverage to the Premises, except by such persons delivering the same as shall be approved by Landlord.

21. If there shall be any inconsistencies between the text of this Lease and these Rules and Regulations, the provisions of the Lease shall prevail.

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EXHIBIT C

APPROVED CONTRACTORS

CONSTRUCTION VENDOR LIST

Mr. Frank Sciame President F.J. Sciame Construction Co., Inc. 80 South Street New York, N.Y. 10038 Tel: (212) 232-2200 Fax: (212) 248-5299	Mr. Al Hot President Fast Track Construction 450 West 33rd Street New York, N.Y. 10001 Tel: (212) 279-0110 Fax:(212)279-9239
Mr. Anthony Genovese Executive Vice President HRH Construction Interiors, Inc. One Park Avenue New York, N.Y, 10016 Tel. (212) 616-3100 Fax; (212) 696-4091	Christopher H. Gallin John Gallin &, Sons, Inc. 40 Gold Street New York, N.Y. I0018 Tel: (212) 267-8624 Fax: (212) 962-7201
Mr. Irving Koven Ambassador Construction Co., Inc. 41 East 42nd Street New York, N.Y. 10017 Tel: (212) 922-1020 Fax:(2I2) 949-9762	Mr. Peter Dove Dominant Construction 523 Route 33, Orangeburg, N.Y. 10962 Tel: (914) 398-3900 Fax: (914) 398-3106
Mr. Chris Philips Vice President Tishman Construction Corp. 666 Fifth Avenue New York, N.Y. 10103 Tel (212) 708-6824 Fax: (212) 399-3643	Mr. Stephen S. Thomsen Thomsen Construction Co., Inc. 180 Varick Street 12th Floor New York, N.Y. 10014 Tel: (212) 647-1412 Fax: (212) 647-1249
Leher McGovern Bovis 200 Park Avenue New York, N.Y. 10166 Tel: (212) 592-6700 Fax (212) 592-6988	Mr. George J. Figliolia New York Qty Builders Group One Wall Street, 4th Floor NewYark, N.Y.10005 Tel: (212) 635-0760 Tel: (212) 635-0767

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EXHIBIT D

FORM OF LETTER OF CREDIT

[LETTERHEAD OF ISSUING BANK]

LETTER OF CREDIT DEPARTMENT

Issue Date:                  , 199  

Our Number:                         

No.                                                                                          

Irrevocable Commercial Letter of Credit

Applicant:
Beneficiary:
Amount (U.S.):	$
Expiry:                                      , 19

Gentlemen:

For the account of Applicant we hereby establish this Irrevocable Letter of Credit No.                                     in your favor for an amount of up to $                              effective immediately, available by your drafts at sight when accompanied by this Irrevocable Letter of Credit and the following document:

Beneficiary’s statement purportedly signed by an officer of Beneficiary or Beneficiary’s authorized managing agent, reading:

“The amount of this drawing under Irrevocable Letter of Credit No.                 is being drawn pursuant to Lease dated                     , 199  , by and between                                      as Landlord, and                                     , as Tenant,

All drafts must be marked “Drawn under                                      Bank, Irrevocable Letter of Credit No.                      dated                 , 19    .”

It is a condition of this Irrevocable Letter of Credit that it shall be fully transferable by Beneficiary without any fees or charges payable by Beneficiary in connection therewith.

It is a condition of this Irrevocable Letter of Credit that it shall be automatically extended for additional periods of one year from the present or future expiration date, unless at least 30 days prior to such expiration date we notify you in writing by certified or registered mail, return receipt requested, at the above address, that we elect not to renew this Irrevocable Letter of Credit for such additional period. Upon receipt by you of such notice you may draw drafts on us at sight for an amount not to exceed the balance remaining in this Irrevocable Letter of Credit within the then applicable expiry date.

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We hereby agree with you that drafts drawn under and in accordance with the terms of this Irrevocable Letter of Credit will be duly honored by us on delivery of this Irrevocable Letter of Credit and the document so specified, when presented at this office.

This credit is subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500; provided, however, that in the event the expiration date occurs during an interruption of our business of the type described in Article 17 of such publication, then the expiration date shall be deemed to be automatically extended until the date which shall be five (5) days after the resumption of our business.

Authorized Signature

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STATE OF NEW YORK	)
	) ss.:
COUNTY OF NEW YORK	)

On this              day of June, 1998, before me personally came                                                              , to me known, who, being by me duly sworn, did depose and say: that he resides at                                                      , that      he is the (Vice) President of EXTRANET TELECOMMUNICATIONS, INC., the corporation described in the foregoing instrument; and that          he signed his/her name thereto by order of the board of directors of said corporation.

Notary Public

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EX-10.11

EXHIBIT 10.11

FIRST AMENDMENT OF LEASE

AGREEMENT (this “Agreement”), made as of August 3, 2005, between 111 CHELSEA COMMERCE LP (“Landlord”), a Delaware limited partnership with an address c/o Taconic Investment Partners LLC, 111 Eighth Avenue, New York, New York 10011, and SWITCH & DATA/NY FACILITIES COMPANY LLC (“Tenant”), a Delaware limited liability company with an address at 111 8^th Avenue, New York, New York 10011.

Statement of Facts

By lease dated as of June 30, 1998 (the “Lease”), 111 Eighth Avenue LLC (Landlord’s predecessor-in-interest) leased to Extranet Telecommunications, Inc. (Tenant’s predecessor-in-interest) portions of the 5^th and 15^th floors in the building (the “Building”) located at 111 8^th Avenue, New York, New York (such portions of the 5^th and 15^th floors in the Building being hereinafter collectively referred to as the “Original Premises”), upon all of the terms, covenants, conditions and provisions more particularly contained in the Lease. The term of the Lease is fixed to expire on August 31, 2005.

Except as otherwise set forth in this Agreement, all capitalized terms used in this Agreement shall have the meanings ascribed to them in the Lease.

Landlord and Tenant now desire to extend the term of the Lease with respect to a portion of the Original Premises and to amend certain provisions of the Lease, upon the terms, covenants, conditions and provisions hereinafter provided.

NOW, THEREFORE, for Ten ($10.00) Dollars and other good and valuable consideration, the receipt and adequacy of which is hereby mutually acknowledged, Landlord and Tenant hereby agree to the following:

1. Extension of Term. Effective from and after the date hereof, (a) the term of the Lease shall be extended to, and expire on, August 31, 2015 (or shall expire on such earlier date upon which said term may expire or be cancelled or terminated pursuant to any of the conditions or covenants of the Lease, as amended by this Agreement, or pursuant to law), and (b) the term “Expiration Date,” as used in the Lease, as amended by this Agreement, shall mean August 31, 2015. The term of the Lease shall be so extended upon all of the terms, covenants, conditions and provisions of the Lease, as amended by this Agreement, and Landlord shall have no obligation to perform any work or make any installations in connection with such extension.

2. Partial Surrender.

(a) For the purposes of this Agreement, the portion of the Original Premises shown in hatching on Exhibit A hereto, and known as Suite 535A, is herein referred to as the “Surrender Space.” On August 31, 2005 (the “Partial Surrender Effective Date”) all of the rights, title and interest of Tenant and of all persons and entities claiming by, through or under Tenant, in and to the Surrender Space shall end, and by the Partial Surrender Effective Date Tenant shall quit and surrender to Landlord the Surrender Space in the condition required under Section 20.1 and the other applicable conditions of the Lease, as if, with respect to the Surrender Space only, the Partial Surrender Effective Date were the Expiration Date.

(b) All of Tenant’s obligations and liabilities under the Lease with respect to the Surrender Space which accrue or arise or relate to matters occurring on or before the Partial Surrender Effective Date shall survive the Partial Surrender Effective Date.

(c) Tenant hereby covenants, represents and warrants to Landlord that the Surrender Space is free of all tenants, subtenants and other occupants and all leases, subleases and other forms of occupancy agreements, and there are no Persons claiming, or who or which may claim, any rights of possession, occupancy or use of the Surrender Space or any portions thereof.

(d) Effective from and after the date next succeeding the Partial Surrender Effective Date, the term “Premises,” as such term is used in the Lease, as amended by this Agreement, shall exclude the Surrender Space, and the floor plans set forth on Exhibit A of the Lease shall be deemed amended accordingly.

3. Fixed Rent.

(a) Effective from and after September 1, 2005, the Fixed Rent payable by Tenant pursuant to the Lease, as amended by this Agreement, subject to adjustment as therein and herein provided, shall be as follows:

(i) $917,420.00 per year ($76,451.67 per month) for the period (the “First Rent Period”) commencing on the September 1, 2005 and ending on August 31, 2006, both dates inclusive;

(ii) $935,768.40 per year ($77,980.70 per month) for the period (the “Second Rent Period”) commencing on the September 1, 2006 and ending on August 31, 2007, both dates inclusive;

(iii) $954,483.77 per year ($79,540.31 per month) for the period (the “Third Rent Period”) commencing on the September 1, 2007 and ending on August 31, 2008, both dates inclusive;

(iv) $973,573.44 per year ($81,131.12 per month) for the period (the “Fourth Rent Period”) commencing on the September 1, 2008 and ending on August 31, 2009, both dates inclusive;

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(v) $993,044.91 per year ($82,753.74 per month) for the period (the “Fifth Rent Period”) commencing on the September 1, 2009 and ending on August 31, 2010, both dates inclusive;

(vi) $1,117,753.81 per year ($93,146.15 per month) for the period (the “Sixth Rent Period”) commencing on the September 1, 2010 and ending on August 31, 2011, both dates inclusive;

(vii) $1,140,108.89 per year ($95,009.07 per month) for the period (the “Seventh Rent Period”) commencing on the September 1, 2011 and ending on August 31, 2012, both dates inclusive;

(viii) $1,162,911.06 per year ($96,909.26 per month) for the period (the “Eighth Rent Period”) commencing on the September 1, 2012 and ending on August 31, 2013, both dates inclusive;

(ix) $1,186,169.29 per year ($98,847.44 per month) for the period (the “Ninth Rent Period”) commencing on the September 1, 2013 and ending on August 31, 2014, both dates inclusive; and

(x) $1,209,892.67 per year ($100,824.39 per month) for the period (the “Tenth Rent Period”) commencing on September 1, 2014 and continuing thereafter through the Expiration Date.

(b) Tenant covenants and agrees to pay the Fixed Rent in accordance with, and subject to, the applicable provisions of the Lease, as amended by this Agreement.

4. Adjustments of Rents.

(a) Tenant covenants and agrees to continue to pay the additional rent payable under Article 6 of the Lease, except that for the purposes of calculating said additional rent from and after September 1, 2005:

(i) “Base Taxes” shall mean an amount equal to the sum of (A) one-half (1/2) of the Taxes payable for the Tax Year commencing on July 1, 2004 and ending June 30, 2005, plus (ii) one-half (1/2) of the Taxes payable for the Tax Year commencing on July 1, 2005 and ending June 30, 2006;

(ii) “Tenant’s Proportionate Share” shall be 1.14%; and

(iii) Sections 6.3 and 6.4 of the Lease shall be of no further force or effect.

(b) All of Tenant’s obligations under Article 6 of the Lease (including, without limitation, Sections 6.3 and 6.4) which accrue during, or relate to, the period ending on August 31, 2005 shall survive August 31, 2005.

5. Subletting. For the purposes of this Paragraph, a lease (other than the Lease) that is from time to time in effect for space in the Building (as such other lease

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may have been, or may hereafter be, amended) is herein referred to as an “Other Lease.” If under an Other Lease it would be reasonable for Landlord to withhold its consent to a proposed subletting or sub-subletting to Tenant of the space (or portion thereof) covered by the Other Lease based on the fact that Tenant is a tenant in the Building, then, subject to all of the terms, covenants and conditions of the Other Lease, and subject to all of Landlord’s rights under the Other Lease, Landlord agrees not to withhold its consent to one (1) or more proposed sublettings (or sub-sublettings) to Tenant, as subtenant (or sub-subtenant), of a portion of space in the Building covered by the Other Lease based solely on the fact that Tenant is a tenant in the Building, provided that, and only if (i) if there is more than one (1) proposed sublettings (or sub-sublettings) all of the proposed sublettings (or sub-sublettings) are from the same tenant (or subtenant) and all of the proposed sublettings (or sub-sublettings) are for portions of the Building covered by the same Other Lease (and, in the case of a sub-sublease to Tenant as sub-subtenant, are covered by the same sublease), (ii) the portions of the Building in question do not exceed 25,000 Rentable Square Feet, in the aggregate, inclusive of all portions of the Building in respect of which Tenant may sublease (or sub-sublease) pursuant to any expansion rights or options set forth in the sublease (or sub-sublease) or otherwise (including rights of first offer and rights of first refusal), regardless of whether or not such rights or options are exercised, and (iii) on the date that Landlord receives the request for its consent to the proposed sublease (or sub-sublease) in full compliance with the provisions of the Other Lease in question (A) the Lease is in full force and effect, (B) the Tenant under the Lease is Switch & Data/NY Facilities Company LLC, (C) Tenant is not in default of any of the terms, covenants or conditions in the Lease on Tenant’s part to observe, perform or comply with, (D) Tenant occupies the entire Premises for its own behalf and is conducting its business therein, and (E) there are at least five (5) years remaining in the term of the Lease. Notwithstanding the foregoing, and notwithstanding any provision contained in the Other Lease in question which may be to the contrary, (1) Landlord shall have no obligation under any circumstances to enter into a non-disturbance agreement with Tenant as subtenant (or sub-subtenant) or otherwise to recognize Tenant as a direct tenant of the space covered by the sublease (or sub-sublease) upon the expiration of the term of the Other Lease or otherwise, and the granting of any consent to the sublease (or sub-subtenant) in question may, in Landlord’s sole discretion, be conditioned upon the tenant under the Other Lease and Tenant waiving any such obligation, and (2) under no circumstances shall Tenant assign its sublease (or sub-sublease) or further sublet the space covered by the sublease (or sub-sublease), and the granting of any consent to the sublease (or sub-sublease) in question may, in Landlord’s sole discretion, be conditioned upon Tenant waiving any right to, and agreeing not to, assign its sublease (or sub-sublease) or further sublet the space covered by the sublease (or sub-sublease). All of Landlord’s obligations and Tenant’s rights under this Paragraph shall be of no further force or effect from and after the date that Landlord consents to the subletting or sub-subletting of any space in the Building by Tenant as the subtenant or sub-subtenant, or Tenant first sublets (or sub-sublets) any space in the Building from another tenant or subtenant in the Building.

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6. Electricity.

(a) From and after the date hereof, the second (2^nd) sentence of Section 9.2(a) of the Lease shall be deleted and replaced with the following:

In the event that Tenant shall require electric capacity in excess of the capacity described in clauses (i) and (ii) above (the “Basic Capacity”), then upon request, and subject to the availability of additional electrical capacity in the Building, as determined by Landlord in its sole judgment, and provided no Event of Default exists, Landlord shall make additional electric power available to Tenant, at a location in the basement of the Building to be designated by Landlord, and Tenant shall pay to Landlord a one-time charge equal to Landlord’s then-applicable rate per ampere for additional power, multiplied by each ampere in excess of the Basic Capacity so provided by Landlord. (Landlord and Tenant agree that as of July 18, 2005, the Basic Capacity is as follows: 1,600 amperes allocated to the Suite 518 portion of the Premises, 200 amperes allocated to the Suite 536 portion of the Premises, and 800 amperes allocated to the Suite 1533 portion of the Premises.) In addition, Tenant, at Tenant’s sole cost and expense, provided no Event of Default exists and upon not less than ten (10) days’ prior written notice to Landlord, may reallocate the Basic Capacity among the various portions of the Premises. Tenant shall be solely responsible, at Tenant’s expense, for the installation of all risers, feeders and other electrical facilities and equipment required in order to deliver such additional electric power to the Premises and/or to reallocate the Basic Capacity, and, in either case, to distribute it therein. As of the date of the First Amendment of Lease which added Article 33 to the Lease the rate per ampere for additional power is $225.00.

(b) From and after the date hereof, Section 9.2(b) of the Lease shall be deleted and replaced with the following:

(b) In the event that Tenant’s total power requirements at the Premises, based on an annual review of Tenant’s consumption following the first anniversary of the Commencement Date, shall be less than the Basic Capacity, as same may be increased pursuant to the second (2^nd) sentence of Subsection 9.2(a), Tenant shall pay to Landlord an annual fee, commonly known as a “use it or lose it” fee, for the availability of such capacity, in the amount of $25.00 per unused ampere per annum. Further, if as of the third (3^rd) anniversary of the date of the First Amendment, Tenant shall continue to require less than the Basic Capacity, as same may have been so increased, then Landlord shall have the right to reduce the level of electric power supplied to the Premises to Tenant’s actual power requirements as reasonably determined by Landlord.

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7. Emergency Generator.

(a) From and after the date hereof, the following shall be added to the end of Subsection 9.6(a) of the Lease:

In the event that Tenant shall require additional EPS capacity in excess of such 800 amperes, Tenant shall notify Landlord, and if sufficient additional EPS capacity is then available, as determined by Landlord in its sole judgment, and provided no Event of Default exists, Landlord shall install, at Tenant’s sole cost and expense (i) in Landlord’s sole discretion, either a new Transfer Switch, in the Premises at a location to be designated by Landlord, sufficient to supply the additional EPS to the Premises (such requested additional EPS being herein referred to as the “Requested Additional EPS”), or a modification to the existing Transfer Switch to accommodate the Requested Additional EPS, and (ii) in Landlord’s sole discretion, either a new connection from the Generator to the new or existing Transfer Switch (as the case may be), or a modification to the existing connection. Tenant shall pay to Landlord, within ten (10) days after Landlord’s demand therefor, the actual out-of-pocket costs incurred by Landlord for the installation of such new Transfer Switch (or modification to the existing Transfer Switch) and the new connection from the Generator to the Transfer Switch (or the modification to the existing connection). From and after the date of the installation of the new Transfer Switch and connection (or the modifications thereof, as the case may be), “EPS” shall include the actual amount of the Requested Additional EPS made available to the Premises.

(b) From and after the date hereof, the per ampere per year charge set forth in subsection 9.6(b) of the Lease shall be increased to $150.00 per ampere per year, subject to increase pursuant to Section 9.6(c) of the Lease.

8. Right of First Offer. From and after the date hereof, the Article 33 set forth in Exhibit B to this Agreement shall be added to the Lease.

9. Notices.

(a) From and after the date hereof, Article 25 of the Lease shall be amended by replacing the current address to which bills, statements, consents, notices, demands, requests or other communications to Landlord are to be given to:

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111 Chelsea Commerce LP

c/o Taconic Investment Partners LLC

111 Eighth Avenue

New York, New York 10011

Attention: Paul E. Pariser, Co-President

(b) From and after the date hereof, Article 25 of the Lease shall be amended by replacing the current address to which copies of bills, statements, consents, notices, demands, requests or other communications to Landlord are to be given to:

Greenberg Traurig, LLP

200 Park Avenue

New York, New York 10166

Attention: Laura S. Norman, Esq.

10. Broker.

(a) Tenant covenants, warrants and represents that it had no conversations or other communications with any broker, finder or consultant except CB Richard Ellis, Inc. and ExtraNet, Inc. (the “Broker”) in connection with the extension of the term of the Lease and the option to lease, and the leasing of, the “Offer Space” pursuant to Article 33 of the Lease, which is being added thereto pursuant to Paragraph 8 above, and that, to Tenant’s best knowledge, there were no brokers, finders or consultants, except the Broker, instrumental in consummating this Agreement. In addition, Tenant covenants, warrants and represents that it has not retained any person as a broker, finder or consultant, whether on an exclusive or non-exclusive basis, in connection with any extension of the term of the Lease or the option to lease, or the leasing of, the “Offer Space”. Tenant agrees to hold Landlord harmless against any claims for a brokerage commission, finder’s fee or consultation fee (including, without limitation, reasonable legal fees, disbursements and court costs incurred in defending such claims) arising out of any conversations or negotiations had by Tenant with any brokers or finders except for the Broker, including any person claiming to have been retained by Tenant in connection with any extension of the term of the Lease or the option to lease, or the leasing of, the “Offer Space”, regardless of whether such person was actually retained by Tenant or whether such person was in any way involved with this transaction.

(b) Based upon the covenants, agreements warranties and representations set forth in subparagraph (a) above, Landlord has agreed to pay, pursuant to a separate agreement, a brokerage commission to the Broker.

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(c) Landlord covenants, warrants and represents that it had no conversations or other communications with any broker, finder or consultant (except the Broker) in connection with the extension of the term of the Lease and the option to lease, and the leasing of, the “Offer Space,” and that, to Landlord’s best knowledge, there were no brokers or finders except the Broker instrumental in consummating this Agreement. Landlord agrees to hold Tenant harmless against any claims for a brokerage commission, finder’s fee or consultation fee (including, without limitation, reasonable legal fees, disbursements and court costs incurred in defending such claims) arising out of any conversations or negotiations had by Landlord with any brokers or finders, including the Broker.

11. Miscellaneous.

(a) Except as otherwise provided herein, all of the terms, covenants, conditions and provisions of the Lease shall remain and continue unmodified, in full force and effect. From and after the date hereof, the terms “this lease” and “this Lease,” as such terms are used in the Lease, shall be deemed to refer to the Lease, as amended by this Agreement, except that references to “this lease” and “this Lease” and all similar references that are used to determine a specific date or dates (such as “as of the date of this lease”) or which are used to determine a time period (such as “for the period commencing on the date of this lease or the date on which this lease was executed”) shall remain references to the date of the Lease.

(b) This Agreement sets forth the entire agreement between the parties regarding the extension of the term of the Lease, superseding all prior agreements and understandings, written and oral, regarding the extension of the term of the Lease.

(c) Landlord and Tenant each represent and warrant to the other that it has not relied upon any representation or warranty, express or implied, in entering into this Agreement, except those which are set forth herein.

(d) This Agreement has been executed in the State of New York and shall be governed by and construed in accordance with the laws of the State of New York.

(e) The covenants and agreements herein contained shall bind and inure to the benefit of Landlord, its successors and assigns, and Tenant, its successors and assigns. If any of the provisions of this Agreement, or its application to any situation, shall be invalid or unenforceable to any extent, the remainder of this Agreement, or the application thereof to situations other than that as to which it is invalid or unenforceable, shall not be affected thereby, and every provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

(f) The captions of this Agreement are for convenience and reference only and in no way define, limit or describe the scope or intent of this Agreement.

(g) This Agreement may not be altered, modified or amended except pursuant to a written agreement executed and delivered by Landlord and Tenant.

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(h) Submission by Landlord of the within Agreement for execution by Tenant shall confer no rights nor impose any obligation on Landlord unless and until both Landlord and Tenant shall have executed this Agreement and duplicate originals thereof shall have been delivered by Landlord and Tenant to each other.

(i) The Statement of Facts first set forth in this Agreement and the exhibits and schedules attached hereto are incorporated into this Agreement and are, and shall for all purposes be deemed to be, a part of this Agreement.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Agreement as of the date first above written.

111 CHELSEA COMMERCE LP (Landlord)
By:	Taconic Chelsea Holdings LLC, managing member
By:	Taconic SL Principals LLC, managing member
By:	/s/ Paul E. Pariser
	Paul E. Pariser, Co-President
SWITCH & DATA/NY FACILITIES COMPANY LLC (Tenant)
By:	/s/ George Pollock, Jr.
Name:	[Blank]
Title:	Authorized Representative

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EXHIBIT “A”

Floor Plan

(follows immediately)

[DEPICTION OF FLOOR PLAN]

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EXHIBIT “B”

ARTICLE 33. RIGHT OF FIRST OFFER

Section 33.1 For the purposes of this Lease, the portion of the fifth (5^th) floor of the Building substantially where shown in hatching on Schedule 1 to this Exhibit “B” is herein referred to as the “Offer Space”). Landlord had advised Tenant that Landlord is presently negotiating a lease agreement for the Offer Space with Atlantic Theater Company (who, together with its affiliates, subsidiaries and/or designees, is herein referred to as the “Proposed Other Tenant”). If Landlord, in its sole and absolute discretion, decides to terminate such negotiations with the Proposed Other Tenant prior to consummating such lease agreement, and all other Persons who, on the date of the First Amendment (as hereinafter defined), have the right or option to lease the Offer Space waive (or are deemed to have waived) such rights or options (Tenant agreeing that the Offer Space Option (as hereinafter defined) is subject to all of such rights and options), Landlord shall so notify Tenant (such notice being herein referred to as the “Offer Space Notice”), in which event, provided that on the date Landlord gives to Tenant the Offer Space Notice this Lease is in full force and effect and no Event of Default exists, during the ten (10) Business Day period commencing on the date that Landlord gives the Offer Space Notice to Tenant, Tenant shall have the option (the “Offer Space Option”) to lease the Offer Space from Landlord for the period (the “Offer Space Term”) commencing on date (the “Offer Space Commencement Date”) which is the eleventh (11^th) Business Day commencing on the date that Landlord gives the Offer Space Notice to Tenant and ending on the last day of the term of this Lease, upon all of the terms, covenants and conditions of this Lease, except as otherwise expressly set forth in this Article. Tenant shall exercise the Offer Space Option only by giving Landlord notice thereof (the “Exercise Notice”), together with an unendorsed bank or certified check payable to the order of Landlord in the amount of $237,562.50 (the “Additional Security”), as an addition to the Security Deposit, both on or before the last day of such ten (10) Business Day period (which last day is hereinafter referred to as the “Exercise Notice Date”), TIME BEING OF THE ESSENCE.

Section 33.2 Tenant shall have no right to exercise the Offer Space Option unless all of the following conditions have been satisfied or waived by Landlord on the date of the Exercise Notice and on the Offer Space Lease Commencement Date:

(i) No default under any of the monetary terms, covenants or conditions under this Lease on Tenant’s part to observe, perform or comply with, and no Event of Default, shall have occurred and be continuing under this Lease; and

(ii) Switch & Data/NY Facilities Company LLC shall occupy all of the then-existing Premises Area.

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Section 33.3 Notwithstanding anything contained in this Article to the contrary, the Offer Space Option shall be deemed revoked, null and void, and of no further force or effect, and the Exercise Notice (or purported Exercise Notice) given in connection with Tenant’s attempt to exercise the Offer Space Option shall be ineffective and void ab initio as an Exercise Notice, (a) if Tenant fails to give the Exercise Notice and the Additional Security to Landlord on or before the Exercise Notice Date, TIME BEING OF THE ESSENCE, in the manner hereinbefore provided, or (b) if the notice given to Landlord amends, modifies or supplements (or attempts or purports to amend, modify or supplement) any of the Offer Terms (as hereinafter defined), or (c) if on the Offer Space Lease Commencement Date, this Lease is not in full force and effect or a default under any of the monetary terms, covenants or conditions under this Lease on Tenant’s part to observe, perform or comply with, or an Event of Default, shall have occurred and be continuing under this Lease; Tenant hereby agreeing that Landlord, in its sole and absolute discretion, may waive any one (1) or more or the conditions set forth in this Section, provided such waiver is expressly set forth in a written notice to Tenant from Landlord.

Section 33.4 If Tenant shall give the Exercise Notice to Landlord on or before the Exercise Notice Date, TIME BEING OF THE ESSENCE, and in the manner set forth in Section 33.1 above and subject to the provisions of Sections 33.2 and 33.3 above, then on the Offer Space Commencement Date, this Lease shall be amended as follows:

(a) Landlord shall lease the Offer Space to Tenant, and Tenant shall hire the Offer Space from Landlord, by adding the Offer Space to the Original Premises;

(b) “Premises” shall include the Offer Space, “Premises Area” shall include the deemed rentable area of the Offer Space, consisting of a total of 13,575 rentable square feet; provided, however, that in no event shall such deemed rentable square footage constitute or imply any representation or warranty by Landlord as to the actual size of the Offer Space, and the floor plans set forth on Exhibit A to the Lease shall include the floor plan of the Offer Space on Schedule 1 to this Exhibit B;

(c) Tenant has examined the Offer Space and shall accept possession of the Offer Space in its “as is” condition as of the Offer Space Commencement Date. Landlord shall have no obligation to perform any work, supply any materials, incur any expenses or make any installations in order to prepare the Offer Space for Tenant’s occupancy. The taking of possession of the Offer Space by Tenant shall be conclusive evidence as against Tenant that at the time such possession was so taken, the Offer Space were in good and satisfactory condition, subject to latent defects. Any Tenant’s Alterations which may be undertaken by or for the account of Tenant to equip, decorate and furnish the Offer Space for Tenant’s occupancy (such Tenant’s Alterations being herein referred to as the “Initial Offer Space Alterations”) shall be performed by Tenant, at Tenant’s sole cost and expense (except as otherwise provided in Section 33.7 below) in accordance with the applicable provisions of this Lease, including, without limitation, Article 3 hereof;

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(d) The Fixed Rent payable by Tenant pursuant to the Lease, as amended by the First Amendment of Lease which added this Article 33 to this Lease (the “First Amendment”), subject to adjustment as therein and herein provided, shall be increased by the following amounts, from the Offer Space Commencement Date, which increased Fixed Rent Tenant covenants and agrees to pay in accordance with, and subject to, the applicable provisions of this Lease:

(i) $475,125.00 per year ($39,593.75 per month) for the balance of the initial term of this Lease ending on August 31, 2005 and for the First Rent Period (as defined in Paragraph 3 of the First Amendment);

(ii) $484,627.50 per year ($40,385.63 per month) for the Second Rent Period (as defined in Paragraph 3 of the First Amendment);

(iii) $494,320.05 per year ($41,193.34 per month) for the Third Rent Period (as defined in Paragraph 3 of the First Amendment);

(iv) $504,206.45 per year ($42,017.20 per month) for the Fourth Rent Period (as defined in Paragraph 3 of the First Amendment);

(v) $514,290.58 per year ($42,857.55 per month) for the Fifth Rent Period (as defined in Paragraph 3 of the First Amendment);

(vi) $578,876.39 per year ($48,239.70 per month) for the Sixth Rent Period (as defined in Paragraph 3 of the First Amendment);

(vii) $590,453.92 per year ($49,204.49 per month) for the Seventh Rent Period (as defined in Paragraph 3 of the First Amendment);

(viii) $602,263.00 per year ($50,188.58 per month) for the Eighth Rent Period (as defined in Paragraph 3 of the First Amendment);

(ix) $614,308.26 per year ($51,192.36 per month) for the Ninth Rent Period (as defined in Paragraph 3 of the First Amendment); and

(x) $626,594.42 per year ($52,216.20 per month) for the Tenth Rent Period (as defined in Paragraph 3 of the First Amendment).

(e) “Tenant’s Proportionate Share” shall be increased by .59 %;

(f) Provided Tenant delivered the Additional Security pursuant to Section 33.1 above, the Security Deposit shall be increased by $237,562.50; and

(g) Articles 29, 33 and this 35 of this Lease shall not apply to the Offer Space;

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Section 33.5 Landlord shall not be subject to any liability for failure to give possession of the Offer Space to Tenant on any specific date and the validity of the addition of the Offer Space to the Original Premises shall not be impaired under such circumstances, nor shall the same be construed to extend the term of this Lease, except that Fixed Rent and additional rent payable with respect to the Offer Space only shall be abated until possession of the Offer Space shall be delivered to Tenant. The provisions of this Section 33.5 are intended to constitute “an express provision to the contrary” within the meaning of Section 223-a of the New York Real Property Law or any successor Law, which shall be inapplicable hereto, and Tenant hereby waives any right to rescind the Offer Space Lease which Tenant might otherwise have thereunder.

Section 33.6 (a) Section 9.2 of this Lease, as modified by the First Amendment, shall apply to the Offer Space, with the modifications described in subsections (b) and (c) below.

(b) In furtherance of subsection (a) above, the 2^nd, 3^rd and 4^th sentences of Section 9.2(a) of this Lease, which were added pursuant to Paragraph 6(a) of the First Amendment, shall apply to the Offer Space, except that “Basic Capacity” shall be deemed to refer to the six (6) watts per Rentable Square Foot of space in the Offer Space on a connected load basis of electrical capacity being provided to the Offer Space.

(c) In furtherance of subsection (a) above, Section 9.2(b) of this Lease, which were added pursuant to Paragraph 6(b) of the First Amendment, shall apply to the Offer Space, except that: (i) “Premises” shall be deemed to refer to the Offer Space; (ii) “Basic Capacity” shall be deemed to refer to the six (6) watts per Rentable Square Foot of space in the Offer Space on a connected load basis of electrical capacity being provided to the Offer Space; and (iii) “Commencement Date” shall be deemed to refer to Offer Space Commencement Date.

Section 33.7 Article 29 of this Lease shall apply to the Offer Space, except that for the purposes of applying said Article to the Offer Space: (a) the term “New Premises” shall be deemed to refer to the Offer Space, (b) the term “Initial Alterations” shall be deemed to refer to the Initial Offer Space Alterations, and (c) the amount “One Hundred Forty-Eight Thousand Nine Hundred and 00/100 Dollars ($148,900.00)” shall be deemed to refer to the amount $407,250.00.

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Section 33.8 If Landlord gives to Tenant the Offer Space Notice and if Tenant fails to give the Exercise Notice to Landlord on or before the Exercise Notice Date and in the manner set forth in Section 33.1 above and subject to the provisions of Sections 33.2 and 33.3 above, the Offer Space Option shall be deemed waived by Tenant and deemed revoked, null and void, and of no further force or effect, and Landlord may, but shall not be obligated, at any time or from time to time, lease, license or otherwise permit the use of, all or any portions of the Offer Space to any Person upon any terms and conditions that are acceptable to Landlord.

Section 33.9 Except as expressly set forth in this Article, Tenant shall not have any option to lease the Offer Space or any portions thereof or any other portion of the Building.

(End)

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EX-10.12

Exhibit 10.12

SUBLEASE

THIS SUBLEASE is made as of this 21^st day of November 2005, by and between GLOBAL CROSSING Telecommunications, INC., a Michigan corporation with offices at 1080 Pittsford Victor Road, Pittsford, New York 14534 (“Sublessor”) and Switch & Data/NY Facilities Company LLC, a Delaware limited liability company with offices at 1715 N. Westshore Blvd., Suite 650, Tampa, Florida 33607 (“Sublessee”).

WHEREAS, Sublessor is the Tenant of a building located at 111 Eighth Ave, New York, NY, (the “Building”) under that certain Lease dated, October 8, 2003, (the “Lease”) (a copy of the Lease is annexed hereto as Exhibit “A” and made a part hereof) (All capitalized terms not defined herein shall have the meanings ascribed to them in the Lease.).

WHEREAS, Sublessor and Sublessee desire to enter into this Sublease for the subletting of that certain portion of the Building on the second (2nd) floor as shown on Exhibit “B”.

NOW, THEREFORE, in consideration of the premises and the terms and conditions contained herein, Sublessor and Sublessee do hereby agree as follows:

1. PREMISES

Sublessor hereby sublets and Sublessee hereby takes from Sublessor 9,035 rentable square feet (“RSF”) which includes a factor of .6023 to convert USF to RSF, including rooms 114 (3,440 USF), an engineering room (241 USF) and a camera monitoring room (73 USF) along with 50 % of the shared conference room, break room, power room and common administrative area (1/2 of 3,389 USF) (the “Premises”) as set forth collectively on Exhibit B. The execution of this sublease by Sublessor is conclusive evidence that Sublessee takes the Premises “as is”.

2. RENT AND SECURITY DEPOSIT

Sublessee shall pay Sublessor Annualized Net Rent on the 1st of the month throughout the entire term without demand as set forth in this Section.

Should this Sublease commence on a date other than the first of the month, Rent payments will be prorated on a daily basis for the partial first and last month of this Sublease.

Sublessee shall provide Sublessor with a payment of three months rent upon Sublease execution to be held as a Security Deposit ($83,573.75). Such Security Deposit shall, in the case of early termination of this Sublease, be non-refundable. If an Event of Default shall occur under this Sublease, Sublessor may use, apply or retain all or any part of the Security Deposit for the payment of any Fixed or Additional Rent or any other sum in default or for the

payment of any other amount which Sublessor may spend or become obligated to spend by reason of such Event of Default, or to compensate Sublessor for any other loss, cost or damage which Sublessor may suffer by reason of such Event of Default. If Sublessor applies or retains any part of the cash security or proceeds of the Letter of Credit, as the case may be, Tenant shall, within five (5) Business Days after written demand, deposit with Sublessor the amount so applied or retained so that Sublessor shall have the full Security Deposit required.

Annualized Net Rent schedule shall be:

	Annual Net Rent/ SF
Commencement – 12/31/2008	$37.00
1/1/2009 – 4/30/2009	$40.98
5/1/2009 – 08/31/2014	$41.00

Annualized Net Rent payments to start Four (4) months after execution and delivery of this sublease and receipt of master landlord consent.

3.

4. EXPENSES

Sublessee will be responsible for its pro-rata share of wage and tax increases over the base year of the lease. “Base Labor Year” shall mean the calendar year 1999. The base year for taxes is the sum of (i) one-half (1/2) of the taxes payable for the Tax Year commencing on July 1, 1998 and ending June 30, 1999, plus (ii) one-half (1/2) of the taxes payable for the Tax Year commencing on July 1, 1999 and ending June 30, 2000. Sublessee will also be responsible for their proportionate share of emergency power allocated to the Sublessor. Sublessee will be allocated 1000 kW of power, the use of which may not be exceeded. Sublessor, at Sublessee’s expense, shall install electric submeters and Sublessee shall pay for such directly billed electricity utilized in the Premises commencing on the Sublease Commencement Date. The Sublessee shall also pay for electricity utilized by equipment located in common areas that are specifically used by Sublessee. By example, this would include the UPS units in the power room and HVAC condensing units in the common HVAC corridor. In addition, the Sublessee shall pay their proportionate share of electric used in common areas, and for electric use that is not directly submetered. Sublessee and Sublessor will mutually agree upon the method of calculating the additional use of electric energy.

5. TENANT IMPROVEMENTS

All tenant improvements must be approved, in writing, by Sublessor. All modifications to electrical, mechanical and structural facilities must be designed by licensed engineers and submitted for approval to Sublessor with a complete set of design documents. Sublessee, at Sublessee’s cost, shall be entitled to make the following minor modifications to the space (subject to any applicable codes/permits and within the modification rights of Sublandlord in the Master Lease including Article 3):

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1) Install their own access control system on the subleased rooms as well as the main entrance. Subtenant’s access control system shall not bar access by Sublessor’s personnel to the central administrative space and corridor’s leading to Sublessor’s space. In addition, in case of emergency, the Master Landlord must be allowed access.

2) Install security cameras in their space and the common shared areas

3) Signage within the bounds set by the Master Lease.

4) Install a DC plant within the Sublessee’s space as required (subject to any applicable codes/permits and within the modification rights of Sublandlord in the Master Lease including Article 3). Sublessee shall have the right to utilize one 200 amp fused switch in the Power Room from Panel DSB#3. Sublessor reserves the right to provide this power from a different location. Should Sublessor need to move the source of the feed, Sublessor will provide 180 days notice prior to implementing the move.

All installations and/or alterations may only made in accordance with the Master Lease and they are specifically subject to Landlord’s approval.

6. SECURITY

Subtenant shall be responsible for their individual security for their Premises, but shall be able to utilize the Sublessor’s existing access control system as appropriate and mutually acceptable to Sublandlord and Subtenant

7. MAINTENANCE OF EQUIPMENT

Sublessee shall have the right to utilize the three UPS units located in the Power Room, one - 200 Amp breaker from DSB#3 in the power room, PDUs #s land 5 located in Room 114, and HVAC units #s 1,2,3, and 4 located in Room 114. Sublessee will not have access to the Power Room unless escorted by the Sublessor’s personnel or in the event of an emergency. Sublessee is responsible for the maintenance of the HVAC and UPS units used by Sublessee. Maintenance records will be forwarded to Sublessor on an annual basis. Sublessee shall pay their proportional share of any maintenance within the common areas as well as the maintenance of the Fire Safety Systems. All power work that could cause a service interruption to Sublessor must be approved in writing by the Sublessor and must be scheduled and performed at a time that has been approved in writing by Sublessor.

8. LATE CHARGES

Sublessee hereby acknowledges that late payment by Sublessee of Rent will cause Sublessor to incur costs not contemplated by the Sublease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to processing and accounting charges, and late charges, which may be imposed upon Sublessor by any Lender. Accordingly, if any Rent, under the terms of this Sublease, is not received by Sublessor within five (5) days after such amount shall be due, then, without any requirement for notice to Sublessee, Sublessee shall pay to Sublessor, a one-time late charge equal to ten percent (10%) of each such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Sublessor will incur by

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reason of such late payment. Acceptance of such late charge by Sublessor shall in no event constitute a waiver of Sublessee Default or Breach with respect to such overdue amount, nor prevent the exercise of any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for three (3) consecutive installments of Base Rent, then notwithstanding any provision of this Sublease to the contrary, Base Rent shall, at Sublessor’s option, become due and payable quarterly in advance.

9. TERM

The term of this Sublease shall commence upon receipt of the Master Landlord’s consent (known as the “Commencement Date”), and shall run through August 31, 2014. This sublease is one month shorter than the Master Lease. Possession of the Premises will be delivered to Sublessee on the Commencement Date.

10. PARKING

No parking is provided as part of this Sublease

11. OPTION TO TAKE ADDITIONAL SPACE

Sublessee shall have the option to take additional space identified as an area within Room 116 (7,357 RSF) and Room 112 (6,573 RSF) as shown in Exhibit B (“Expansion Space”) under the same terms and conditions as the existing space under this Agreement for as long as such Expansion Space has not been sub-leased to a third party during the Term of this Sub-Lease.

If Sublessor makes Room 116 and/or Room 112 available for sublease, Sublessor shall provide at least thirty (30) days prior written notice to Sublessee of any intent to lease Room 116 and /or Room 112 to a bona fide third party and if Sublessee does not exercise its Option to take Room 116 and/or Room 112 by the end of the thirty (30) days, Sublessor may sublease to a third party.

12. ACCESS and SERVICES

Sublessee shall have access to the Premises twenty-four (24) hours per day, seven (7) days a week.

The hours of operation for the standard heating, ventilation and cooling systems shall be 8:00 am to 6:00 pm, Monday through Friday within the administrative areas. Any after-hours building HVAC needed by the Sublessee shall be paid by Sublessee at building invoiced cost.

Sublessor may have reasonable access to mechanical corridor via the ramp off of RM 114.

13. APPLIED SERVICES AND CONDUIT USAGE

Sublessor grants to Sublessee the right to use up to, if available, two (2) separate - one inch (1”) inter-ducts within the existing 4-inch conduit between Suite 734 and the Sublessor’s NTN Room at no additional charge for the Term of the Sublease, subject to Landlord approval, if any. Any expenses related to the installation and use of ducts and conduits will be born by the Sublessee. If capacity is not available within Sublessor’s existing conduit, as solely

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determined by Sublessor, and Sublessee wishes to install a new conduit, subject to Landlord’s approval, Sublessee may do so, at its sole cost and expense. If Sublessee takes additional space as described in Section 11, Sublessor will credit Sublessee’s rent for one half of the cost of the installation of an additional conduit not to exceed an amount equal to two months rent of the additional space.

14. SURRENDER OF PREMISE

Upon the expiration or earlier termination of the Term of this Sublease, Sublessee shall peaceably quit and surrender to Sublessor the Premise in neat and broom clean condition and in good order, condition and repair, together with all alterations, additions and Improvements which may have been made or installed in, on or to the Premises prior to or during the Term of this Sublease, excepting only ordinary wear and tear. Any alterations, additions and improvements made by Sublessee on the Premise, except Sublessee’s movable Property, shall at once when made become property of the Master Landlord and remain upon and be surrendered with the Premise at the expiration of the Term, unless Master Landlord requires it be removed at the expiration of the Term in which case the improvements will be removed at the sole cost of the Sublessee. The Sublessee is also responsible for removing, at the request of the Landlord and at Sublessee’s expense, any and all of sublessee’s improvements and equipment within the premises at the termination of the lease. This includes any equipment or improvements specifically installed by the Sublessee within the common areas. Sublessee shall remove all Sublessee’s movable Property and shall repair any damages to the Premises or the Building caused by such removal. Any Sublessee movable Property which shall remain in the Premise or the Building after the expiration or termination of the Term of this Sublease shall be deemed abandoned and may be removed and disposed of in such a manner as the Sublessor or Master Landlord may see fit, at Sublessee’s sole cost and expense.

15. MASTER LEASE

Except as specifically set forth herein, this Sub-Lease shall be subject to all terms and conditions of the Master Lease dated, October 8, 2003. Sublessee acknowledges that it has reviewed the Master Lease and agrees that this Sublease is subject to all terms and conditions contained therein. In the case of a conflict between this Sublease and the Master Lease, the Master Lease shall control.

16. USE

Sublessee shall use the Premises for the installation, operation and maintenance of switching and transmission equipment and facilities in connection with Sublessee’s telecommunications business and for no other purpose. Tenant shall not use or occupy or permit the use or occupancy of any part of the premises in any manner not permitted hereunder, or which would materially and adversely affect (a) the functioning of the Building Systems, (b) the use and occupancy of any part of the Building by any other tenant or other occupant, or (c) the appearance of the Building.

17. LEGAL REQUIREMENTS

Section 17.1 Sublessee, at its expense, shall comply with all Legal Requirements applicable to the Premises or the use and occupancy thereof by Sublessee, and make all repairs or Alterations required thereby, whether structural or nonstructural, ordinary or extraordinary, unless otherwise expressly provided herein; provided, however, that Sublessee shall not be obligated to comply with any Legal Requirement requiring any structural alteration to the Premises unless the application of such Legal Requirement arises from (i) Sublessee’s manner of use or occupancy

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of the Premises (as distinguished from the use or occupancy of the Premises for office purposes generally), (ii) any cause or condition created by or on behalf of Sublessee or any Sublessee Party (including any Alterations), (iii) the breach of any of Sublessee’s obligations under this Lease, or (iv) any Hazardous Materials having been brought into the Building by Sublessee or any Sublessee Party. Sublessee shall not do or permit to be done any act or thing upon the Premises which will invalidate or be in conflict with Sublessor’s insurance policies, and shall not do or permit anything to be done in or upon the Premises, or use the Premises in a manner, or bring or keep anything therein, which shall increase the rates for casualty or liability insurance applicable to the Building. If, as a result of any act or omission by Sublessee or by reason of Sublessee’s failure to comply with the provisions of this Article, the insurance rates for the Building shall be increased, then Sublessee shall desist from doing or permitting to be done any such act or thing and shall reimburse Sublessor, as Additional Rent hereunder, for that part of all insurance premiums thereafter paid by Sublessor which shall have been charged because of such act, omission or failure by Sublessee, and shall make such reimbursement upon demand by Sublessor.

Section 17.2 Sublessee, at its expense, shall comply with all Environmental Laws and with any directive of any Governmental Authority which shall impose any violation, order or duty upon Sublessor or Sublessee under any Environmental Laws with respect to the Premises or the use or occupation thereof. Sublessee’s obligations hereunder with respect to Hazardous Materials shall extend only to those matters directly or indirectly based on, or arising or resulting from (a) the actual or alleged presence of Hazardous Materials on the Premises or in the Building which is caused or permitted by Sublessee, and (b) any Environmental Claim (defined below) relating in anyway to Sublessee’s operation or use of the Premises or the Building.

Section 17.3 Sublessee shall provide Sublessor with copies of all communications and related materials regarding the Premises which Sublessee shall receive from or send to (a) any Governmental Authority relating in any way to any Environmental Laws, or (b) any Person with respect to any claim based upon any Environmental Laws or relating in any way to Hazardous Materials (any such claim, an “Environmental Claim”). Sublessor or its agents may perform an environmental inspection of the Premises at any time during the Term, upon prior notice to Sublessee except in an emergency.

18. NOTICE

All notices required to be given under this Sublease shall be sent to the parties at the following addresses:

if to Sublessor:

Global Crossing Real Estate Services

1080 Pittsford Victor Road

Pittsford, NY 14534

Attention: Lease Administrator (585) 255-1274

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if to Sublessee:

Switch & Data/NY Facilities Company LLC

1715 N. Westshore Blvd., Suite 650

Tampa, FL 33607 Attention: Legal Department

19. INDEMNITY

Sublessee shall indemnify, defend and hold Sublessor and the Master Landlord harmless from any and all claims arising from Sublessee’s, their agents, contractors, and employee’s use of the Premises and will comply with all Indemnification provisions of the Master Lease.

Sublessor covenants and agrees that (a) Sublessor shall not willfully suffer or permit any uncured defaults under the Master Lease that would cause the Master Lease to be canceled, terminated or forfeited, and (b) Sublessor will indemnify and hold harmless Sublessee from and against any and all claims, liabilities, losses and damages of any kind that Sublessee may incur to the extent they are by reason or, resulting from or arising out of Sublessor’s willful misconduct or gross negligence in complying with this sublease.

20. QUIET ENJOYMENT

Sublessee shall have the right to quietly enjoy the Premises subject to the Master lease and any other interest to which the Master Lease is subject.

21. INSURANCE

Sublessee shall comply with the provisions set forth in Article 17 of the Lease and name both Landlord and Sublessor as additional insured.

IN WITNESS WHEREOF, Sublessor and Sublessee have caused this Sublease to be signed by their authorized officers as of the date first above written.

GLOBAL CROSSING TELECOMMUNICATIONS, INC., a Michigan corporation (Sublessor)

By:	/s/ Mitchell Sussis
Name:	Mitchell Sussis
Title:	VP

Switch & Data/NY Facilities Company LLC, a Delaware limited liability company (Sublessee)

By:	/s/ George Pollock, Jr.
Name:	George Pollock, Jr.
Title:	Authorized Representative

Page 7

Exhibit A

Exhibit A is the Master Lease dated October 8, 2003 and is attached as a separate document.

.

AGREEMENT OF LEASE

111 CHELSEA LLC

LANDLORD

AND

GLOBAL CROSSING TELECOMMUNICATIONS, INC.

TENANT

Premises:	Portion of the Second (2nd) Floor
	111 Eighth Avenue
	New York, New York 10011
Dated:	October 8, 2003

TABLE OF CONTENTS

Definitions		1
Article 1.	Demise, Premises, Term, Rent	5
Article 2.	Use And Occupancy	6
Article 3.	Alterations	7
Article 4.	Condition of the Premises	9
Article 5.	Repairs; Floor Load	10
Article 6.	Real Estate Taxes and Labor Rate Increases	11
Article 7.	Legal Requirements	17
Article 8.	Subordination and Non-Disturbance; Estoppel Certificates	17
Article 9.	Services	19
Article 10.	Insurance	27
Article 11.	Destruction of the Premises; Property Loss or Damage	28
Article 12.	Eminent Domain	30
Article 13.	Assignment and Subletting	31
Article 14.	Access to Premises	38
Article 15.	Certificate of Occupancy	39
Article 16.	Default	39
Article 17.	Remedies and Damages	42
Article 18.	Fees and Expenses	44
Article 19.	No Representations By Landlord	44
Article 20.	End Of Term	45
Article 21.	Quiet Enjoyment	45
Article 22.	No Waiver; Non-Liability	46
Article 23.	Waiver Of Trial By Jury	47
Article 24.	Inability To Perform	47
Article 25.	Bills And Notices	47
Article 26.	Rules And Regulations	48
Article 27.	Broker	48
Article 28.	Indemnity	49
Article 29.	Guaranty	49
Article 30.	Security Deposit	50
Article 31.	Rent Modifications	52
Article 32.	Miscellaneous	53

Exhibit A:	Floor Plan of the Premises
Exhibit B:	Rules and Regulations
Exhibit C:	Form of Guaranty
Exhibit D:	Intentionally Omitted
Exhibit E:	Floor Plan of the Ramp Space
Exhibit F:	Form of Letter of Credit

AGREEMENT OF LEASE, dated as of October 8, 2003, between 111 CHELSEA LLC (successor-in-interest to 111 Eighth Avenue LLC), a Delaware limited liability company with an address c/o Taconic Investment Partners LLC, 111 Eighth Avenue, New York, New York 10011 (“Landlord”), and GLOBAL CROSSING TELECOMMUNICATIONS, INC., a Michigan corporation with an address at 1080 Pittsford-Victor Road, Pittsford, New York 14534 (“Tenant”).

WlTNESSETH:

The parties hereto, for themselves, their legal representatives, successors and assigns, hereby covenant as follows.

DEFINITIONS

“Additional Rent” means Tenant’s Tax Payment, Tenant’s Labor Rate Payment, and any and all other sums, other than Fixed Rent, payable by Tenant to Landlord under this Lease.

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such first Person.

“Alterations” means alterations, installations, improvements, additions or other physical changes (other than decorations, movable fixtures and equipment) in or about the Premises or elsewhere in the Building.

“Base Rate” means the annual rate of interest publicly announced from time to time by Citibank, N.A., New York, New York (or any successor thereto) as its “base rate”, or such other term as may be used by Citibank, N.A. from time to time for the rate presently referred to as its base rate.

“Building” means all the buildings, equipment and other improvements and appurtenances of every kind and description now located or hereafter erected, constructed or placed upon the land and any and all alterations, renewals, replacements, additions and substitutions thereto, presently known by the address of 111 Eighth Avenue, New York, New York.

“Building Systems” means the mechanical, electrical, heating, ventilating, air conditioning, elevator, plumbing, sanitary, life-safety and other service systems of the Building, but shall not include the portions of such systems installed in the Premises or elsewhere in the Building by Tenant.

“Business Days” means all days, excluding Saturdays, Sundays, and all days observed by either the State of New York, the Federal Government or by the labor unions servicing the Building as legal holidays.

“Commencement Date” means the date on which all of the Delivery Conditions are satisfied.

“Control” means: (i) the ownership, directly or indirectly, of more than fifty per cent (50%) of the voting stock of a corporation, or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person.

“Default Rate” means a rate at all times four (4) percentage points above the Base Rate.

“Delivery Conditions” means each of the following:

Tenant shall have deposited the Security Deposit with Landlord in accordance with the provisions of Section 30.1;

Landlord and Cable & Wireless Internet Services, Inc. (“Prior Tenant”), shall have fully executed and delivered a Lease Termination Agreement, in form and substance satisfactory to Landlord in its sole and absolute discretion, whereby the existing lease covering the Premises shall be duly terminated, and all conditions to the effectiveness thereof shall have been satisfied; and

Tenant shall have obtained all necessary consents, approvals and authorizations, if any, to the execution and delivery of this Lease and to the transactions contemplated hereby, of each of (i) the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) in the consolidated cases entitled Global Crossing Ltd, et al., Case No. 02-40188 (REG) et seq. (collectively, the “Bankruptcy Case”), and (ii) Singapore Technologies Telemedia PTE Ltd. (“STT”), a party to the Purchase Agreement, dated as of August 9, 2002, among STT, Guarantor and Global Crossing Ltd., among others, and no consents or approvals of any other parties shall be necessary in connection therewith.

“Effective Date” means the date that a Plan of Reorganization pursuant to the Bankruptcy Case has been confirmed by the Bankruptcy Court and has become effective.

“Environmental Laws” means any Legal Requirements now or hereafter in effect relating to the environment, health, safety or Hazardous Materials.

“Expiration Date” means September 30, 2014.

“Governmental Authority” means any of the United States of America, the State of New York, the City of New York, any political subdivision thereof and any agency, department, commission, board, bureau or instrumentality of any of the foregoing, now existing or hereafter created, having jurisdiction over the Real Property or any portion thereof or the curbs, sidewalks, and areas adjacent thereto.

2

“Guarantor” means (i) if prior to the Effective Date, Global Crossing Holdings Ltd., a Bermuda company, and (ii) from and after the Effective Date, the entity that is the successor to all of the assets and business of Global Crossing Holdings Ltd. (“Successor”), and any other Person who or which shall from time to time guaranty to Landlord the payment and performance of all or any portion of the obligations of Tenant under this Lease, as provided in Article 29.

“Guaranty” means the Agreement and Guaranty, dated as of the date hereof, made by Guarantor to Landlord, in the form attached to this Lease as Exhibit C, and any amendment, modification, restatement, confirmation or extension thereof, and any other agreement pursuant to which any Guarantor shall from time to time guaranty to Landlord the payment and performance of all or any portion of the obligations of Tenant under this Lease.

“Hazardous Materials” means any substances, materials or wastes regulated by any Governmental Authority or deemed or defined as a “hazardous substance”, “hazardous material”, “toxic substance”, “toxic pollutant”, “contaminant”, “pollutant”, “solid waste”, “hazardous waste” or words of similar import under applicable Legal Requirements, including oil and petroleum products, natural or synthetic gas, polychlorinated biphenyls, asbestos in any form, mold, urea formaldehyde, radon gas, or the emission of non-ionizing radiation, microwave radiation or electromagnetic fields at levels in excess of those (if any) specified by any Governmental Authority or which may cause a health hazard or danger to property, or the emission of any form of ionizing radiation.

“Initial Alterations” are defined in Section 4.3.

“Legal Requirements” means all present and future laws, rules, orders, ordinances, regulations, statutes, requirements, codes, executive orders, rules of common law, and any judicial interpretations thereof, extraordinary as well as ordinary, of all Governmental Authorities, including the Americans with Disabilities Act (42 U.S.C. §12,101 et seq.), New York City Local Law 58 of 1987, and any law of like import, and all rules, regulations and government orders with respect thereto, and any of the foregoing relating to environmental matters, Hazardous Materials, public health and safety matters, and of any applicable fire rating bureau, or other body exercising similar functions, affecting the Real Property or the maintenance, use or occupation thereof, or any street or sidewalk comprising a part of or in front thereof or any vault in or under the same.

“Mortgage” means any mortgage or trust indenture which may now or hereafter affect the Real Property, the Building or any Superior Lease and the leasehold interest created thereby, and all renewals, extensions, supplements, amendments, modifications, consolidations and replacements thereof or thereto, substitutions therefor, and advances made thereunder; “Mortgagee” means any mortgagee, trustee or other holder of a Mortgage.

“Permitted Use” means the use of the Premises by Tenant as executive and general offices, including the installation, operation and maintenance of switching and transmission equipment and facilities in connection with Tenant’s telecommunications business, and for no other purpose.

3

“Person” means any individual, corporation, partnership, limited liability company, limited liability partnership, joint venture, estate, trust, unincorporated association, business trust, tenancy-in-common or other entity, or any Governmental Authority.

“Premises” means a portion of the second (2nd) floor of the Building, as shown on the floor plan attached to this Lease as Exhibit A.

“Premises Area” means the Rentable Square Foot area of the Premises, consisting of a total of 50,028 Rentable Square Feet, as such Premises Area may be increased or decreased from time to time pursuant to this Lease.

“Real Property” means the Building, together with the plot of land upon which it stands.

“Rentable Square Feet” means the deemed rentable area of the Building or any portion thereof, computed on the basis of the current standard employed by Landlord on the date hereof with respect to the calculation of the deemed Rentable Square Foot area of the Building; provided, however, that in no event shall such deemed Rentable Square Footage constitute or imply any representation or warranty by Landlord as to the actual size of any floor or other portion of the Building, including the Premises.

“Rules and Regulations” means the rules and regulations attached as Exhibit B to this Lease, and such other and further rules and regulations as Landlord may from time to time adopt.

“Security Deposit” means the sum of Five Hundred Thousand and 00/100 Dollars ($500,000.00), to be deposited by Tenant with Landlord as provided in Article 30.

“Substantial Completion” means, as to any construction performed by any party in the Premises, including any Alterations, that such work has been completed substantially in accordance with (i) the provisions of this Lease applicable thereto, (ii) the plans and specifications for such work, and (iii) all applicable Legal Requirements and Insurance Requirements, except for minor details of construction, decoration and mechanical adjustments, if any, the noncompletion of which does not materially interfere with Tenant’s use of the Premises, or which, in accordance with good construction practice, should be completed after the completion of other work to be performed in the Premises.

“Superior Lease(s)” means any ground or underlying lease of the Real Property or any part thereof heretofore or hereafter made by Landlord and all renewals, extensions, supplements, amendments and modifications thereof; “Lessor” means a lessor under a Superior Lease.

“Tenant’s Alterations” means all Alterations, including the Initial Alterations, in and to the Premises or elsewhere in the Building that may be made by or on behalf of Tenant prior to and during the Term, or any renewal thereof.

4

“Tenant Party” means any of Tenant, any Affiliate of Tenant, any subtenant or any other occupant of the Premises, or any of their respective direct or indirect partners, officers, shareholders, directors, members, trustees, beneficiaries, employees, principals, contractors, licensees, invitees, servants, agents or representatives.

“Tenant’s Property” means Tenant’s movable fixtures and movable partitions, telephone and other communications equipment, computer systems, furniture, trade fixtures, furnishings and other items of personal property which are removable without material damage to the Premises or Building.

“Term” means the term of this Lease, which shall commence on the Commencement Date and shall expire on the Expiration Date.

ARTICLE 1. DEMISE, PREMISES, TERM, RENT

Section 1.1 Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord, the Premises, for the Term to commence on the Commencement Date and to end on the Expiration Date, at an annual rent (“Fixed Rent”) as follows:

(a) One Million Seven Hundred Thousand Nine Hundred Fifty-Two and 00/100 Dollars ($1,700,952.00) per annum ($141,746.00 per month) for the period commencing on the Commencement Date and ending on December 31, 2004;

(b) One Million Eight Hundred Fifty Thousand and 00/100 Dollars ($1,850,000.00) per annum ($154,166.67 per month) for the period commencing on January 1, 2005 and ending on April 30, 2005;

(c) One Million Eight Hundred Fifty-One Thousand Thirty-Six and 00/100 Dollars ($1,851,036.00) per annum ($154,253.00 per month) for the period commencing on May 1, 2005 and ending on December 31, 2008;

(d) Two Million Fifty Thousand and 00/100 Dollars ($2,050,000.00) per annum ($170,833.33 per month) for the period commencing on January 1, 2009 and ending on April 30, 2009; and

(e) Two Million Fifty-One Thousand One Hundred Forty-Eight and 00/100 Dollars ($2,051,148.00) per annum ($170,929.00 per month) for the period commencing on May 1, 2009 and ending on the Expiration Date;

which Tenant agrees to pay to Landlord, without notice or demand, in lawful money of the United States, in monthly installments in advance on the first (1st) day of each calendar month during the Term, at the office of Landlord or such other place as Landlord may designate, without any set-off, offset, abatement or deduction whatsoever. Fixed Rent and Additional Rent shall be payable by check drawn upon a bank which is a member of the New York Clearinghouse Association or by wire transfer of immediately available funds.

Section 1.2 Notwithstanding anything to the contrary contained herein, upon execution and delivery of this Lease, Tenant shall pay to Landlord the sum of Eighty-Three Thousand and 00/100 Dollars ($83,000.00) representing a portion of the installment of Fixed Rent for the first (1st) full calendar month of the Term after the Commencement Date.

5

Section 1.3 Tenant represents and warrants to Landlord that (i) this Lease constitutes a transaction entered into in the ordinary course of Tenant’s business, and (ii) the creditors’ committee in the Bankruptcy Case has been given the opportunity to review this Lease prior to the execution hereof by Tenant. In reliance on the foregoing representation, Landlord has agreed to waive any requirement that Tenant obtain the approval of the Bankruptcy Court and/or of any creditors’ committee or any other parties to the Bankruptcy Case other than STT.

ARTICLE 2. USE AND OCCUPANCY

Section 2.1 Tenant shall use and occupy the Premises for the Permitted Use and for no other purpose. Tenant shall not use or occupy or permit the use or occupancy of any part of the Premises in any manner not permitted hereunder, or which would materially and adversely affect (a) the functioning of the Building Systems, (b) the use and occupancy of any part of the Building by any other tenant or other occupant, or (c) the appearance of the Building.

Section 2.2 Tenant shall not use or permit the Premises or any part thereof to be used: (a) for the business of printing or other manufacturing of any kind, (b) as a retail branch of a bank or savings and loan association, or as a retail loan company, as a retail stock broker’s or dealer’s office, (c) for the storage of merchandise, (d) for the distribution, by mail-order or otherwise, of merchandise, (e) as a restaurant or bar or for the sale of food or beverages, (f) as a news or cigar stand, (g) as an employment agency, labor union office, school, physician’s or dentist’s office, dance or music studio, (h) as a barber shop or beauty salon, (i) for the sale, at retail or otherwise, of any goods or products, (j) by the United States Government, the City or State of New York, any Governmental Authority, any foreign government, the United Nations or any agency or department of any of the foregoing or any Person having sovereign or diplomatic immunity, (k) for the rendition of medical, dental or other therapeutic or diagnostic services, or (1) for the conduct of an auction.

Section 2.3 (a) Landlord shall not be subject to any liability for failure to give possession of the Premises on the Commencement Date and the validity of this Lease shall not be impaired under such circumstances, nor shall the same be construed to extend the term of this Lease, except that Fixed Rent and Additional Rent shall be abated until possession of the Premises shall be delivered to Tenant. The foregoing shall constitute an express negation of Section 223-a of the New York Real Property Law or any successor law or ordinance, which shall be inapplicable hereto, and Tenant hereby waives any right to rescind this Lease which Tenant might otherwise have thereunder.

(b) Notwithstanding the foregoing, if the Commencement Date shall not occur on or before September 1, 2004, other than as a result of Unavoidable Delays (provided that for purposes of this Section 2.3(b), Unavoidable Delays shall not include the holding over of any tenant or other occupant of the Premises), then, provided that Tenant shall have duly satisfied the Delivery Conditions described in clauses (i) and (iii) of the definition of the Delivery Conditions, and as Tenant’s sole and exclusive remedy for such delay in the Commencement Date, Tenant shall have the right to terminate this Lease, by notice to Landlord given no earlier than September 1, 2004 and no later than September 30, 2004, such termination to be effective on the date that is thirty (30) days after the date such notice is given, and thereupon neither party shall have any liability to the other hereunder, except that Landlord shall return all prepaid Fixed Rent,

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Additional Rent, if any, and the Security Deposit deposited by Tenant hereunder; provided, however, that if the Commencement Date shall occur at any time within thirty (30) days following Landlord’s receipt of Tenant’s termination notice, such termination shall be void and of no force and effect, and Tenant shall have no further right to terminate this Lease pursuant to this Section 2.3.

Article 3. Alterations

Section 3.1 Tenant shall not make any Alterations without Landlord’s prior written consent in each instance, provided that Tenant’s changing of wall coverings, carpeting or paint shall not be deemed to be Alterations requiring such consent. Landlord’s consent shall be granted or denied in Landlord’s sole discretion; provided, however, that Landlord shall not unreasonably withhold its consent to Alterations proposed to be made by Tenant to adapt the Premises for the Permitted Use provided that such Alterations (a) are non-structural and do not affect the Building Systems or services, (b) are performed only by contractors approved in writing by Landlord, (c) do not affect any part of the Building other than the Premises, (d) do not adversely affect any service required to be furnished by Landlord to Tenant or to any other tenant or occupant of the Building, and (e) do not reduce the value or utility of the Building.

Section 3.2 (a) Prior to making any Alterations, Tenant shall (i) submit to Landlord, for Landlord’s written approval, detailed plans and specifications therefor in form satisfactory to Landlord, (ii) if such Alterations require a filing with Governmental Authority or require the consent of such authority, then such plans and specifications shall (A) be prepared and certified by a registered architect or licensed engineer, and (B) comply with all Legal Requirements to the extent necessary for such governmental filing or consent, (iii) at its expense, obtain all required permits, approvals and certificates, (iv) furnish to Landlord duplicate original policies or certificates of worker’s compensation (covering all persons to be employed by Tenant, and all contractors and subcontractors supplying materials or performing work in connection with such Alterations) and comprehensive public liability (including property damage coverage) insurance and Builder’s Risk coverage (issued on a completed value basis) all in such form, with such companies, for such periods and in such amounts as Landlord may require, naming Landlord and its employees and agents, and any Lessor and any Mortgagee as additional insureds, and (v) with respect to any Alteration costing more than $100,000.00 to complete, furnish to Landlord payment and performance bonds or such other evidence of Tenant’s ability to complete and to fully and completely pay for such Alteration as is satisfactory to Landlord; provided, however, that so long as either Global Crossing Holdings, Ltd. or Successor shall be the Guarantor under this Lease, Tenant shall not be required to furnish bonds or other security to Landlord in connection with Alterations. All Alterations shall be performed by Tenant at Tenant’s expense (A) in a good and workmanlike manner using new materials of first class quality, (B) in compliance with all Legal Requirements, and (C) in accordance with the plans and specifications previously approved by Landlord. Tenant shall at its cost and expense obtain all approvals, consents and permits from every Governmental Authority having or claiming

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jurisdiction prior to, during and upon completion of such Alterations. Tenant shall promptly reimburse Landlord, as Additional Rent and upon demand, for any and all actual, reasonable out-of-pocket costs and expenses incurred by Landlord in connection with Landlord’s review of Tenant’s plans and specifications for any such Alteration.

(b) Landlord shall not unreasonably withhold, condition or delay its approval of the contractors proposed to be used by Tenant for Tenant’s Alterations, provided that in the case of the mechanical, electrical, plumbing and fire safety trades, Tenant shall select its contractors and sub-contractors from Landlord’s list of approved contractors, which list may be modified by Landlord from time to time.

(c) Notwithstanding the foregoing provisions of this Article 3, Tenant shall be permitted to make minor, non-structural alterations to the Premises (“Minor Alterations”) upon prior notice to Landlord, but without the necessity of procuring Landlord’s consent thereto, provided that the estimated cost of each such Minor Alteration does not exceed $100,000.00 in any one instance. The provisions of Sections 3.2(a) and 3.2(b) shall be applicable to Minor Alterations. Prior to commencing any Minor Alteration, Tenant shall furnish Landlord with (i) working drawings or plans for such Minor Alteration in sufficient detail to permit Landlord to determine that such Alteration complies with the requirements hereof, and (ii) the names of the contractors proposed to be used by Tenant for such Minor Alteration.

(d) Upon completion of any Alterations, Tenant, at its expense, shall promptly obtain certificates of final approval of such Alterations as may be required by any Governmental Authority, and shall furnish Landlord with copies thereof, together with “as-built” plans and specifications for such Alterations prepared on an Autocad Computer Assisted Drafting and Design System (or such other system or medium as Landlord may accept) using naming conventions issued by the American Institute of Architects in June, 1990 (or such other naming convention as Landlord may accept) and magnetic computer media of such record drawings and specifications, translated into DXF format or another format acceptable to Landlord.

Section 3.3 All Alterations in and to the Premises which may be made by or on behalf of Tenant, prior to and during the Term or any renewal thereof, shall become the property of Landlord upon the expiration or sooner termination of this Lease. Landlord may condition its approval of any Alterations by requiring Tenant to agree in writing at the time of such approval that Tenant will remove such Alterations at the end of the Term as set forth in this Section 3.3 (any such Alterations which Landlord so requires Tenant to agree to remove, “Designated Alterations”). If Landlord does not specify at the time of its approval that an Alteration constitutes a Designated Alteration, Tenant shall have no obligation to remove such Alteration upon the expiration or sooner termination of this Lease. Tenant acknowledges that Designated Alterations shall include raised floors and reinforced floors, Tenant’s HVAC System (as defined in Section 9.3(d)), kitchen facilities, vaults, internal stairways and other slab penetrations, and conduit, wiring and telecommunications cabling within and outside of the Premises. Designated Alterations shall not include standard office installations such as internal partitions and corridors, dropped ceilings and lighting, ordinary HVAC ductwork, and pantries not containing cooking

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equipment. On the Expiration Date or earlier termination of the Term or any renewal thereof (a) Tenant shall remove Tenant’s Property from the Premises, and (b) unless Landlord notifies Tenant no later than one hundred eighty (180) prior to the Expiration Date that any or all of the Designated Alterations shall not be removed from the Premises, Tenant shall remove the Designated Alterations from the Premises, at Tenant’s expense. Tenant shall repair and restore in a good and workmanlike manner (reasonable wear and tear excepted) any damage to the Premises and the Building caused by such removal of Tenant’s Property and the Designated Alterations. Any of the Designated Alterations or Tenant’s Property not so removed by Tenant at or prior to the Expiration Date or earlier termination of the Term shall be deemed abandoned and may, at the election of Landlord, either be retained as Landlord’s property or be removed from the Premises by Landlord, and Tenant shall reimburse Landlord, as Additional Rent within thirty (30) days after demand, for Landlord’s reasonable, actual out-of-pocket costs incurred in connection with such removal. The covenants and agreements set forth in this Section 3.3 shall survive the expiration or earlier termination of this Lease.

Section 3.4 If, because of any act or omission of Tenant, its employees, agents, contractors, or subcontractors, any mechanic’s lien, U.C.C. financing statement or other lien, charge or order for the payment of money shall be filed against Landlord, or against all or any portion of the Premises, the Building or the Real Property, Tenant shall, at its own cost and expense, cause the same to be discharged of record, by bonding or otherwise, within forty-five (45) days after the filing thereof, and Tenant shall indemnify, defend and save Landlord harmless against and from all costs, expenses, liabilities, suits, penalties, claims and demands (including reasonable attorneys’ fees and disbursements) resulting therefrom.

Section 3.5 Tenant shall not, at any time prior to or during the Term, directly or indirectly employ, or permit the employment of, any contractor, mechanic or laborer in the Premises, whether in connection with any Alteration or otherwise, if in Landlord’s sole judgment such employment will interfere or cause any conflict with other contractors, mechanics, or laborers engaged in the construction, maintenance or operation of the Building by Landlord, Tenant or others, or the use and enjoyment of other tenants or occupants of the Building.

ARTICLE 4. CONDITION OF THE PREMISES

Section 4.1 (a) Tenant has examined the Premises and agrees to accept possession of the Premises in their “as is” condition on the Commencement Date, and further agrees that Landlord shall have no obligation to perform any work, supply any materials, incur any expenses or make any installations in order to prepare the Premises for Tenant’s occupancy. The taking of possession of the Premises by Tenant shall be conclusive evidence as against Tenant that at the time such possession was so taken, the Premises were in good and satisfactory condition, subject to the provisions of Section 4.2.

(b) Landlord and Tenant acknowledge that Prior Tenant has made certain improvements to the Premises, including the installation of certain infrastructure and equipment in or serving the Premises, such as air-conditioning and ventilation systems, emergency generators, electrical wiring and equipment, racks, cables and other personal property (all such infrastructure and equipment, collectively, the “Existing Improvements”). Landlord has duly approved the Existing Improvements as and when made by Prior Tenant in accordance with the

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provisions of Prior Tenant’s lease, and to the best of Landlord’s knowledge, there are no filed or noted violations of applicable Legal Requirements with respect to the Existing Improvements. However, no such approval by Landlord of the Existing Improvements shall be deemed to constitute any representation, warranty or other assurance of any kind that the Existing Improvements are in compliance with applicable Legal Requirements. Landlord agrees that if and to the extent the Existing Improvements remain in the Premises or the Building, as applicable, on the Commencement Date, then, so long as this Lease remains in force and effect, Tenant shall have the right to use and operate the Existing Improvements, provided, however, that Tenant shall accept possession of the Premises on the Commencement Date with the Existing Improvements, if any, in their then “as is, where is” condition, with all faults, without representation, warranty or recourse. EXCEPT AS SPECIFICALLY SET FORTH IN THIS LEASE, LANDLORD MAKES NO REPRESENTATIONS OR WARRANTIES REGARDING THE PREMISES, THE EXISTING IMPROVEMENTS OR THE BUILDING, WHETHER EXPRESS OR IMPLIED, AND LANDLORD SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

Section 4.2 Upon the request of Tenant, Landlord, at Tenant’s cost and expense, shall join in any applications for any permits, approvals or certificates from any Governmental Authority required to be obtained by Tenant, and shall sign such applications reasonably promptly after request by Tenant (provided that (i) the provisions of the applicable Legal Requirement shall require that Landlord join in such application, and (ii) is made in connection with an Alteration approved by Landlord, or if such approval is not required hereunder, such application is reasonably acceptable to Landlord) and shall otherwise cooperate with Tenant in connection therewith, provided that Landlord shall not be obligated to incur any cost or expense, including attorneys’ fees and disbursements, or suffer or incur any liability, in connection therewith.

ARTICLE 5. REPAIRS; FLOOR LOAD

Section 5.1 Landlord shall maintain and repair, in a good and workmanlike manner, the Building Systems and the public portions of the Building, both exterior and interior, and the structural elements thereof, including the roof, foundation and curtain wall. Tenant, at Tenant’s expense, shall take good care of the Premises and the fixtures, systems, equipment and appurtenances therein, and make all non-structural repairs thereto as and when needed to preserve them in good working order and condition, except for reasonable wear and tear, obsolescence and damage for which Tenant is not responsible pursuant to the provisions of Articles 10 and 11. Notwithstanding the foregoing, all damage or injury to the Premises or to any other part of the Building, or to its fixtures, equipment and appurtenances, caused by or resulting from carelessness, omission, neglect or improper conduct of, or Alterations made by Tenant, Tenant’s agents, employees or licensees, shall be repaired at Tenant’s expense, (a) by Tenant to the satisfaction of Landlord (if the required repairs are non-structural and do not affect any Building System), or (b) by Landlord (if the required repairs are structural or affect any Building System). Tenant also shall repair all damage to the Building and the Premises caused by the making of any Alterations by Tenant or by the moving of Tenant’s Property. All of such repairs shall be of quality or class equal to the original work or construction. If Tenant fails after fifteen (15) days notice to proceed with due diligence to make repairs required to be made by Tenant, Landlord may make such repairs at the expense of Tenant, and Tenant shall pay the costs and expenses thereof incurred by Landlord, with interest at the Default Rate, as Additional Rent within ten (10) days after rendition of a bill or statement therefor.

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Section 5.2 Tenant shall not place a load upon any floor of the Premises exceeding the floor load per square foot which such floor was designed to carry and which is allowed by law. Tenant shall not move any safe, heavy equipment, business machines, freight, bulky matter or fixtures into or out of the Building without Landlord’s prior consent. If such safe, equipment, freight, bulky matter or fixtures requires special handling, Tenant shall employ only persons holding a Master Rigger’s license to do such work.

Section 5.3 There shall be no allowance to Tenant for a diminution of rental value, no constructive eviction of Tenant and no liability on the part of Landlord by reason of inconvenience, annoyance or injury to business arising from Landlord making, or failing to make, any repairs, alterations, additions or improvements in or to any portion of the Building or the Premises, or in or to fixtures, appurtenances or equipment thereof. Landlord shall use reasonable efforts to minimize interference with Tenant’s access to and use and occupancy of the Premises in making any repairs, alterations, additions or improvements; provided, however, that Landlord shall have no obligation to employ contractors or labor at overtime or other premium pay rates or to incur any other overtime costs or additional expenses whatsoever.

Section 5.4 Tenant shall not require, permit, suffer or allow the cleaning of any window in the Premises from the outside in violation of Section 202 of the New York Labor Law or any successor statute thereto, or of any other Legal Requirement.

ARTICLE 6. REAL ESTATE TAXES AND LABOR RATE INCREASES

Section 6.1 The following terms shall have the meanings set forth below:

(a) “Taxes” shall include the aggregate amount of (i) all real estate taxes, assessments (special or otherwise), sewer and water rents, rates and charges and any other governmental levies, impositions or charges, whether general, special, ordinary, extraordinary, foreseen or unforeseen, which may be assessed, levied or imposed upon all or any part of the Real Property, and (ii) any expenses (including attorneys’ fees and disbursements and experts’ and other witness’ fees) incurred in contesting any of the foregoing or the Assessed Valuation (as defined in Section 6.1(d)) of all or any part of the Real Property, provided that such expenses shall be included in Taxes for any Tax Year only to the extent of the reduction in Taxes achieved thereby. If at any time after the date hereof the methods of taxation prevailing at the date hereof shall be altered so that in lieu of or as an addition to or as a substitute for the whole or any part of the taxes, assessments, rents, rates, charges, levies or impositions now assessed, levied or imposed upon all or any part of the Real Property, there shall be assessed, levied or imposed (A) a tax, assessment, levy, imposition or charge based on the rents received therefrom whether or not wholly or partially as a capital levy or otherwise, (B) a tax, assessment, levy, imposition or charge measured by or based in whole or in part upon all or any part of the Real Property and imposed upon Landlord, (C) a license fee measured by the rents or (D) any other tax, assessment, levy, imposition, charges or license fee however described or imposed, then all such taxes, assessments, levies, impositions, charges or license fees or the part thereof so measured or based shall be deemed to be Taxes. Taxes shall not include franchise, gift, inheritance, estate, sales, income or profit taxes imposed upon Landlord, any Lessor or any Mortgagee by any Governmental Authority, or any fines, interest or penalties imposed for late payment of Taxes.

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(b) “Tenant’s Share” means Two and 2/10ths of one percent (2.2%). Tenant’s Share has been computed by Landlord consistently with the standard employed by Landlord with respect to the calculation of the deemed Rentable Square Footage of the Premises and the Building under this Lease.

(c) “Base Taxes” means an amount equal to the sum of (i) one-half (1/2) of the Taxes payable for the Tax Year commencing on July 1, 1998 and ending June 30, 1999, plus (ii) one-half (1/2) the Taxes payable for the Tax Year commencing on July 1, 1999 and ending June 30, 2000.

(d) “Assessed Valuation” means the amount for which the Real Property is assessed pursuant to applicable provisions of the New York City Charter and of the Administrative Code of the City of New York for the purpose of imposition of Taxes.

(e) “Tax Year” means the period July 1 through June 30 (or such other period as may be duly adopted by the City of New York as its fiscal year for real estate tax purposes).

(f) “Comparison Year” means (i) with respect to Taxes, any Tax Year commencing with the 1999/2000 Tax Year, and (ii) with respect to Labor Rates, any calendar year commencing subsequent to the Base Labor Year.

(g) “Landlord’s Statement” means an instrument or instruments containing a comparison of either (i) the Base Taxes and the Taxes payable for any Comparison Year, or (ii) the Base Labor Rates and the Labor Rates applicable to any Comparison Year.

(h) “Tenant’s Projected Share of Taxes” means Tenant’s Tax Payment (as defined in Section 6.1(i)), if any, made by Tenant for the prior Comparison Year, plus an amount equal to Landlord’s estimate of the amount of increase in Tenant’s Tax Payment for the then current Comparison Year, divided by twelve (12) and payable monthly by Tenant to Landlord as Additional Rent.

(i) “Tenant’s Tax Payment” means Tenant’s Share of the excess of the Taxes payable for any Comparison Year over the Base Taxes.

Section 6.2 (a) If the Taxes payable for any Comparison Year (any part or all of which falls within the Term) shall exceed the Base Taxes, Tenant shall pay Tenant’s Tax Payment to Landlord, as Additional Rent, within ten (10) business days after demand from Landlord therefor, which demand shall be accompanied by Landlord’s Statement. Before or after the start of each Comparison Year, Landlord shall furnish to Tenant a Landlord’s Statement in respect of Taxes. If there shall be any increase in Taxes payable for any Comparison Year, whether during or after such Comparison Year or if there shall be any decrease in the Taxes

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payable for any Comparison Year during such Comparison Year, Landlord may furnish a revised Landlord’s Statement for such Comparison Year, and Tenant’s Tax Payment for such Comparison Year shall be adjusted and, within ten (10) business days after Tenant’s receipt of such revised Landlord’s Statement, Tenant shall (i) with respect to any increase in Taxes payable for such Comparison Year, pay such increase in Tenant’s Tax Payment to Landlord, or (ii) with respect to any decrease in Taxes payable for such Comparison Year, Landlord shall credit such decrease in Tenant’s Tax Payment against the next installment of Tenant’s Share of Taxes payable by Tenant pursuant to this Section 6.2(a), provided that if such decrease in Taxes is attributable to the final Comparison Year of the Term, Landlord shall pay the amount of such decrease in Tenant’s Tax Payment to Tenant. If, during the Term, Landlord shall elect to collect Tenant’s Tax Payments in full or in quarterly or bi-annual or other installments on any other date or dates than as presently required, then following Landlord’s notice to Tenant, Tenant’s Tax Payments shall be correspondingly revised, provided that Landlord shall not collect any periodic installment of Tenant’s Tax Payment earlier than thirty (30) days prior to the beginning of the period to which such payment relates. The benefit of any discount for any early payment or prepayment of Taxes relating to all or any part of the Real Property shall accrue solely to the benefit of Landlord and Taxes shall be computed without subtracting such discount.

(b) With respect to each Comparison Year, on account of which Landlord shall (or anticipates that it may) be entitled to receive Tenant’s Tax Payment, Tenant shall pay to Landlord, as Additional Rent for the then current Tax Year, Tenant’s Projected Share of Taxes. Upon each date that a Tax Payment or an installment on account thereof shall be due from Tenant pursuant to the terms of this Section 6.2. Landlord shall apply the aggregate of the installments of Tenant’s Projected Share of Taxes then on account with Landlord against Tenant’s Tax Payment or installment thereof then due from Tenant. In the event that such aggregate amount shall not be sufficient to discharge such Tax Payment or installment, Landlord shall so notify Tenant, and the amount of Tenant’s payment obligation with respect to such Tax Payment or installment pursuant to this Section 6.2, shall be equal to the amount of the insufficiency and shall be payable within ten (10) business days of demand by Landlord. If, however, such aggregate amount shall be greater than the Tax Payment or installment, Landlord shall credit the amount of such excess against the next payment of Tenant’s Projected Share of Taxes due hereunder.

(c) Only Landlord shall be eligible to institute Tax reduction or other proceedings to reduce the Assessed Valuation of the Real Property, and the filings of any such proceeding by Tenant without Landlord’s prior written consent shall constitute a default hereunder. If the Taxes payable for either the 1998/1999 Tax Year or the 1999/2000 Tax Year are reduced by final determination of legal proceedings, settlement or otherwise, then Base Taxes shall be correspondingly revised, the Additional Rent theretofore paid or payable on account of Tenant’s Tax Payment hereunder for all Comparison Years shall be recomputed on the basis of such reduction, and Tenant shall pay to Landlord, as Additional Rent within ten (10) business days after being billed therefor, any deficiency between the amount of such Additional Rent theretofore computed and paid by Tenant to Landlord and the amount thereof due as a result of such recomputations. If the Base Taxes are increased by such final determination of legal proceedings, settlement or otherwise, then, Landlord shall either pay to Tenant, or at Landlord’s election, credit against subsequent payments due under this Section 6.2, an amount equal to the excess of the amounts of such Additional Rent theretofore paid by Tenant over the

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amount thereof actually due as a result of such recomputations. If Landlord shall receive a refund or reduction of Taxes for any Comparison Year, Landlord shall, within a reasonable time after such refund is actually received or such credit is actually applied against Taxes then due and payable, either pay to Tenant, or, at Landlord’s election, credit against subsequent payments under this Section 6.2, an amount equal to Tenant’s Share of the refund or reduction, provided that such amount shall not exceed Tenant’s Tax Payment paid for such Comparison Year. Nothing herein contained shall obligate Landlord to file any application or institute any proceeding seeking a reduction in Taxes or Assessed Valuation.

(d) Tenant’s Tax Payment shall be made as provided in this Section 6.2 regardless of the fact that Tenant may be exempt, in whole or in part, from the payment of any taxes by reason of Tenant’s diplomatic or other tax exempt status or for any other reason whatsoever.

(e) Tenant shall pay to Landlord, as Additional Rent upon demand, any occupancy tax or rent tax now in effect or hereafter enacted, if payable by Landlord in the first instance or hereafter required to be paid by Landlord.

(f) If the Commencement Date or the Expiration Date shall occur on a date other than July 1 or June 30, respectively, any Additional Rent payable by Tenant to Landlord under this Section 6.2 for the Comparison Year in which such Commencement Date or Expiration Date shall occur, shall be apportioned in that percentage which the number of days in the period from the Commencement Date to June 30 or from July 1 to the Expiration Date, as the case may be, both inclusive, shall bear to the total number of days in such Comparison Year. In the event of a termination of this Lease, any Additional Rent under this Section 6.2 shall be paid or adjusted within thirty (30) days after submission of Landlord’s Statement. In no event shall Fixed Rent ever be reduced by operation of this Section 6.2 and the rights and obligations of Landlord and Tenant under the provisions of this Section 6.2 with respect to any Additional Rent shall survive the expiration or earlier termination of this Lease.

Section 6.3 The following terms shall have the meanings set forth below:

(a) “Comparison Year” shall mean any calendar year subsequent to the Base Labor Year.

(b) “R.A.B.” shall mean the Realty Advisory Board on Labor Relations, Incorporated, or its successor.

(c) “Local 32B-32J” shall mean Local 32B-32J of the Building Service Employees International Union, AFL-CIO, or its successor.

(d) “Class A Office Buildings” shall mean office buildings so categorized under any agreement between R.A.B. and Local 32B-32J, regardless of the designation given to such office buildings in any such agreement.

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(e) “Labor Rates” shall mean a sum equal to the regular hourly wage rate required to be paid to Others (hereinafter defined) employed in Class A Office Buildings pursuant to an agreement between R.A.B. and Local 32B-32J; provided, however, that:

(i) if, as of October 1st of any Comparison Year, any such agreement shall require Others in Class A Office Buildings to be regularly employed on days or during hours when overtime or other premium pay rates are in effect pursuant to such agreement, then the term “regular hourly wage rate”, as used in this Section 6.3 shall mean the average hourly wage rate for the hours in a calendar week during which Others are required to be regularly employed;

(ii) if no such agreement is in effect as of October 1st of any Comparison Year with respect to Others, then the term “regular hourly wage rate”, as used in this Section 6.3 shall mean the regular hourly wage rate actually paid to Others employed in the Building by Landlord or by an independent contractor engaged by Landlord; and

(iii) the term “regular hourly wage rate” shall exclude all benefits of any kind, including those payable directly to taxing authorities or others on account of the employment and all welfare, pension and fringe employee benefits and payments of any kind paid or given pursuant to such agreement.

(f) “Others” shall mean that classification of employee engaged in the general maintenance and operation of Class A Office Buildings most nearly comparable to the classification now applicable to “others” in the current agreement between R.A.B. and Local 32B-32J.

(g) “Base Labor Year” shall mean the calendar year 1999.

(h) “Base Labor Rates” shall mean the Labor Rates in effect for the Base Labor Year.

(i) “Tenant’s Labor Rate Payment” is defined in Section 6.4(a).

Section 6.4 (a) If the Labor Rates in effect for any Comparison Year (any part or all of which falls within the Term) shall be greater than the Base Labor Rates, then Tenant shall pay, as Additional Rent for such Comparison Year and continuing thereafter until a new Landlord’s Statement is rendered to Tenant, an amount (“Tenant’s Labor Rate Payment”) equal to (i) 50,028, multiplied by (ii) the number of cents (inclusive of any fractions of a cent) by which the Labor Rates in effect for such Comparison Year exceed the Base Labor Rates.

(b) At any time prior to, during or after any Comparison Year Landlord shall render to Tenant a Landlord’s Statement showing (i) a comparison of the Labor Rates for the Comparison Year with the Base Labor Rates, and (ii) the amount of Tenant’s Labor Rate Payment resulting from such comparison. Landlord’s failure to render a Landlord’s Statement during or with respect to any Comparison Year shall not prejudice Landlord’s right to render a Landlord’s Statement during or with respect to any subsequent Comparison Year and shall not eliminate or reduce Tenant’s obligation to pay Tenant’s Labor Rate Payment pursuant to this Article 6 for such Comparison Year.

(c) Tenant’s Labor Rate Payment shall be payable by Tenant on the first day of the month following the furnishing to Tenant of a Landlord’s Statement, in equal monthly

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installments, each such installment to be equal to 1/12th of Tenant’s Labor Rate Payment for such Comparison Year multiplied by the number of months (and any fraction thereof) of the Term then elapsed since the commencement of such Comparison Year, continuing monthly thereafter until rendition of the next succeeding Landlord’s Statement.

(d) The provisions of this Section 6.4 shall be effective irrespective of whether or not (i) the Building is classified as a Class A office building from time to time, or (ii) any Building employees are members of Local 32B-32J. Tenant acknowledges and agrees that the computation of Labor Rates hereunder is intended to serve solely as a formula for an agreed rental adjustment, rather than an actual operating expense calculation, and is not intended to reflect the actual cost to Landlord of wages at the Building or any increases or decreases in such cost.

Section 6.5 (a) If the Commencement Date or the Expiration Date shall occur on a date other than January 1 or December 31, respectively, any Additional Rent under this Article 6 for the Comparison Year in which such Commencement Date or Expiration Date shall occur shall be apportioned in that percentage which the number of days in the period from the Commencement Date to December 31 or from January 1 to the Expiration Date, as the case may be, both inclusive, shall bear to the total number of days in such Comparison Year. In the event of a termination of this Lease, any Additional Rent under this Article shall be paid or adjusted within thirty (30) days after submission of a Landlord’s Statement. In no event shall Fixed Rent ever be reduced by operation of this Section 6.5 and the rights and obligations of Landlord and Tenant under the provisions of this Article 6 with respect to any Additional Rent shall survive the expiration or earlier termination of this Lease.

(b) The computations of Additional Rent under this Article 6 are intended to constitute a formula for an agreed rental adjustment and may or may not constitute an actual reimbursement to Landlord for costs and expenses paid by Landlord with respect to the Building.

Section 6.6 Landlord’s failure to render a Landlord’s Statement with respect to any Comparison Year shall not prejudice Landlord’s right to thereafter render a Landlord’s Statement with respect thereto or with respect to any subsequent Comparison Year, nor shall the rendering of a Landlord’s Statement prejudice Landlord’s right to thereafter render a corrected Landlord’s Statement for that Comparison Year. Nothing herein contained shall restrict Landlord from issuing a Landlord’s Statement at any time there is an increase in Taxes or Labor Rates during any Comparison Year or any time thereafter.

Section 6.7 If any capital improvement is made to the Real Property during any calendar year during the Term in compliance with any Legal Requirements enacted after the date of this Lease (including the cost of compliance with Legal Requirements enacted prior to the date of this Lease if such compliance is required pursuant to any amendment, modification or reinterpretation thereof which is imposed or enacted after the date of this Lease), then Tenant shall pay to Landlord, immediately upon demand therefor, Tenant’s Proportionate Share of the amortized cost of such improvement, on a straight-line basis over the useful life thereof as determined by Landlord in the exercise of its reasonable judgment, with interest at the Base Rate plus two percent (2%) per annum, in each calendar year during the Term during which such amortization occurs.

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ARTICLE 7. LEGAL REQUIREMENTS

Section 7.1 Tenant, at its expense, shall comply with all Legal Requirements applicable to the Premises or the use and occupancy thereof by Tenant, and make all repairs or Alterations required thereby, whether structural or nonstructural, ordinary or extraordinary, unless otherwise expressly provided herein; provided, however, that Tenant shall not be obligated to comply with any Legal Requirement requiring any structural alteration to the Premises unless the application of such Legal Requirement arises from (i) Tenant’s manner of use or occupancy of the Premises (as distinguished from the use or occupancy of the Premises for office purposes generally), (ii) any cause or condition created by or on behalf of Tenant or any Tenant Party (including any Alterations), (iii) the breach of any of Tenant’s obligations under this Lease, or (iv) any Hazardous Materials having been brought into the Building by Tenant or any Tenant Party. Tenant shall not do or permit to be done any act or thing upon the Premises which will invalidate or be in conflict with Landlord’s insurance policies, and shall not do or permit anything to be done in or upon the Premises, or use the Premises in a manner, or bring or keep anything therein, which shall increase the rates for casualty or liability insurance applicable to the Building. If, as a result of any act or omission by Tenant or by reason of Tenant’s failure to comply with the provisions of this Article, the insurance rates for the Building shall be increased, then Tenant shall desist from doing or permitting to be done any such act or thing and shall reimburse Landlord, as Additional Rent hereunder, for that part of all insurance premiums thereafter paid by Landlord which shall have been charged because of such act, omission or failure by Tenant, and shall make such reimbursement upon demand by Landlord.

Section 7.2 Tenant, at its expense, shall comply with all Environmental Laws and with any directive of any Governmental Authority which shall impose any violation, order or duty upon Landlord or Tenant under any Environmental Laws with respect to the Premises or the use or occupation thereof. Tenant’s obligations hereunder with respect to Hazardous Materials shall extend only to those matters directly or indirectly based on, or arising or resulting from (a) the actual or alleged presence of Hazardous Materials on the Premises or in the Building which is caused or permitted by Tenant, and (b) any Environmental Claim (defined below) relating in any way to Tenant’s operation or use of the Premises or the Building.

Section 7.3 Tenant shall provide Landlord with copies of all communications and related materials regarding the Premises which Tenant shall receive from or send to (a) any Governmental Authority relating in any way to any Environmental Laws, or (b) any Person with respect to any claim based upon any Environmental Laws or relating in any way to Hazardous Materials (any such claim, an “Environmental Claim”). Landlord or its agents may perform an environmental inspection of the Premises at any time during the Term, upon prior notice to Tenant except in an emergency.

ARTICLE 8. SUBORDINATION AND NON-DISTURBANCE; ESTOPPEL CERTIFICATES

Section 8.1 This Lease, and all rights of Tenant hereunder, are and shall be subject and subordinate in all respects to all Mortgages and Superior Leases. This Section 8.1 shall be self-operative and no further instrument of subordination shall be required. In confirmation of such subordination, Tenant shall promptly execute and deliver any instrument that Landlord or any Lessor or Mortgagee may reasonably request to evidence such subordination.

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Section 8.2 In the event of any act or omission of Landlord which would give Tenant the right, immediately or after lapse of a period of time, to cancel or terminate this lease, or to claim a partial or total eviction, Tenant shall not exercise such right (a) until it has given written notice of such act or omission to each Mortgagee and Lessor whose name and address shall previously have been furnished to Tenant in writing, and (b) unless such act or omission shall be one which is not capable of being remedied by Landlord or such Mortgagee or Lessor within a reasonable period of time, until a reasonable period for remedying such act or omission shall have elapsed following the giving of such notice and following the time when such Mortgagee or Lessor shall have become entitled under such Mortgage or Superior Lease, as the case may be, to remedy the same (which reasonable period shall in no event be less than the period to which Landlord would be entitled under this Lease or otherwise, after similar notice, to effect such remedy), provided such Mortgagee or Lessor shall with due diligence give Tenant written notice of its intention to remedy such act or omission, and such Mortgagee or Lessor shall commence and thereafter continue with reasonable diligence to remedy such act or omission. If more than one Mortgagee or Superior Lessor shall become entitled to any additional cure period under this Section 8.2, such cure periods shall run concurrently, not consecutively.

Section 8.3 If a Mortgagee or Lessor shall succeed to the rights of Landlord under this Lease, whether through possession or foreclosure action or delivery of a new lease or deed, then at the request of such party so succeeding to Landlord’s rights (“Successor Landlord”) and upon Successor Landlord’s written agreement to accept Tenant’s attornment, Tenant shall attorn to and recognize Successor Landlord as Tenant’s landlord under this Lease, and shall promptly execute and deliver any instrument that Successor Landlord may reasonably request to evidence such attornment. Upon such attornment this Lease shall continue in full force and effect as, or as if it were, a direct lease between Successor Landlord and Tenant upon all of the terms, conditions and covenants as are set forth in this Lease and shall be applicable after such attornment except that Successor Landlord shall not:

(a) be liable for any previous act or omission of Landlord under this Lease;

(b) be subject to any offset, not expressly provided for in this Lease, which shall have theretofore accrued to Tenant against Landlord; or

(c) be bound by any previous modification of this Lease, not expressly provided for in this Lease, or by any previous prepayment of more than one month’s fixed rent, unless such modification or prepayment shall have been expressly approved in writing by such Mortgagee or Lessor.

Section 8.4 Each party agrees, at any time and from time to time, as requested by the other party, upon not less than ten (10) days’ prior notice, to execute and deliver to the other a written statement executed and acknowledged by such party (a) stating that this Lease is then in full force and effect and has not been modified (or if modified, setting forth all modifications), (b) setting forth the then annual Fixed Rent, (c) setting forth the date to which the Fixed Rent and Additional Rent have been paid, (d) stating whether or not, to the best knowledge

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of the signatory, the other party is in default under this Lease, and if so, setting forth the specific nature of all such defaults, (e) stating the amount of any security deposit held by Landlord, (f) stating whether there are any subleases affecting the Premises, (g) stating the address of the signatory to which all notices and communication under the Lease shall be sent, the Commencement Date and the Expiration Date, and (i) as to any other matters reasonably requested by the party requesting such certificate. The parties acknowledge that any statement delivered pursuant to this Section 8.4 may be relied upon by others with whom the party requesting such certificate may be dealing, including any purchaser or owner of the Real Property or the Building, or of Landlord’s interest in the Real Property or the Building or any Superior Lease, or by any Mortgagee or Lessor, or by any prospective or actual sublessee of the Premises or assignee of this Lease, or permitted transferee of or successor to Tenant.

Section 8.5 Without limitation of the provisions of Section 8.1, Landlord agrees to use commercially reasonable efforts to obtain for Tenant a subordination, non-disturbance and attornment agreement from all existing and future Mortgagees and Superior Lessors, in the standard form customarily employed by such Mortgagee or Superior Lessor, provided that Landlord shall have no liability to Tenant in the event that it is unable to obtain any such agreements. Tenant shall reimburse Landlord, within ten (10) days after demand therefor, for Landlord’s reasonable out-of-pocket costs, including reasonable attorney’s fees and disbursements, incurred in connection with such efforts.

ARTICLE 9. SERVICES

Section 9.1 Landlord shall provide, at Landlord’s expense, except as otherwise set forth herein, the following services:

Section 9.2 ELECTRICITY. (a) Landlord, at Landlord’s expense, subject to the provisions of this Article 9, shall furnish electric power to Tenant for use in the Premises by making available to Tenant 3,600 amperes (connected load) of AC electric capacity at 480 volts, 3-phase, 4-wire, dedicated to Tenant (the “Electrical Capacity”), at the existing electrical panels serving the Premises. Tenant covenants that Tenant’s use and consumption of electric current shall not at any time exceed the Electrical Capacity, nor exceed the capacity of any of the electrical facilities and installations in or otherwise serving or being used in the Premises. Tenant shall pay Landlord, as Additional Rent, at any time and from time to time, but no more frequently than monthly, for its consumption of electric power at the Premises, as provided in Sections 9.2(b) and 9.2(c).

(b) The calculations and determinations of the charges for electric power consumed by Tenant shall be based on the readings of one or more submeters to be installed by Landlord at Tenant’s expense, applied to Landlord’s Electricity Cost, as defined in Section 9.2(c). Tenant shall pay for electricity consumed as determined thereunder as measured and calculated from time to time by such submeter or submeters, plus Landlord’s charge for overhead and supervision, which charge shall not exceed four percent (4%) of such payment by Tenant. In addition, Tenant shall pay to Landlord, as Additional Rent (i) the fees and expenses

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of Landlord’s electrical contractor for services rendered by such contractor in the maintenance and repair of such submeter(s), and (ii) the amount of any taxes imposed by any Governmental Authority on Landlord’s receipts from the sale of electricity to Tenant. In the event that more that one submeter is used to measure Tenant’s consumption of electricity in the Premises, Tenant shall be billed only on the basis of the “totalized” demand, i.e., as though a single meter were measuring such usage.

(c) “Landlord’s Electricity Cost” means the cost per kilowatt hour and cost per kilowatt demand, adjusted by time of day factors, fuel adjustment charges and other applicable rate adjustments, to Landlord for the purchase of electricity from the public utility or other electricity provider furnishing electricity service to the Building from time to time (the “Electricity Provider”), including sales and other taxes imposed by any Governmental Authority on Landlord’s purchase of electricity. If at any time during the Term the cost elements comprising Landlord’s Electricity Cost shall be increased by the Electricity Provider, or Landlord’s Electricity Cost shall be increased for any other reason, then effective as of the date of such increase, Tenant’s payment for submetered electricity under this Section 9.2 shall be proportionately increased. Landlord reserves the right to contract with different Electricity Providers from time to time in its sole judgment, and without reference to whether any Electricity Provider selected by Landlord provides lower rates than any other electricity supplier. Currently, Landlord’s Electricity Cost is based upon Consolidated Edison Company’s Service Classification rate schedule S.C. #4 Rate II as in effect on the Commencement Date.

(d) In the event that Tenant’s total power requirements at the Premises, based on an annual review of Tenant’s consumption commencing on the second (2nd) anniversary of the Commencement Date and thereafter on each succeeding anniversary thereof, shall be less than 3,000 amperes (at 460/480 volts), Tenant shall pay to Landlord an annual sum equal to the fee, if any, which Landlord is obligated to pay to the Electricity Provider (as hereinafter defined), commonly known as a “use it or lose it” fee, for the availability of such excess capacity, presently payable by Landlord to the Electricity Provider at the rate of $25.00 per unused ampere per annum.

(e) Tenant covenants that Tenant’s use and consumption of electric current shall not at any time exceed the capacity of any of the electrical facilities and installations in or otherwise serving or being used in the Premises and Tenant shall, upon the submission by Landlord to Tenant of written notice, promptly cease the use of any of Tenant’s electrical equipment which Landlord believes will cause Tenant to exceed such capacity. Any additional feeders, risers, electrical facilities and other such installations required for electric service to the Premises in excess of the Electrical Capacity will be supplied by Landlord, at Tenant’s expense, upon Landlord’s prior consent in each instance, provided that, in Landlord’s judgment, such additional electrical facilities and installations, feeders or risers are necessary and are permissible under Legal Requirements (including the New York State Energy Conservation Construction Code) and insurance regulations and the installation of such feeders or risers will not cause permanent damage or injury to the Building or the Premises or cause or create a dangerous or

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hazardous condition or entail excessive or unreasonable alterations or repairs or interfere with, or disturb, other tenants or occupants of the Building. In addition, Landlord shall have no obligation to consent to such additional feeders, risers, electrical facilities and installations if in Landlord’s judgment, the same would give Tenant a disproportionate amount of the electrical current supplied to the Building at the expense of, or in derogation of the needs of other tenants or occupants of the Building.

(f) Unless caused by Landlord’s gross negligence or willful misconduct, Landlord shall not in any way be liable or responsible to Tenant for any loss, damage or expense which Tenant may sustain or incur as a result of the unavailability of or interruption in the supply of electric current to the Premises or a change in the quantity or character or nature of such current and such change, interruption or unavailability shall not constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent (except that Tenant’s liability to pay Landlord for electricity under this Section 9.2 shall cease as of the date of such disturbance), or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Landlord, or its agents, by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant’s business, or otherwise.

(g) Landlord reserves the right to discontinue furnishing electricity to Tenant in the Premises on not less than sixty (60) days’ notice to Tenant. If Landlord exercises such right to discontinue, or is compelled to discontinue furnishing electricity to Tenant, this Lease shall continue in full force and effect and shall be unaffected thereby, except only that from and after the effective date of such discontinuance, Landlord shall not be obligated to furnish electricity to Tenant, and Tenant shall have no further obligation to pay Landlord for electricity supplied to the Premises. If Landlord so discontinues furnishing electricity to Tenant, Tenant shall arrange to obtain electricity directly from the Electricity Provider. Such electricity may be furnished to Tenant by means of the then existing electrical facilities serving the Premises to the extent that the same are available, suitable and safe for such purposes. All meters and all additional panel boards, feeders, risers, wiring and other equipment which may be required by Tenant to obtain electricity directly from the Electricity Provider shall be installed by Landlord, at Tenant’s expense.

(h) If submetering of electricity in the Building is hereafter prohibited by any Legal Requirement, or by any order or ruling of the Public Service Commission of the State of New York, then Tenant shall apply, within ten (10) days of Tenant’s receiving notice thereof, to the Electricity Provider in order to obtain direct electric service, and Tenant shall bear all costs and expenses, as set forth in Section 9.2(h), necessary to comply with all rules and regulations of the Electricity Provider pertinent thereto, and from and after the date upon which Tenant procures direct electric service, Landlord shall be relieved of any further obligation to furnish electricity to Tenant pursuant to this Section 9.2. Such electricity may be furnished to Tenant by means of the then existing electrical facilities serving the Premises, including Building feeders and risers, to the extent that the same are suitable and safe for such purposes.

Section 9.3 HEAT. (a) Landlord shall provide heat to the Premises on Business Days from 8:00 A.M. to 6:00 P.M., when required in Landlord’s judgment for the comfortable use and occupancy of the Premises, through use of the Building standard heating system (the “Building Heating System”).

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(b) Anything in this Section 9.3 to the contrary notwithstanding, and without limitation of Landlord’s obligations under Section 5.1 with respect to the repair of Building Systems, Landlord shall not be responsible if the normal operation of the Building Heating System shall fail to provide heat at reasonable temperatures uniformly to all interior portions of the Premises. Tenant at all times shall cooperate fully with Landlord and shall abide by the regulations and requirements which Landlord may prescribe for the proper functioning and protection of the Building Heating System.

(c) Landlord shall not be required to furnish heat during periods other than the hours and days set forth in this Section 9.3 for the furnishing and distributing of such services (“Overtime Periods”), unless Landlord has received advance notice from Tenant requesting such service not less than twenty-four (24) hours prior to the time when such service shall be required. Accordingly, if Landlord shall furnish heat to the Premises at the request of Tenant during Overtime Periods, Tenant shall pay Landlord, as Additional Rent within ten (10) days after demand, for such services at the standard rate then fixed by Landlord for the Building. Failure by Landlord to furnish or distribute heat or any other services during Overtime Periods shall not constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of Fixed Rent or Additional Rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Landlord or its agents by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant’s business or otherwise.

(d) Landlord shall have no obligation to provide air-conditioning or ventilation services to the Premises. Landlord agrees that Tenant shall have the right to use any air-conditioning systems forming part of the Existing Improvements, subject to the provisions of Section 4.1(b).

(e) Landlord will not unreasonably withhold its consent to the removal by Tenant of the existing louvers in the exterior curtain wall of the Building and the replacement of such louvers with Building standard windows. Notwithstanding the foregoing, Tenant shall not, without Landlord’s consent, which may be granted or withheld in Landlord’s sole and absolute discretion, install additional exterior louvers or in any other way alter the exterior appearance of the Building, and Tenant agrees that all elements of the design and materials of any such louvers or other alterations that would be visible from the exterior of the Building shall be consistent with the exterior design and appearance of the Building, as determined by Landlord in its sole judgment.

Section 9.4 ELEVATORS. Landlord shall provide passenger elevator service to the Premises on Business Days from 8:00 A.M. to 6:00 P.M. and freight elevator facilities on a non-exclusive basis, on Business Days from 8:00 A.M. to 4:45 P.M., and shall have one passenger elevator available at all other times. Such elevator service shall be subject to such rules and regulations as Landlord may promulgate from time to time with respect thereto. Landlord shall have the right to change the operation or manner of operation of any of the elevators in the Building and/or to discontinue, temporarily or permanently, the use of any one or more cars in any of the passenger, freight or truck elevator banks.

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Section 9.5 CLEANING AND RUBBISH REMOVAL. Tenant shall, at Tenant’s sole cost, provide cleaning services at the Premises pursuant to reasonable rules and regulations established by Landlord from time to time, and use a cleaning contractor approved by Landlord. Tenant shall, at Tenant’s sole cost, provide refuse and rubbish removal service at the Premises at times, and pursuant to regulations, established by Landlord from time to time.

Section 9.6 WATER. Landlord shall furnish hot and cold water in such quantities as Landlord deems sufficient for ordinary drinking, lavatory and cleaning purposes to the Premises. If Tenant requires, uses or consumes water for any purpose in addition to ordinary lavatory, cleaning and drinking purposes, Landlord may install a hot water meter and a cold water meter and thereby measure Tenant’s consumption of water for all purposes. Tenant shall (a) pay to Landlord the cost of any such meters and their installation, (b) at Tenant’s expense, keep any such meters and any such installation equipment in good working order and repair, and (c) pay to Landlord, as Additional Rent, as and when billed therefor for water consumed, together with a charge for any required pumping or heating thereof, all sewer rents, charges or any other taxes, rents, levies or charges which now or hereafter are assessed, imposed or shall become a lien upon the Premises or the Real Property pursuant to law, order or regulation made or issued in connection with any such metered use, consumption, maintenance or supply of water, water system, or sewage or sewage connection or system, and in default in making such payment Landlord may pay such charges and collect the same from Tenant.

Section 9.7 NO WARRANTY OF LANDLORD. Landlord does not warrant that any of the services to be provided by Landlord to Tenant hereunder, or any other services which Landlord may supply (a) will be adequate for Tenant’s particular purposes or as to any other particular need of Tenant or (b) will be free from interruption, and Tenant acknowledges that any one or more such services may be interrupted or suspended by reason of Unavoidable Delays. In addition, Landlord reserves the right to stop, interrupt or reduce service of the Building Systems by reason of Unavoidable Delays, or for repairs, additions, alterations, replacements, decorations or improvements which are, in the judgment of Landlord, necessary to be made, until said repairs, alterations, replacements or improvements shall have been completed. Any such interruption or discontinuance of service, or the exercise of such right by Landlord to suspend or interrupt such service shall not (i) constitute an actual or constructive eviction, or disturbance of Tenant’s use and possession of the Premises, in whole or in part, (ii) entitle Tenant to any compensation or to any abatement or diminution of Fixed Rent or Additional Rent, (iii) relieve Tenant from any of its obligations under this Lease, or (iv) impose any responsibility or liability upon Landlord or its agents by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant’s business, or otherwise. Landlord shall use reasonable efforts to minimize interference with Tenant’s access to and use and occupancy of the Premises in making any repairs, alterations, additions, replacements, decorations or improvements; provided, however, that Landlord shall have no obligation to employ contractors or labor at “overtime” or other premium pay rates or to incur any other “overtime” costs or additional expenses whatsoever. Landlord shall not be required to furnish any services except as expressly provided in this Article 9.

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SECTION 9.8 ANTENNA EQUIPMENT

(a) Landlord will grant to Tenant, for Tenant’s own use and not for resale purposes, a non-exclusive license of sufficient space on the roof of the Building, at a location designated by Landlord in its sole discretion, for the construction, installation, operation and use by Tenant of up to six (6) antenna masts for the installation of cellular communications antennae or satellite dishes, none of which shall exceed ten feet (10’) in overall height or, in the case of satellite dishes, one (1) meter in width, for use in conjunction with Tenant’s equipment and facilities in the Premises, together with related cabling, mountings and supports for the foregoing (collectively, the “Antenna Equipment”), at a location or locations designated by Landlord, taking into account any reasonable “line of sight” requirements of Tenant.

(b) If the Antenna Equipment interferes with any equipment installed by Landlord or any tenant in the Building leasing space in the Building as of the date of this Lease, or interferes with the operation of the Building or the Building Systems, or if Landlord shall determine that the operation thereof (i) may cause a health hazard or danger to property, (ii) may not be in accordance with governmental or quasi-governmental standards for non-ionizing radiation for occupational or general public health levels, then Tenant, at its expense, shall take all steps necessary to eliminate such interference, and if Tenant shall fail to eliminate such interference, Tenant shall relocate the Antenna Equipment to another area on the roof designated by Landlord. In the event Tenant fails, within thirty (30) days after notice, to relocate or remove the Antenna Equipment, Landlord may do so, and Tenant shall promptly reimburse Landlord for any costs and expenses incurred by Landlord in connection therewith.

(c) Landlord makes no representation that the Antenna Equipment will be able to receive or transmit communication signals without interference or disturbance (whether or not by reason of the installation or use of similar equipment by others on the roof) and Tenant agrees that Landlord shall not be liable to Tenant therefor.

(d) Tenant shall pay to Landlord, as a fee for the Antenna Equipment (the “Antenna License Fee”) in a amount per month equal to the product of (i) of Five Hundred and 00/100 Dollars ($500.00), multiplied by (ii) the number of antenna masts installed by Tenant pursuant to Section 9.8(a). The Antenna License Fee shall be payable by Landlord in advance on the first day of each calendar month during the Term, and if the Term shall commence or terminate on other than the first day or last day, respectively, of a calendar month, the Antenna License Fee for such month shall be prorated based upon the actual number of days elapsed.

SECTION 9.9 EMERGENCY GENERATOR

(a) Landlord shall make up to 2,000 kilowatts (kW) of 460/480-volt emergency electric power service (“EPS”) available to Tenant for use in the Premises from the Building emergency electric generator system (collectively, the “Generator System”) as provided in this Section 9.9.

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(b) Tenant shall pay Landlord for EPS as follows:

(i) Tenant shall pay the costs and expenses incurred by Landlord in making EPS available to the Premises, including the costs to furnish and install a transfer switch, if required, cabling and other devices necessary to connect the Generator System to the Premises, and the costs of testing, recertifying and repairing the Generator System, within thirty (30) days after demand by Landlord; and

(ii) Tenant shall pay an annual fee (the “EPS Fee”) for the period commencing on the date on which Landlord makes EPS available to the Premises through the Expiration Date, irrespective of whether or not emergency power is ever required or used by Tenant, in an amount equal to the product of (A) Landlord’s actual annual costs for the operation, maintenance and repair of the Generator System, multiplied by (B) a fraction, the numerator of which is 2,000, and the denominator of which is the total capacity, measured in kW, of the Generator System or, at Landlord’s option, of the portion thereof serving the Premises. At Landlord’s option, the EPS Fee shall be payable in monthly, quarterly, or annual installments, and in all cases shall be payable within thirty (30) days after demand by Landlord.

(c) Landlord shall supply EPS to Tenant only if there is an interruption or failure in the supply of electric current to the Premises, and under no other circumstances. Tenant shall be responsible for the payment of any occupancy tax, or any other tax (other than Landlord’s income tax) imposed upon the Additional Rent paid by Tenant pursuant to this Section 9.9.

(d) Tenant shall not transfer or assign the right to receive the EPS service described in this Section 9.9 except in connection with an assignment of this Lease consented to by Landlord as and to the extent required under Article 13, and under no circumstances shall this right be transferred or assigned to any party who is not a tenant under this Lease. Tenant acknowledges that the Generator System (and any replacement or substitute therefor), and all connections thereto, are and shall remain the sole property of Landlord and may not be removed by Tenant.

(e) Landlord shall have the right, in Landlord’s sole discretion, at any time and from time to time during the term of this Lease, upon not less than thirty (30) days prior written notice to Tenant, to relocate any of the generators comprising the Generator System to other areas of the Building, or to substitute different or additional generators for those comprising the Generator System as of the date hereof. Tenant shall cooperate with Landlord to effectuate any such relocation or substitution affecting the Generator System.

(g) Upon and subject to the provisions of this Lease, Landlord shall maintain and repair the Generator System, and shall maintain such service contracts and take such other actions as may be necessary in Landlord’s sole judgment to keep the Generator System in good working order; provided, however, that Landlord shall not be liable in any way to Tenant for any delay, interruption, failure, variation or defect in or with regard to the Generator System or EPS, and in no event shall Landlord be liable to Tenant for special, indirect or consequential damages which may result from any such delay, interruption, failure, variation or defect.

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Section 9.10 RAMP SPACE

(a) Landlord hereby grants to Tenant, for Tenant’s own use and not for resale purposes, a license of an area of the ramp on the 15th Street side of the Premises leading to the ground floor of the Building, as shown on Exhibit E to this Lease, containing approximately 2,479 usable square feet (the “Ramp Space”) for use by Tenant as (i) storage space, and (ii) for access to the Premises by individuals and vehicles, if permitted under applicable Legal Requirements. Tenant shall be solely responsible for (A) constructing such access doors, gates or other means of access to the Premises through the Ramp Space as required by Tenant and permitted under Legal Requirements, and (B) obtaining, at its expense, all required permits, approvals and certificates from all Governmental Authorities having or claiming jurisdiction with respect to Tenant’s use of the Ramp Space, and for compliance with all Legal Requirements applicable thereto, including the provisions of the certificate of occupancy from time to time issued for the Building. Without limitation of the foregoing, if any use of the Ramp Space by Tenant generates noise or exhaust fumes, then Tenant shall install sound attenuated acoustic enclosures reasonably satisfactory to Landlord designed to eliminate such noise or reduce such noise to acceptable levels, and adequate venting to eliminate such exhaust fumes from the Ramp Space and the Building.

(b) Tenant shall pay a license fee to Landlord for the Ramp Space, as Additional Rent in advance on the first day of each month during the Term, as follows (i) during the period from the Rent Commencement Date through the day before the fifth (5th) anniversary of the Rent Commencement Date, the product of the usable square foot area of the Ramp Space, multiplied by Eighteen and 00/100 Dollars ($18.00), and (ii) during the period from the fifth (5th) anniversary of the Rent Commencement Date through day before the tenth (10th) anniversary of the Rent Commencement Date, the product of the usable square foot area of the Ramp Space, multiplied by Twenty-One and 00/100 Dollars ($21.00), and (iii) during the period from the tenth (10th) anniversary of the Rent Commencement Date through the Expiration Date, the product of the usable square foot area of the Ramp Space, multiplied by Twenty-Four and 00/100 Dollars ($24.00). All of the provisions of this Lease shall apply to the Ramp Space, including all provisions relating to compliance with Legal Requirements, insurance, indemnity, repairs and maintenance. The license granted to Tenant in this Section 9.10 shall not be assignable by Tenant separately from this Lease.

(c) Landlord shall not have any obligations with respect to the Ramp Space or compliance with any Legal Requirements (including the obtaining of any required permits or licenses, or the maintenance thereof) relating thereto, nor shall Landlord be required to provide any services to the Ramp Space.

(d) The privileges granted Tenant under this Section 9.10 merely constitute a license and shall not, now or at any time after the installation of the Ramp Space, be deemed to grant Tenant a leasehold or other real property interest in the Building or any portion thereof. The license granted to Tenant in this Section 9.10 shall continue until and automatically

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terminate and expire upon the expiration or earlier termination of this Lease and the termination of such license shall be self-operative and no further instrument shall be required to effect such termination. For so long as this Lease shall be in full force and effect, Landlord will not terminate the license granted to Tenant hereby. Upon request by Landlord following the expiration or sooner termination of this Lease and the license granted to Tenant in this Section 9.10, Tenant, at Tenant’s expense, shall promptly execute and deliver to Landlord, in recordable form, any certificate or other document reasonably required by Landlord confirming the termination of Tenant’s right to use the Ramp Space.

ARTICLE 10. INSURANCE

Section 10.1 Tenant, at its expense, shall obtain and keep in full force and effect a policy of commercial general liability insurance under which Tenant is named as the insured and Landlord, Landlord’s managing agent for the Building, and any Lessors and any Mortgagees (whose names shall have been furnished to Tenant) are named as additional insureds, which insurance shall provide primary coverage without contribution from any other insurance carried by or for the benefit of Landlord, Landlord’s managing agent or any Lessors or Mortgagees named as additional insureds. Tenant’s primary commercial general liability policy shall contain a provision that the policy shall be noncancellable unless twenty (20) days’ written notice shall have been given to Landlord and Landlord shall similarly receive twenty (20) days’ notice of any material change in coverage. The minimum limits of liability shall be a combined single limit with respect to each occurrence in an amount of not less than $5,000,000 per location general aggregate limit; provided, however, that Landlord shall retain the right to require Tenant to increase said coverage to that amount of insurance which in Landlord’s reasonable judgment is then being customarily required by prudent landlords of comparable buildings in the City of New York, and provided further that Landlord shall require similar increases of other tenants of space in the Building comparable to the Premises, to the extent Landlord shall then have the right to do so under applicable leases. Tenant shall also obtain and keep in full force and effect during the Term, (a) insurance against loss or damage by fire, and such other risks and hazards as are insurable under then available standard forms of “all risk” insurance policies with extended coverage, to Tenant’s Property and Tenant’s Alterations for the full insurable value thereof or on a replacement cost basis; (b) Workers’ Compensation Insurance, as required by law; (c) New York Disability Benefits Law Policy; and (d) such other insurance in such amounts as Landlord, any Mortgagee or Lessor may reasonably require from time to time. All insurance required to be carried by Tenant pursuant to the terms of this Lease shall be effected under valid and enforceable policies issued by reputable and independent insurers permitted to do business in the State of New York, and rated in Best’s Insurance Guide, or any successor thereto (or if there be none, an organization having a national reputation) as having a Best’s Rating” of “A-” and a “Financial Size Category” of at least “XI” or if such ratings are not then in effect, the equivalent thereof.

Section 10.2 (a) The parties hereto do hereby waive, any and all rights of recovery against the other, or against the officers, employees, partners, agents and representatives of the other, for loss of or damage to the property of the waiving party to the extent such loss or damage is insured against under any insurance policy carried by Landlord or

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Tenant hereunder. In addition, the parties hereto shall procure an appropriate clause in, or endorsement on, any fire or extended coverage insurance covering the Premises, the Building and personal property, fixtures and equipment located thereon or therein, pursuant to which the insurance companies waive subrogation or consent to a waiver of right of recovery and subject to obtaining such clauses or endorsements of waiver of subrogation or consent to a waiver of right of recovery, hereby agree not to make any claim against or seek to recover from the other for any loss or damage to its property or the property of others resulting from fire or other hazards covered by such fire and extended coverage insurance; provided, however, that the release, discharge, exoneration and covenant not to sue herein contained shall be limited by and coextensive with the terms and provisions of the waiver of subrogation clause or endorsements or clauses or endorsements consenting to a waiver of right of recovery. If the payment of an additional premium is required for the inclusion of such waiver of subrogation or consent to waiver provision, each party shall advise the other of the amount of any such additional premiums and the other party at its own election may, but shall not be obligated to, pay the same. If such other party shall not elect to pay such additional premium, the first party shall not be required to obtain such waiver of subrogation or consent to waiver provision. Tenant acknowledges that Landlord shall not carry insurance on and shall not be responsible for damage to, Tenant’s Alterations (if any) or Tenant’s Property, and that Landlord shall not carry insurance against, or be responsible for any loss suffered by Tenant due to, interruption of Tenant’s business.

(b) As to each party hereto, provided such party’s right of full recovery under the applicable insurance policy is not adversely affected, such party hereby releases the other (its servants, agents, contractors, employees and invitees) with respect to any claim (including a claim for negligence) which it might otherwise have against the other party for loss, damages or destruction of the type covered by such insurance with respect to its property by fire or other casualty i.e. in the case of Landlord, as to the Building, and, in the case of Tenant, as to Tenant’s Property and Tenant’s Alterations (including rental value or business interruption, as the case may be) occurring during the Term of this Lease.

Section 10.3 On or prior to the Commencement Date, Tenant shall deliver to Landlord appropriate certificates of insurance required to be carried by Tenant pursuant to this Article 10, including evidence of waivers of subrogation required pursuant to Section 10.2. Evidence of each renewal or replacement of a policy shall be delivered by Tenant to Landlord at least twenty (20) days prior to the expiration of such policy.

ARTICLE 11. DESTRUCTION OF THE PREMISES; PROPERTY LOSS OR DAMAGE

Section 11.1 (a) If the Premises shall be damaged by fire or other casualty, or if the Building shall be so damaged that Tenant shall be deprived of reasonable access to the Premises, Tenant shall give prompt notice thereof to Landlord, and the damage shall be repaired by and at the expense of Landlord to substantially the condition prior to the damage, including Tenant’s Alterations, but excluding Tenant’s Property. Until such repairs shall be substantially completed, Fixed Rent and Additional Rent shall, so long as Tenant shall not be in default beyond applicable grace or notice provisions in the payment or performance of its obligations under this Section 11.1, be reduced in the proportion which the area of the part of the Premises which is neither usable nor used by Tenant bears to the total area of the Premises. Tenant shall

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pay to Landlord all proceeds of insurance policies covering Tenant’s Alterations, and such proceeds shall be used by Landlord in the repair of Tenant’s Alterations. Landlord shall have no obligation to repair any damage to, or to replace, any of Tenant’s Property.

(b) Concurrently with the collection of any insurance proceeds attributable to damage to Tenant’s Alterations (or the payment by the Tenant to Landlord of an amount equal to such insurance proceeds, pending collection of such proceeds from its insurer), and as a condition precedent to Landlord’s obligation to commence those repairs to Tenant’s Alterations required to be performed by Landlord pursuant to this Section 11.1, Tenant shall pay to Landlord (i) the amount of any deductible under the policy insuring Tenant’s Alterations, and (ii) the amount, if any, by which the cost of repairing and restoring Tenant’s Alterations, as estimated by a reputable independent contractor designated by Landlord, exceeds the available insurance proceeds therefor. The amounts due in accordance with the preceding sentence constitute Additional Rent under this Lease and shall be payable by Tenant to Landlord upon demand.

Section 11.2 (a) Anything contained in Section 11.1 to the contrary notwithstanding, if the Premises are totally damaged or are rendered wholly untenantable, and if Landlord shall decide not to restore the Premises, or if the Building shall be so damaged by fire or other casualty that, in Landlord’s opinion, substantial alteration, demolition, or reconstruction of the Building shall be required (whether or not the Premises shall have been damaged or rendered untenantable), then in any of such events, Landlord may, not later than sixty (60) days following the date of the damage, give Tenant a notice in writing terminating this Lease. If this Lease is so terminated, the Term shall expire upon the tenth (10th) day after such notice is given, and Tenant shall vacate the Premises and surrender the same to Landlord. Upon the termination of this Lease under the conditions provided for in this Section 11.2, Tenant’s liability for Fixed Rent and Additional Rent shall cease as of the date of such fire or other casualty, and any prepaid portion of Fixed Rent or Additional Rent for any period after such date shall be refunded by Landlord to Tenant.

(b) If this Lease is terminated pursuant to the provisions of this Article 11, then Landlord shall collect the insurance proceeds of policies providing coverage for Tenant’s Alterations as provided in Section 11.1 (a). Landlord shall retain such proceeds to the extent of sums, if any, advanced by Landlord to Tenant with respect to any of Tenant’s Alterations. The balance of such proceeds, if any, shall be paid to Tenant.

Section 11.3 If the Premises are damaged by fire or other casualty and are rendered wholly untenantable thereby, or if the Building shall be so damaged that Tenant shall be deprived of reasonable access to the Premises, and if Landlord shall elect to restore the Premises, Landlord shall, within sixty (60) days following the date of the damage, cause a contractor or architect selected by Landlord to give notice (the “Restoration Notice”) to Tenant of the date by which such contractor or architect believes the restoration of the Premises shall be substantially completed. If the Restoration Notice shall indicate that the restoration shall not be substantially completed on or before the date which shall be twelve (12) months following the date of such damage or destruction, Tenant shall have the right to terminate this Lease by giving written notice (the “Termination Notice”) to Landlord not later than thirty (30) days following receipt of the Restoration Notice. If Tenant gives a Termination Notice, this Lease shall be deemed cancelled and terminated as of the date of the giving of the Termination Notice as if such date

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were the Expiration Date, and Fixed Rent and Additional Rent shall be apportioned and shall be paid or refunded, as the case may be up to and including the date of such damage or destruction. Notwithstanding anything set forth to the contrary in this Article 11, in the event that a fire or other casualty rendering the Premises wholly untenantable shall occur during the final year of the Term, either Landlord or Tenant may terminate this Lease by giving the other party a Termination Notice as set forth herein.

Section 11.4 This Article 11 constitutes an express agreement governing any case of damage or destruction of the Premises or the Building by fire or other casualty, and Section 227 of the Real Property Law of the State of New York, which provides for such contingency in the absence of an express agreement, and any other law of like nature and purpose now or hereafter in force shall have no application in any such case.

ARTICLE 12. EMINENT DOMAIN

Section 12.1 If (a) all of the floor area of the Premises, or so much thereof as shall render the Premises wholly untenantable or not reasonably sufficient for Tenant to continue the normal and practical operation of its business, shall be acquired or condemned for any public or quasi-public use or purpose, or (b) a portion of the Real Property, not including the Premises, shall be so acquired or condemned, but by reason of such acquisition or condemnation, Tenant no longer has means of access to the Premises, then this Lease and the Term shall end as of the date of the vesting of title with the same effect as if that date were the Expiration Date. In the event of any termination of this Lease and the Term pursuant to the provisions of this Article 12, Fixed Rent and Additional Rent shall be apportioned as of the date of sooner termination and any prepaid portion of Fixed Rent or Additional Rent for any period after such date shall be refunded by Landlord to Tenant.

Section 12.2 In the event of any such acquisition or condemnation of all or any part of the Real Property, Landlord shall be entitled to receive the entire award for any such acquisition or condemnation. Tenant shall have no claim against Landlord or the condemning authority for the value of any unexpired portion of the Term or Tenant’s Alterations, and Tenant hereby expressly assigns to Landlord all of its right in and to any such award. Nothing contained in this Section 12.2 shall be deemed to prevent Tenant from making a separate claim in any condemnation proceedings for the then value of any Tenant’s Property included in such taking and for any moving expenses, provided such award shall be made by the condemning authority in addition to, and shall not result in a reduction of, the award made by it to Landlord.

Section 12.3 If only a part of the Real Property shall be so acquired or condemned then, subject to Section 12.1, this Lease and the Term shall continue in force and effect. If a part of the Premises shall be so acquired or condemned and this Lease and the Term shall not be terminated, Landlord, at Landlord’s expense, shall restore that part of the Premises not so acquired or condemned so as to constitute tenantable Premises. From and after the date of the vesting of title, Fixed Rent and Additional Rent shall be reduced in the proportion which the area of the part of the Premises so acquired or condemned bears to the total area of the Premises immediately prior to such acquisition or condemnation.

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ARTICLE 13. ASSIGNMENT AND SUBLETTING

Section 13.1 Except as otherwise expressly provided herein, Tenant, for itself, its heirs, distributees, executors, administrators, legal representatives, successors and assigns, expressly covenants that it shall not assign, mortgage, pledge, encumber, or otherwise transfer this Lease, nor sublet (nor underlet), nor suffer, nor permit the Premises or any part thereof to be used or occupied by others (whether for desk space, mailing privileges or otherwise), without the prior written consent of Landlord in each instance. If this Lease is assigned, or if the Premises or any part thereof are sublet or occupied by anybody other than Tenant, or if this Lease or the Premises or Tenant’s personal property are encumbered (whether by operation of law or otherwise) without Landlord’s consent, then Landlord may, after default by Tenant, collect rent from the assignee, subtenant or occupant, and apply the net amount collected to Fixed Rent and Additional Rent, but no assignment, subletting, occupancy or collection shall be deemed a waiver by Landlord of the provisions hereof, the acceptance by Landlord of the assignee, subtenant or occupant as a tenant, or a release by Landlord of Tenant from the further performance by Tenant its obligations under this Lease, and Tenant shall remain fully liable therefor. The consent by Landlord to any assignment or subletting shall not in any way be construed to relieve Tenant from obtaining the express consent in writing of Landlord to any further assignment or subletting. In no event shall any permitted subtenant assign or encumber its sublease or further sublet all or any portion of its sublet space, or otherwise suffer or permit the sublet space or any part thereof to be used or occupied by others, without Landlord’s prior written consent in each instance. Any assignment, sublease, mortgage, pledge, encumbrance or transfer in contravention of the provisions of this Article 13 shall be void.

Section 13.2 If Tenant shall, at any time or from time to time, during the Term desire to assign this Lease or sublet all or part of the Premises, Tenant shall give notice (a “Tenant’s Notice”) thereof to Landlord, which Tenant’s Notice shall set forth: (a) with respect to an assignment of this Lease, the date Tenant desires the assignment to be effective and any consideration Tenant would receive under such assignment, (b) with respect to a sublet of all or a part of the Premises (i) the dates upon which Tenant desires the sublease term to commence and expire, (ii) the rental rate and other material business terms upon which Tenant would sublet such premises, and (iii) a description of the Premises showing the portion to be sublet, the effective or commencement date of which shall be not less than sixty (60) nor more than one hundred and eighty (180) days after the giving of such notice, (c) a statement setting forth in reasonable detail the identity of the proposed assignee or subtenant, the nature of its business and its proposed use of the Premises, (d) current financial information with respect to the proposed assignee or subtenant, including its most recent financial report, and (e) a true and complete copy of the proposed assignment or sublease and any other agreements relating thereto. Tenant’s Notice shall be deemed an offer from Tenant to Landlord whereby Landlord (or Landlord’s designee) may, at its option, (I) sublease such space (the “Leaseback Space”) from Tenant upon the terms and conditions set forth in Section 13.4, or terminate the Lease with respect to only the Leaseback Space, or (II) if the proposed transaction is (1) an assignment of this Lease or (2) a subletting of fifty percent (50%) or more of the rentable area of the Premises, terminate this Lease. Said options may be exercised by Landlord by notice given to Tenant at any time within thirty (30) days after Tenant’s Notice has been given by Tenant to Landlord, and during such thirty-day period, Tenant shall not assign this Lease nor sublet such space to any Person other than Landlord.

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Section 13.3 If Landlord exercises its option to terminate this Lease with respect to all or a portion of the Premises pursuant to Section 13.2, then this Lease shall end and expire on the date that such assignment or sublease was to be effective or commence, as the case may be, and the Fixed Rent and Additional Rent due hereunder shall be paid and apportioned to such date. In such event, Landlord and Tenant, upon request of either party, shall enter into an amendment of this Lease ratifying and confirming such total or partial termination, and setting forth appropriate modifications, if any, to the terms and provisions hereof. Following such termination, Landlord shall be free to and shall have no liability to Tenant if Landlord should lease the Premises (or any part thereof) to Tenant’s prospective assignee or subtenant.

Section 13.4 If Landlord exercises its option to sublet the Leaseback Space, such sublease to Landlord or its designee (as subtenant) shall be at a rental rate equal to the product of (i) the lesser of (A) the rental rate per rentable square foot of Fixed Rent and Additional Rent then payable pursuant to this Lease, or (B) the rental rate per rentable square foot of rent and additional rent set forth in Tenant’s Notice, multiplied by (ii) the number of rentable square feet of the Leaseback Space, and shall be for the same term as that of the proposed subletting, and such sublease shall:

(a) be upon such other terms and conditions as are contained in Tenant’s Notice, and be expressly subject to all of the covenants, agreements, terms, provisions and conditions of this Lease, except such as are irrelevant or inapplicable, and except as expressly set forth in this Article 13 to the contrary;

(b) give the subtenant the unqualified and unrestricted right, without Tenant’s permission, to assign such sublease or any interest therein and/or to sublet the space covered by such sublease or any part or parts of such space and to make any and all changes, alterations and improvements in the space covered by such sublease, and if the proposed sublease will result in all or substantially all of the Premises being sublet, grant Landlord or its designee the option to extend the term of such sublease for the balance of the Term of this Lease less one day;

(c) provide that any assignee or further subtenant of Landlord or its designee, may, at Landlord’s option, be permitted to make alterations, decorations and installations in such space or any part thereof and shall also provide in substance that any such alterations, decorations and installations in such space therein made by any assignee or subtenant of Landlord or its designee may be removed, in whole or in part, by such assignee or subtenant, at its option, prior to or upon the expiration or other termination of such sublease; provided, however, that such assignee or subtenant shall, at its expense, repair any damage and injury caused by such removal; and

(d) provide that (i) the parties to such sublease expressly negate any intention that any estate created under such sublease be merged with any other estate held by either of said parties, (ii) any assignment or sublease by Landlord or its designee (as the subtenant) may be for any purpose or purposes that Landlord, in Landlord’s uncontrolled discretion, shall deem suitable or appropriate, (iii) Tenant shall, at Tenant’s expense, at all times provide and permit reasonably appropriate means of ingress to and egress from such space so sublet by Tenant to Landlord or its designee, (iv) Landlord

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may, at Tenant’s expense, make such alterations as may be required or deemed necessary by Landlord to physically separate the subleased space from the balance of the Premises and to comply with any legal or insurance requirements relating to such separation, and (v) that at the expiration of the term of such sublease, Tenant will accept the space covered by such sublease in its then existing condition, subject to the obligations of the subtenant to make such repairs thereto as may be necessary to preserve the premises demised by such sublease in good order and condition.

Section 13.5 (a) If Landlord exercises its option to sublet the Leaseback Space, Landlord shall indemnify and save Tenant harmless from all obligations under this Lease as to the Leaseback Space during the period of time it is so sublet to Landlord, except as to any obligation which arises out of or results from the negligence or willful misconduct of Tenant, or any of its agents, servants or employees.

(b) Performance by Landlord, or its designee, under a sublease of the Leaseback Space shall be deemed performance by Tenant of any similar obligation under this Lease and any default under any such sublease shall not give rise to a default under a similar obligation contained in this Lease nor shall Tenant be liable for any default under this Lease or deemed to be in default hereunder if such default is occasioned by or arises from any act or omission of the tenant under such sublease or is occasioned by or arises from any act or omission of any occupant holding under or pursuant to any such sublease.

(c) Tenant shall have no obligation, at the expiration or earlier termination of the Term, to remove any alteration, installation or improvement made in the Leaseback Space by Landlord (or Landlord’s designee).

(d) Any consent required of Tenant, as Landlord under the sublease, shall be deemed granted if consent with respect thereto is granted by Landlord under this Lease, and any failure of Landlord (or its designee) to comply with the provisions of the sublease other than with respect to the payment of Fixed Rent and Additional Rent to Tenant, shall not constitute a default thereunder or hereunder if Landlord shall have consented to such non-compliance.

Section 13.6 In the event Landlord does not exercise either option provided to it pursuant to Section 13.2, and provided that no Event of Default shall have occurred and be continuing under this Lease as of the time Landlord’s consent is requested by Tenant, Landlord’s consent (which must be in writing and in form and substance satisfactory to Landlord) to the proposed assignment or sublease shall not be unreasonably withheld or delayed; provided, however, that:

(a) Tenant shall have complied with the provisions of Section 13.2 and Landlord shall not have exercised any of its options thereunder within the time permitted therefor;

(b) In Landlord’s judgment, the proposed assignee or subtenant is engaged in a business or activity, and the Premises, or the relevant part thereof, will be used in a manner, which (i) is in keeping with the then standards of the Building, and (ii) does not violate the restrictions set forth in Article 2;

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(c) The proposed assignee or subtenant is a reputable Person with sufficient financial worth considering the responsibility involved, and Landlord has been furnished with evidence thereof reasonably satisfactory to Landlord;

(d) In the event Landlord has space in the Building available for lease, then (i) neither the proposed assignee or subtenant nor any Person which, directly or indirectly, controls, is controlled by, or is under common control with, the proposed assignee or subtenant, is then an occupant of any part of the Building, and (ii) the proposed assignee or subtenant is not a Person (or Affiliate of a Person) with whom Landlord or Landlord’s agent is then, or has been within the previous six (6) month period, negotiating in connection with rental of space in the Building;

(e) The form of the proposed sublease or instrument of assignment shall be reasonably satisfactory to Landlord and shall comply with the applicable provisions of this Article 13, and Tenant shall deliver a true and complete original, fully executed counterpart of such sublease or other instrument to Landlord promptly upon the execution and delivery thereof;

(f) Tenant and its proposed subtenant or assignee, as the case may be, shall execute and deliver to Landlord an agreement, in form and substance reasonably satisfactory to Landlord, setting forth the terms and conditions upon which Landlord shall have granted its consent to such assignment or subletting, and the agreement of Tenant and such subtenant or assignee, as the case may be, to be bound by the provisions of this Article 13;

(g) There shall not be more than five (5) occupants of the Premises (including Tenant);

(h) The amount of the aggregate rent to be paid by the proposed subtenant shall not be less than the then current market rent per rentable square foot for the Premises, determined as though the Premises were vacant, and the rental and other terms and conditions of the sublease shall be substantially the same as those contained in Tenant’s Notice;

(i) Tenant shall reimburse Landlord, as Additional Rent upon demand, for (A) the actual, out-of-pocket costs and expenses incurred by Landlord in connection with the assignment or sublease, including the costs of making investigations as to the acceptability of the proposed assignee or subtenant and the cost of reviewing plans and specifications proposed to be made in connection therewith, and (B) Landlord’s reasonable legal fees and disbursements incurred in connection with the granting of any requested consent and the preparation of Landlord’s written consent to the sublease or assignment;

(j) Tenant shall not have (i) advertised or publicized in any way the availability of the Premises without prior notice of and approval by Landlord, or (ii) listed the Premises for sublease or assignment with a broker, agent or otherwise at a rental rate less than the fixed rent and additional rent at which Landlord is then offering to lease comparable space in the Building;

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(k) The proposed occupancy shall not impose an extra burden upon services to be supplied by Landlord to Tenant, unless Tenant and such proposed subtenant or assignee shall agree with Landlord in writing to pay the costs of such additional services; and

(1) The proposed subtenant or assignee shall not be entitled, directly or indirectly, to diplomatic or sovereign immunity and shall be subject to the service of process in, and the jurisdiction of the courts of New York State.

Except for any sublease by Tenant to Landlord or its designee pursuant to this Article 13, each sublease pursuant to this Section 13.6 shall be subject to all of the covenants, agreements, terms, provisions and conditions contained in this Lease. Notwithstanding any such sublease to Landlord or any such sublease to any other subtenant, or any acceptance of Fixed Rent or Additional Rent by Landlord from any subtenant, Tenant will remain fully liable for the payment of the Fixed Rent and Additional Rent due and to become due hereunder and for the performance of all the covenants, agreements, terms, provisions and conditions contained in this Lease on Tenant’s part to be observed and performed, and for all acts and omissions of any licensee or subtenant or anyone claiming under or through any subtenant which shall be in violation of any of the obligations of this Lease, and any such violation shall be deemed to be a violation by Tenant. If Landlord shall decline to give its consent to any proposed assignment or sublease, or if Landlord shall exercise either of its options under Section 13.2, Tenant shall indemnify, defend and hold harmless Landlord against and from any and all losses, liabilities, damages, costs, and expenses (including reasonable attorneys’ fees and disbursements) resulting from any claims that may be made against Landlord by the proposed assignee or subtenant arising from or in connection with such proposed assignment or subletting, or by any brokers or other Persons (with whom Tenant or its proposed assignee or subtenant may have dealt) claiming a commission or similar compensation in connection with the proposed assignment or sublease.

Section 13.7 In the event that (a) Landlord fails to exercise either of its options under Section 13.2 and consents to a proposed assignment or sublease, and (b) Tenant fails to execute and deliver the assignment or sublease to which Landlord consented within one hundred twenty (120) days after the giving of such consent, then, Tenant shall again comply with all of the provisions and conditions of Section 13.2 before assigning this Lease or subletting all or part of the Premises.

Section 13.8 With respect to each and every sublease authorized by Landlord under the provisions of this Lease, it is further agreed that:

(a) No sublease shall be for a term ending later than one day prior to the Expiration Date of this Lease;

(b) No sublease shall be delivered, and no subtenant shall take possession of the Premises or any part thereof, until an executed counterpart of such sublease has been delivered to Landlord and approved in writing by Landlord; and

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(c) Each sublease shall be subject and subordinate to this Lease and to the matters to which this Lease is or shall be subordinate, and each subtenant by entering into a sublease is deemed to have agreed that in the event of termination, re-entry or dispossession by Landlord under this Lease, Landlord may, at its option, take over all of the right, title and interest of Tenant, as sublandlord, under such sublease, and such subtenant shall, at Landlord’s option, attorn to Landlord pursuant to the then executory provisions of such sublease, except that Landlord shall not (i) be liable for any previous act or omission of Tenant under such sublease, (ii) be subject to any counterclaim, offset or defense, not expressly provided in such sublease, which theretofore accrued to such subtenant against Tenant, (iii) be bound by any previous modification of such sublease or by any previous prepayment of more than one month’s Fixed Rent or of any Additional Rent, or (iv) be obligated to perform any work in the subleased space or to prepare it for occupancy, and in connection with such attornment, the subtenant shall execute and deliver to Landlord any instruments Landlord may reasonably request to evidence and confirm such attornment. Each subtenant or licensee of Tenant shall be deemed, automatically upon and as a condition of its occupying or using the Premises or any part thereof, to have agreed to be bound by the terms and conditions set forth in this Article 13. The provisions of this Article 13 shall be self-operative and no further instrument shall be required to give effect to this provision.

Section 13.9 If Landlord shall consent to any assignment of this Lease or to any sublease, or if Tenant shall enter into any other assignment or sublease permitted hereunder, Tenant shall, in consideration therefor, pay to Landlord, as Additional Rent:

(a) In the case of an assignment, on the effective date of the assignment, an amount equal to (i) all sums and other consideration paid to Tenant by the assignee for or by reason of such assignment (including sums paid for Tenant’s Property, less, in the case of a sale thereof, the then net unamortized or undepreciated cost thereof, determined on the basis of Tenant’s federal income tax returns) less (ii) all expenses reasonably and actually incurred by Tenant on account of brokerage commissions and attorneys’ fees in connection with such assignment; or

(b) In the case of a sublease, an amount equal to (i) all rents, additional charges or other consideration payable to Tenant under the sublease in excess of the Fixed Rent and Additional Rent accruing during the term of the sublease in respect of the subleased space (at the rate per square foot payable by Tenant hereunder) pursuant to the terms hereof (including sums paid for the sale or rental of Tenant’s Property, less, in the case of the sale thereof, the then net unamortized or undepreciated cost thereof, determined on the basis of Tenant’s federal income tax returns) less (ii) all expenses reasonably and actually incurred by Tenant on account of brokerage commissions and attorneys’ fees in connection with such sublease. The sums payable under this clause shall be paid by Tenant to Landlord as Additional Rent as and when payable by the subtenant to Tenant.

Section 13.10 (a) If Tenant is a corporation (but not a public corporation), the provisions of Section 13.1 shall apply to a transfer (by one or more transfer(s)), of a majority of the stock of Tenant as if such transfer of a majority of the stock of Tenant were an assignment of

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this Lease. It is expressly understood that the term “transfer(s)” shall be deemed to include the issuance of new stock which results in a majority of the stock of Tenant being held by Persons which do not hold a majority of the stock of Tenant on the date hereof. The foregoing shall not apply to, and Landlord’s consent shall not be required for, transactions with a corporation or other business entity into or with which Tenant is merged or consolidated or to which substantially all of Tenant’s assets are transferred; provided, however, that (i) such transfer shall have been made for a legitimate independent business purpose and not for the principal purpose of transferring this Lease, (ii) the successor to Tenant shall have a net worth, computed in accordance with generally accepted accounting principles, at least equal to the greater of (A) the net worth of Tenant immediately prior to such merger, consolidation or transfer, or (B) the net worth of Tenant herein named on the date of this Lease, and (iii) proof reasonably satisfactory to Landlord of such net worth shall have been delivered to Landlord at least ten (10) days prior to the effective date of any such transaction.

(b) If Tenant is a partnership, the provisions of Section 13.1 shall apply to a transfer (by one or more transfers) of a majority interest in the partnership, as if such transfer were an assignment of this Lease.

(c) The limitations set forth in this Section 13.10 shall be deemed to apply to subtenant(s), assignee(s) and Guarantor(s) of this Lease, if any, and any transfer by any such Person in violation of this Section 13.10 shall be deemed to be a transfer in violation of Section 13.1.

(d) A modification, amendment or extension of a sublease shall be deemed a sublease for the purposes of Section 13.1, and a takeover agreement shall be deemed a transfer of this Lease for the purposes of Section 13.1.

Section 13.11 Tenant may, without Landlord’s consent, but upon not less than ten (10) days’ prior notice to Landlord, permit any Affiliate of Tenant to sublet all or part of the Premises for any Permitted Use, or assign this Lease to any Affiliate, subject however to compliance with Tenant’s obligations under this Lease. Such sublease shall not be deemed to vest in any such Affiliate any right or interest in this Lease or the Premises nor shall it relieve, release, impair or discharge any of Tenant’s obligations hereunder.

Section 13.12 (a) Any assignment or transfer, whether made with Landlord’s consent pursuant to Section 13.1 or without Landlord’s consent to the extent permitted under Sections 13.10 and 13.11, shall be made only if, and shall not be effective until, the assignee shall execute, acknowledge and deliver to Landlord an agreement in form and substance reasonably satisfactory to Landlord whereby the assignee shall assume the obligations of this Lease on the part of Tenant to be performed or observed from and after the effective date of such assignment or transfer, and whereby the assignee shall agree that the provisions in Section 13.1 shall, notwithstanding such assignment or transfer, continue to be binding upon it in respect of all future assignments and transfers.

(b) The joint and several liability of Tenant and any immediate or remote successor in interest of Tenant and the due performance of the obligations of this Lease on Tenant’s part to be performed or observed shall not be discharged, released or impaired in any

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respect by any agreement or stipulation made by Landlord, or any grantee or assignee of Landlord by way of mortgage or otherwise, extending the time, or modifying any of the obligations of this Lease, or by any waiver or failure of Landlord, or any grantee or assignee of Landlord by way of mortgage or otherwise, to enforce any of the obligations of this Lease.

(c) The listing of any name other than that of Tenant, whether on the doors of the Premises or the Building directory, or otherwise, shall not operate to vest any right or interest in this Lease or in the Premises, nor shall it be deemed to be the consent of Landlord to any assignment or transfer of this Lease or to any sublease of Premises or to the use or occupancy thereof by others. Any such listing shall constitute a privilege extended by Landlord, revocable at Landlord’s will by notice to Tenant, provided that Landlord shall not unreasonably revoke such privilege as to any Affiliate of Tenant, or any subtenant of Tenant or assignee of this Lease approved by Landlord pursuant to this Article 13.

ARTICLE 14. ACCESS TO PREMISES

Section 14.1 Tenant shall permit Landlord, Landlord’s agents and public utilities servicing the Building to erect, use and maintain concealed ducts, pipes and conduits in and through the Premises, provided that Landlord will not thereby reduce the rentable area of the Premises, other than to a de minimis extent. Landlord or Landlord’s agents shall have the right to enter the Premises at all reasonable times upon reasonable prior notice (except no such prior notice shall be required in case of emergency), which notice may be oral, to examine the same, to show them to prospective purchasers, Mortgagees, Lessors or lessees of the Building and their respective agents and representatives or prospective tenants of the Premises, and to make such repairs, alterations, improvements or additions (a) as Landlord may deem necessary or desirable to the Premises or to any other portion of the Building, or (b) which Landlord may elect to perform following Tenant’s failure to make repairs or perform any work which Tenant is obligated to make or perform under this Lease, or (c) for the purpose of complying with Legal Requirements, and Landlord shall be allowed to take all material into and upon the Premises that may be required therefor without the same constituting an eviction or constructive eviction of Tenant in whole or in part and Fixed Rent and Additional Rent will not be abated while said repairs, alterations, improvements or additions are being made, by reason of loss or interruption of business of Tenant, or otherwise.

Section 14.2 If Tenant shall not be present when for any reason entry into the Premises shall be necessary or permissible, Landlord or Landlord’s agents may enter the same without rendering Landlord or such agents liable therefor (if during such entry Landlord or Landlord’s agents shall accord reasonable care to Tenant’s property), and without in any manner affecting this Lease. Nothing herein contained, however, shall be deemed or construed to impose upon Landlord any obligation, responsibility or liability whatsoever for the care, supervision or repair of the Building or any part thereof, other than as herein provided.

Section 14.3 Landlord shall have the right from time to time to alter the Building and, without the same constituting an actual or constructive eviction and without incurring any liability to Tenant therefor, to change the arrangement or location of entrances or passageways, doors and doorways, and corridors, elevators, stairs, toilets, or other public parts of the Building and to change the name, number or designation by which the Building is commonly

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known; provided, however, that Landlord shall not make any permanent alterations which will deny or substantially interfere with Tenant’s access to the Premises from the public areas of the Building. All parts (except surfaces facing the interior of the Premises) of all walls, windows and doors bounding the Premises (including exterior Building walls, exterior core corridor walls, exterior doors and entrances other than doors and entrances solely servicing the Premises), all balconies, terraces and roofs adjacent to the Premises, all space in or adjacent to the Premises used for shafts, stacks, stairways, chutes, pipes, conduits, ducts, fan rooms, heating, air cooling, plumbing and other mechanical facilities, service closets and other Building facilities are not part of the Premises, and Landlord shall have the use thereof, as well as access thereto through the Premises for the purposes of operation, maintenance, alteration and repair. Landlord shall use reasonable efforts to minimize interference with Tenant’s access to and use and occupancy of the Premises in connection with any actions by Landlord permitted under this Section 14.3; provided, however, that Landlord shall have no obligation to employ contractors or labor at overtime or other premium pay rates or to incur any other overtime costs or additional expenses whatsoever.

ARTICLE 15. CERTIFICATE OF OCCUPANCY

Tenant shall not at any time use or occupy the Premises in violation of the certificate of occupancy at such time issued for the Premises or for the Building and in the event that any department of the City or State of New York shall hereafter contend or declare by notice, violation, order or in any other manner whatsoever that the Premises are used for a purpose which is a violation of such certificate of occupancy, Tenant shall, upon five (5) days’ written notice from Landlord or any Governmental Authority, immediately discontinue such use of the Premises. Failure by Tenant to discontinue such use after such notice shall be considered a default in the fulfillment of a material covenant of this Lease and Landlord shall have the right to terminate this Lease immediately, and in addition thereto shall have the right to exercise any and all rights and privileges and remedies given to Landlord by and pursuant to the provisions of Articles 16 and 17.

ARTICLE 16. DEFAULT

Section 16.1 Each of the following events shall be an “Event of Default” hereunder:

(a) if Tenant defaults in the payment when due of any installment of Fixed Rent, or in the payment when due of any Additional Rent, and such default continues for a period of five (5) days after notice thereof from Landlord; provided, however, that if Tenant shall default after such notice in the timely payment of Fixed Rent or Additional Rent, and any such Event of Default shall occur more than three (3) times in any period of 12 months, then, notwithstanding that such Events of Default shall have each been cured within the applicable period provided above, upon any further similar default, Landlord may serve a three days’ notice of termination upon Tenant without affording to Tenant an opportunity to cure such further default; or

(b) if Tenant’s interest in this Lease is transferred in violation of Article 13; or

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(c) if the Premises or a substantial portion thereof becomes permanently vacant or abandoned; or

(d) (i) if Tenant or any Guarantor admits in writing its inability to pay its debts as they become due; or

(ii) if Tenant or any Guarantor commences or institutes any case, proceeding or other action (A) seeking relief as a debtor, or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property; or

(iii) if Tenant or any Guarantor makes a general assignment for the benefit of creditors; or

(iv) if any case, proceeding or other action is commenced or instituted against Tenant or any Guarantor (A) seeking to have an order for relief entered against it as debtor or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property, which either (A) results in any such entry of an order for relief, adjudication of bankruptcy or insolvency or such an appointment or the issuance or entry of any other order having a similar effect or (B) remains undismissed for a period of one hundred twenty (120) days; or

(v) if any case, proceeding or other action is commenced or instituted against Tenant or any Guarantor seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its property which results in the entry of an order for any such relief which has not been vacated, discharged, or stayed or bonded pending appeal within one hundred twenty (120) days from the entry thereof; or

(vi) if Tenant or any Guarantor takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clauses (ii), (iii), (iv) or (v) of this Subsection 16.1(d); or

(vii) if a trustee, receiver or other custodian is appointed for any substantial part of the assets of Tenant or any Guarantor, which appointment is not vacated or effectively stayed within seven (7) Business Days, or if any such vacating or stay does not thereafter remain in effect; or

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(e) if Tenant defaults in the observance or performance of any other term, covenant or condition of this Lease on Tenant’s part to be observed or performed and Tenant fails to remedy such default within thirty (30) days after notice by Landlord to Tenant of such default, or, if such default is of such a nature that it cannot be completely remedied within said period of thirty (30) days, if Tenant fails to commence to remedy such default within such thirty-day period, or fails thereafter to diligently prosecute to completion all steps necessary to remedy such default;

(f) if Tenant or any Affiliate of Tenant defaults beyond applicable grace and notice periods in the payment of any fixed rent or additional rent under any other lease of space in the Building, or if any such lease is terminated by Landlord as a result of a default by the tenant thereunder;

(g) if Tenant fails to deliver the Replacement Guaranty (as defined in Section 29.1), duly executed and acknowledged by Successor, within ten (10) Business Days after the Effective Date; or

(h) if any Guarantor defaults beyond applicable grace and notice periods in the payment or performance of any of its obligations under any Guaranty.

Section 16.2 (a) If an Event of Default occurs, Landlord may at any time thereafter give written notice to Tenant stating that this Lease and the Term shall expire and terminate on the date specified in such notice, which date shall not be less than seven (7) days after the giving of such notice. If Landlord gives such notice, this Lease and the Term and all rights of Tenant under this Lease shall expire and terminate as if the date set forth in such notice were the Fixed Expiration Date and Tenant immediately shall quit and surrender the Premises, but Tenant shall remain liable as hereinafter provided. Anything contained herein to the contrary notwithstanding, if such termination shall be stayed by order of any court having jurisdiction over any proceeding described in Section 16.1(d), or by federal or state statute, then, following the expiration of any such stay, or if the trustee appointed in any such proceeding, Tenant or Tenant as debtor-in-possession shall fail to assume Tenant’s obligations under this Lease within the period prescribed therefor by law or within one hundred twenty (120) days after entry of the order for relief or as may be allowed by the court, or if said trustee, Tenant or Tenant as debtor-in-possession shall fail to provide adequate protection of Landlord’s right, title and interest in and to the Premises or adequate assurance of the complete and continuous future performance of Tenant’s obligations under this Lease, Landlord, to the extent permitted by law or by leave of the court having jurisdiction over such proceeding, shall have the right, at its election, to terminate this Lease on seven (7) days’ notice to Tenant, Tenant as debtor-in-possession or said trustee and upon the expiration of said seven (7) day period this Lease shall cease and expire as set forth above and Tenant, Tenant as debtor-in-possession or said trustee shall immediately quit and surrender the Premises as aforesaid.

Section 16.3 If, at any time, (a) Tenant shall comprise two (2) or more Persons, (b) Tenant’s obligations under this Lease shall have been guaranteed by any Person other than Tenant, or (c) Tenant’s interest in this Lease shall have been assigned, the word “Tenant,” as used in Section 16.1(d), shall be deemed to mean any one or more of the Persons primarily or secondarily liable for Tenant’s obligations under this Lease. Any monies received by Landlord

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from or on behalf of Tenant during the pendency of any proceeding of the types referred to in Section 16.1(d) shall be deemed paid as compensation for the use and occupation of the Premises and the acceptance of any such compensation by Landlord shall not be deemed an acceptance of Fixed Rent and/or Additional Rent or a waiver on the part of Landlord of any rights under this Lease.

ARTICLE 17. REMEDIES AND DAMAGES

Section 17.1 (a) If an Event of Default shall occur, and this Lease and the Term shall expire and come to an end as provided in Article 16:

(i) Tenant shall quit and peacefully surrender the Premises to Landlord, and Landlord and its agents may immediately, or at any time after such Event of Default or after the date upon which this Lease and the Term shall expire and come to an end, re-enter the Premises or any part thereof, without notice, either by summary proceedings, or by any other applicable action or proceeding, or by legal force or other legal means (without being liable to indictment, prosecution or damages therefor), and may repossess the Premises and dispossess Tenant and any other Persons from the Premises and remove any and all of their property and effects from the Premises; and

(ii) Landlord, at Landlord’s option, may relet the whole or any part or parts of the Premises from time to time, either in the name of Landlord or otherwise, to such tenant or tenants, for such term or terms ending before, on or after the Expiration Date, at such rental or rentals and upon such other conditions, which may include concessions and free rent periods, as Landlord, in its sole discretion, may determine; provided, however, that Landlord shall have no obligation to relet the Premises or any part thereof and shall in no event be liable for refusal or failure to relet the Premises or any part thereof, or, in the event of any such reletting, for refusal or failure to collect any rent due upon any such reletting, and no such refusal or failure shall operate to relieve Tenant of any liability under this Lease or otherwise affect any such liability, and Landlord, at Landlord’s option, may make such repairs, replacements, alterations, additions, improvements, decorations and other physical changes in and to the Premises as Landlord, in its sole discretion, considers advisable or necessary in connection with any such reletting or proposed reletting, without relieving Tenant of any liability under this Lease or otherwise affecting any such liability.

(b) Tenant hereby waives the service of any notice of intention to re-enter or to institute legal proceedings to that end which may otherwise be required to be given under any present or future law. Tenant, on its own behalf and on behalf of all Persons claiming through or under Tenant, including all creditors, does further hereby waive any and all rights which Tenant and all such Persons might otherwise have under any present or future law to redeem the Premises, or to re-enter or repossess the Premises, or to restore the operation of this Lease, after (i) Tenant shall have been dispossessed by a judgment or by warrant of any court or judge, (ii) any re-entry by Landlord, or (iii) any expiration or termination of this Lease and the Term, whether such dispossess, re-entry, expiration or termination shall be by operation of law or pursuant to the provisions of this Lease. The words “re-enter,” re-entry” and “re-entered” as used in this Lease shall not be deemed to be restricted to their technical legal meanings. In the event

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of a breach or threatened breach by Tenant, or any Persons claiming through or under Tenant, of any term, covenant or condition of this Lease, Landlord shall have the right to enjoin such breach and the right to invoke any other remedy allowed by law or in equity as if re-entry, summary proceedings and other special remedies were not provided in this Lease for such breach. The rights to invoke the remedies hereinbefore set forth are cumulative and shall not preclude Landlord from invoking any other remedy allowed at law or in equity.

Section 17.2 (a) If this Lease and the Term shall expire and come to an end as provided in Article 16, or by or under any summary proceeding or any other action or proceeding, or if Landlord shall re-enter the Premises as provided in Section 17.1, or by or under any summary proceeding or any other action or proceeding, then, in any of such events:

(i) Tenant shall pay to Landlord all Fixed Rent and Additional Rent payable under this Lease by Tenant to Landlord to the date upon which this Lease and the Term shall have expired and come to an end or to the date of re-entry upon the Premises by Landlord, as the case may be;

(ii) Tenant also shall be liable for and shall pay to Landlord, as damages, any deficiency (the “Deficiency”) between (A) Fixed Rent and Additional Rent for the period which otherwise would have constituted the unexpired portion of the Term (conclusively presuming the Additional Rent for each year thereof to be the same as was payable for the year immediately preceding such termination or re-entry), and (B) the net amount, if any, of rents collected under any reletting effected pursuant to the provisions of Section 17.1(a)(ii) for any part of such period (first deducting from the rents collected under any such reletting all of Landlord’s expenses in connection with the termination of this Lease, Landlord’s re-entry upon the Premises and with such reletting including all repossession costs, brokerage commissions, legal expenses, attorneys’ fees and disbursements, alteration costs and other expenses of preparing the Premises for such reletting). Tenant shall pay the Deficiency in monthly installments on the days specified in this Lease for payment of installments of Fixed Rent, and Landlord shall be entitled to recover from Tenant each monthly Deficiency as the same shall arise. No suit to collect the amount of the Deficiency for any month shall prejudice Landlord’s right to collect the Deficiency for any subsequent month by a similar proceeding; and

(iii) whether or not Landlord shall have collected any monthly Deficiency as aforesaid, Landlord shall be entitled to recover from Tenant, and Tenant shall pay to Landlord, on demand, in lieu of any further Deficiency as and for liquidated and agreed final damages, a sum equal (A) to the amount by which the Fixed Rent and Additional Rent for the period which otherwise would have constituted the unexpired portion of the Term (conclusively presuming the Additional Rent for each year thereof to be the same as was payable for the year immediately preceding such termination or re-entry) exceeds (B) the then fair and reasonable rental value of the Premises, including Additional Rent for the same period, both discounted to present value at the rate of four percent (4%) per annum less (C) the aggregate amount of Deficiencies previously collected by Landlord pursuant to the provisions of Section 17.2(a)(ii) for the same period. If, before presentation of proof of such liquidated damages to any court, commission or tribunal, Landlord shall have relet the Premises or any part thereof for the

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period which otherwise would have constituted the unexpired portion of the Term, or any part thereof, the amount of net rents collected in connection with such reletting shall be deemed, prima facie, to be the fair and reasonable rental value for the part or the whole of the Premises so relet during the term of the reletting.

(b) If Landlord shall relet the Premises, or any part thereof, together with other space in the Building, the net rents collected under any such reletting and the expenses of any such reletting shall be equitably apportioned for the purposes of this Section 17.2. Tenant shall in no event be entitled to any rents collected or payable under any reletting, whether or not such rents shall exceed the Fixed Rent reserved in this Lease. Nothing contained in Article 16 or this Article 17 shall be deemed to limit or preclude the recovery by Landlord from Tenant of the maximum amount allowed to be obtained as damages by any statute or rule of law, or of any sums or damages to which Landlord may be entitled in addition to the damages set forth in this Section 17.2.

ARTICLE 18. FEES AND EXPENSES

Section 18.1 If an Event of Default shall occur under this Lease or if Tenant shall do or permit to be done any act or thing upon the Premises which would cause Landlord to be in default under any Superior Lease or Mortgage, or if Tenant shall fail to comply with its obligations under this Lease and the preservation of property or the safety of any tenant, occupant or other person is threatened, Landlord may, after reasonable prior notice to Tenant except in an emergency, perform the same for the account of Tenant or make any expenditure or incur any obligation for the payment of money for the account of Tenant. All amounts expended by Landlord in connection with the foregoing, including reasonable attorneys’ fees and disbursements in instituting, prosecuting or defending any action or proceeding or recovering possession, and the cost thereof, with interest thereon at the Default Rate, shall be deemed to be Additional Rent hereunder and shall be paid by Tenant to Landlord within ten (10) days of rendition of any bill or statement to Tenant therefor.

Section 18.2 If Tenant shall fail to pay any installment of Fixed Rent and/or Additional Rent when due, Tenant shall pay to Landlord, in addition to such installment of Fixed Rent and/or Additional Rent, as the case may be, as a late charge and as Additional Rent, a sum equal to interest at the Default Rate on the amount unpaid, computed from the date such payment was due to and including the date of payment.

ARTICLE 19. NO REPRESENTATIONS BY LANDLORD

Except as expressly set forth in this Lease, Landlord and Landlord’s agents have made no warranties, representations, statements or promises with respect to (a) the rentable and usable areas of the Premises or the Building, (b) the amount of any current or future Labor Rates or Taxes, (c) the compliance with applicable Requirements of the Premises or the Building, or (d) the suitability of the Premises for any particular use or purpose. No rights, easements or licenses are acquired by Tenant under this Lease, by implication or otherwise, except as expressly set forth herein. This Lease (including any Exhibits referred to herein and all supplementary agreements provided for herein) contains the entire agreement between the parties and all understandings and agreements previously made between Landlord and Tenant are

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merged in this Lease, which alone fully and completely expresses their agreement. Tenant is entering into this Lease after full investigation, and is not relying upon any statement or representation made by Landlord not embodied in this Lease.

ARTICLE 20. END OF TERM

Section 20.1 Upon the expiration or other termination of this Lease, Tenant shall quit and surrender to Landlord the Premises, vacant, broom-clean, in good order and condition, ordinary wear and tear and damage for which Tenant is not responsible under the terms of this Lease excepted, and Tenant shall remove all of Tenant’s Property and the Designated Alterations from the Premises as required under Section 3.3, and this obligation shall survive the expiration or sooner termination of the Term. If the last day of the Term or any renewal thereof falls on Saturday or Sunday, this Lease shall expire on the Business Day immediately preceding. Tenant expressly waives, for itself and for any Person claiming through or under Tenant, any rights which Tenant or any such Person may have under the provisions of Section 2201 of the New York Civil Practice Law and Rules and of any successor law of like import then in force in connection with any holdover summary proceedings which Landlord may institute to enforce the foregoing provisions of this Article 20.

Section 20.2 Tenant acknowledges that Tenant or any subtenant of Tenant remaining in possession of the Premises after the expiration or earlier termination of this Lease would create an unusual hardship for Landlord and for any prospective tenant. Tenant, therefore, covenants that if for any reason Tenant or any subtenant of Tenant shall fail to vacate and surrender possession of the Premises or any part thereof on or before the expiration or earlier termination of this Lease and the Term, then Tenant’s continued possession of the Premises shall be as a “month-to-month” tenant, during which time, without prejudice and in addition to any other rights and remedies Landlord may have hereunder or at law, Tenant shall pay to Landlord for each month and for each portion of any month during which Tenant holds over, an amount equal to (i) one hundred fifty percent (150%) of the total monthly amount of Fixed Rent and Additional Rent payable hereunder immediately prior to such termination (the “Existing Rent”) for the first thirty (30) days during which Tenant holds over, and (ii) two hundred percent (200%) of the Existing Rent thereafter. The provisions of this Section 20.2 shall not in any way be deemed to (a) permit Tenant to remain in possession of the Premises after the Expiration Date or sooner termination of this Lease or (b) imply any right of Tenant to use or occupy the Premises upon expiration or termination of this Lease and the Term, and no acceptance by Landlord of payments from Tenant after the Expiration Date or sooner termination of the Term shall be deemed to be other than on account of the amount to be paid by Tenant in accordance with the provisions of this Article 20. Tenant’s obligations under this Article shall survive the expiration or earlier termination of this Lease.

ARTICLE 21. QUIET ENJOYMENT

Provided no Event of Default has occurred and is continuing, Tenant may peaceably and quietly enjoy the Premises without hindrance by Landlord or any Person lawfully claiming through or under Landlord, subject, nevertheless, to the terms and conditions of this Lease.

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ARTICLE 22. NO WAIVER; NON-LIABILITY

Section 22.1 No act or thing done by Landlord or Landlord’s agents during the Term shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept such surrender shall be valid unless in writing and signed by Landlord. No employee of Landlord or of Landlord’s agents shall have any power to accept the keys of the Premises prior to the termination of this Lease. The delivery of keys to any employee of Landlord or of Landlord’s agents shall not operate as a termination of this Lease or a surrender of the Premises. Any Building employee to whom any property shall be entrusted by or on behalf of Tenant shall be deemed to be acting as Tenant’s agent with respect to such property and, subject to the provisions of Section 10.2, neither Landlord nor its agents shall be liable for any damage to property of Tenant or of others entrusted to employees of the Building, nor for the loss of or damage to any property of Tenant by theft or otherwise.

Section 22.2 The failure of Landlord to seek redress for violation of, or to insist upon the strict performance of, any covenant or condition of this Lease, or any of the Rules and Regulations set forth or hereafter adopted by Landlord, shall not prevent a subsequent act, which would have originally constituted a violation, from having all of the force and effect of an original violation. The receipt by Landlord of Fixed Rent and/or Additional Rent with knowledge of the breach of any covenant of this Lease shall not be deemed a waiver of such breach. The failure of Landlord to enforce any of the Rules and Regulations set forth, or hereafter adopted, against Tenant or any other tenant in the Building shall not be deemed a waiver of any such Rules and Regulations. Landlord shall not enforce the Rules and Regulations against Tenant in a discriminatory manner. No provision of this Lease shall be deemed to have been waived by Landlord, unless such waiver be in writing signed by Landlord. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly Fixed Rent or any Additional Rent shall be deemed to be other than on account of the next installment of Fixed Rent or Additional Rent, as the case may be, or as Landlord may elect to apply same, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as Fixed Rent or Additional Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Fixed Rent or Additional Rent or pursue any other remedy in this Lease provided. Any executory agreement hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of this Lease in whole or in part unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification, discharge or abandonment is sought. All references in this Lease to the consent or approval of Landlord shall be deemed to mean the written consent or approval of Landlord and no consent or approval of Landlord shall be effective for any purpose unless such consent or approval is set forth in a written instrument executed by Landlord.

Section 22.3 (a) Neither Landlord nor its agents shall be liable for any injury or damage to persons or property or interruption of Tenant’s business resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or snow or leaks from any part of the Building or from the pipes, appliances or plumbing works or from the roof, street or subsurface or from any other place or by dampness or by any other cause of whatsoever nature; nor shall Landlord or its agents be liable for any such damage caused by other tenants or persons in the Building or caused by construction of any private, public or quasi-public work; nor shall Landlord be liable

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for any latent defect in the Premises or in the Building (except that Landlord shall be required to repair the same to the extent provided in Article 5). Nothing in the foregoing shall affect any right of Landlord to the indemnity from Tenant to which Landlord may be entitled under Article 28 in order to recoup for payments made to compensate for losses of third parties.

(b) If, at any time or from time to time, any windows of the Premises are temporarily closed, darkened or bricked-up for any reason whatsoever, or any of such windows are permanently closed, darkened or bricked-up if required by any Legal Requirement or related to any construction upon property adjacent to the Real Property by parties other than Landlord, Landlord shall not be liable for any damage Tenant may sustain thereby and Tenant shall not be entitled to any compensation therefor nor abatement of Fixed Rent or Additional Rent nor shall the same release Tenant from its obligations hereunder nor constitute an eviction or constructive eviction of Tenant from the Premises.

ARTICLE 23. WAIVER OF TRIAL BY JURY

The respective parties hereto shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other (except for personal injury or property damage) on any matters whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy of the Premises, or for the enforcement of any remedy under any statute, emergency or otherwise. If Landlord commences any summary proceeding against Tenant, Tenant will not interpose any counterclaim of whatever nature or description in any such proceeding (unless failure to impose such counterclaim would preclude Tenant from asserting in a separate action the claim which is the subject of such counterclaim), and will not seek to consolidate such proceeding with any other action which may have been or will be brought in any other court by Tenant.

ARTICLE 24. INABILITY TO PERFORM

This Lease and the obligation of Tenant to pay Fixed Rent and Additional Rent hereunder and perform all of the other covenants and agreements hereunder on the part of Tenant to be performed will not be affected, impaired or excused because Landlord is unable to fulfill any of its obligations under this Lease expressly or impliedly to be performed by Landlord or because Landlord is unable to make, or is delayed in making any repairs, additions, alterations, improvements or decorations or is unable to supply or is delayed in supplying any equipment or fixtures, if Landlord is prevented or delayed from so doing by reason of strikes or labor troubles or by accident, or by any cause whatsoever reasonably beyond Landlord’s control, including laws, governmental preemption in connection with a national emergency or by reason of any Legal Requirements or by reason of the conditions of supply and demand which have been or are affected by war or other emergency (“Unavoidable Delays”).

ARTICLE 25. BILLS AND NOTICES

Except as otherwise expressly provided in this Lease, any bills, statements, consents, notices, demands, requests or other communications given or required to be given under this Lease shall be in writing and shall be deemed sufficiently given or rendered if

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delivered by hand (against a signed receipt), sent by a nationally recognized overnight courier service, or sent by registered or certified mail (return receipt requested) and addressed:

if to Tenant, (a) at Tenant’s address at the Premises, with a copy to: Global Crossing Telecommunications, Inc., 1080 Pittsford-Victor Road, Pittsford, New York 14534, Attention: Real Estate Group, with a copy to: Global Crossing Ltd., 200 Park Avenue, Florham Park, New Jersey 07932, Attention: Office of the General Counsel, or (b) at any place where Tenant or any agent or employee or Tenant may be found if mailed subsequent to Tenant’s abandoning or surrendering the Premises; or

if to Landlord, as follows: 111 Chelsea LLC, c/o Taconic Investment Partners LLC, 111 Eighth Avenue, New York, New York 10011, Attention: Mr. Paul Pariser, with a copy to: Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022, Attention: Eric Asmundsson, Esq.

Any such bill, statement, consent, notice, demand, request or other communication given as provided in this Article 25 shall be deemed to have been rendered or given (i) on the date when it shall have been hand delivered, (ii) three (3) Business Days from the date when it shall have been mailed, or (iii) one (1) Business Day from the date when it shall have been sent by overnight courier service.

ARTICLE 26. RULES AND REGULATIONS

Landlord reserves the right, from time to time, to adopt additional reasonable and non-discriminatory Rules and Regulations and to amend the Rules and Regulations then in effect. Tenant and Tenant’s contractors, employees, agents, and licensees shall comply with the Rules and Regulations, as so supplemented or amended. Nothing contained in this Lease shall be construed to impose upon Landlord any duty or obligation to enforce the Rules and Regulations or terms, covenants or conditions in any other lease against any other tenant, and Landlord shall not be liable to Tenant for violation of the same by any other tenant, its employees, agents, visitors or licensees. Landlord will not discriminate against Tenant in its enforcement of the Rules and Regulations. If there shall be any inconsistencies between this Lease and the Rules and Regulations, the provisions of this Lease shall prevail.

ARTICLE 27. BROKER

Section 27.1 Each of Landlord and Tenant represents and warrants to the other that it has not dealt with any broker in connection with this Lease other than CB/Richard Ellis, Inc. (“Broker”) and that to the best of its knowledge and belief, no other broker, finder or similar Person procured or negotiated this Lease or is entitled to any fee or commission in connection herewith. Landlord has agreed to pay a commission to Broker pursuant to a separate written agreement.

Section 27.2 Each of Landlord and Tenant shall indemnify, defend, protect and hold the other party harmless from and against any and all losses, liabilities, damages, claims, judgments, fines, suits, demands, costs, interest and expenses of any kind or nature (including reasonable attorneys’ fees and disbursements) which the indemnified party may incur by reason of any claim of or liability to any broker, finder or like agent (other than Broker) arising out of

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any dealings claimed to have occurred between the indemnifying party and the claimant in connection with this Lease, or the above representation being false. The provisions of this Article 27 shall survive the expiration or earlier termination of the Term of this Lease.

ARTICLE 28. INDEMNITY

Section 28.1 Tenant shall not do or permit any act or thing to be done upon the Premises which may subject Landlord to any liability or responsibility for injury, damages to persons or property or to any liability by reason of any violation of law or of any Legal Requirement, but shall exercise such control over the Premises as to fully protect Landlord against any such liability. Tenant shall defend, indemnify and save harmless Landlord from and against (a) all claims of whatever nature against Landlord arising from any act, omission or negligence of Tenant, its contractors, licensees, agents, servants, employees, invitees or visitors, (b) all claims against Landlord arising from any accident, injury or damage whatsoever caused to any person or to the property of any person and occurring during the Term in or about the Premises, except to the extent resulting from the gross negligence or willful misconduct of Landlord, its employees, agents, or contractors, (c) all claims against Landlord arising from any accident, injury or damage occurring outside of the Premises but anywhere within or about the Real Property, where such accident, injury or damage results or is claimed to have resulted from an act, omission or negligence of Tenant or Tenant’s agents, employees, and (d) any breach, violation or nonperformance of any covenant, condition or agreement in this Lease set forth and contained on the part of Tenant to be fulfilled, kept, observed and performed. This indemnity and hold harmless agreement shall include indemnity from and against any and all liability, fines, suits, demands, costs and expenses of any kind or nature (including attorneys’ fees and disbursements) incurred in or in connection with any such claim or proceeding brought thereon, and the defense thereof.

Section 28.2 Tenant agrees to defend, indemnify and hold harmless Landlord and any partner, shareholder, director, officer, principal, employee or agent, directly and indirectly, of Landlord, from and against all obligations (including removal and remedial actions), losses, claims, suits, judgments, liabilities, penalties, damages (including consequential and punitive damages), costs and expenses (including attorneys’ and consultants’ fees and expenses) of any kind or nature whatsoever that may at any time be incurred by, imposed on or asserted against Landlord or any such party directly or indirectly based on, or arising or resulting from (a) the actual or alleged presence of Hazardous Materials on the Premises or in the Building which is caused or permitted by Tenant, and (b) any Environmental Claim relating in any way to Tenant’s operation or use of the Premises or the Building. The provisions of this Section 28.2 shall survive the expiration or sooner termination of this Lease.

ARTICLE 29. GUARANTY

Section 29.1 On or before the date of execution and delivery of this Lease, Tenant will deliver to Landlord the Guaranty, in the form of Exhibit C to this Lease. If such date is prior to the Effective Date, then the Guarantor shall be Global Crossing Holdings Ltd.; provided that within ten (10) Business Days after the Effective Date, Tenant shall cause Successor to execute and deliver to Landlord a replacement Guaranty, in the form of Exhibit C (the “Replacement Guaranty”), along with proof, reasonably satisfactory to Landlord, that

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Successor is the successor to all of the assets and business of Global Crossing Holdings Ltd. Time shall be of the essence as to Tenant’s obligation to deliver the Replacement Guaranty within ten (10) Business Days after the Effective Date.

ARTICLE 30. SECURITY DEPOSIT

Section 30.1 Tenant has deposited with Landlord the sum of Five Hundred Thousand and 00/100 Dollars ($500,000.00) as security for the full and faithful performance of all of the obligations of Tenant under this Lease (all or any part of such amount, the “Security Deposit”). If an Event of Default shall occur under this Lease, Landlord may use, apply or retain all or any part of the Security Deposit for the payment of any Fixed or Additional Rent or any other sum in default or for the payment of any other amount which Landlord may spend or become obligated to spend by reason of such Event of Default, or to compensate Landlord for any other loss, cost or damage which Landlord may suffer by reason of such Event of Default. Tenant shall, within five (5) Business Days after notice from Landlord, deposit with Landlord cash or a letter of credit in an amount sufficient to restore the Security Deposit to the amount then required pursuant to the terms of this Article 30. Tenant’s obligation to make such payment shall be deemed a requirement that Tenant pay an item of Additional Rent, and Tenant’s failure to do so shall be a breach of this Lease. Landlord shall not, unless otherwise required under applicable Law, pay interest to Tenant on the Security Deposit, and if Landlord is required to maintain the Security Deposit in an interest bearing account, Landlord will retain the maximum amount permitted under applicable Laws as a bookkeeping and administrative charge. Tenant shall not assign or encumber any part of the Security Deposit, and no assignment or encumbrance by Tenant of all of any part of the Security Deposit shall be binding upon Landlord, whether made prior to, during, or after the Term. Landlord shall not be required to exhaust its remedies against Tenant or against the Security Deposit before having recourse to any other form of security held by Landlord, and recourse by Landlord to any portion of the Security Deposit shall not affect any remedies of Landlord provided in this Lease or available to Landlord under applicable Laws. So long as no Event of Default shall then have occurred and be continuing, the Security Deposit or any balance thereof shall be returned to Tenant reasonably promptly after the expiration or sooner termination (other than a termination pursuant to Article 16) of the Term and Tenant’s surrender to Landlord of the Premises.

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Section 30.2 Tenant shall use all commercially reasonable efforts, subject to any required consents, approvals or authorizations from the Bankruptcy Court, to replace the cash Security Deposit deposited with Landlord pursuant to Section 30.1 with a clean, irrevocable, non-documentary and unconditional letter of credit (the “Letter of Credit”) issued by and drawn upon any commercial bank, trust company, national banking association or savings and loan association having offices for banking and drawing purposes in the City of New York and which is a member of the New York Clearinghouse Association (the “Issuing Bank”). The Issuing Bank (or its parent company) shall have outstanding unsecured, uninsured and unguaranteed indebtedness, or shall have issued a letter of credit or other credit facility that constitutes the primary security for any outstanding indebtedness (which is otherwise uninsured and unguaranteed), that is then rated, without regard to qualification of such rating by symbols such as “+” or “-” or numerical notation, “Aa” or better by Moody’s Investors Service and “AA” or better by Standard & Poor’s Corporation, and has combined capital, surplus and undivided profits of not less than $500,000,000.00. The Letter of Credit shall have a term of not less than one year, be in form and content satisfactory to Landlord (and substantially as shown on Exhibit F to this Lease), be for the account of Landlord, be in the amount of the Security Deposit then required to be deposited hereunder, and be fully transferable by Landlord to successor owners of the Building without the payment of any fees or charges, it being agreed that if any such fees or charges shall be so imposed, then such fees or charges, shall be paid by Tenant. The Letter of Credit shall provide that it shall be deemed automatically renewed, without amendment, for consecutive periods of one year each thereafter during the Term, unless the Issuing Bank sends notice (the “Non-Renewal Notice”) to Landlord by certified mail, return receipt requested, not less than thirty (30) days prior to the then expiration date of the Letter of Credit that the Issuing bank elects not to have such Letter of Credit renewed. Additionally, the Letter of Credit shall provide that Landlord shall have the right, exercisable at any time after Landlord’s receipt of the Non-Renewal Notice, by sight draft on the Issuing Bank, to receive the monies represented by the existing Letter of Credit and to hold such proceeds pursuant to the terms of this Article 30 as a cash security deposit pending the replacement Letter of Credit. If an Event of Default shall have occurred and be continuing under any provision of this Lease, including the provisions relating to the payment of Fixed Rent and Additional Rent, Landlord may apply or retain the whole or any pan of the cash security so deposited or may notify the Issuing Bank and thereupon receive all the monies represented by the Letter of Credit and use, apply, or retain the whole or any part of such proceeds as provided in this Section 30.2. Any portion of the cash proceeds of the Letter of Credit not so used or applied by Landlord in satisfaction of the obligations of Tenant as to which such Event of Default shall have occurred shall be deposited by Landlord and retained as a cash security deposit as provided in Section 30.1. If Landlord applies or retains any part of the cash security or proceeds of the Letter of Credit, as the case may be, Tenant shall, within five (5) Business Days after written demand, deposit with Landlord the amount so applied or retained so that Landlord shall have the full Security Deposit required pursuant to Section 30.1 on hand at all times during the Term. So long as no Event of Default shall then have occurred and be continuing, the Letter of Credit shall be returned to Tenant after the Expiration Date and after delivery of possession of the Premises to Landlord. In the event of a sale or lease of Landlord’s interest in the Premises, within thirty (30) days of notice of such sale or leasing, Tenant, at Tenant’s expense, shall arrange for the transfer of the Letter of Credit to the new landlord, as designated by Landlord, or have the Letter of Credit reissued in the name of the new landlord, and Landlord shall thereupon be released by Tenant from all liability for the return of the Letter of Credit; provided, however, that if the Letter of Credit is reissued, Landlord shall return the original Letter of Credit issued in Landlord’s name to Tenant.

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ARTICLE 31. RENT MODIFICATIONS

Section 31.1 In consideration of certain transactions associated with the termination of the lease with Prior Tenant, Landlord hereby agrees that, so long as no Event of Default shall have occurred and be continuing under this Lease, Landlord hereby agrees to be responsible for, and Tenant shall not be obligated to pay, a portion of the Fixed Rent payable by Tenant hereunder, in the following amounts during the following periods:

(a) Seven Hundred Thousand Nine Hundred Fifty-Two and 00/100 Dollars ($700,952.00) per annum ($58,412.67 per month) for the period commencing on the Commencement Date and ending on June 30, 2004;

(b) One Hundred Thousand Nine Hundred Fifty-Two and 00/100 Dollars ($100,952.00) per annum ($8,412.67 per month) for the period commencing on July 1, 2004 and ending on December 31, 2004;

(c) During the period commencing on January 1, 2005 and ending on April 30, 2005, Zero and 00/100 Dollars ($0.00);

(d) One Thousand Thirty-Six and 00/100 Dollars ($1,036.00) per annum ($86.33 per month) for the period commencing on May 1, 2005 and ending on December 31, 2008;

(e) During the period commencing on January 1, 2009 and ending on April 30, 2009, Zero and 00/100 Dollars ($0.00); and

(f) One Thousand One Hundred Forty-Eight and 00/100 Dollars ($1,148.00) per annum ($95.67 per month) for the period commencing on May 1, 2009 and ending on the Expiration Date.

Section 31.2 Upon the occurrence and during the continuation of an Event of Default, and following any termination of this Lease as a consequence of any Event of Default, Tenant shall be obligated to pay Fixed Rent in the full amounts set forth in Section 1.1, without giving effect to the provisions of this Section 31.2.

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ARTICLE 32. MISCELLANEOUS

Section 32.1 (a) The obligations of Landlord under this Lease shall not be binding upon Landlord named herein after the sale, conveyance, assignment or transfer by such Landlord (or upon any subsequent landlord after the sale, conveyance, assignment or transfer by such subsequent landlord) of its interest in the Building or the Real Property, as the case may be, and in the event of any such sale, conveyance, assignment or transfer, Landlord shall be and hereby is entirely freed and relieved of all covenants and obligations of Landlord hereunder, and the transferee of Landlord’s interest in the Building or the Real Property, as the case may be, shall be deemed to have assumed all obligations under this Lease. Prior to any such sale, conveyance, assignment or transfer, the liability of Landlord for Landlord’s obligations under this Lease shall be limited to Landlord’s interest in the Real Property and Tenant shall not look to any other property or assets of Landlord or the property or assets of any of the Exculpated Parties (defined below) in seeking either to enforce Landlord’s obligations under this Lease or to satisfy a judgment for Landlord’s failure to perform such obligations.

(b) Notwithstanding anything contained herein to the contrary, Tenant shall look solely to Landlord to enforce Landlord’s obligations hereunder and no partner, shareholder, director, officer, principal, employee or agent, directly or indirectly, of Landlord (collectively, the “Exculpated Parties”) shall be personally liable for the performance of Landlord’s obligations under this Lease. Tenant shall not seek any damages against any of the Exculpated Parties.

Section 32.2 Wherever in this Lease Landlord’s consent or approval is required, if Landlord shall refuse such consent or approval, Tenant in no event shall be entitled to make, nor shall Tenant make, any claim, and Tenant hereby waives any claim, for money damages (nor shall Tenant claim any money damages by way of set-off, counterclaim or defense) based upon any claim or assertion by Tenant that Landlord unreasonably withheld or unreasonably delayed its consent or approval. Tenant’s sole remedy shall be an action or proceeding to enforce any such provision, for specific performance, injunction or declaratory judgment.

Section 32.3 (a) All of the Exhibits attached to this Lease are incorporated in and made a part of this Lease, but in the event of any conflict or inconsistency between the provisions of this Lease and the Exhibits, the provisions of this Lease shall control. As used in this Lease, unless expressly stated to the contrary: (i) the words “include”, “includes”, or “including” shall be deemed to be followed by the words “without limitation”, (ii) personal pronouns shall be deemed to include the other genders and the singular to include the plural, (iii) all references to notices to be given by or to a party shall be deemed to refer to written notices, (iv) all Article, Section and Exhibit references shall be deemed references to the Articles, Sections and Exhibits of this Lease, (v) if a party has agreed in this Lease that it will not unreasonably withhold its consent or approval, such consent or approval shall not be unreasonably conditioned or delayed, (vi) whenever a financial obligation is stated to be at a party’s expense, such obligation shall be at such party’s sole cost and expense, and (vii) when a period of time is stated in this Lease as commencing or ending on specified dates, such period of time shall be deemed (A) inclusive of such stated commencement and ending dates, and (B) to commence at 12:00 a.m. Eastern Time on such stated commencement date and to end at 11:59 p.m. Eastern Time on such stated ending date. The captions used in this Lease are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this Lease nor the intent of any provision hereof.

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(b) This Lease shall be governed in all respects by the laws of the State of New York applicable to agreements executed in and to be performed wholly within said State.

(c) If any term, covenant, condition or provision of this Lease, or the application thereof to any person or circumstance, shall ever be held to be invalid or unenforceable, then in each such event the remainder of this Lease or the application of such term, covenant, condition or provision to any other person or any other circumstance (other than those as to which it shall be invalid or unenforceable) shall not be thereby affected, and each term, covenant, condition and provision hereof shall remain valid and enforceable to the fullest extent permitted by law.

(d) If at the commencement of, or at any time or times during the Term of this Lease, the Fixed Rent and Additional Rent reserved in this Lease shall not be fully collectible by reason of any Legal Requirement, Tenant shall enter into such agreements and take such other steps (without additional expense to Tenant) as Landlord may request and as may be legally permissible to permit Landlord to collect the maximum rents which may from time to time during the continuance of such legal rent restriction be legally permissible (and not in excess of the amounts reserved therefor under this Lease). Upon the termination of such legal rent restriction prior to the expiration of the Term, (i) Fixed Rent and Additional Rent shall become and thereafter be payable hereunder in accordance with the amounts reserved in this Lease for the periods following such termination, and (ii) Tenant shall pay to Landlord, if legally permissible, an amount equal to (A) the items of Fixed Rent and Additional Rent which would have been paid pursuant to this Lease but for such legal rent restriction less (B) the rents paid by Tenant to Landlord during the period or periods such legal rent restriction was in effect.

(e) The covenants, conditions and agreements contained in this Lease shall bind and inure to the benefit of Landlord and Tenant and their respective legal representatives, successors, and, except as otherwise provided in this Lease, their assigns.

Section 32.4 Except as expressly provided to the contrary in this Lease, Tenant agrees that all disputes arising, directly or indirectly, out of or relating to this Lease, and all actions to enforce this Lease, shall be dealt with and adjudicated in the state courts of New York or the Federal courts sitting in New York City; and for that purpose hereby expressly and irrevocably submits itself to the jurisdiction of such courts. Tenant hereby irrevocably appoints the Secretary of the State of New York as its authorized agent upon which process may be served in any such action or proceeding.

Section 32.5 Tenant hereby irrevocably waives, with respect to itself and its property, any diplomatic or sovereign immunity of any kind or nature, and any immunity from the jurisdiction of any court or from any legal process, to which Tenant may be entitled, and agrees not to assert any claims of any such immunities in any action brought by Landlord under or in connection with this Lease. Tenant acknowledges that the making of such waivers, and Landlord’s reliance on the enforceability thereof, is a material inducement to Landlord to enter into this Lease.

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IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this Lease as of the day and year first above written.

LANDLORD:	111 CHELSEA LLC
	By:	Taconic Chelsea Holdings LLC, managing member
		By:	Taconic SL Principals LLC, managing member
			By:	/s/ Paul Pariser
				Paul E. Pariser, Principal
TENANT:	GLOBAL CROSSING TELECOMMUNICATIONS, INC.
	By:	/s/ David J. Showerman
	Name:	David J. Showerman
	Title:	VP, Real Estate

Tenant’s Federal Tax Identification Number:

36-3098226

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EXHIBIT A

FLOOR PLAN OF THE PREMISES

The floor plan that follows is intended solely to identify the general outline of the Premises, and should not be used for any other purpose. All areas, dimensions and locations are approximate, and any physical conditions indicated may not exist as shown.

[DEPICTION OF FLOOR PLAN]

EXHIBIT B

RULES AND REGULATIONS

1. The rights of tenants in the entrances, corridors, elevators of the Building are limited to ingress to and egress from tenants’ premises for tenants and their employees, licenses and invitees, and no tenant shall use, or permit the use of, the entrances, corridors, or elevators for any other purpose. No tenant shall invite to such tenant’s premises, or permit the visit of, persons in such numbers or under such conditions as to interfere with the use and enjoyment of any of the entrances, corridors, elevators and other facilities of the Building by other tenants. Fire exits and stairways are for emergency use only, and shall not be used for any other purposes by the tenants, their employees, licensees or invitees. No tenant shall encumber or obstruct, or permit the encumbrance or obstruction of, any of the sidewalks, entrances, corridors, elevators, fire exits or stairways of the Building. Landlord reserves the right to control and operate the public portions of the Building and the public facilities, as well as facilities furnished for the common use of tenants, in such manner as it reasonably deems best for the benefit of tenants generally.

2. Tenant’s employees shall not loiter around the hallways, stairways, elevators, front, roof or any other part of the Building used in common by the occupants thereof.

3. Tenant shall not alter the exterior appearance of the Building by installing signs, advertisements, notices or other graphics on exterior walls, without prior written permission from Landlord. Similarly, electrical fixtures hung in offices or other spaces along the perimeter of the Building which affect its exterior appearance must be fluorescent and a quality, type, design and bulb color, previously approved in writing by Building management.

4. Subject to Section 11.2 of this Lease, the cost of repairing any damage to the public portions of the Building or the public facilities or to any facilities used in common with other tenants, caused by a tenant or the employees, licensees or invitees of the tenant, shall be paid by such tenant.

5. Except as specifically provided in the Lease, Tenant shall have no right of access to the roof of the Building and shall not install, repair or replace any satellite dish, antennae, fan, air conditioner or other devices on the roof of the Building without the prior written consent of Landlord. Any such device installed without such written consent shall be subject to removal, at Tenant’s expense, without notice, at any time.

6. Exterior signs on doors and any directory tablet must be approved by Landlord, which approval shall not be unreasonably withheld.

7. No awnings or other projections over or around the windows shall be installed by any tenant and only such window blinds as are permitted by Landlord shall be used in any tenant’s premises.

8. No acids, vapors or other materials shall be discharged or permitted to be discharged into the waste lines, vents or flues of the Building. The water and service closets and other plumbing fixtures in or serving any tenant’s premises shall not be used for any purpose other than the purpose for which they were designed or constructed and no sweepings, rubbish, rags, acids or other foreign substances shall be deposited therein. All damages resulting from any misuse of the fixtures shall be borne by the tenant who, or whose servants, employees, agents, visitors or licensees, shall have caused the same.

9. Tenant shall not disturb others. This rule prohibits any noise audible from the hallway, adjoining office suites or outside whether created by musical instruments, radios, television sets, group activities or any other source. Notwithstanding the foregoing, Tenant may hold holiday parties and other parties and receptions in the Premises, provided that Tenant shall not unreasonably disturb any other tenants or other occupants of the Building.

10. All hand trucks used in the Building shall be equipped with rubber tires and side guards.

11. No tenant shall install wires, conduit, sleeves or similar installations in Building shaftways without prior written consent of Landlord, and as Landlord may direct.

12. Each tenant shall, at its expense, provide artificial light in the premises demised to such tenant for Landlord’s agents, contractors and employees while performing janitorial or other cleaning services and making repairs or alterations therein.

13. Tenants shall not permit any cooking or food odors emanating from their demised premises to be detectable in any other portions of the Building.

14. Tenants shall coordinate entrance door locks with the Building’s master lock system. Upon vacating the Building, tenants must return keys to storerooms, offices and toilets or pay replacement costs.

15. All entrance doors in each tenant’s premises shall be left locked when the tenant’s premises are not in use. Entrance doors shall not be left open at any time.

16. Tenants shall not keep pets, bicycles, or other vehicles in their premises without prior written approval by Landlord. Exceptions are made for seeing-eye dogs and conveyances required by handicapped persons.

17. Regular suppliers of outside services must be approved by Building management, which may establish hours or other conditions for entrance to the Building. Such suppliers include vendors of food, spring water, ice, towels, barbering, shoe shining and other products and services.

18. Canvassing, soliciting and peddling of products or services are prohibited in the Building, and tenants shall cooperate with Landlord in attempting to prevent such acts in the Building.

19. Landlord may refuse admission to the Building outside of normal hours to any person not having a pass issued by Landlord or not properly identified, and may require all persons admitted to or leaving the Building outside of normal business hours to register. Tenant’s employees, agents and visitors shall be permitted to enter and leave the Building whenever appropriate arrangements have been previously made between Landlord and Tenant. Each tenant shall be responsible for all persons for whom such person requests such permission and shall be liable to Landlord for all acts of such persons. Any person whose presence in the Building at any time shall, in the reasonable judgment of Landlord, be prejudicial to the safety, character, reputation and interests of the Building or its tenants may be denied access to the Building or may be rejected therefrom. In case of invasion, riot, public excitement or other commotion, Landlord may prevent all access to the Building during the continuance of the same, by closing the doors or otherwise, for the safety of the tenants and protection of property in the Building. Landlord may require any person leaving the Building with any package or other object to exhibit a pass from the tenant from whose premises the package or object is being removed, but the establishment and enforcement of such requirements shall not impose any responsibility on Landlord for the protection of any tenant against the removal of property from the premises of the tenant. Landlord shall in no way be liable to any tenant for injury or loss arising from the admission, exclusion or ejection of any person to or from the tenant’s premises or the Building under the provisions of this rule.

20. Tenant, at its expense, shall cause the Premises to be exterminated from time to time to the reasonable satisfaction of the Building Management Office, and shall employ such exterminators therefor as shall be approved by the Building Management Office. Such service may be provided by Tenant’s own employees, subject to the provisions of Section 4.5.

21. Tenant shall not serve alcoholic beverages in the premises unless Tenant shall have procured host liquor liability insurance, issued by companies and in amounts reasonably satisfactory to Landlord, naming Landlord and its managing agent as additional insureds.

22. The Building loading docks may be used only for loading and unloading procedures. Tenants may not use the loading dock area for parking. Tenants may not place any dumpsters at the loading docks or any other portion of the Building without the prior written approval of Landlord.

23. No shutdowns of any Building systems will be permitted without prior written approval of Landlord and supervision by the Building engineer.

24. Tenant’s contractors or vendors may not use any space within the Building outside the Premises for storage or moving of materials or equipment or for the location of a field office or facilities for the employees of such contractors or vendors without obtaining Landlord’s prior written approval for each such use. Landlord shall have the right to terminate such use and remove all such contractor’s or vendor’s materials, equipment and other property from such space, without Landlord being liable to tenant or to such contractor or vendor, and the cost of such termination and removal shall be paid by Tenant to Landlord.

25. Tenants are required to have a full service maintenance contract covering their supplemental HVAC, Uninterrupted Power Supply (UPS) and Automatic Transfer systems, and to provide copies of such contracts to the Building management office.

26. The Building reserves the right to restrict the use of certain materials (for example, Omega heads and piping manufactured in The Republic of China) in the Building based on notifications that declare the materials unsafe.

27. Trucks using the Tenant Shipping Platforms on the ground floor of the Building, and the upper floor truck lobbies, will load and discharge at the place or places thereat and therein as indicated by the duly authorized representative of Landlord in charge of such operation.

28. Elevators for freight handling service will be operated during Business Hours on Business Days, unless special arrangement is made with Landlord for operation at other times.

29. The use of the private right of way and the truck elevators will be subject to and under the reasonable direction and control of the duly authorized representative of Landlord in charge of such operation. When in the interest of continuity of service or in the interest of the common service, Tenant’s freight departing from or arriving at the Building by truck may at the direction of Landlord be handled over and through the Tenant Shipping Platforms on the ground floor and the freight elevators. Landlord reserves the right to direct such handling in lieu of truck elevator service.

30. In the interest of preserving the continuity of freight elevator service, freight will not be floored upon the freight elevator, but will at all times be handled and moved upon suitable vehicles of the indoor industrial wheeler type permitting such freight to be economically and expeditiously wheeled on and off the freight elevators. Freight which cannot be handled upon such equipment will be handled in such alternative manner as may be approved by Landlord.

31. (a) The Tenant Shipping Platforms located on first or ground floor of the Building are designed to accomplish the immediate transfer and movement of freight between the freight elevators and trucks. The use of such facility by Tenant or any of its agents, servants, employees, representatives or contractors will be confined to such purpose, under the reasonable direction and control of the duly authorized representative of Landlord in charge of such operation.

(b) No storage or holding of freight on such Tenant Shipping Platforms awaiting the arrival of trucks, or awaiting transfer by Tenant from such Tenant Shipping Platforms to the Premises, will be permitted. No automobiles of Tenant or any Tenant Party may enter on or be stored in any portion of the Building, except in areas designated by Landlord, and provided Tenant pays for such parking at rates designated by Landlord, its agents or parking lessees.

(c) Any violation of this rule or disregard of directions issued by Landlord will give Landlord the right to handle, transfer, remove or store such freight in or to other premises in the Building. When such handling, transfer, removal or storage is performed by Landlord, and when it shall be deemed necessary by Landlord to preserve the continuity of common service provided by this facility, any and all expense will be at Tenant’s expense. Landlord will not be responsible for any loss or damage which any such freight may suffer by such handling, removing or storage.

32. Neither Tenant nor any Tenant Party will at any time be permitted to operate any freight, passenger or truck elevator.

33. The Building is equipped with scuppers for carrying off water which may result from sprinkler operation or other causes. Tenant shall not, under any circumstances, deposit or permit to be deposited sweepings or any other rubbish in such scuppers, and Tenant will keep the scuppers within the Premises at all times free of any and all rubbish, sweepings, and other obstructions of any nature whatsoever.

34. Tenant shall not, under any circumstances, permit the accumulation of sweepings or any other rubbish in the expansion joints of the Building, or in any other portions of the Building outside of the Premises, and all such sweepings or rubbish shall be removed daily by Tenant in such manner as Landlord shall direct. Tenant will keep the Building’s expansion joints free of any and all rubbish, sweepings and any other obstruction of any nature whatsoever. Tenant will not place machinery or equipment in a position so that such machinery or equipment straddles an expansion joint, or erect a partition which intersects an expansion joint, unless one end of such machinery, equipment or partition is free to permit the expansion and contraction of such expansion joint.

35. If any electrical or telephone installations made or operated by Tenant shall emit any electromagnetic interference, Tenant shall immediately discontinue use of such installations until such electromagnetic interference is eliminated to Landlord’s satisfaction.

36. Landlord reserves the right at any time and from time to time, to rescind, alter, waive, modify, add to or delete, in whole or in part, any of these Rules and Regulations in order to protect the comfort, convenience and safety of all tenants at the Building. Tenant shall not have any rights or claims against Landlord by reason of non- enforcement of these rules and regulations against any tenant, and such non-enforcement will not constitute a waiver as to Tenant.

37. If there shall be any inconsistencies between the text of the main body of the Lease and these Rules and Regulations, the provisions of the Lease shall prevail.

EXHIBIT C

FORM OF GUARANTY

AGREEMENT AND GUARANTY

AGREEMENT AND GUARANTY (this “Guaranty”) made as of October , 2003, by [GLOBAL CROSSING HOLDINGS LTD.] [SUCCESSOR GUARANTOR], a Bermuda company with an office at Wessex House, 45 Reid Street, Hamilton, HM12, Bermuda (“Guarantor”) to 111 CHELSEA LLC, a Delaware limited liability company with an address c/o Taconic Investment Partners LLC, 111 Eighth Avenue, New York, New York 10011 (“Landlord”).

WITNESSETH:

WHEREAS:

A. Landlord has been requested by Global Crossing Telecommunications, Inc., a Michigan corporation with an address at 1080 Pittsford-Victor Road, Pittsford, New York 14534 (“Tenant”), to enter into an Agreement of Lease, dated as of the date hereof (the “Lease”), whereby Landlord would lease to Tenant, and Tenant would hire and rent from Landlord a portion of the second (2nd) floor, as more particularly described in the Lease (the “Premises”), in the building known as 111 Eighth Avenue, New York, New York.

B. Guarantor owns, directly or indirectly, all of the issued and outstanding stock of Tenant, and will derive substantial benefit from the execution and delivery of the Lease.

C. Guarantor acknowledges that Landlord would not enter into the Lease unless this Guaranty accompanied the execution and delivery of the Lease.

NOW, THEREFORE, in consideration of the execution and delivery of the Lease and of other good and valuable consideration, the receipt and sufficiency whereof are hereby acknowledged by Guarantor:

1. DEFINITIONS. Defined terms used in this Guaranty and not otherwise defined have the meanings assigned to them in the Lease. For purposes of this Guaranty, the term “Governmental Authorities” shall, supplementing and in addition to the definition of such term in the Lease, be deemed to include Bermuda, a dependency of the United Kingdom, and any political subdivision, agency, department, commission, board, bureau or instrumentality thereof, now existing or hereafter created, having jurisdiction over Guarantor.

2. COVENANTS OF GUARANTOR

(a) Guarantor absolutely, unconditionally and irrevocably guarantees, as a primary obligor and not merely as a surety: (i) the full and prompt payment of all Fixed Rent, Additional Rent and all other sums and charges payable by Tenant under the Lease, and (ii) the full and timely performance of all covenants, terms, conditions, obligations and agreements to be performed by Tenant under the Lease (all of the obligations described in clauses (i) and (ii), collectively, the “Obligations”). If an Event of Default shall occur under the Lease, Guarantor will, without notice or demand, promptly pay and perform all of the Obligations, and pay to

Landlord when due all Fixed Rent and Additional Rent payable by Tenant under the Lease, together with all damages, costs and expenses to which Landlord is entitled pursuant to the Lease or under applicable Legal Requirements.

(b) Guarantor agrees with Landlord that (i) any action, suit or proceeding of any kind or nature whatsoever (an “Action”) commenced by Landlord against Guarantor to collect Fixed Rent, Additional Rent and any other sums and charges due under the Lease for any month or months shall not prejudice in any way Landlord’s rights to collect any such amounts due for any subsequent month or months throughout the Term in any subsequent Action, (ii) Landlord may, at its option, without prior notice or demand, join Guarantor in any Action against Tenant in connection with or based upon the Lease or any of the Obligations, (iii) Landlord may seek and obtain recovery against Guarantor in an Action against Tenant or in any independent Action against Guarantor without Landlord first asserting, prosecuting, or exhausting any remedy or claim against Tenant or against any security of Tenant held by Landlord under the Lease, and (iv) Guarantor will be conclusively bound in any jurisdiction by a judgment in any Action by Landlord against Tenant, as if Guarantor were a party to such Action, even though Guarantor is not joined as a party in such Action.

3. GUARANTOR’S OBLIGATIONS UNCONDITIONAL

(a) This Guaranty is an absolute and unconditional guaranty of payment and of performance, and not of collection, and shall be enforceable against Guarantor without the necessity of the commencement by Landlord of any Action against Tenant, and without the necessity of any notice of nonpayment, nonperformance or nonobservance, or any notice of acceptance of this Guaranty, or of any other notice or demand to which Guarantor might otherwise be entitled, all of which Guarantor hereby expressly waives in advance.

(b) If the Lease is renewed, or the Term extended, for any period beyond the Expiration Date, either pursuant to any option granted under the Lease or otherwise, or if Tenant holds over beyond the Expiration Date, the obligations of Guarantor hereunder shall extend and apply to the full and faithful performance and observance of all of the Obligations under the Lease during any renewal, extension or holdover period.

(c) This Guaranty is a continuing guarantee and will remain in full force and effect notwithstanding, and the liability of Guarantor hereunder shall be absolute and unconditional irrespective of: (i) any modifications or amendments of the Lease, (ii) any releases or discharges of Tenant other than the complete satisfaction and/or full release and complete discharge of all of the Obligations, (iii) any extension of time that may be granted by Landlord to Tenant, (iv) any assignment or transfer of all of any part of Tenant’s interest under the Lease, (v) any subletting of the Premises, (vi) any changed or different use of the Premises, (vii) any other dealings or matters occurring between Landlord and Tenant, (viii) the taking by Landlord of any additional guarantees from other persons or entities, (ix) the releasing by Landlord of any other guarantor, (x) Landlord’s release of any security provided under the Lease, or (xi) Landlord’s failure to perfect any landlord’s lien or other security interest available under applicable Legal Requirements. Guarantor hereby consents, prospectively, to Landlord’s taking or entering into any or all of the foregoing actions.

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4. WAIVERS OF GUARANTOR

(a) Guarantor waives (i) notice of acceptance of this Guaranty, (ii) notice of any actions taken by Landlord or Tenant under the Lease or any other agreement or instrument relating thereto, (iii) notice of any and all defaults by Tenant in the payment of Fixed Rent, Additional Rent or other charges, or of any other defaults by Tenant under the Lease, (iv) all other notices, demands and protests, and all other formalities of every kind in connection with the enforcement of the Obligations, omission of or delay in which, but for the provisions of this Section 4, might constitute grounds for relieving Guarantor of its obligations hereunder, and (v) any requirement that Landlord protect, secure, perfect or insure any security interest or lien, or any property subject thereto, or exhaust any right or take any action against Tenant or any other Person or any collateral.

(b) Guarantor waives trial by jury of any and all issues arising in any Action upon, under or in connection with this Guaranty, the Lease, the Obligations, and any and all negotiations or agreements in connection therewith.

5. SUBROGATION. Until such time as the Obligations shall be satisfied in full, Guarantor waives and disclaims any claim or right against Tenant by way of subrogation or otherwise in respect of any payment that Guarantor may be required to make hereunder, to the extent that such claim or right would cause Guarantor to be a “creditor” of Tenant for purposes of the United States Bankruptcy Code (11 U.S.C. §101 et seq., as amended), or any other Federal, state or other bankruptcy, insolvency, receivership or similar Legal Requirement. If any amount shall be paid to Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid and performed in full, Guarantor shall hold such amount in trust for Landlord and shall pay such amount to Landlord immediately following receipt by Guarantor, to be applied against the Obligations, whether matured or unmatured, in such order as Landlord may determine. Guarantor hereby subordinates any liability or indebtedness of Tenant now or hereafter held by Guarantor to the obligations of Tenant to Landlord under the Lease.

6. REPRESENTATIONS AND WARRANTIES OF GUARANTOR. Guarantor represents and warrants that:

(a) Guarantor is a corporation duly organized, validly existing and in good standing under the laws of Bermuda, is duly qualified to do business in each jurisdiction where the conduct of its business requires such qualification and has full requisite corporate power and authority to enter into and perform its obligations under this Guaranty. Guarantor’s principal offices are located at the address set forth in the opening paragraph of this Guaranty.

(b) The execution, delivery and performance by Guarantor of this Guaranty does not and will not (i) contravene applicable Legal Requirements or any contractual restriction binding on or affecting Guarantor or any of its properties, or (ii) result in or require the creation of any lien, security interest or other charge or encumbrance upon or with respect to any of its properties.

3

(c) No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or other regulatory body is required for the due execution, delivery and performance by Guarantor of this Guaranty.

(d) This Guaranty is a legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms.

(e) There is no action, suit or proceeding pending or threatened against or otherwise affecting Guarantor before any court or other Governmental Authority or any arbitrator which may adversely affect Guarantor’s ability to perform its obligations under this Guaranty.

(f) Guarantor owns, directly or indirectly, all of the issued and outstanding stock of Tenant.

(g) Guarantor has reviewed and approved the Lease and each of the documents, agreements and instruments executed and delivered in connection with the Lease.

(h) All necessary consents, approvals and authorizations, if any, to the execution and delivery of this Guaranty and to the transactions contemplated hereby, of each of (i) the United States Bankruptcy Court for the Southern District of New York in the consolidated cases entitled Global Crossing Ltd, et al., Case No. 02-40188 (REG) et seq., and (ii) Singapore Technologies Telemedia PTE Ltd. (“STT”), a party to the Purchase Agreement, dated as of August 9, 2002, among STT, Guarantor and Global Crossing Ltd., among others, have been duly obtained, and no consents or approvals of any other parties are or will be necessary in connection therewith.

(i) (i) The Lease constitutes a transaction entered into in the ordinary course of Tenant’s business, (ii) this Guaranty constitutes a transaction entered into in the ordinary course of Guarantor’s business, and (iii) the creditors’ committee in the Bankruptcy Case has been given the opportunity to review the Lease prior to its execution by Tenant, and this Guaranty prior to its execution by Guarantor. In reliance on the foregoing representation, and without limitation of the provisions of Section 6(h), Landlord has agreed to waive any requirement that Guarantor and/or Tenant obtain the approval of the Bankruptcy Court, and/or of any creditors’ committee or any other parties to the Bankruptcy Case other than STT, to the entering into of the Lease and/or this Guaranty.

[(j) [Successor Guarantor] is the successor to all of the assets and business of Global Crossing Holdings Ltd.]

7. NOTICES. All consents, notices, demands, requests, approvals or other communications given under this Guaranty shall be given as provided the Lease, as follows:

(a) if to Guarantor at Guarantor’s address set forth on the first page of this Guaranty, with a copy to: Global Crossing Ltd., 200 Park Avenue, Florham Park, New Jersey 07932, Attention: Office of the General Counsel; and

(b) if to Landlord, as follows: 111 Chelsea LLC, c/o Taconic Investment Partners LLC, 111 Eighth Avenue, New York, New York 10011, Attention: Mr. Paul Pariser, with a copy to: Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022, Attention: Eric Asmundsson, Esq.; or

4

to such other addresses as either Landlord or Guarantor may designate by notice given to the other in accordance with the provisions of this Section 7.

8. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES

(a) Guarantor hereby irrevocably (i) submits to the jurisdiction of any New York State or Federal court sitting in New York County, New York in any Action arising out of or relating to this Guaranty, and (ii) agrees that all claims in respect of such Action may be heard and determined in such New York State or Federal court. Guarantor hereby irrevocably appoints Global Crossing Ltd., 200 Park Avenue, Florham Park, New Jersey 07932, Attention: Corporate Secretary (the “Process Agent”), as its agent to receive, on behalf of Guarantor, service of copies of the summons and complaint and any other process which may be served in any such Action. Such service may be made by mailing or delivering a copy of such process to Guarantor in care of the Process Agent at the Process Agent’s address, and Guarantor hereby irrevocably authorizes and directs the Process Agent to accept such service on its behalf. As an alternative method of service, Guarantor also irrevocably consents to the service of any and all process in any such Action by the mailing of copies of such process to Guarantor at its address specified in Section 7. Guarantor agrees that a final judgment in any such Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner permitted under Legal Requirements.

(b) Guarantor irrevocably waives, to the fullest extent permitted by Legal Requirements, and agrees not to assert, by way of motion, as a defense or otherwise (i) any objection which it may have or may hereafter have to the laying of the venue of any such Action brought any of the courts described in Section 8(a), (ii) any claim that any such Action brought in any such court has been brought in an inconvenient forum, or (iii) any claim that Guarantor is not personally subject to the jurisdiction of any such courts. Guarantor agrees that final judgment in any such Action brought in any such court shall be conclusive and binding upon Guarantor and may be enforced by Landlord in the courts of any state, in any federal court, and in any other courts having jurisdiction over Guarantor or any of its property, and Guarantor agrees not to assert any defense, counterclaim or right of set-off in any Action brought by Landlord to enforce such judgment.

(c) Nothing in this Section 8 shall limit or affect Landlord’s right to (i) serve legal process in any other manner permitted by Legal Requirements, or (ii) bring any Action against Guarantor or its property in the courts of any other jurisdictions.

(d) Guarantor hereby irrevocably waives, with respect to itself and its property, any diplomatic or sovereign immunity of any kind or nature, and any immunity from the jurisdiction of any court or from any legal process, to which Guarantor may be entitled, and agrees not to assert any claims of any such immunities in any Action brought by Landlord under or in connection with this Guaranty. Guarantor acknowledges that the making of such waivers, and Landlord’s reliance on the enforceability thereof, is a material inducement to Landlord to enter into the Lease.

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(e) Guarantor agrees to execute, deliver and file all such further instruments as may be necessary under the laws of the State of New York, in order to make effective (i) the appointment of the Process Agent, (ii) the consent by Guarantor to jurisdiction of the state courts of New York and the federal courts sitting in New York County, New York, and (iii) all of the other provisions of this Section 8.

9. MISCELLANEOUS

(a) The provisions, covenants and guaranties of this Guaranty shall be binding upon Guarantor and its successors and assigns, and shall inure to the benefit of Landlord and its successors and assigns, and shall not be deemed waived or modified unless such waiver or modification is specifically set forth in writing, executed and delivered by each of Landlord or its successors and assigns and Guarantor or its successors and assigns.

(b) Whenever the words “include”, “includes”, or “including” are used in this Guaranty, they shall be deemed to be followed by the words “without limitation”, and, whenever the circumstances or the context requires, the singular shall be construed as the plural, the masculine shall be construed as the feminine and/or the neuter and vice versa. All Section references shall be deemed references to the Sections of this Guaranty. This Guaranty shall be interpreted and enforced without the aid of any canon, custom or rule of law requiring or suggesting construction against the party drafting or causing the drafting of the provision in question.

(c) The provisions of this Guaranty shall be governed by and interpreted solely in accordance with the internal laws of the State of New York, without giving effect to the principles of conflicts of law.

IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as of October     , 2003.

GUARANTOR:

[GLOBAL CROSSING HOLDINGS LTD.]

[SUCCESSOR GUARANTOR]

By:

Name:

Title:

6

STATE OF NEW YORK	)
	) ss.:
COUNTY OF	)

On the      day of                     , 2003, before me, the undersigned, personally appeared                                          , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in its capacity, and that by its signature on the instrument, the individual or the person upon behalf of which the individual acted, executed the instrument.

Notary Public

(Affix Notarial Stamp)

EXHIBIT D

INTENTIONALLY OMITTED

EXHIBIT E

FLOOR PLAN OF THE RAMP SPACE

The floor plan that follows is intended solely to identify the general outline of the Ramp Space, and should not be used for any other purpose. All areas, dimensions and locations are approximate, and any physical conditions indicated may not exist as shown.

[DEPICTION OF FLOOR PLAN]

EXHIBIT F

FORM OF LETTER OF CREDIT

[LETTERHEAD OF ISSUING BANK]

LETTER OF CREDIT DEPARTMENT

Issue Date:                              , 200  

Our Number:                                       

111 Chelsea LLC

c/o Taconic Investment Partners LLC

111 Eighth Avenue, New York, NY 10011

No.                                                                     

Irrevocable Commercial Letter of Credit

Applicant:        [Tenant]
Beneficiary:     111 Chelsea LLC
	c/o Taconic Investment Partners LLC
111 Eighth Avenue, New York, NY 10011
Amount (U.S.): $
Expiry:	, 200
	[The initial expiry date must occur at least one year after the Commencement Date.]

Gentlemen:

For the account of Applicant we hereby establish this Irrevocable Letter of Credit No.                      in your favor for an amount of up to $             effective immediately, available by your drafts at sight when accompanied by this Irrevocable Letter of Credit and Beneficiary’s statement, purportedly signed by an officer of Beneficiary or Beneficiary’s authorized managing agent, stating:

“The amount of this drawing under Irrevocable Letter of Credit No.              is being drawn pursuant to Lease dated                           200  , by and between 111 Chelsea LLC as Landlord and                                      as Tenant.”

All drafts must be marked “Drawn under                              Bank, Irrevocable Letter of Credit No.                      dated                          , 200  .”

It is a condition of this Irrevocable Letter of Credit that it shall be fully transferable by Beneficiary without any fees or charges payable by Beneficiary in connection therewith.

It is a condition of this Irrevocable Letter of Credit that it shall be automatically extended for additional periods of one year from the present or any future expiry date, unless at least thirty (30) days prior to such expiry date we notify you in writing by certified or registered mail, return receipt requested, at the above address, that we elect not to renew this Irrevocable Letter of Credit for such additional period. Upon receipt by you of such notice you may draw drafts on us at sight for an amount not to exceed the balance remaining in this Irrevocable Letter of Credit within the then applicable expiry date.

We hereby agree with you that drafts drawn under and in accordance with the terms of this Irrevocable Letter of Credit will be duly honored by us on delivery of this Irrevocable Letter of Credit and the document so specified, when presented at                              [address of Bank issuing this Letter of Credit - THIS ADDRESS MUST BE LOCATED IN NEW YORK CITY].

This credit is subject to the International Standby Practices 1998, International Chamber of Commerce Publication No. 590; provided, however, that in the event the expiry date occurs during an interruption of our business of the type described in Article 17 of such publication, then such expiry date shall be deemed to be automatically extended until the date that is five (5) days after the resumption of our business.

Authorized Signature

Exhibit B

[DEPICTION OF FLOOR PLAN]

EX-10.13

EXHIBIT 10.13

FIRST AMENDMENT TO SUBLEASE

THIS AMENDMENT to SUBLEASE is made as of this 4 day of May 2006, by and between Global Crossing Telecommunications, Inc., a Michigan corporation with offices at 1080 Pittsford Victor Road, Pittsford, New York 14534 (“Sublessor”) and Switch & Data/NY Facilities Company LLC, a Delaware limited liability company with offices at 1715 N. Westshore Blvd., Suite 650, Tampa, Florida 33607 (“Sublessee”).

WHEREAS, Sublessor is the Tenant of a building located at 111 Eighth Ave, New York, NY, (the “Building”) under that certain Lease dated, October 8, 2003, (the “Lease”) (a copy of the Lease is annexed hereto as Exhibit “A” and made a part hereof) (All capitalized terms not defined herein shall have the meanings ascribed to them in the Lease.).

WHEREAS, Sublessor and Sublessee entered into a Sublease dated November 21, 2005 for the subletting of a certain portion of the Building on the second (2nd) floor.

WHEREAS, the Sublease provided in Section 11., entitled, “Option to Take Additional Space” that Sublessee had two options to exercise for additional space for subletting of an additional portion of the Building on the second (2nd) floor.

WHEREAS, Sublessee has delivered written notice of its exercise of the option for Room 112 (6,573 RSF) (“Expansion Space”) effective June 1, 2006.

NOW, THEREFORE, in consideration of the premises and the terms and conditions contained herein, Sublessor and Sublessee do hereby agree as follows:

1. PREMISES

Effective June 1, 2006 Sublessor hereby sublets and Sublessee hereby takes from Sublessor 6,573 rentable square feet (“RSF”) which includes a factor of .6023 to convert USF to RSF designated as Room 112 on Exhibit B to the Sublease under the same terms and conditions as the existing space under the Sublease. The terms and conditions in the base Sublease related to free rent, security deposit, and power allocation are excluded from this Amendment. The execution of this Amendment to sublease by Sublessor is conclusive evidence that Sublessee takes the Premises “as is”.

2. TENANT IMPROVEMENTS

All tenant improvements must be approved, in writing, by Sublessor. All modifications to electrical, mechanical and structural facilities must be designed by licensed engineers and submitted for approval to Sublessor with a complete set of design documents.

IN WITNESS WHEREOF, Sublessor and Sublessee have caused this Sublease to be signed by their authorized officers as of the date first above written.

GLOBAL CROSSING TELECOMMUNICATIONS, INC.,

a Michigan corporation (Sublessor)

By:	[name illegible]
Name:	[name illegible]
Title:	Vice President

Switch & Data/NY Facilities Company LLC,

a Delaware limited liability company (Sublessee)

By:	Switch and Data Operating Company, LLC, a
	Delaware limited liability company, Manager
By:	/s/ George Pollock, Jr.
	George Pollock, Jr., Sr. Vice President

Page 2

[Exhibit A]

AGREEMENT OF LEASE

111 CHELSEA LLC

LANDLORD

AND

GLOBAL CROSSING TELECOMMUNICATIONS, INC.

TENANT

Premises:	Portion of the Second (2nd) Floor
	111 Eighth Avenue
	New York, New York 10011
Dated:	October 8, 2003

TABLE OF CONTENTS

Definitions		1
Article 1.	Demise, Premises, Term, Rent	5
Article 2.	Use And Occupancy	6
Article 3.	Alterations	7
Article 4.	Condition of the Premises	9
Article 5.	Repairs; Floor Load	10
Article 6.	Real Estate Taxes and Labor Rate Increases	11
Article 7.	Legal Requirements	17
Article 8.	Subordination and Non-Disturbance; Estoppel Certificates	17
Article 9.	Services	19
Article 10.	Insurance	27
Article 11.	Destruction of the Premises; Property Loss or Damage	28
Article 12.	Eminent Domain	30
Article 13.	Assignment and Subletting	31
Article 14.	Access to Premises	38
Article 15.	Certificate of Occupancy	39
Article 16.	Default	39
Article 17.	Remedies and Damages	42
Article 18.	Fees and Expenses	44
Article 19.	No Representations By Landlord	44
Article 20.	End Of Term	45
Article 21.	Quiet Enjoyment	45
Article 22.	No Waiver; Non-Liability	46
Article 23.	Waiver Of Trial By Jury	47
Article 24.	Inability To Perform	47
Article 25.	Bills And Notices	47
Article 26.	Rules And Regulations	48
Article 27.	Broker	48
Article 28.	Indemnity	49
Article 29.	Guaranty	49
Article 30.	Security Deposit	50
Article 31.	Rent Modifications	52
Article 32.	Miscellaneous	53
Exhibit A:	Floor Plan of the Premises
Exhibit B:	Rules and Regulations
Exhibit C:	Form of Guaranty
Exhibit D:	Intentionally Omitted
Exhibit E:	Floor Plan of the Ramp Space
Exhibit F:	Form of Letter of Credit

EXHIBIT 10.13

AGREEMENT OF LEASE, dated as of October 8, 2003, between 111 CHELSEA LLC (successor-in-interest to 111 Eighth Avenue LLC), a Delaware limited liability company with an address c/o Taconic Investment Partners LLC, 111 Eighth Avenue, New York, New York 10011 (“Landlord”), and GLOBAL CROSSING TELECOMMUNICATIONS, INC., a Michigan corporation with an address at 1080 Pittsford-Victor Road, Pittsford, New York 14534 (“Tenant”).

WlTNESSETH:

The parties hereto, for themselves, their legal representatives, successors and assigns, hereby covenant as follows.

DEFINITIONS

“Additional Rent” means Tenant’s Tax Payment, Tenant’s Labor Rate Payment, and any and all other sums, other than Fixed Rent, payable by Tenant to Landlord under this Lease.

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such first Person.

“Alterations” means alterations, installations, improvements, additions or other physical changes (other than decorations, movable fixtures and equipment) in or about the Premises or elsewhere in the Building.

“Base Rate” means the annual rate of interest publicly announced from time to time by Citibank, N.A., New York, New York (or any successor thereto) as its “base rate”, or such other term as may be used by Citibank, N.A. from time to time for the rate presently referred to as its base rate.

“Building” means all the buildings, equipment and other improvements and appurtenances of every kind and description now located or hereafter erected, constructed or placed upon the land and any and all alterations, renewals, replacements, additions and substitutions thereto, presently known by the address of 111 Eighth Avenue, New York, New York.

“Building Systems” means the mechanical, electrical, heating, ventilating, air conditioning, elevator, plumbing, sanitary, life-safety and other service systems of the Building, but shall not include the portions of such systems installed in the Premises or elsewhere in the Building by Tenant.

“Business Days” means all days, excluding Saturdays, Sundays, and all days observed by either the State of New York, the Federal Government or by the labor unions servicing the Building as legal holidays.

“Commencement Date” means the date on which all of the Delivery Conditions are satisfied.

“Control” means: (i) the ownership, directly or indirectly, of more than fifty per cent (50%) of the voting stock of a corporation, or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person.

“Default Rate” means a rate at all times four (4) percentage points above the Base Rate.

“Delivery Conditions” means each of the following:

Tenant shall have deposited the Security Deposit with Landlord in accordance with the provisions of Section 30.1;

Landlord and Cable & Wireless Internet Services, Inc. (“Prior Tenant”), shall have fully executed and delivered a Lease Termination Agreement, in form and substance satisfactory to Landlord in its sole and absolute discretion, whereby the existing lease covering the Premises shall be duly terminated, and all conditions to the effectiveness thereof shall have been satisfied; and

Tenant shall have obtained all necessary consents, approvals and authorizations, if any, to the execution and delivery of this Lease and to the transactions contemplated hereby, of each of (i) the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) in the consolidated cases entitled Global Crossing Ltd, et al., Case No. 02-40188 (REG) et seq. (collectively, the “Bankruptcy Case”), and (ii) Singapore Technologies Telemedia PTE Ltd. (“STT”), a party to the Purchase Agreement, dated as of August 9, 2002, among STT, Guarantor and Global Crossing Ltd., among others, and no consents or approvals of any other parties shall be necessary in connection therewith.

“Effective Date” means the date that a Plan of Reorganization pursuant to the Bankruptcy Case has been confirmed by the Bankruptcy Court and has become effective.

“Environmental Laws” means any Legal Requirements now or hereafter in effect relating to the environment, health, safety or Hazardous Materials.

“Expiration Date” means September 30, 2014.

“Governmental Authority” means any of the United States of America, the State of New York, the City of New York, any political subdivision thereof and any agency, department, commission, board, bureau or instrumentality of any of the foregoing, now existing or hereafter created, having jurisdiction over the Real Property or any portion thereof or the curbs, sidewalks, and areas adjacent thereto.

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“Guarantor” means (i) if prior to the Effective Date, Global Crossing Holdings Ltd., a Bermuda company, and (ii) from and after the Effective Date, the entity that is the successor to all of the assets and business of Global Crossing Holdings Ltd. (“Successor”), and any other Person who or which shall from time to time guaranty to Landlord the payment and performance of all or any portion of the obligations of Tenant under this Lease, as provided in Article 29.

“Guaranty” means the Agreement and Guaranty, dated as of the date hereof, made by Guarantor to Landlord, in the form attached to this Lease as Exhibit C, and any amendment, modification, restatement, confirmation or extension thereof, and any other agreement pursuant to which any Guarantor shall from time to time guaranty to Landlord the payment and performance of all or any portion of the obligations of Tenant under this Lease.

“Hazardous Materials” means any substances, materials or wastes regulated by any Governmental Authority or deemed or defined as a “hazardous substance”, “hazardous material”, “toxic substance”, “toxic pollutant”, “contaminant”, “pollutant”, “solid waste”, “hazardous waste” or words of similar import under applicable Legal Requirements, including oil and petroleum products, natural or synthetic gas, polychlorinated biphenyls, asbestos in any form, mold, urea formaldehyde, radon gas, or the emission of non-ionizing radiation, microwave radiation or electromagnetic fields at levels in excess of those (if any) specified by any Governmental Authority or which may cause a health hazard or danger to property, or the emission of any form of ionizing radiation.

“Initial Alterations” are defined in Section 4.3.

“Legal Requirements” means all present and future laws, rules, orders, ordinances, regulations, statutes, requirements, codes, executive orders, rules of common law, and any judicial interpretations thereof, extraordinary as well as ordinary, of all Governmental Authorities, including the Americans with Disabilities Act (42 U.S.C. §12,101 et seq.), New York City Local Law 58 of 1987, and any law of like import, and all rules, regulations and government orders with respect thereto, and any of the foregoing relating to environmental matters, Hazardous Materials, public health and safety matters, and of any applicable fire rating bureau, or other body exercising similar functions, affecting the Real Property or the maintenance, use or occupation thereof, or any street or sidewalk comprising a part of or in front thereof or any vault in or under the same.

“Mortgage” means any mortgage or trust indenture which may now or hereafter affect the Real Property, the Building or any Superior Lease and the leasehold interest created thereby, and all renewals, extensions, supplements, amendments, modifications, consolidations and replacements thereof or thereto, substitutions therefor, and advances made thereunder; “Mortgagee” means any mortgagee, trustee or other holder of a Mortgage.

“Permitted Use” means the use of the Premises by Tenant as executive and general offices, including the installation, operation and maintenance of switching and transmission equipment and facilities in connection with Tenant’s telecommunications business, and for no other purpose.

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“Person” means any individual, corporation, partnership, limited liability company, limited liability partnership, joint venture, estate, trust, unincorporated association, business trust, tenancy-in-common or other entity, or any Governmental Authority.

“Premises” means a portion of the second (2nd) floor of the Building, as shown on the floor plan attached to this Lease as Exhibit A.

“Premises Area” means the Rentable Square Foot area of the Premises, consisting of a total of 50,028 Rentable Square Feet, as such Premises Area may be increased or decreased from time to time pursuant to this Lease.

“Real Property” means the Building, together with the plot of land upon which it stands.

“Rentable Square Feet” means the deemed rentable area of the Building or any portion thereof, computed on the basis of the current standard employed by Landlord on the date hereof with respect to the calculation of the deemed Rentable Square Foot area of the Building; provided, however, that in no event shall such deemed Rentable Square Footage constitute or imply any representation or warranty by Landlord as to the actual size of any floor or other portion of the Building, including the Premises.

“Rules and Regulations” means the rules and regulations attached as Exhibit B to this Lease, and such other and further rules and regulations as Landlord may from time to time adopt.

“Security Deposit” means the sum of Five Hundred Thousand and 00/100 Dollars ($500,000.00), to be deposited by Tenant with Landlord as provided in Article 30.

“Substantial Completion” means, as to any construction performed by any party in the Premises, including any Alterations, that such work has been completed substantially in accordance with (i) the provisions of this Lease applicable thereto, (ii) the plans and specifications for such work, and (iii) all applicable Legal Requirements and Insurance Requirements, except for minor details of construction, decoration and mechanical adjustments, if any, the noncompletion of which does not materially interfere with Tenant’s use of the Premises, or which, in accordance with good construction practice, should be completed after the completion of other work to be performed in the Premises.

“Superior Lease(s)” means any ground or underlying lease of the Real Property or any part thereof heretofore or hereafter made by Landlord and all renewals, extensions, supplements, amendments and modifications thereof; “Lessor” means a lessor under a Superior Lease.

“Tenant’s Alterations” means all Alterations, including the Initial Alterations, in and to the Premises or elsewhere in the Building that may be made by or on behalf of Tenant prior to and during the Term, or any renewal thereof.

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“Tenant Party” means any of Tenant, any Affiliate of Tenant, any subtenant or any other occupant of the Premises, or any of their respective direct or indirect partners, officers, shareholders, directors, members, trustees, beneficiaries, employees, principals, contractors, licensees, invitees, servants, agents or representatives.

“Tenant’s Property” means Tenant’s movable fixtures and movable partitions, telephone and other communications equipment, computer systems, furniture, trade fixtures, furnishings and other items of personal property which are removable without material damage to the Premises or Building.

“Term” means the term of this Lease, which shall commence on the Commencement Date and shall expire on the Expiration Date.

ARTICLE 1. DEMISE, PREMISES, TERM, RENT

Section 1.1 Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord, the Premises, for the Term to commence on the Commencement Date and to end on the Expiration Date, at an annual rent (“Fixed Rent”) as follows:

(a) One Million Seven Hundred Thousand Nine Hundred Fifty-Two and 00/100 Dollars ($1,700,952.00) per annum ($141,746.00 per month) for the period commencing on the Commencement Date and ending on December 31, 2004;

(b) One Million Eight Hundred Fifty Thousand and 00/100 Dollars ($1,850,000.00) per annum ($154,166.67 per month) for the period commencing on January 1, 2005 and ending on April 30, 2005;

(c) One Million Eight Hundred Fifty-One Thousand Thirty-Six and 00/100 Dollars ($1,851,036.00) per annum ($154,253.00 per month) for the period commencing on May 1, 2005 and ending on December 31, 2008;

(d) Two Million Fifty Thousand and 00/100 Dollars ($2,050,000.00) per annum ($170,833.33 per month) for the period commencing on January 1, 2009 and ending on April 30, 2009; and

(e) Two Million Fifty-One Thousand One Hundred Forty-Eight and 00/100 Dollars ($2,051,148.00) per annum ($170,929.00 per month) for the period commencing on May 1, 2009 and ending on the Expiration Date;

which Tenant agrees to pay to Landlord, without notice or demand, in lawful money of the United States, in monthly installments in advance on the first (1st) day of each calendar month during the Term, at the office of Landlord or such other place as Landlord may designate, without any set-off, offset, abatement or deduction whatsoever. Fixed Rent and Additional Rent shall be payable by check drawn upon a bank which is a member of the New York Clearinghouse Association or by wire transfer of immediately available funds.

Section 1.2 Notwithstanding anything to the contrary contained herein, upon execution and delivery of this Lease, Tenant shall pay to Landlord the sum of Eighty-Three Thousand and 00/100 Dollars ($83,000.00) representing a portion of the installment of Fixed Rent for the first (1st) full calendar month of the Term after the Commencement Date.

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Section 1.3 Tenant represents and warrants to Landlord that (i) this Lease constitutes a transaction entered into in the ordinary course of Tenant’s business, and (ii) the creditors’ committee in the Bankruptcy Case has been given the opportunity to review this Lease prior to the execution hereof by Tenant. In reliance on the foregoing representation, Landlord has agreed to waive any requirement that Tenant obtain the approval of the Bankruptcy Court and/or of any creditors’ committee or any other parties to the Bankruptcy Case other than STT.

ARTICLE 2. USE AND OCCUPANCY

Section 2.1 Tenant shall use and occupy the Premises for the Permitted Use and for no other purpose. Tenant shall not use or occupy or permit the use or occupancy of any part of the Premises in any manner not permitted hereunder, or which would materially and adversely affect (a) the functioning of the Building Systems, (b) the use and occupancy of any part of the Building by any other tenant or other occupant, or (c) the appearance of the Building.

Section 2.2 Tenant shall not use or permit the Premises or any part thereof to be used: (a) for the business of printing or other manufacturing of any kind, (b) as a retail branch of a bank or savings and loan association, or as a retail loan company, as a retail stock broker’s or dealer’s office, (c) for the storage of merchandise, (d) for the distribution, by mail-order or otherwise, of merchandise, (e) as a restaurant or bar or for the sale of food or beverages, (f) as a news or cigar stand, (g) as an employment agency, labor union office, school, physician’s or dentist’s office, dance or music studio, (h) as a barber shop or beauty salon, (i) for the sale, at retail or otherwise, of any goods or products, (j) by the United States Government, the City or State of New York, any Governmental Authority, any foreign government, the United Nations or any agency or department of any of the foregoing or any Person having sovereign or diplomatic immunity, (k) for the rendition of medical, dental or other therapeutic or diagnostic services, or (1) for the conduct of an auction.

Section 2.3 (a) Landlord shall not be subject to any liability for failure to give possession of the Premises on the Commencement Date and the validity of this Lease shall not be impaired under such circumstances, nor shall the same be construed to extend the term of this Lease, except that Fixed Rent and Additional Rent shall be abated until possession of the Premises shall be delivered to Tenant. The foregoing shall constitute an express negation of Section 223-a of the New York Real Property Law or any successor law or ordinance, which shall be inapplicable hereto, and Tenant hereby waives any right to rescind this Lease which Tenant might otherwise have thereunder.

(b) Notwithstanding the foregoing, if the Commencement Date shall not occur on or before September 1, 2004, other than as a result of Unavoidable Delays (provided that for purposes of this Section 2.3(b), Unavoidable Delays shall not include the holding over of any tenant or other occupant of the Premises), then, provided that Tenant shall have duly satisfied the Delivery Conditions described in clauses (i) and (iii) of the definition of the Delivery Conditions, and as Tenant’s sole and exclusive remedy for such delay in the Commencement Date, Tenant shall have the right to terminate this Lease, by notice to Landlord given no earlier than September 1, 2004 and no later than September 30, 2004, such termination to be effective on the date that is thirty (30) days after the date such notice is given, and thereupon neither party shall have any liability to the other hereunder, except that Landlord shall return all prepaid Fixed Rent,

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Additional Rent, if any, and the Security Deposit deposited by Tenant hereunder; provided, however, that if the Commencement Date shall occur at any time within thirty (30) days following Landlord’s receipt of Tenant’s termination notice, such termination shall be void and of no force and effect, and Tenant shall have no further right to terminate this Lease pursuant to this Section 2.3.

Article 3. Alterations

Section 3.1 Tenant shall not make any Alterations without Landlord’s prior written consent in each instance, provided that Tenant’s changing of wall coverings, carpeting or paint shall not be deemed to be Alterations requiring such consent. Landlord’s consent shall be granted or denied in Landlord’s sole discretion; provided, however, that Landlord shall not unreasonably withhold its consent to Alterations proposed to be made by Tenant to adapt the Premises for the Permitted Use provided that such Alterations (a) are non-structural and do not affect the Building Systems or services, (b) are performed only by contractors approved in writing by Landlord, (c) do not affect any part of the Building other than the Premises, (d) do not adversely affect any service required to be furnished by Landlord to Tenant or to any other tenant or occupant of the Building, and (e) do not reduce the value or utility of the Building.

Section 3.2 (a) Prior to making any Alterations, Tenant shall (i) submit to Landlord, for Landlord’s written approval, detailed plans and specifications therefor in form satisfactory to Landlord, (ii) if such Alterations require a filing with Governmental Authority or require the consent of such authority, then such plans and specifications shall (A) be prepared and certified by a registered architect or licensed engineer, and (B) comply with all Legal Requirements to the extent necessary for such governmental filing or consent, (iii) at its expense, obtain all required permits, approvals and certificates, (iv) furnish to Landlord duplicate original policies or certificates of worker’s compensation (covering all persons to be employed by Tenant, and all contractors and subcontractors supplying materials or performing work in connection with such Alterations) and comprehensive public liability (including property damage coverage) insurance and Builder’s Risk coverage (issued on a completed value basis) all in such form, with such companies, for such periods and in such amounts as Landlord may require, naming Landlord and its employees and agents, and any Lessor and any Mortgagee as additional insureds, and (v) with respect to any Alteration costing more than $100,000.00 to complete, furnish to Landlord payment and performance bonds or such other evidence of Tenant’s ability to complete and to fully and completely pay for such Alteration as is satisfactory to Landlord; provided, however, that so long as either Global Crossing Holdings, Ltd. or Successor shall be the Guarantor under this Lease, Tenant shall not be required to furnish bonds or other security to Landlord in connection with Alterations. All Alterations shall be performed by Tenant at Tenant’s expense (A) in a good and workmanlike manner using new materials of first class quality, (B) in compliance with all Legal Requirements, and (C) in accordance with the plans and specifications previously approved by Landlord. Tenant shall at its cost and expense obtain all approvals, consents and permits from every Governmental Authority having or claiming

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jurisdiction prior to, during and upon completion of such Alterations. Tenant shall promptly reimburse Landlord, as Additional Rent and upon demand, for any and all actual, reasonable out-of-pocket costs and expenses incurred by Landlord in connection with Landlord’s review of Tenant’s plans and specifications for any such Alteration.

(b) Landlord shall not unreasonably withhold, condition or delay its approval of the contractors proposed to be used by Tenant for Tenant’s Alterations, provided that in the case of the mechanical, electrical, plumbing and fire safety trades, Tenant shall select its contractors and sub-contractors from Landlord’s list of approved contractors, which list may be modified by Landlord from time to time.

(c) Notwithstanding the foregoing provisions of this Article 3, Tenant shall be permitted to make minor, non-structural alterations to the Premises (“Minor Alterations”) upon prior notice to Landlord, but without the necessity of procuring Landlord’s consent thereto, provided that the estimated cost of each such Minor Alteration does not exceed $100,000.00 in any one instance. The provisions of Sections 3.2(a) and 3.2(b) shall be applicable to Minor Alterations. Prior to commencing any Minor Alteration, Tenant shall furnish Landlord with (i) working drawings or plans for such Minor Alteration in sufficient detail to permit Landlord to determine that such Alteration complies with the requirements hereof, and (ii) the names of the contractors proposed to be used by Tenant for such Minor Alteration.

(d) Upon completion of any Alterations, Tenant, at its expense, shall promptly obtain certificates of final approval of such Alterations as may be required by any Governmental Authority, and shall furnish Landlord with copies thereof, together with “as-built” plans and specifications for such Alterations prepared on an Autocad Computer Assisted Drafting and Design System (or such other system or medium as Landlord may accept) using naming conventions issued by the American Institute of Architects in June, 1990 (or such other naming convention as Landlord may accept) and magnetic computer media of such record drawings and specifications, translated into DXF format or another format acceptable to Landlord.

Section 3.3 All Alterations in and to the Premises which may be made by or on behalf of Tenant, prior to and during the Term or any renewal thereof, shall become the property of Landlord upon the expiration or sooner termination of this Lease. Landlord may condition its approval of any Alterations by requiring Tenant to agree in writing at the time of such approval that Tenant will remove such Alterations at the end of the Term as set forth in this Section 3.3 (any such Alterations which Landlord so requires Tenant to agree to remove, “Designated Alterations”). If Landlord does not specify at the time of its approval that an Alteration constitutes a Designated Alteration, Tenant shall have no obligation to remove such Alteration upon the expiration or sooner termination of this Lease. Tenant acknowledges that Designated Alterations shall include raised floors and reinforced floors, Tenant’s HVAC System (as defined in Section 9.3(d)), kitchen facilities, vaults, internal stairways and other slab penetrations, and conduit, wiring and telecommunications cabling within and outside of the Premises. Designated Alterations shall not include standard office installations such as internal partitions and corridors, dropped ceilings and lighting, ordinary HVAC ductwork, and pantries not containing cooking

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equipment. On the Expiration Date or earlier termination of the Term or any renewal thereof (a) Tenant shall remove Tenant’s Property from the Premises, and (b) unless Landlord notifies Tenant no later than one hundred eighty (180) prior to the Expiration Date that any or all of the Designated Alterations shall not be removed from the Premises, Tenant shall remove the Designated Alterations from the Premises, at Tenant’s expense. Tenant shall repair and restore in a good and workmanlike manner (reasonable wear and tear excepted) any damage to the Premises and the Building caused by such removal of Tenant’s Property and the Designated Alterations. Any of the Designated Alterations or Tenant’s Property not so removed by Tenant at or prior to the Expiration Date or earlier termination of the Term shall be deemed abandoned and may, at the election of Landlord, either be retained as Landlord’s property or be removed from the Premises by Landlord, and Tenant shall reimburse Landlord, as Additional Rent within thirty (30) days after demand, for Landlord’s reasonable, actual out-of-pocket costs incurred in connection with such removal. The covenants and agreements set forth in this Section 3.3 shall survive the expiration or earlier termination of this Lease.

Section 3.4 If, because of any act or omission of Tenant, its employees, agents, contractors, or subcontractors, any mechanic’s lien, U.C.C. financing statement or other lien, charge or order for the payment of money shall be filed against Landlord, or against all or any portion of the Premises, the Building or the Real Property, Tenant shall, at its own cost and expense, cause the same to be discharged of record, by bonding or otherwise, within forty-five (45) days after the filing thereof, and Tenant shall indemnify, defend and save Landlord harmless against and from all costs, expenses, liabilities, suits, penalties, claims and demands (including reasonable attorneys’ fees and disbursements) resulting therefrom.

Section 3.5 Tenant shall not, at any time prior to or during the Term, directly or indirectly employ, or permit the employment of, any contractor, mechanic or laborer in the Premises, whether in connection with any Alteration or otherwise, if in Landlord’s sole judgment such employment will interfere or cause any conflict with other contractors, mechanics, or laborers engaged in the construction, maintenance or operation of the Building by Landlord, Tenant or others, or the use and enjoyment of other tenants or occupants of the Building.

ARTICLE 4. CONDITION OF THE PREMISES

Section 4.1 (a) Tenant has examined the Premises and agrees to accept possession of the Premises in their “as is” condition on the Commencement Date, and further agrees that Landlord shall have no obligation to perform any work, supply any materials, incur any expenses or make any installations in order to prepare the Premises for Tenant’s occupancy. The taking of possession of the Premises by Tenant shall be conclusive evidence as against Tenant that at the time such possession was so taken, the Premises were in good and satisfactory condition, subject to the provisions of Section 4.2.

(b) Landlord and Tenant acknowledge that Prior Tenant has made certain improvements to the Premises, including the installation of certain infrastructure and equipment in or serving the Premises, such as air-conditioning and ventilation systems, emergency generators, electrical wiring and equipment, racks, cables and other personal property (all such infrastructure and equipment, collectively, the “Existing Improvements”). Landlord has duly approved the Existing Improvements as and when made by Prior Tenant in accordance with the

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provisions of Prior Tenant’s lease, and to the best of Landlord’s knowledge, there are no filed or noted violations of applicable Legal Requirements with respect to the Existing Improvements. However, no such approval by Landlord of the Existing Improvements shall be deemed to constitute any representation, warranty or other assurance of any kind that the Existing Improvements are in compliance with applicable Legal Requirements. Landlord agrees that if and to the extent the Existing Improvements remain in the Premises or the Building, as applicable, on the Commencement Date, then, so long as this Lease remains in force and effect, Tenant shall have the right to use and operate the Existing Improvements, provided, however, that Tenant shall accept possession of the Premises on the Commencement Date with the Existing Improvements, if any, in their then “as is, where is” condition, with all faults, without representation, warranty or recourse. EXCEPT AS SPECIFICALLY SET FORTH IN THIS LEASE, LANDLORD MAKES NO REPRESENTATIONS OR WARRANTIES REGARDING THE PREMISES, THE EXISTING IMPROVEMENTS OR THE BUILDING, WHETHER EXPRESS OR IMPLIED, AND LANDLORD SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

Section 4.2 Upon the request of Tenant, Landlord, at Tenant’s cost and expense, shall join in any applications for any permits, approvals or certificates from any Governmental Authority required to be obtained by Tenant, and shall sign such applications reasonably promptly after request by Tenant (provided that (i) the provisions of the applicable Legal Requirement shall require that Landlord join in such application, and (ii) is made in connection with an Alteration approved by Landlord, or if such approval is not required hereunder, such application is reasonably acceptable to Landlord) and shall otherwise cooperate with Tenant in connection therewith, provided that Landlord shall not be obligated to incur any cost or expense, including attorneys’ fees and disbursements, or suffer or incur any liability, in connection therewith.

ARTICLE 5. REPAIRS; FLOOR LOAD

Section 5.1 Landlord shall maintain and repair, in a good and workmanlike manner, the Building Systems and the public portions of the Building, both exterior and interior, and the structural elements thereof, including the roof, foundation and curtain wall. Tenant, at Tenant’s expense, shall take good care of the Premises and the fixtures, systems, equipment and appurtenances therein, and make all non-structural repairs thereto as and when needed to preserve them in good working order and condition, except for reasonable wear and tear, obsolescence and damage for which Tenant is not responsible pursuant to the provisions of Articles 10 and 11. Notwithstanding the foregoing, all damage or injury to the Premises or to any other part of the Building, or to its fixtures, equipment and appurtenances, caused by or resulting from carelessness, omission, neglect or improper conduct of, or Alterations made by Tenant, Tenant’s agents, employees or licensees, shall be repaired at Tenant’s expense, (a) by Tenant to the satisfaction of Landlord (if the required repairs are non-structural and do not affect any Building System), or (b) by Landlord (if the required repairs are structural or affect any Building System). Tenant also shall repair all damage to the Building and the Premises caused by the making of any Alterations by Tenant or by the moving of Tenant’s Property. All of such repairs shall be of quality or class equal to the original work or construction. If Tenant fails after fifteen (15) days notice to proceed with due diligence to make repairs required to be made by Tenant, Landlord may make such repairs at the expense of Tenant, and Tenant shall pay the costs and expenses thereof incurred by Landlord, with interest at the Default Rate, as Additional Rent within ten (10) days after rendition of a bill or statement therefor.

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Section 5.2 Tenant shall not place a load upon any floor of the Premises exceeding the floor load per square foot which such floor was designed to carry and which is allowed by law. Tenant shall not move any safe, heavy equipment, business machines, freight, bulky matter or fixtures into or out of the Building without Landlord’s prior consent. If such safe, equipment, freight, bulky matter or fixtures requires special handling, Tenant shall employ only persons holding a Master Rigger’s license to do such work.

Section 5.3 There shall be no allowance to Tenant for a diminution of rental value, no constructive eviction of Tenant and no liability on the part of Landlord by reason of inconvenience, annoyance or injury to business arising from Landlord making, or failing to make, any repairs, alterations, additions or improvements in or to any portion of the Building or the Premises, or in or to fixtures, appurtenances or equipment thereof. Landlord shall use reasonable efforts to minimize interference with Tenant’s access to and use and occupancy of the Premises in making any repairs, alterations, additions or improvements; provided, however, that Landlord shall have no obligation to employ contractors or labor at overtime or other premium pay rates or to incur any other overtime costs or additional expenses whatsoever.

Section 5.4 Tenant shall not require, permit, suffer or allow the cleaning of any window in the Premises from the outside in violation of Section 202 of the New York Labor Law or any successor statute thereto, or of any other Legal Requirement.

ARTICLE 6. REAL ESTATE TAXES AND LABOR RATE INCREASES

Section 6.1 The following terms shall have the meanings set forth below:

(a) “Taxes” shall include the aggregate amount of (i) all real estate taxes, assessments (special or otherwise), sewer and water rents, rates and charges and any other governmental levies, impositions or charges, whether general, special, ordinary, extraordinary, foreseen or unforeseen, which may be assessed, levied or imposed upon all or any part of the Real Property, and (ii) any expenses (including attorneys’ fees and disbursements and experts’ and other witness’ fees) incurred in contesting any of the foregoing or the Assessed Valuation (as defined in Section 6.1(d)) of all or any part of the Real Property, provided that such expenses shall be included in Taxes for any Tax Year only to the extent of the reduction in Taxes achieved thereby. If at any time after the date hereof the methods of taxation prevailing at the date hereof shall be altered so that in lieu of or as an addition to or as a substitute for the whole or any part of the taxes, assessments, rents, rates, charges, levies or impositions now assessed, levied or imposed upon all or any part of the Real Property, there shall be assessed, levied or imposed (A) a tax, assessment, levy, imposition or charge based on the rents received therefrom whether or not wholly or partially as a capital levy or otherwise, (B) a tax, assessment, levy, imposition or charge measured by or based in whole or in part upon all or any part of the Real Property and imposed upon Landlord, (C) a license fee measured by the rents or (D) any other tax, assessment, levy, imposition, charges or license fee however described or imposed, then all such taxes, assessments, levies, impositions, charges or license fees or the part thereof so measured or based shall be deemed to be Taxes. Taxes shall not include franchise, gift, inheritance, estate, sales, income or profit taxes imposed upon Landlord, any Lessor or any Mortgagee by any Governmental Authority, or any fines, interest or penalties imposed for late payment of Taxes.

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(b) “Tenant’s Share” means Two and 2/10ths of one percent (2.2%). Tenant’s Share has been computed by Landlord consistently with the standard employed by Landlord with respect to the calculation of the deemed Rentable Square Footage of the Premises and the Building under this Lease.

(c) “Base Taxes” means an amount equal to the sum of (i) one-half (1/2) of the Taxes payable for the Tax Year commencing on July 1, 1998 and ending June 30, 1999, plus (ii) one-half (1/2) the Taxes payable for the Tax Year commencing on July 1, 1999 and ending June 30, 2000.

(d) “Assessed Valuation” means the amount for which the Real Property is assessed pursuant to applicable provisions of the New York City Charter and of the Administrative Code of the City of New York for the purpose of imposition of Taxes.

(e) “Tax Year” means the period July 1 through June 30 (or such other period as may be duly adopted by the City of New York as its fiscal year for real estate tax purposes).

(f) “Comparison Year” means (i) with respect to Taxes, any Tax Year commencing with the 1999/2000 Tax Year, and (ii) with respect to Labor Rates, any calendar year commencing subsequent to the Base Labor Year.

(g) “Landlord’s Statement” means an instrument or instruments containing a comparison of either (i) the Base Taxes and the Taxes payable for any Comparison Year, or (ii) the Base Labor Rates and the Labor Rates applicable to any Comparison Year.

(h) “Tenant’s Projected Share of Taxes” means Tenant’s Tax Payment (as defined in Section 6.1(i)), if any, made by Tenant for the prior Comparison Year, plus an amount equal to Landlord’s estimate of the amount of increase in Tenant’s Tax Payment for the then current Comparison Year, divided by twelve (12) and payable monthly by Tenant to Landlord as Additional Rent.

(i) “Tenant’s Tax Payment” means Tenant’s Share of the excess of the Taxes payable for any Comparison Year over the Base Taxes.

Section 6.2 (a) If the Taxes payable for any Comparison Year (any part or all of which falls within the Term) shall exceed the Base Taxes, Tenant shall pay Tenant’s Tax Payment to Landlord, as Additional Rent, within ten (10) business days after demand from Landlord therefor, which demand shall be accompanied by Landlord’s Statement. Before or after the start of each Comparison Year, Landlord shall furnish to Tenant a Landlord’s Statement in respect of Taxes. If there shall be any increase in Taxes payable for any Comparison Year, whether during or after such Comparison Year or if there shall be any decrease in the Taxes

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payable for any Comparison Year during such Comparison Year, Landlord may furnish a revised Landlord’s Statement for such Comparison Year, and Tenant’s Tax Payment for such Comparison Year shall be adjusted and, within ten (10) business days after Tenant’s receipt of such revised Landlord’s Statement, Tenant shall (i) with respect to any increase in Taxes payable for such Comparison Year, pay such increase in Tenant’s Tax Payment to Landlord, or (ii) with respect to any decrease in Taxes payable for such Comparison Year, Landlord shall credit such decrease in Tenant’s Tax Payment against the next installment of Tenant’s Share of Taxes payable by Tenant pursuant to this Section 6.2(a), provided that if such decrease in Taxes is attributable to the final Comparison Year of the Term, Landlord shall pay the amount of such decrease in Tenant’s Tax Payment to Tenant. If, during the Term, Landlord shall elect to collect Tenant’s Tax Payments in full or in quarterly or bi-annual or other installments on any other date or dates than as presently required, then following Landlord’s notice to Tenant, Tenant’s Tax Payments shall be correspondingly revised, provided that Landlord shall not collect any periodic installment of Tenant’s Tax Payment earlier than thirty (30) days prior to the beginning of the period to which such payment relates. The benefit of any discount for any early payment or prepayment of Taxes relating to all or any part of the Real Property shall accrue solely to the benefit of Landlord and Taxes shall be computed without subtracting such discount.

(b) With respect to each Comparison Year, on account of which Landlord shall (or anticipates that it may) be entitled to receive Tenant’s Tax Payment, Tenant shall pay to Landlord, as Additional Rent for the then current Tax Year, Tenant’s Projected Share of Taxes. Upon each date that a Tax Payment or an installment on account thereof shall be due from Tenant pursuant to the terms of this Section 6.2. Landlord shall apply the aggregate of the installments of Tenant’s Projected Share of Taxes then on account with Landlord against Tenant’s Tax Payment or installment thereof then due from Tenant. In the event that such aggregate amount shall not be sufficient to discharge such Tax Payment or installment, Landlord shall so notify Tenant, and the amount of Tenant’s payment obligation with respect to such Tax Payment or installment pursuant to this Section 6.2, shall be equal to the amount of the insufficiency and shall be payable within ten (10) business days of demand by Landlord. If, however, such aggregate amount shall be greater than the Tax Payment or installment, Landlord shall credit the amount of such excess against the next payment of Tenant’s Projected Share of Taxes due hereunder.

(c) Only Landlord shall be eligible to institute Tax reduction or other proceedings to reduce the Assessed Valuation of the Real Property, and the filings of any such proceeding by Tenant without Landlord’s prior written consent shall constitute a default hereunder. If the Taxes payable for either the 1998/1999 Tax Year or the 1999/2000 Tax Year are reduced by final determination of legal proceedings, settlement or otherwise, then Base Taxes shall be correspondingly revised, the Additional Rent theretofore paid or payable on account of Tenant’s Tax Payment hereunder for all Comparison Years shall be recomputed on the basis of such reduction, and Tenant shall pay to Landlord, as Additional Rent within ten (10) business days after being billed therefor, any deficiency between the amount of such Additional Rent theretofore computed and paid by Tenant to Landlord and the amount thereof due as a result of such recomputations. If the Base Taxes are increased by such final determination of legal proceedings, settlement or otherwise, then, Landlord shall either pay to Tenant, or at Landlord’s election, credit against subsequent payments due under this Section 6.2, an amount equal to the excess of the amounts of such Additional Rent theretofore paid by Tenant over the

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amount thereof actually due as a result of such recomputations. If Landlord shall receive a refund or reduction of Taxes for any Comparison Year, Landlord shall, within a reasonable time after such refund is actually received or such credit is actually applied against Taxes then due and payable, either pay to Tenant, or, at Landlord’s election, credit against subsequent payments under this Section 6.2, an amount equal to Tenant’s Share of the refund or reduction, provided that such amount shall not exceed Tenant’s Tax Payment paid for such Comparison Year. Nothing herein contained shall obligate Landlord to file any application or institute any proceeding seeking a reduction in Taxes or Assessed Valuation.

(d) Tenant’s Tax Payment shall be made as provided in this Section 6.2 regardless of the fact that Tenant may be exempt, in whole or in part, from the payment of any taxes by reason of Tenant’s diplomatic or other tax exempt status or for any other reason whatsoever.

(e) Tenant shall pay to Landlord, as Additional Rent upon demand, any occupancy tax or rent tax now in effect or hereafter enacted, if payable by Landlord in the first instance or hereafter required to be paid by Landlord.

(f) If the Commencement Date or the Expiration Date shall occur on a date other than July 1 or June 30, respectively, any Additional Rent payable by Tenant to Landlord under this Section 6.2 for the Comparison Year in which such Commencement Date or Expiration Date shall occur, shall be apportioned in that percentage which the number of days in the period from the Commencement Date to June 30 or from July 1 to the Expiration Date, as the case may be, both inclusive, shall bear to the total number of days in such Comparison Year. In the event of a termination of this Lease, any Additional Rent under this Section 6.2 shall be paid or adjusted within thirty (30) days after submission of Landlord’s Statement. In no event shall Fixed Rent ever be reduced by operation of this Section 6.2 and the rights and obligations of Landlord and Tenant under the provisions of this Section 6.2 with respect to any Additional Rent shall survive the expiration or earlier termination of this Lease.

Section 6.3 The following terms shall have the meanings set forth below:

(a) “Comparison Year” shall mean any calendar year subsequent to the Base Labor Year.

(b) “R.A.B.” shall mean the Realty Advisory Board on Labor Relations, Incorporated, or its successor.

(c) “Local 32B-32J” shall mean Local 32B-32J of the Building Service Employees International Union, AFL-CIO, or its successor.

(d) “Class A Office Buildings” shall mean office buildings so categorized under any agreement between R.A.B. and Local 32B-32J, regardless of the designation given to such office buildings in any such agreement.

(e) “Labor Rates” shall mean a sum equal to the regular hourly wage rate required to be paid to Others (hereinafter defined) employed in Class A Office Buildings pursuant to an agreement between R.A.B. and Local 32B-32J; provided, however, that:

(i) if, as of October 1st of any Comparison Year, any such agreement shall require Others in Class A Office Buildings to be regularly employed on days or during hours when overtime or other premium pay rates are in effect pursuant to such agreement, then the term “regular hourly wage rate”, as used in this Section 6.3 shall mean the average hourly wage rate for the hours in a calendar week during which Others are required to be regularly employed;

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(ii) if no such agreement is in effect as of October 1st of any Comparison Year with respect to Others, then the term “regular hourly wage rate”, as used in this Section 6.3 shall mean the regular hourly wage rate actually paid to Others employed in the Building by Landlord or by an independent contractor engaged by Landlord; and

(iii) the term “regular hourly wage rate” shall exclude all benefits of any kind, including those payable directly to taxing authorities or others on account of the employment and all welfare, pension and fringe employee benefits and payments of any kind paid or given pursuant to such agreement.

(f) “Others” shall mean that classification of employee engaged in the general maintenance and operation of Class A Office Buildings most nearly comparable to the classification now applicable to “others” in the current agreement between R.A.B. and Local 32B-32J.

(g) “Base Labor Year” shall mean the calendar year 1999.

(h) “Base Labor Rates” shall mean the Labor Rates in effect for the Base Labor Year.

(i) “Tenant’s Labor Rate Payment” is defined in Section 6.4(a).

Section 6.4 (a) If the Labor Rates in effect for any Comparison Year (any part or all of which falls within the Term) shall be greater than the Base Labor Rates, then Tenant shall pay, as Additional Rent for such Comparison Year and continuing thereafter until a new Landlord’s Statement is rendered to Tenant, an amount (“Tenant’s Labor Rate Payment”) equal to (i) 50,028, multiplied by (ii) the number of cents (inclusive of any fractions of a cent) by which the Labor Rates in effect for such Comparison Year exceed the Base Labor Rates.

(b) At any time prior to, during or after any Comparison Year Landlord shall render to Tenant a Landlord’s Statement showing (i) a comparison of the Labor Rates for the Comparison Year with the Base Labor Rates, and (ii) the amount of Tenant’s Labor Rate Payment resulting from such comparison. Landlord’s failure to render a Landlord’s Statement during or with respect to any Comparison Year shall not prejudice Landlord’s right to render a Landlord’s Statement during or with respect to any subsequent Comparison Year and shall not eliminate or reduce Tenant’s obligation to pay Tenant’s Labor Rate Payment pursuant to this Article 6 for such Comparison Year.

(c) Tenant’s Labor Rate Payment shall be payable by Tenant on the first day of the month following the furnishing to Tenant of a Landlord’s Statement, in equal monthly

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installments, each such installment to be equal to 1/12th of Tenant’s Labor Rate Payment for such Comparison Year multiplied by the number of months (and any fraction thereof) of the Term then elapsed since the commencement of such Comparison Year, continuing monthly thereafter until rendition of the next succeeding Landlord’s Statement.

(d) The provisions of this Section 6.4 shall be effective irrespective of whether or not (i) the Building is classified as a Class A office building from time to time, or (ii) any Building employees are members of Local 32B-32J. Tenant acknowledges and agrees that the computation of Labor Rates hereunder is intended to serve solely as a formula for an agreed rental adjustment, rather than an actual operating expense calculation, and is not intended to reflect the actual cost to Landlord of wages at the Building or any increases or decreases in such cost.

Section 6.5 (a) If the Commencement Date or the Expiration Date shall occur on a date other than January 1 or December 31, respectively, any Additional Rent under this Article 6 for the Comparison Year in which such Commencement Date or Expiration Date shall occur shall be apportioned in that percentage which the number of days in the period from the Commencement Date to December 31 or from January 1 to the Expiration Date, as the case may be, both inclusive, shall bear to the total number of days in such Comparison Year. In the event of a termination of this Lease, any Additional Rent under this Article shall be paid or adjusted within thirty (30) days after submission of a Landlord’s Statement. In no event shall Fixed Rent ever be reduced by operation of this Section 6.5 and the rights and obligations of Landlord and Tenant under the provisions of this Article 6 with respect to any Additional Rent shall survive the expiration or earlier termination of this Lease.

(b) The computations of Additional Rent under this Article 6 are intended to constitute a formula for an agreed rental adjustment and may or may not constitute an actual reimbursement to Landlord for costs and expenses paid by Landlord with respect to the Building.

Section 6.6 Landlord’s failure to render a Landlord’s Statement with respect to any Comparison Year shall not prejudice Landlord’s right to thereafter render a Landlord’s Statement with respect thereto or with respect to any subsequent Comparison Year, nor shall the rendering of a Landlord’s Statement prejudice Landlord’s right to thereafter render a corrected Landlord’s Statement for that Comparison Year. Nothing herein contained shall restrict Landlord from issuing a Landlord’s Statement at any time there is an increase in Taxes or Labor Rates during any Comparison Year or any time thereafter.

Section 6.7 If any capital improvement is made to the Real Property during any calendar year during the Term in compliance with any Legal Requirements enacted after the date of this Lease (including the cost of compliance with Legal Requirements enacted prior to the date of this Lease if such compliance is required pursuant to any amendment, modification or reinterpretation thereof which is imposed or enacted after the date of this Lease), then Tenant shall pay to Landlord, immediately upon demand therefor, Tenant’s Proportionate Share of the amortized cost of such improvement, on a straight-line basis over the useful life thereof as determined by Landlord in the exercise of its reasonable judgment, with interest at the Base Rate plus two percent (2%) per annum, in each calendar year during the Term during which such amortization occurs.

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ARTICLE 7. LEGAL REQUIREMENTS

Section 7.1 Tenant, at its expense, shall comply with all Legal Requirements applicable to the Premises or the use and occupancy thereof by Tenant, and make all repairs or Alterations required thereby, whether structural or nonstructural, ordinary or extraordinary, unless otherwise expressly provided herein; provided, however, that Tenant shall not be obligated to comply with any Legal Requirement requiring any structural alteration to the Premises unless the application of such Legal Requirement arises from (i) Tenant’s manner of use or occupancy of the Premises (as distinguished from the use or occupancy of the Premises for office purposes generally), (ii) any cause or condition created by or on behalf of Tenant or any Tenant Party (including any Alterations), (iii) the breach of any of Tenant’s obligations under this Lease, or (iv) any Hazardous Materials having been brought into the Building by Tenant or any Tenant Party. Tenant shall not do or permit to be done any act or thing upon the Premises which will invalidate or be in conflict with Landlord’s insurance policies, and shall not do or permit anything to be done in or upon the Premises, or use the Premises in a manner, or bring or keep anything therein, which shall increase the rates for casualty or liability insurance applicable to the Building. If, as a result of any act or omission by Tenant or by reason of Tenant’s failure to comply with the provisions of this Article, the insurance rates for the Building shall be increased, then Tenant shall desist from doing or permitting to be done any such act or thing and shall reimburse Landlord, as Additional Rent hereunder, for that part of all insurance premiums thereafter paid by Landlord which shall have been charged because of such act, omission or failure by Tenant, and shall make such reimbursement upon demand by Landlord.

Section 7.2 Tenant, at its expense, shall comply with all Environmental Laws and with any directive of any Governmental Authority which shall impose any violation, order or duty upon Landlord or Tenant under any Environmental Laws with respect to the Premises or the use or occupation thereof. Tenant’s obligations hereunder with respect to Hazardous Materials shall extend only to those matters directly or indirectly based on, or arising or resulting from (a) the actual or alleged presence of Hazardous Materials on the Premises or in the Building which is caused or permitted by Tenant, and (b) any Environmental Claim (defined below) relating in any way to Tenant’s operation or use of the Premises or the Building.

Section 7.3 Tenant shall provide Landlord with copies of all communications and related materials regarding the Premises which Tenant shall receive from or send to (a) any Governmental Authority relating in any way to any Environmental Laws, or (b) any Person with respect to any claim based upon any Environmental Laws or relating in any way to Hazardous Materials (any such claim, an “Environmental Claim”). Landlord or its agents may perform an environmental inspection of the Premises at any time during the Term, upon prior notice to Tenant except in an emergency.

ARTICLE 8. SUBORDINATION AND NON-DISTURBANCE; ESTOPPEL CERTIFICATES

Section 8.1 This Lease, and all rights of Tenant hereunder, are and shall be subject and subordinate in all respects to all Mortgages and Superior Leases. This Section 8.1 shall be self-operative and no further instrument of subordination shall be required. In confirmation of such subordination, Tenant shall promptly execute and deliver any instrument that Landlord or any Lessor or Mortgagee may reasonably request to evidence such subordination.

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Section 8.2 In the event of any act or omission of Landlord which would give Tenant the right, immediately or after lapse of a period of time, to cancel or terminate this lease, or to claim a partial or total eviction, Tenant shall not exercise such right (a) until it has given written notice of such act or omission to each Mortgagee and Lessor whose name and address shall previously have been furnished to Tenant in writing, and (b) unless such act or omission shall be one which is not capable of being remedied by Landlord or such Mortgagee or Lessor within a reasonable period of time, until a reasonable period for remedying such act or omission shall have elapsed following the giving of such notice and following the time when such Mortgagee or Lessor shall have become entitled under such Mortgage or Superior Lease, as the case may be, to remedy the same (which reasonable period shall in no event be less than the period to which Landlord would be entitled under this Lease or otherwise, after similar notice, to effect such remedy), provided such Mortgagee or Lessor shall with due diligence give Tenant written notice of its intention to remedy such act or omission, and such Mortgagee or Lessor shall commence and thereafter continue with reasonable diligence to remedy such act or omission. If more than one Mortgagee or Superior Lessor shall become entitled to any additional cure period under this Section 8.2, such cure periods shall run concurrently, not consecutively.

Section 8.3 If a Mortgagee or Lessor shall succeed to the rights of Landlord under this Lease, whether through possession or foreclosure action or delivery of a new lease or deed, then at the request of such party so succeeding to Landlord’s rights (“Successor Landlord”) and upon Successor Landlord’s written agreement to accept Tenant’s attornment, Tenant shall attorn to and recognize Successor Landlord as Tenant’s landlord under this Lease, and shall promptly execute and deliver any instrument that Successor Landlord may reasonably request to evidence such attornment. Upon such attornment this Lease shall continue in full force and effect as, or as if it were, a direct lease between Successor Landlord and Tenant upon all of the terms, conditions and covenants as are set forth in this Lease and shall be applicable after such attornment except that Successor Landlord shall not:

(a) be liable for any previous act or omission of Landlord under this Lease;

(b) be subject to any offset, not expressly provided for in this Lease, which shall have theretofore accrued to Tenant against Landlord; or

(c) be bound by any previous modification of this Lease, not expressly provided for in this Lease, or by any previous prepayment of more than one month’s fixed rent, unless such modification or prepayment shall have been expressly approved in writing by such Mortgagee or Lessor.

Section 8.4 Each party agrees, at any time and from time to time, as requested by the other party, upon not less than ten (10) days’ prior notice, to execute and deliver to the other a written statement executed and acknowledged by such party (a) stating that this Lease is then in full force and effect and has not been modified (or if modified, setting forth all modifications), (b) setting forth the then annual Fixed Rent, (c) setting forth the date to which the Fixed Rent and Additional Rent have been paid, (d) stating whether or not, to the best knowledge

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of the signatory, the other party is in default under this Lease, and if so, setting forth the specific nature of all such defaults, (e) stating the amount of any security deposit held by Landlord, (f) stating whether there are any subleases affecting the Premises, (g) stating the address of the signatory to which all notices and communication under the Lease shall be sent, the Commencement Date and the Expiration Date, and (i) as to any other matters reasonably requested by the party requesting such certificate. The parties acknowledge that any statement delivered pursuant to this Section 8.4 may be relied upon by others with whom the party requesting such certificate may be dealing, including any purchaser or owner of the Real Property or the Building, or of Landlord’s interest in the Real Property or the Building or any Superior Lease, or by any Mortgagee or Lessor, or by any prospective or actual sublessee of the Premises or assignee of this Lease, or permitted transferee of or successor to Tenant.

Section 8.5 Without limitation of the provisions of Section 8.1, Landlord agrees to use commercially reasonable efforts to obtain for Tenant a subordination, non-disturbance and attornment agreement from all existing and future Mortgagees and Superior Lessors, in the standard form customarily employed by such Mortgagee or Superior Lessor, provided that Landlord shall have no liability to Tenant in the event that it is unable to obtain any such agreements. Tenant shall reimburse Landlord, within ten (10) days after demand therefor, for Landlord’s reasonable out-of-pocket costs, including reasonable attorney’s fees and disbursements, incurred in connection with such efforts.

ARTICLE 9. SERVICES

Section 9.1 Landlord shall provide, at Landlord’s expense, except as otherwise set forth herein, the following services:

Section 9.2 ELECTRICITY. (a) Landlord, at Landlord’s expense, subject to the provisions of this Article 9, shall furnish electric power to Tenant for use in the Premises by making available to Tenant 3,600 amperes (connected load) of AC electric capacity at 480 volts, 3-phase, 4-wire, dedicated to Tenant (the “Electrical Capacity”), at the existing electrical panels serving the Premises. Tenant covenants that Tenant’s use and consumption of electric current shall not at any time exceed the Electrical Capacity, nor exceed the capacity of any of the electrical facilities and installations in or otherwise serving or being used in the Premises. Tenant shall pay Landlord, as Additional Rent, at any time and from time to time, but no more frequently than monthly, for its consumption of electric power at the Premises, as provided in Sections 9.2(b) and 9.2(c).

(b) The calculations and determinations of the charges for electric power consumed by Tenant shall be based on the readings of one or more submeters to be installed by Landlord at Tenant’s expense, applied to Landlord’s Electricity Cost, as defined in Section 9.2(c). Tenant shall pay for electricity consumed as determined thereunder as measured and calculated from time to time by such submeter or submeters, plus Landlord’s charge for overhead and supervision, which charge shall not exceed four percent (4%) of such payment by Tenant. In addition, Tenant shall pay to Landlord, as Additional Rent (i) the fees and expenses

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of Landlord’s electrical contractor for services rendered by such contractor in the maintenance and repair of such submeter(s), and (ii) the amount of any taxes imposed by any Governmental Authority on Landlord’s receipts from the sale of electricity to Tenant. In the event that more that one submeter is used to measure Tenant’s consumption of electricity in the Premises, Tenant shall be billed only on the basis of the “totalized” demand, i.e., as though a single meter were measuring such usage.

(c) “Landlord’s Electricity Cost” means the cost per kilowatt hour and cost per kilowatt demand, adjusted by time of day factors, fuel adjustment charges and other applicable rate adjustments, to Landlord for the purchase of electricity from the public utility or other electricity provider furnishing electricity service to the Building from time to time (the “Electricity Provider”), including sales and other taxes imposed by any Governmental Authority on Landlord’s purchase of electricity. If at any time during the Term the cost elements comprising Landlord’s Electricity Cost shall be increased by the Electricity Provider, or Landlord’s Electricity Cost shall be increased for any other reason, then effective as of the date of such increase, Tenant’s payment for submetered electricity under this Section 9.2 shall be proportionately increased. Landlord reserves the right to contract with different Electricity Providers from time to time in its sole judgment, and without reference to whether any Electricity Provider selected by Landlord provides lower rates than any other electricity supplier. Currently, Landlord’s Electricity Cost is based upon Consolidated Edison Company’s Service Classification rate schedule S.C. #4 Rate II as in effect on the Commencement Date.

(d) In the event that Tenant’s total power requirements at the Premises, based on an annual review of Tenant’s consumption commencing on the second (2nd) anniversary of the Commencement Date and thereafter on each succeeding anniversary thereof, shall be less than 3,000 amperes (at 460/480 volts), Tenant shall pay to Landlord an annual sum equal to the fee, if any, which Landlord is obligated to pay to the Electricity Provider (as hereinafter defined), commonly known as a “use it or lose it” fee, for the availability of such excess capacity, presently payable by Landlord to the Electricity Provider at the rate of $25.00 per unused ampere per annum.

(e) Tenant covenants that Tenant’s use and consumption of electric current shall not at any time exceed the capacity of any of the electrical facilities and installations in or otherwise serving or being used in the Premises and Tenant shall, upon the submission by Landlord to Tenant of written notice, promptly cease the use of any of Tenant’s electrical equipment which Landlord believes will cause Tenant to exceed such capacity. Any additional feeders, risers, electrical facilities and other such installations required for electric service to the Premises in excess of the Electrical Capacity will be supplied by Landlord, at Tenant’s expense, upon Landlord’s prior consent in each instance, provided that, in Landlord’s judgment, such additional electrical facilities and installations, feeders or risers are necessary and are permissible under Legal Requirements (including the New York State Energy Conservation Construction Code) and insurance regulations and the installation of such feeders or risers will not cause permanent damage or injury to the Building or the Premises or cause or create a dangerous or

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hazardous condition or entail excessive or unreasonable alterations or repairs or interfere with, or disturb, other tenants or occupants of the Building. In addition, Landlord shall have no obligation to consent to such additional feeders, risers, electrical facilities and installations if in Landlord’s judgment, the same would give Tenant a disproportionate amount of the electrical current supplied to the Building at the expense of, or in derogation of the needs of other tenants or occupants of the Building.

(f) Unless caused by Landlord’s gross negligence or willful misconduct, Landlord shall not in any way be liable or responsible to Tenant for any loss, damage or expense which Tenant may sustain or incur as a result of the unavailability of or interruption in the supply of electric current to the Premises or a change in the quantity or character or nature of such current and such change, interruption or unavailability shall not constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent (except that Tenant’s liability to pay Landlord for electricity under this Section 9.2 shall cease as of the date of such disturbance), or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Landlord, or its agents, by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant’s business, or otherwise.

(g) Landlord reserves the right to discontinue furnishing electricity to Tenant in the Premises on not less than sixty (60) days’ notice to Tenant. If Landlord exercises such right to discontinue, or is compelled to discontinue furnishing electricity to Tenant, this Lease shall continue in full force and effect and shall be unaffected thereby, except only that from and after the effective date of such discontinuance, Landlord shall not be obligated to furnish electricity to Tenant, and Tenant shall have no further obligation to pay Landlord for electricity supplied to the Premises. If Landlord so discontinues furnishing electricity to Tenant, Tenant shall arrange to obtain electricity directly from the Electricity Provider. Such electricity may be furnished to Tenant by means of the then existing electrical facilities serving the Premises to the extent that the same are available, suitable and safe for such purposes. All meters and all additional panel boards, feeders, risers, wiring and other equipment which may be required by Tenant to obtain electricity directly from the Electricity Provider shall be installed by Landlord, at Tenant’s expense.

(h) If submetering of electricity in the Building is hereafter prohibited by any Legal Requirement, or by any order or ruling of the Public Service Commission of the State of New York, then Tenant shall apply, within ten (10) days of Tenant’s receiving notice thereof, to the Electricity Provider in order to obtain direct electric service, and Tenant shall bear all costs and expenses, as set forth in Section 9.2(h), necessary to comply with all rules and regulations of the Electricity Provider pertinent thereto, and from and after the date upon which Tenant procures direct electric service, Landlord shall be relieved of any further obligation to furnish electricity to Tenant pursuant to this Section 9.2. Such electricity may be furnished to Tenant by means of the then existing electrical facilities serving the Premises, including Building feeders and risers, to the extent that the same are suitable and safe for such purposes.

Section 9.3 HEAT. (a) Landlord shall provide heat to the Premises on Business Days from 8:00 A.M. to 6:00 P.M., when required in Landlord’s judgment for the comfortable use and occupancy of the Premises, through use of the Building standard heating system (the “Building Heating System”).

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(b) Anything in this Section 9.3 to the contrary notwithstanding, and without limitation of Landlord’s obligations under Section 5.1 with respect to the repair of Building Systems, Landlord shall not be responsible if the normal operation of the Building Heating System shall fail to provide heat at reasonable temperatures uniformly to all interior portions of the Premises. Tenant at all times shall cooperate fully with Landlord and shall abide by the regulations and requirements which Landlord may prescribe for the proper functioning and protection of the Building Heating System.

(c) Landlord shall not be required to furnish heat during periods other than the hours and days set forth in this Section 9.3 for the furnishing and distributing of such services (“Overtime Periods”), unless Landlord has received advance notice from Tenant requesting such service not less than twenty-four (24) hours prior to the time when such service shall be required. Accordingly, if Landlord shall furnish heat to the Premises at the request of Tenant during Overtime Periods, Tenant shall pay Landlord, as Additional Rent within ten (10) days after demand, for such services at the standard rate then fixed by Landlord for the Building. Failure by Landlord to furnish or distribute heat or any other services during Overtime Periods shall not constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of Fixed Rent or Additional Rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Landlord or its agents by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant’s business or otherwise.

(d) Landlord shall have no obligation to provide air-conditioning or ventilation services to the Premises. Landlord agrees that Tenant shall have the right to use any air-conditioning systems forming part of the Existing Improvements, subject to the provisions of Section 4.1(b).

(e) Landlord will not unreasonably withhold its consent to the removal by Tenant of the existing louvers in the exterior curtain wall of the Building and the replacement of such louvers with Building standard windows. Notwithstanding the foregoing, Tenant shall not, without Landlord’s consent, which may be granted or withheld in Landlord’s sole and absolute discretion, install additional exterior louvers or in any other way alter the exterior appearance of the Building, and Tenant agrees that all elements of the design and materials of any such louvers or other alterations that would be visible from the exterior of the Building shall be consistent with the exterior design and appearance of the Building, as determined by Landlord in its sole judgment.

Section 9.4 ELEVATORS. Landlord shall provide passenger elevator service to the Premises on Business Days from 8:00 A.M. to 6:00 P.M. and freight elevator facilities on a non-exclusive basis, on Business Days from 8:00 A.M. to 4:45 P.M., and shall have one passenger elevator available at all other times. Such elevator service shall be subject to such rules and regulations as Landlord may promulgate from time to time with respect thereto. Landlord shall have the right to change the operation or manner of operation of any of the elevators in the Building and/or to discontinue, temporarily or permanently, the use of any one or more cars in any of the passenger, freight or truck elevator banks.

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Section 9.5 CLEANING AND RUBBISH REMOVAL. Tenant shall, at Tenant’s sole cost, provide cleaning services at the Premises pursuant to reasonable rules and regulations established by Landlord from time to time, and use a cleaning contractor approved by Landlord. Tenant shall, at Tenant’s sole cost, provide refuse and rubbish removal service at the Premises at times, and pursuant to regulations, established by Landlord from time to time.

Section 9.6 WATER. Landlord shall furnish hot and cold water in such quantities as Landlord deems sufficient for ordinary drinking, lavatory and cleaning purposes to the Premises. If Tenant requires, uses or consumes water for any purpose in addition to ordinary lavatory, cleaning and drinking purposes, Landlord may install a hot water meter and a cold water meter and thereby measure Tenant’s consumption of water for all purposes. Tenant shall (a) pay to Landlord the cost of any such meters and their installation, (b) at Tenant’s expense, keep any such meters and any such installation equipment in good working order and repair, and (c) pay to Landlord, as Additional Rent, as and when billed therefor for water consumed, together with a charge for any required pumping or heating thereof, all sewer rents, charges or any other taxes, rents, levies or charges which now or hereafter are assessed, imposed or shall become a lien upon the Premises or the Real Property pursuant to law, order or regulation made or issued in connection with any such metered use, consumption, maintenance or supply of water, water system, or sewage or sewage connection or system, and in default in making such payment Landlord may pay such charges and collect the same from Tenant.

Section 9.7 NO WARRANTY OF LANDLORD. Landlord does not warrant that any of the services to be provided by Landlord to Tenant hereunder, or any other services which Landlord may supply (a) will be adequate for Tenant’s particular purposes or as to any other particular need of Tenant or (b) will be free from interruption, and Tenant acknowledges that any one or more such services may be interrupted or suspended by reason of Unavoidable Delays. In addition, Landlord reserves the right to stop, interrupt or reduce service of the Building Systems by reason of Unavoidable Delays, or for repairs, additions, alterations, replacements, decorations or improvements which are, in the judgment of Landlord, necessary to be made, until said repairs, alterations, replacements or improvements shall have been completed. Any such interruption or discontinuance of service, or the exercise of such right by Landlord to suspend or interrupt such service shall not (i) constitute an actual or constructive eviction, or disturbance of Tenant’s use and possession of the Premises, in whole or in part, (ii) entitle Tenant to any compensation or to any abatement or diminution of Fixed Rent or Additional Rent, (iii) relieve Tenant from any of its obligations under this Lease, or (iv) impose any responsibility or liability upon Landlord or its agents by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant’s business, or otherwise. Landlord shall use reasonable efforts to minimize interference with Tenant’s access to and use and occupancy of the Premises in making any repairs, alterations, additions, replacements, decorations or improvements; provided, however, that Landlord shall have no obligation to employ contractors or labor at “overtime” or other premium pay rates or to incur any other “overtime” costs or additional expenses whatsoever. Landlord shall not be required to furnish any services except as expressly provided in this Article 9.

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SECTION 9.8 ANTENNA EQUIPMENT

(a) Landlord will grant to Tenant, for Tenant’s own use and not for resale purposes, a non-exclusive license of sufficient space on the roof of the Building, at a location designated by Landlord in its sole discretion, for the construction, installation, operation and use by Tenant of up to six (6) antenna masts for the installation of cellular communications antennae or satellite dishes, none of which shall exceed ten feet (10’) in overall height or, in the case of satellite dishes, one (1) meter in width, for use in conjunction with Tenant’s equipment and facilities in the Premises, together with related cabling, mountings and supports for the foregoing (collectively, the “Antenna Equipment”), at a location or locations designated by Landlord, taking into account any reasonable “line of sight” requirements of Tenant.

(b) If the Antenna Equipment interferes with any equipment installed by Landlord or any tenant in the Building leasing space in the Building as of the date of this Lease, or interferes with the operation of the Building or the Building Systems, or if Landlord shall determine that the operation thereof (i) may cause a health hazard or danger to property, (ii) may not be in accordance with governmental or quasi-governmental standards for non-ionizing radiation for occupational or general public health levels, then Tenant, at its expense, shall take all steps necessary to eliminate such interference, and if Tenant shall fail to eliminate such interference, Tenant shall relocate the Antenna Equipment to another area on the roof designated by Landlord. In the event Tenant fails, within thirty (30) days after notice, to relocate or remove the Antenna Equipment, Landlord may do so, and Tenant shall promptly reimburse Landlord for any costs and expenses incurred by Landlord in connection therewith.

(c) Landlord makes no representation that the Antenna Equipment will be able to receive or transmit communication signals without interference or disturbance (whether or not by reason of the installation or use of similar equipment by others on the roof) and Tenant agrees that Landlord shall not be liable to Tenant therefor.

(d) Tenant shall pay to Landlord, as a fee for the Antenna Equipment (the “Antenna License Fee”) in a amount per month equal to the product of (i) of Five Hundred and 00/100 Dollars ($500.00), multiplied by (ii) the number of antenna masts installed by Tenant pursuant to Section 9.8(a). The Antenna License Fee shall be payable by Landlord in advance on the first day of each calendar month during the Term, and if the Term shall commence or terminate on other than the first day or last day, respectively, of a calendar month, the Antenna License Fee for such month shall be prorated based upon the actual number of days elapsed.

SECTION 9.9 EMERGENCY GENERATOR

(a) Landlord shall make up to 2,000 kilowatts (kW) of 460/480-volt emergency electric power service (“EPS”) available to Tenant for use in the Premises from the Building emergency electric generator system (collectively, the “Generator System”) as provided in this Section 9.9.

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(b) Tenant shall pay Landlord for EPS as follows:

(i) Tenant shall pay the costs and expenses incurred by Landlord in making EPS available to the Premises, including the costs to furnish and install a transfer switch, if required, cabling and other devices necessary to connect the Generator System to the Premises, and the costs of testing, recertifying and repairing the Generator System, within thirty (30) days after demand by Landlord; and

(ii) Tenant shall pay an annual fee (the “EPS Fee”) for the period commencing on the date on which Landlord makes EPS available to the Premises through the Expiration Date, irrespective of whether or not emergency power is ever required or used by Tenant, in an amount equal to the product of (A) Landlord’s actual annual costs for the operation, maintenance and repair of the Generator System, multiplied by (B) a fraction, the numerator of which is 2,000, and the denominator of which is the total capacity, measured in kW, of the Generator System or, at Landlord’s option, of the portion thereof serving the Premises. At Landlord’s option, the EPS Fee shall be payable in monthly, quarterly, or annual installments, and in all cases shall be payable within thirty (30) days after demand by Landlord.

(c) Landlord shall supply EPS to Tenant only if there is an interruption or failure in the supply of electric current to the Premises, and under no other circumstances. Tenant shall be responsible for the payment of any occupancy tax, or any other tax (other than Landlord’s income tax) imposed upon the Additional Rent paid by Tenant pursuant to this Section 9.9.

(d) Tenant shall not transfer or assign the right to receive the EPS service described in this Section 9.9 except in connection with an assignment of this Lease consented to by Landlord as and to the extent required under Article 13, and under no circumstances shall this right be transferred or assigned to any party who is not a tenant under this Lease. Tenant acknowledges that the Generator System (and any replacement or substitute therefor), and all connections thereto, are and shall remain the sole property of Landlord and may not be removed by Tenant.

(e) Landlord shall have the right, in Landlord’s sole discretion, at any time and from time to time during the term of this Lease, upon not less than thirty (30) days prior written notice to Tenant, to relocate any of the generators comprising the Generator System to other areas of the Building, or to substitute different or additional generators for those comprising the Generator System as of the date hereof. Tenant shall cooperate with Landlord to effectuate any such relocation or substitution affecting the Generator System.

(g) Upon and subject to the provisions of this Lease, Landlord shall maintain and repair the Generator System, and shall maintain such service contracts and take such other actions as may be necessary in Landlord’s sole judgment to keep the Generator System in good working order; provided, however, that Landlord shall not be liable in any way to Tenant for any delay, interruption, failure, variation or defect in or with regard to the Generator System or EPS, and in no event shall Landlord be liable to Tenant for special, indirect or consequential damages which may result from any such delay, interruption, failure, variation or defect.

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Section 9.10 RAMP SPACE

(a) Landlord hereby grants to Tenant, for Tenant’s own use and not for resale purposes, a license of an area of the ramp on the 15th Street side of the Premises leading to the ground floor of the Building, as shown on Exhibit E to this Lease, containing approximately 2,479 usable square feet (the “Ramp Space”) for use by Tenant as (i) storage space, and (ii) for access to the Premises by individuals and vehicles, if permitted under applicable Legal Requirements. Tenant shall be solely responsible for (A) constructing such access doors, gates or other means of access to the Premises through the Ramp Space as required by Tenant and permitted under Legal Requirements, and (B) obtaining, at its expense, all required permits, approvals and certificates from all Governmental Authorities having or claiming jurisdiction with respect to Tenant’s use of the Ramp Space, and for compliance with all Legal Requirements applicable thereto, including the provisions of the certificate of occupancy from time to time issued for the Building. Without limitation of the foregoing, if any use of the Ramp Space by Tenant generates noise or exhaust fumes, then Tenant shall install sound attenuated acoustic enclosures reasonably satisfactory to Landlord designed to eliminate such noise or reduce such noise to acceptable levels, and adequate venting to eliminate such exhaust fumes from the Ramp Space and the Building.

(b) Tenant shall pay a license fee to Landlord for the Ramp Space, as Additional Rent in advance on the first day of each month during the Term, as follows (i) during the period from the Rent Commencement Date through the day before the fifth (5th) anniversary of the Rent Commencement Date, the product of the usable square foot area of the Ramp Space, multiplied by Eighteen and 00/100 Dollars ($18.00), and (ii) during the period from the fifth (5th) anniversary of the Rent Commencement Date through day before the tenth (10th) anniversary of the Rent Commencement Date, the product of the usable square foot area of the Ramp Space, multiplied by Twenty-One and 00/100 Dollars ($21.00), and (iii) during the period from the tenth (10th) anniversary of the Rent Commencement Date through the Expiration Date, the product of the usable square foot area of the Ramp Space, multiplied by Twenty-Four and 00/100 Dollars ($24.00). All of the provisions of this Lease shall apply to the Ramp Space, including all provisions relating to compliance with Legal Requirements, insurance, indemnity, repairs and maintenance. The license granted to Tenant in this Section 9.10 shall not be assignable by Tenant separately from this Lease.

(c) Landlord shall not have any obligations with respect to the Ramp Space or compliance with any Legal Requirements (including the obtaining of any required permits or licenses, or the maintenance thereof) relating thereto, nor shall Landlord be required to provide any services to the Ramp Space.

(d) The privileges granted Tenant under this Section 9.10 merely constitute a license and shall not, now or at any time after the installation of the Ramp Space, be deemed to grant Tenant a leasehold or other real property interest in the Building or any portion thereof. The license granted to Tenant in this Section 9.10 shall continue until and automatically

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terminate and expire upon the expiration or earlier termination of this Lease and the termination of such license shall be self-operative and no further instrument shall be required to effect such termination. For so long as this Lease shall be in full force and effect, Landlord will not terminate the license granted to Tenant hereby. Upon request by Landlord following the expiration or sooner termination of this Lease and the license granted to Tenant in this Section 9.10, Tenant, at Tenant’s expense, shall promptly execute and deliver to Landlord, in recordable form, any certificate or other document reasonably required by Landlord confirming the termination of Tenant’s right to use the Ramp Space.

ARTICLE 10. INSURANCE

Section 10.1 Tenant, at its expense, shall obtain and keep in full force and effect a policy of commercial general liability insurance under which Tenant is named as the insured and Landlord, Landlord’s managing agent for the Building, and any Lessors and any Mortgagees (whose names shall have been furnished to Tenant) are named as additional insureds, which insurance shall provide primary coverage without contribution from any other insurance carried by or for the benefit of Landlord, Landlord’s managing agent or any Lessors or Mortgagees named as additional insureds. Tenant’s primary commercial general liability policy shall contain a provision that the policy shall be noncancellable unless twenty (20) days’ written notice shall have been given to Landlord and Landlord shall similarly receive twenty (20) days’ notice of any material change in coverage. The minimum limits of liability shall be a combined single limit with respect to each occurrence in an amount of not less than $5,000,000 per location general aggregate limit; provided, however, that Landlord shall retain the right to require Tenant to increase said coverage to that amount of insurance which in Landlord’s reasonable judgment is then being customarily required by prudent landlords of comparable buildings in the City of New York, and provided further that Landlord shall require similar increases of other tenants of space in the Building comparable to the Premises, to the extent Landlord shall then have the right to do so under applicable leases. Tenant shall also obtain and keep in full force and effect during the Term, (a) insurance against loss or damage by fire, and such other risks and hazards as are insurable under then available standard forms of “all risk” insurance policies with extended coverage, to Tenant’s Property and Tenant’s Alterations for the full insurable value thereof or on a replacement cost basis; (b) Workers’ Compensation Insurance, as required by law; (c) New York Disability Benefits Law Policy; and (d) such other insurance in such amounts as Landlord, any Mortgagee or Lessor may reasonably require from time to time. All insurance required to be carried by Tenant pursuant to the terms of this Lease shall be effected under valid and enforceable policies issued by reputable and independent insurers permitted to do business in the State of New York, and rated in Best’s Insurance Guide, or any successor thereto (or if there be none, an organization having a national reputation) as having a Best’s Rating” of “A-” and a “Financial Size Category” of at least “XI” or if such ratings are not then in effect, the equivalent thereof.

Section 10.2 (a) The parties hereto do hereby waive, any and all rights of recovery against the other, or against the officers, employees, partners, agents and representatives of the other, for loss of or damage to the property of the waiving party to the extent such loss or damage is insured against under any insurance policy carried by Landlord or

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Tenant hereunder. In addition, the parties hereto shall procure an appropriate clause in, or endorsement on, any fire or extended coverage insurance covering the Premises, the Building and personal property, fixtures and equipment located thereon or therein, pursuant to which the insurance companies waive subrogation or consent to a waiver of right of recovery and subject to obtaining such clauses or endorsements of waiver of subrogation or consent to a waiver of right of recovery, hereby agree not to make any claim against or seek to recover from the other for any loss or damage to its property or the property of others resulting from fire or other hazards covered by such fire and extended coverage insurance; provided, however, that the release, discharge, exoneration and covenant not to sue herein contained shall be limited by and coextensive with the terms and provisions of the waiver of subrogation clause or endorsements or clauses or endorsements consenting to a waiver of right of recovery. If the payment of an additional premium is required for the inclusion of such waiver of subrogation or consent to waiver provision, each party shall advise the other of the amount of any such additional premiums and the other party at its own election may, but shall not be obligated to, pay the same. If such other party shall not elect to pay such additional premium, the first party shall not be required to obtain such waiver of subrogation or consent to waiver provision. Tenant acknowledges that Landlord shall not carry insurance on and shall not be responsible for damage to, Tenant’s Alterations (if any) or Tenant’s Property, and that Landlord shall not carry insurance against, or be responsible for any loss suffered by Tenant due to, interruption of Tenant’s business.

(b) As to each party hereto, provided such party’s right of full recovery under the applicable insurance policy is not adversely affected, such party hereby releases the other (its servants, agents, contractors, employees and invitees) with respect to any claim (including a claim for negligence) which it might otherwise have against the other party for loss, damages or destruction of the type covered by such insurance with respect to its property by fire or other casualty i.e. in the case of Landlord, as to the Building, and, in the case of Tenant, as to Tenant’s Property and Tenant’s Alterations (including rental value or business interruption, as the case may be) occurring during the Term of this Lease.

Section 10.3 On or prior to the Commencement Date, Tenant shall deliver to Landlord appropriate certificates of insurance required to be carried by Tenant pursuant to this Article 10, including evidence of waivers of subrogation required pursuant to Section 10.2. Evidence of each renewal or replacement of a policy shall be delivered by Tenant to Landlord at least twenty (20) days prior to the expiration of such policy.

ARTICLE 11. DESTRUCTION OF THE PREMISES; PROPERTY LOSS OR DAMAGE

Section 11.1 (a) If the Premises shall be damaged by fire or other casualty, or if the Building shall be so damaged that Tenant shall be deprived of reasonable access to the Premises, Tenant shall give prompt notice thereof to Landlord, and the damage shall be repaired by and at the expense of Landlord to substantially the condition prior to the damage, including Tenant’s Alterations, but excluding Tenant’s Property. Until such repairs shall be substantially completed, Fixed Rent and Additional Rent shall, so long as Tenant shall not be in default beyond applicable grace or notice provisions in the payment or performance of its obligations under this Section 11.1, be reduced in the proportion which the area of the part of the Premises which is neither usable nor used by Tenant bears to the total area of the Premises. Tenant shall

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pay to Landlord all proceeds of insurance policies covering Tenant’s Alterations, and such proceeds shall be used by Landlord in the repair of Tenant’s Alterations. Landlord shall have no obligation to repair any damage to, or to replace, any of Tenant’s Property.

(b) Concurrently with the collection of any insurance proceeds attributable to damage to Tenant’s Alterations (or the payment by the Tenant to Landlord of an amount equal to such insurance proceeds, pending collection of such proceeds from its insurer), and as a condition precedent to Landlord’s obligation to commence those repairs to Tenant’s Alterations required to be performed by Landlord pursuant to this Section 11.1, Tenant shall pay to Landlord (i) the amount of any deductible under the policy insuring Tenant’s Alterations, and (ii) the amount, if any, by which the cost of repairing and restoring Tenant’s Alterations, as estimated by a reputable independent contractor designated by Landlord, exceeds the available insurance proceeds therefor. The amounts due in accordance with the preceding sentence constitute Additional Rent under this Lease and shall be payable by Tenant to Landlord upon demand.

Section 11.2 (a) Anything contained in Section 11.1 to the contrary notwithstanding, if the Premises are totally damaged or are rendered wholly untenantable, and if Landlord shall decide not to restore the Premises, or if the Building shall be so damaged by fire or other casualty that, in Landlord’s opinion, substantial alteration, demolition, or reconstruction of the Building shall be required (whether or not the Premises shall have been damaged or rendered untenantable), then in any of such events, Landlord may, not later than sixty (60) days following the date of the damage, give Tenant a notice in writing terminating this Lease. If this Lease is so terminated, the Term shall expire upon the tenth (10th) day after such notice is given, and Tenant shall vacate the Premises and surrender the same to Landlord. Upon the termination of this Lease under the conditions provided for in this Section 11.2, Tenant’s liability for Fixed Rent and Additional Rent shall cease as of the date of such fire or other casualty, and any prepaid portion of Fixed Rent or Additional Rent for any period after such date shall be refunded by Landlord to Tenant.

(b) If this Lease is terminated pursuant to the provisions of this Article 11, then Landlord shall collect the insurance proceeds of policies providing coverage for Tenant’s Alterations as provided in Section 11.1 (a). Landlord shall retain such proceeds to the extent of sums, if any, advanced by Landlord to Tenant with respect to any of Tenant’s Alterations. The balance of such proceeds, if any, shall be paid to Tenant.

Section 11.3 If the Premises are damaged by fire or other casualty and are rendered wholly untenantable thereby, or if the Building shall be so damaged that Tenant shall be deprived of reasonable access to the Premises, and if Landlord shall elect to restore the Premises, Landlord shall, within sixty (60) days following the date of the damage, cause a contractor or architect selected by Landlord to give notice (the “Restoration Notice”) to Tenant of the date by which such contractor or architect believes the restoration of the Premises shall be substantially completed. If the Restoration Notice shall indicate that the restoration shall not be substantially completed on or before the date which shall be twelve (12) months following the date of such damage or destruction, Tenant shall have the right to terminate this Lease by giving written notice (the “Termination Notice”) to Landlord not later than thirty (30) days following receipt of the Restoration Notice. If Tenant gives a Termination Notice, this Lease shall be deemed cancelled and terminated as of the date of the giving of the Termination Notice as if such date

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were the Expiration Date, and Fixed Rent and Additional Rent shall be apportioned and shall be paid or refunded, as the case may be up to and including the date of such damage or destruction. Notwithstanding anything set forth to the contrary in this Article 11, in the event that a fire or other casualty rendering the Premises wholly untenantable shall occur during the final year of the Term, either Landlord or Tenant may terminate this Lease by giving the other party a Termination Notice as set forth herein.

Section 11.4 This Article 11 constitutes an express agreement governing any case of damage or destruction of the Premises or the Building by fire or other casualty, and Section 227 of the Real Property Law of the State of New York, which provides for such contingency in the absence of an express agreement, and any other law of like nature and purpose now or hereafter in force shall have no application in any such case.

ARTICLE 12. EMINENT DOMAIN

Section 12.1 If (a) all of the floor area of the Premises, or so much thereof as shall render the Premises wholly untenantable or not reasonably sufficient for Tenant to continue the normal and practical operation of its business, shall be acquired or condemned for any public or quasi-public use or purpose, or (b) a portion of the Real Property, not including the Premises, shall be so acquired or condemned, but by reason of such acquisition or condemnation, Tenant no longer has means of access to the Premises, then this Lease and the Term shall end as of the date of the vesting of title with the same effect as if that date were the Expiration Date. In the event of any termination of this Lease and the Term pursuant to the provisions of this Article 12, Fixed Rent and Additional Rent shall be apportioned as of the date of sooner termination and any prepaid portion of Fixed Rent or Additional Rent for any period after such date shall be refunded by Landlord to Tenant.

Section 12.2 In the event of any such acquisition or condemnation of all or any part of the Real Property, Landlord shall be entitled to receive the entire award for any such acquisition or condemnation. Tenant shall have no claim against Landlord or the condemning authority for the value of any unexpired portion of the Term or Tenant’s Alterations, and Tenant hereby expressly assigns to Landlord all of its right in and to any such award. Nothing contained in this Section 12.2 shall be deemed to prevent Tenant from making a separate claim in any condemnation proceedings for the then value of any Tenant’s Property included in such taking and for any moving expenses, provided such award shall be made by the condemning authority in addition to, and shall not result in a reduction of, the award made by it to Landlord.

Section 12.3 If only a part of the Real Property shall be so acquired or condemned then, subject to Section 12.1, this Lease and the Term shall continue in force and effect. If a part of the Premises shall be so acquired or condemned and this Lease and the Term shall not be terminated, Landlord, at Landlord’s expense, shall restore that part of the Premises not so acquired or condemned so as to constitute tenantable Premises. From and after the date of the vesting of title, Fixed Rent and Additional Rent shall be reduced in the proportion which the area of the part of the Premises so acquired or condemned bears to the total area of the Premises immediately prior to such acquisition or condemnation.

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ARTICLE 13. ASSIGNMENT AND SUBLETTING

Section 13.1 Except as otherwise expressly provided herein, Tenant, for itself, its heirs, distributees, executors, administrators, legal representatives, successors and assigns, expressly covenants that it shall not assign, mortgage, pledge, encumber, or otherwise transfer this Lease, nor sublet (nor underlet), nor suffer, nor permit the Premises or any part thereof to be used or occupied by others (whether for desk space, mailing privileges or otherwise), without the prior written consent of Landlord in each instance. If this Lease is assigned, or if the Premises or any part thereof are sublet or occupied by anybody other than Tenant, or if this Lease or the Premises or Tenant’s personal property are encumbered (whether by operation of law or otherwise) without Landlord’s consent, then Landlord may, after default by Tenant, collect rent from the assignee, subtenant or occupant, and apply the net amount collected to Fixed Rent and Additional Rent, but no assignment, subletting, occupancy or collection shall be deemed a waiver by Landlord of the provisions hereof, the acceptance by Landlord of the assignee, subtenant or occupant as a tenant, or a release by Landlord of Tenant from the further performance by Tenant its obligations under this Lease, and Tenant shall remain fully liable therefor. The consent by Landlord to any assignment or subletting shall not in any way be construed to relieve Tenant from obtaining the express consent in writing of Landlord to any further assignment or subletting. In no event shall any permitted subtenant assign or encumber its sublease or further sublet all or any portion of its sublet space, or otherwise suffer or permit the sublet space or any part thereof to be used or occupied by others, without Landlord’s prior written consent in each instance. Any assignment, sublease, mortgage, pledge, encumbrance or transfer in contravention of the provisions of this Article 13 shall be void.

Section 13.2 If Tenant shall, at any time or from time to time, during the Term desire to assign this Lease or sublet all or part of the Premises, Tenant shall give notice (a “Tenant’s Notice”) thereof to Landlord, which Tenant’s Notice shall set forth: (a) with respect to an assignment of this Lease, the date Tenant desires the assignment to be effective and any consideration Tenant would receive under such assignment, (b) with respect to a sublet of all or a part of the Premises (i) the dates upon which Tenant desires the sublease term to commence and expire, (ii) the rental rate and other material business terms upon which Tenant would sublet such premises, and (iii) a description of the Premises showing the portion to be sublet, the effective or commencement date of which shall be not less than sixty (60) nor more than one hundred and eighty (180) days after the giving of such notice, (c) a statement setting forth in reasonable detail the identity of the proposed assignee or subtenant, the nature of its business and its proposed use of the Premises, (d) current financial information with respect to the proposed assignee or subtenant, including its most recent financial report, and (e) a true and complete copy of the proposed assignment or sublease and any other agreements relating thereto. Tenant’s Notice shall be deemed an offer from Tenant to Landlord whereby Landlord (or Landlord’s designee) may, at its option, (I) sublease such space (the “Leaseback Space”) from Tenant upon the terms and conditions set forth in Section 13.4, or terminate the Lease with respect to only the Leaseback Space, or (II) if the proposed transaction is (1) an assignment of this Lease or (2) a subletting of fifty percent (50%) or more of the rentable area of the Premises, terminate this Lease. Said options may be exercised by Landlord by notice given to Tenant at any time within thirty (30) days after Tenant’s Notice has been given by Tenant to Landlord, and during such thirty-day period, Tenant shall not assign this Lease nor sublet such space to any Person other than Landlord.

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Section 13.3 If Landlord exercises its option to terminate this Lease with respect to all or a portion of the Premises pursuant to Section 13.2, then this Lease shall end and expire on the date that such assignment or sublease was to be effective or commence, as the case may be, and the Fixed Rent and Additional Rent due hereunder shall be paid and apportioned to such date. In such event, Landlord and Tenant, upon request of either party, shall enter into an amendment of this Lease ratifying and confirming such total or partial termination, and setting forth appropriate modifications, if any, to the terms and provisions hereof. Following such termination, Landlord shall be free to and shall have no liability to Tenant if Landlord should lease the Premises (or any part thereof) to Tenant’s prospective assignee or subtenant.

Section 13.4 If Landlord exercises its option to sublet the Leaseback Space, such sublease to Landlord or its designee (as subtenant) shall be at a rental rate equal to the product of (i) the lesser of (A) the rental rate per rentable square foot of Fixed Rent and Additional Rent then payable pursuant to this Lease, or (B) the rental rate per rentable square foot of rent and additional rent set forth in Tenant’s Notice, multiplied by (ii) the number of rentable square feet of the Leaseback Space, and shall be for the same term as that of the proposed subletting, and such sublease shall:

(a) be upon such other terms and conditions as are contained in Tenant’s Notice, and be expressly subject to all of the covenants, agreements, terms, provisions and conditions of this Lease, except such as are irrelevant or inapplicable, and except as expressly set forth in this Article 13 to the contrary;

(b) give the subtenant the unqualified and unrestricted right, without Tenant’s permission, to assign such sublease or any interest therein and/or to sublet the space covered by such sublease or any part or parts of such space and to make any and all changes, alterations and improvements in the space covered by such sublease, and if the proposed sublease will result in all or substantially all of the Premises being sublet, grant Landlord or its designee the option to extend the term of such sublease for the balance of the Term of this Lease less one day;

(c) provide that any assignee or further subtenant of Landlord or its designee, may, at Landlord’s option, be permitted to make alterations, decorations and installations in such space or any part thereof and shall also provide in substance that any such alterations, decorations and installations in such space therein made by any assignee or subtenant of Landlord or its designee may be removed, in whole or in part, by such assignee or subtenant, at its option, prior to or upon the expiration or other termination of such sublease; provided, however, that such assignee or subtenant shall, at its expense, repair any damage and injury caused by such removal; and

(d) provide that (i) the parties to such sublease expressly negate any intention that any estate created under such sublease be merged with any other estate held by either of said parties, (ii) any assignment or sublease by Landlord or its designee (as the subtenant) may be for any purpose or purposes that Landlord, in Landlord’s uncontrolled discretion, shall deem suitable or appropriate, (iii) Tenant shall, at Tenant’s expense, at all times provide and permit reasonably appropriate means of ingress to and egress from such space so sublet by Tenant to Landlord or its designee, (iv) Landlord

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may, at Tenant’s expense, make such alterations as may be required or deemed necessary by Landlord to physically separate the subleased space from the balance of the Premises and to comply with any legal or insurance requirements relating to such separation, and (v) that at the expiration of the term of such sublease, Tenant will accept the space covered by such sublease in its then existing condition, subject to the obligations of the subtenant to make such repairs thereto as may be necessary to preserve the premises demised by such sublease in good order and condition.

Section 13.5 (a) If Landlord exercises its option to sublet the Leaseback Space, Landlord shall indemnify and save Tenant harmless from all obligations under this Lease as to the Leaseback Space during the period of time it is so sublet to Landlord, except as to any obligation which arises out of or results from the negligence or willful misconduct of Tenant, or any of its agents, servants or employees.

(b) Performance by Landlord, or its designee, under a sublease of the Leaseback Space shall be deemed performance by Tenant of any similar obligation under this Lease and any default under any such sublease shall not give rise to a default under a similar obligation contained in this Lease nor shall Tenant be liable for any default under this Lease or deemed to be in default hereunder if such default is occasioned by or arises from any act or omission of the tenant under such sublease or is occasioned by or arises from any act or omission of any occupant holding under or pursuant to any such sublease.

(c) Tenant shall have no obligation, at the expiration or earlier termination of the Term, to remove any alteration, installation or improvement made in the Leaseback Space by Landlord (or Landlord’s designee).

(d) Any consent required of Tenant, as Landlord under the sublease, shall be deemed granted if consent with respect thereto is granted by Landlord under this Lease, and any failure of Landlord (or its designee) to comply with the provisions of the sublease other than with respect to the payment of Fixed Rent and Additional Rent to Tenant, shall not constitute a default thereunder or hereunder if Landlord shall have consented to such non-compliance.

Section 13.6 In the event Landlord does not exercise either option provided to it pursuant to Section 13.2, and provided that no Event of Default shall have occurred and be continuing under this Lease as of the time Landlord’s consent is requested by Tenant, Landlord’s consent (which must be in writing and in form and substance satisfactory to Landlord) to the proposed assignment or sublease shall not be unreasonably withheld or delayed; provided, however, that:

(a) Tenant shall have complied with the provisions of Section 13.2 and Landlord shall not have exercised any of its options thereunder within the time permitted therefor;

(b) In Landlord’s judgment, the proposed assignee or subtenant is engaged in a business or activity, and the Premises, or the relevant part thereof, will be used in a manner, which (i) is in keeping with the then standards of the Building, and (ii) does not violate the restrictions set forth in Article 2;

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(c) The proposed assignee or subtenant is a reputable Person with sufficient financial worth considering the responsibility involved, and Landlord has been furnished with evidence thereof reasonably satisfactory to Landlord;

(d) In the event Landlord has space in the Building available for lease, then (i) neither the proposed assignee or subtenant nor any Person which, directly or indirectly, controls, is controlled by, or is under common control with, the proposed assignee or subtenant, is then an occupant of any part of the Building, and (ii) the proposed assignee or subtenant is not a Person (or Affiliate of a Person) with whom Landlord or Landlord’s agent is then, or has been within the previous six (6) month period, negotiating in connection with rental of space in the Building;

(e) The form of the proposed sublease or instrument of assignment shall be reasonably satisfactory to Landlord and shall comply with the applicable provisions of this Article 13, and Tenant shall deliver a true and complete original, fully executed counterpart of such sublease or other instrument to Landlord promptly upon the execution and delivery thereof;

(f) Tenant and its proposed subtenant or assignee, as the case may be, shall execute and deliver to Landlord an agreement, in form and substance reasonably satisfactory to Landlord, setting forth the terms and conditions upon which Landlord shall have granted its consent to such assignment or subletting, and the agreement of Tenant and such subtenant or assignee, as the case may be, to be bound by the provisions of this Article 13;

(g) There shall not be more than five (5) occupants of the Premises (including Tenant);

(h) The amount of the aggregate rent to be paid by the proposed subtenant shall not be less than the then current market rent per rentable square foot for the Premises, determined as though the Premises were vacant, and the rental and other terms and conditions of the sublease shall be substantially the same as those contained in Tenant’s Notice;

(i) Tenant shall reimburse Landlord, as Additional Rent upon demand, for (A) the actual, out-of-pocket costs and expenses incurred by Landlord in connection with the assignment or sublease, including the costs of making investigations as to the acceptability of the proposed assignee or subtenant and the cost of reviewing plans and specifications proposed to be made in connection therewith, and (B) Landlord’s reasonable legal fees and disbursements incurred in connection with the granting of any requested consent and the preparation of Landlord’s written consent to the sublease or assignment;

(j) Tenant shall not have (i) advertised or publicized in any way the availability of the Premises without prior notice of and approval by Landlord, or (ii) listed the Premises for sublease or assignment with a broker, agent or otherwise at a rental rate less than the fixed rent and additional rent at which Landlord is then offering to lease comparable space in the Building;

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(k) The proposed occupancy shall not impose an extra burden upon services to be supplied by Landlord to Tenant, unless Tenant and such proposed subtenant or assignee shall agree with Landlord in writing to pay the costs of such additional services; and

(1) The proposed subtenant or assignee shall not be entitled, directly or indirectly, to diplomatic or sovereign immunity and shall be subject to the service of process in, and the jurisdiction of the courts of New York State.

Except for any sublease by Tenant to Landlord or its designee pursuant to this Article 13, each sublease pursuant to this Section 13.6 shall be subject to all of the covenants, agreements, terms, provisions and conditions contained in this Lease. Notwithstanding any such sublease to Landlord or any such sublease to any other subtenant, or any acceptance of Fixed Rent or Additional Rent by Landlord from any subtenant, Tenant will remain fully liable for the payment of the Fixed Rent and Additional Rent due and to become due hereunder and for the performance of all the covenants, agreements, terms, provisions and conditions contained in this Lease on Tenant’s part to be observed and performed, and for all acts and omissions of any licensee or subtenant or anyone claiming under or through any subtenant which shall be in violation of any of the obligations of this Lease, and any such violation shall be deemed to be a violation by Tenant. If Landlord shall decline to give its consent to any proposed assignment or sublease, or if Landlord shall exercise either of its options under Section 13.2, Tenant shall indemnify, defend and hold harmless Landlord against and from any and all losses, liabilities, damages, costs, and expenses (including reasonable attorneys’ fees and disbursements) resulting from any claims that may be made against Landlord by the proposed assignee or subtenant arising from or in connection with such proposed assignment or subletting, or by any brokers or other Persons (with whom Tenant or its proposed assignee or subtenant may have dealt) claiming a commission or similar compensation in connection with the proposed assignment or sublease.

Section 13.7 In the event that (a) Landlord fails to exercise either of its options under Section 13.2 and consents to a proposed assignment or sublease, and (b) Tenant fails to execute and deliver the assignment or sublease to which Landlord consented within one hundred twenty (120) days after the giving of such consent, then, Tenant shall again comply with all of the provisions and conditions of Section 13.2 before assigning this Lease or subletting all or part of the Premises.

Section 13.8 With respect to each and every sublease authorized by Landlord under the provisions of this Lease, it is further agreed that:

(a) No sublease shall be for a term ending later than one day prior to the Expiration Date of this Lease;

(b) No sublease shall be delivered, and no subtenant shall take possession of the Premises or any part thereof, until an executed counterpart of such sublease has been delivered to Landlord and approved in writing by Landlord; and

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(c) Each sublease shall be subject and subordinate to this Lease and to the matters to which this Lease is or shall be subordinate, and each subtenant by entering into a sublease is deemed to have agreed that in the event of termination, re-entry or dispossession by Landlord under this Lease, Landlord may, at its option, take over all of the right, title and interest of Tenant, as sublandlord, under such sublease, and such subtenant shall, at Landlord’s option, attorn to Landlord pursuant to the then executory provisions of such sublease, except that Landlord shall not (i) be liable for any previous act or omission of Tenant under such sublease, (ii) be subject to any counterclaim, offset or defense, not expressly provided in such sublease, which theretofore accrued to such subtenant against Tenant, (iii) be bound by any previous modification of such sublease or by any previous prepayment of more than one month’s Fixed Rent or of any Additional Rent, or (iv) be obligated to perform any work in the subleased space or to prepare it for occupancy, and in connection with such attornment, the subtenant shall execute and deliver to Landlord any instruments Landlord may reasonably request to evidence and confirm such attornment. Each subtenant or licensee of Tenant shall be deemed, automatically upon and as a condition of its occupying or using the Premises or any part thereof, to have agreed to be bound by the terms and conditions set forth in this Article 13. The provisions of this Article 13 shall be self-operative and no further instrument shall be required to give effect to this provision.

Section 13.9 If Landlord shall consent to any assignment of this Lease or to any sublease, or if Tenant shall enter into any other assignment or sublease permitted hereunder, Tenant shall, in consideration therefor, pay to Landlord, as Additional Rent:

(a) In the case of an assignment, on the effective date of the assignment, an amount equal to (i) all sums and other consideration paid to Tenant by the assignee for or by reason of such assignment (including sums paid for Tenant’s Property, less, in the case of a sale thereof, the then net unamortized or undepreciated cost thereof, determined on the basis of Tenant’s federal income tax returns) less (ii) all expenses reasonably and actually incurred by Tenant on account of brokerage commissions and attorneys’ fees in connection with such assignment; or

(b) In the case of a sublease, an amount equal to (i) all rents, additional charges or other consideration payable to Tenant under the sublease in excess of the Fixed Rent and Additional Rent accruing during the term of the sublease in respect of the subleased space (at the rate per square foot payable by Tenant hereunder) pursuant to the terms hereof (including sums paid for the sale or rental of Tenant’s Property, less, in the case of the sale thereof, the then net unamortized or undepreciated cost thereof, determined on the basis of Tenant’s federal income tax returns) less (ii) all expenses reasonably and actually incurred by Tenant on account of brokerage commissions and attorneys’ fees in connection with such sublease. The sums payable under this clause shall be paid by Tenant to Landlord as Additional Rent as and when payable by the subtenant to Tenant.

Section 13.10 (a) If Tenant is a corporation (but not a public corporation), the provisions of Section 13.1 shall apply to a transfer (by one or more transfer(s)), of a majority of the stock of Tenant as if such transfer of a majority of the stock of Tenant were an assignment of

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this Lease. It is expressly understood that the term “transfer(s)” shall be deemed to include the issuance of new stock which results in a majority of the stock of Tenant being held by Persons which do not hold a majority of the stock of Tenant on the date hereof. The foregoing shall not apply to, and Landlord’s consent shall not be required for, transactions with a corporation or other business entity into or with which Tenant is merged or consolidated or to which substantially all of Tenant’s assets are transferred; provided, however, that (i) such transfer shall have been made for a legitimate independent business purpose and not for the principal purpose of transferring this Lease, (ii) the successor to Tenant shall have a net worth, computed in accordance with generally accepted accounting principles, at least equal to the greater of (A) the net worth of Tenant immediately prior to such merger, consolidation or transfer, or (B) the net worth of Tenant herein named on the date of this Lease, and (iii) proof reasonably satisfactory to Landlord of such net worth shall have been delivered to Landlord at least ten (10) days prior to the effective date of any such transaction.

(b) If Tenant is a partnership, the provisions of Section 13.1 shall apply to a transfer (by one or more transfers) of a majority interest in the partnership, as if such transfer were an assignment of this Lease.

(c) The limitations set forth in this Section 13.10 shall be deemed to apply to subtenant(s), assignee(s) and Guarantor(s) of this Lease, if any, and any transfer by any such Person in violation of this Section 13.10 shall be deemed to be a transfer in violation of Section 13.1.

(d) A modification, amendment or extension of a sublease shall be deemed a sublease for the purposes of Section 13.1, and a takeover agreement shall be deemed a transfer of this Lease for the purposes of Section 13.1.

Section 13.11 Tenant may, without Landlord’s consent, but upon not less than ten (10) days’ prior notice to Landlord, permit any Affiliate of Tenant to sublet all or part of the Premises for any Permitted Use, or assign this Lease to any Affiliate, subject however to compliance with Tenant’s obligations under this Lease. Such sublease shall not be deemed to vest in any such Affiliate any right or interest in this Lease or the Premises nor shall it relieve, release, impair or discharge any of Tenant’s obligations hereunder.

Section 13.12 (a) Any assignment or transfer, whether made with Landlord’s consent pursuant to Section 13.1 or without Landlord’s consent to the extent permitted under Sections 13.10 and 13.11, shall be made only if, and shall not be effective until, the assignee shall execute, acknowledge and deliver to Landlord an agreement in form and substance reasonably satisfactory to Landlord whereby the assignee shall assume the obligations of this Lease on the part of Tenant to be performed or observed from and after the effective date of such assignment or transfer, and whereby the assignee shall agree that the provisions in Section 13.1 shall, notwithstanding such assignment or transfer, continue to be binding upon it in respect of all future assignments and transfers.

(b) The joint and several liability of Tenant and any immediate or remote successor in interest of Tenant and the due performance of the obligations of this Lease on Tenant’s part to be performed or observed shall not be discharged, released or impaired in any

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respect by any agreement or stipulation made by Landlord, or any grantee or assignee of Landlord by way of mortgage or otherwise, extending the time, or modifying any of the obligations of this Lease, or by any waiver or failure of Landlord, or any grantee or assignee of Landlord by way of mortgage or otherwise, to enforce any of the obligations of this Lease.

(c) The listing of any name other than that of Tenant, whether on the doors of the Premises or the Building directory, or otherwise, shall not operate to vest any right or interest in this Lease or in the Premises, nor shall it be deemed to be the consent of Landlord to any assignment or transfer of this Lease or to any sublease of Premises or to the use or occupancy thereof by others. Any such listing shall constitute a privilege extended by Landlord, revocable at Landlord’s will by notice to Tenant, provided that Landlord shall not unreasonably revoke such privilege as to any Affiliate of Tenant, or any subtenant of Tenant or assignee of this Lease approved by Landlord pursuant to this Article 13.

ARTICLE 14. ACCESS TO PREMISES

Section 14.1 Tenant shall permit Landlord, Landlord’s agents and public utilities servicing the Building to erect, use and maintain concealed ducts, pipes and conduits in and through the Premises, provided that Landlord will not thereby reduce the rentable area of the Premises, other than to a de minimis extent. Landlord or Landlord’s agents shall have the right to enter the Premises at all reasonable times upon reasonable prior notice (except no such prior notice shall be required in case of emergency), which notice may be oral, to examine the same, to show them to prospective purchasers, Mortgagees, Lessors or lessees of the Building and their respective agents and representatives or prospective tenants of the Premises, and to make such repairs, alterations, improvements or additions (a) as Landlord may deem necessary or desirable to the Premises or to any other portion of the Building, or (b) which Landlord may elect to perform following Tenant’s failure to make repairs or perform any work which Tenant is obligated to make or perform under this Lease, or (c) for the purpose of complying with Legal Requirements, and Landlord shall be allowed to take all material into and upon the Premises that may be required therefor without the same constituting an eviction or constructive eviction of Tenant in whole or in part and Fixed Rent and Additional Rent will not be abated while said repairs, alterations, improvements or additions are being made, by reason of loss or interruption of business of Tenant, or otherwise.

Section 14.2 If Tenant shall not be present when for any reason entry into the Premises shall be necessary or permissible, Landlord or Landlord’s agents may enter the same without rendering Landlord or such agents liable therefor (if during such entry Landlord or Landlord’s agents shall accord reasonable care to Tenant’s property), and without in any manner affecting this Lease. Nothing herein contained, however, shall be deemed or construed to impose upon Landlord any obligation, responsibility or liability whatsoever for the care, supervision or repair of the Building or any part thereof, other than as herein provided.

Section 14.3 Landlord shall have the right from time to time to alter the Building and, without the same constituting an actual or constructive eviction and without incurring any liability to Tenant therefor, to change the arrangement or location of entrances or passageways, doors and doorways, and corridors, elevators, stairs, toilets, or other public parts of the Building and to change the name, number or designation by which the Building is commonly

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known; provided, however, that Landlord shall not make any permanent alterations which will deny or substantially interfere with Tenant’s access to the Premises from the public areas of the Building. All parts (except surfaces facing the interior of the Premises) of all walls, windows and doors bounding the Premises (including exterior Building walls, exterior core corridor walls, exterior doors and entrances other than doors and entrances solely servicing the Premises), all balconies, terraces and roofs adjacent to the Premises, all space in or adjacent to the Premises used for shafts, stacks, stairways, chutes, pipes, conduits, ducts, fan rooms, heating, air cooling, plumbing and other mechanical facilities, service closets and other Building facilities are not part of the Premises, and Landlord shall have the use thereof, as well as access thereto through the Premises for the purposes of operation, maintenance, alteration and repair. Landlord shall use reasonable efforts to minimize interference with Tenant’s access to and use and occupancy of the Premises in connection with any actions by Landlord permitted under this Section 14.3; provided, however, that Landlord shall have no obligation to employ contractors or labor at overtime or other premium pay rates or to incur any other overtime costs or additional expenses whatsoever.

ARTICLE 15. CERTIFICATE OF OCCUPANCY

Tenant shall not at any time use or occupy the Premises in violation of the certificate of occupancy at such time issued for the Premises or for the Building and in the event that any department of the City or State of New York shall hereafter contend or declare by notice, violation, order or in any other manner whatsoever that the Premises are used for a purpose which is a violation of such certificate of occupancy, Tenant shall, upon five (5) days’ written notice from Landlord or any Governmental Authority, immediately discontinue such use of the Premises. Failure by Tenant to discontinue such use after such notice shall be considered a default in the fulfillment of a material covenant of this Lease and Landlord shall have the right to terminate this Lease immediately, and in addition thereto shall have the right to exercise any and all rights and privileges and remedies given to Landlord by and pursuant to the provisions of Articles 16 and 17.

ARTICLE 16. DEFAULT

Section 16.1 Each of the following events shall be an “Event of Default” hereunder:

(a) if Tenant defaults in the payment when due of any installment of Fixed Rent, or in the payment when due of any Additional Rent, and such default continues for a period of five (5) days after notice thereof from Landlord; provided, however, that if Tenant shall default after such notice in the timely payment of Fixed Rent or Additional Rent, and any such Event of Default shall occur more than three (3) times in any period of 12 months, then, notwithstanding that such Events of Default shall have each been cured within the applicable period provided above, upon any further similar default, Landlord may serve a three days’ notice of termination upon Tenant without affording to Tenant an opportunity to cure such further default; or

(b) if Tenant’s interest in this Lease is transferred in violation of Article 13; or

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(c) if the Premises or a substantial portion thereof becomes permanently vacant or abandoned; or

(d) (i) if Tenant or any Guarantor admits in writing its inability to pay its debts as they become due; or

(ii) if Tenant or any Guarantor commences or institutes any case, proceeding or other action (A) seeking relief as a debtor, or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property; or

(iii) if Tenant or any Guarantor makes a general assignment for the benefit of creditors; or

(iv) if any case, proceeding or other action is commenced or instituted against Tenant or any Guarantor (A) seeking to have an order for relief entered against it as debtor or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property, which either (A) results in any such entry of an order for relief, adjudication of bankruptcy or insolvency or such an appointment or the issuance or entry of any other order having a similar effect or (B) remains undismissed for a period of one hundred twenty (120) days; or

(v) if any case, proceeding or other action is commenced or instituted against Tenant or any Guarantor seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its property which results in the entry of an order for any such relief which has not been vacated, discharged, or stayed or bonded pending appeal within one hundred twenty (120) days from the entry thereof; or

(vi) if Tenant or any Guarantor takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clauses (ii), (iii), (iv) or (v) of this Subsection 16.1(d); or

(vii) if a trustee, receiver or other custodian is appointed for any substantial part of the assets of Tenant or any Guarantor, which appointment is not vacated or effectively stayed within seven (7) Business Days, or if any such vacating or stay does not thereafter remain in effect; or

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(e) if Tenant defaults in the observance or performance of any other term, covenant or condition of this Lease on Tenant’s part to be observed or performed and Tenant fails to remedy such default within thirty (30) days after notice by Landlord to Tenant of such default, or, if such default is of such a nature that it cannot be completely remedied within said period of thirty (30) days, if Tenant fails to commence to remedy such default within such thirty-day period, or fails thereafter to diligently prosecute to completion all steps necessary to remedy such default;

(f) if Tenant or any Affiliate of Tenant defaults beyond applicable grace and notice periods in the payment of any fixed rent or additional rent under any other lease of space in the Building, or if any such lease is terminated by Landlord as a result of a default by the tenant thereunder;

(g) if Tenant fails to deliver the Replacement Guaranty (as defined in Section 29.1), duly executed and acknowledged by Successor, within ten (10) Business Days after the Effective Date; or

(h) if any Guarantor defaults beyond applicable grace and notice periods in the payment or performance of any of its obligations under any Guaranty.

Section 16.2 (a) If an Event of Default occurs, Landlord may at any time thereafter give written notice to Tenant stating that this Lease and the Term shall expire and terminate on the date specified in such notice, which date shall not be less than seven (7) days after the giving of such notice. If Landlord gives such notice, this Lease and the Term and all rights of Tenant under this Lease shall expire and terminate as if the date set forth in such notice were the Fixed Expiration Date and Tenant immediately shall quit and surrender the Premises, but Tenant shall remain liable as hereinafter provided. Anything contained herein to the contrary notwithstanding, if such termination shall be stayed by order of any court having jurisdiction over any proceeding described in Section 16.1(d), or by federal or state statute, then, following the expiration of any such stay, or if the trustee appointed in any such proceeding, Tenant or Tenant as debtor-in-possession shall fail to assume Tenant’s obligations under this Lease within the period prescribed therefor by law or within one hundred twenty (120) days after entry of the order for relief or as may be allowed by the court, or if said trustee, Tenant or Tenant as debtor-in-possession shall fail to provide adequate protection of Landlord’s right, title and interest in and to the Premises or adequate assurance of the complete and continuous future performance of Tenant’s obligations under this Lease, Landlord, to the extent permitted by law or by leave of the court having jurisdiction over such proceeding, shall have the right, at its election, to terminate this Lease on seven (7) days’ notice to Tenant, Tenant as debtor-in-possession or said trustee and upon the expiration of said seven (7) day period this Lease shall cease and expire as set forth above and Tenant, Tenant as debtor-in-possession or said trustee shall immediately quit and surrender the Premises as aforesaid.

Section 16.3 If, at any time, (a) Tenant shall comprise two (2) or more Persons, (b) Tenant’s obligations under this Lease shall have been guaranteed by any Person other than Tenant, or (c) Tenant’s interest in this Lease shall have been assigned, the word “Tenant,” as used in Section 16.1(d), shall be deemed to mean any one or more of the Persons primarily or secondarily liable for Tenant’s obligations under this Lease. Any monies received by Landlord

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from or on behalf of Tenant during the pendency of any proceeding of the types referred to in Section 16.1(d) shall be deemed paid as compensation for the use and occupation of the Premises and the acceptance of any such compensation by Landlord shall not be deemed an acceptance of Fixed Rent and/or Additional Rent or a waiver on the part of Landlord of any rights under this Lease.

ARTICLE 17. REMEDIES AND DAMAGES

Section 17.1 (a) If an Event of Default shall occur, and this Lease and the Term shall expire and come to an end as provided in Article 16:

(i) Tenant shall quit and peacefully surrender the Premises to Landlord, and Landlord and its agents may immediately, or at any time after such Event of Default or after the date upon which this Lease and the Term shall expire and come to an end, re-enter the Premises or any part thereof, without notice, either by summary proceedings, or by any other applicable action or proceeding, or by legal force or other legal means (without being liable to indictment, prosecution or damages therefor), and may repossess the Premises and dispossess Tenant and any other Persons from the Premises and remove any and all of their property and effects from the Premises; and

(ii) Landlord, at Landlord’s option, may relet the whole or any part or parts of the Premises from time to time, either in the name of Landlord or otherwise, to such tenant or tenants, for such term or terms ending before, on or after the Expiration Date, at such rental or rentals and upon such other conditions, which may include concessions and free rent periods, as Landlord, in its sole discretion, may determine; provided, however, that Landlord shall have no obligation to relet the Premises or any part thereof and shall in no event be liable for refusal or failure to relet the Premises or any part thereof, or, in the event of any such reletting, for refusal or failure to collect any rent due upon any such reletting, and no such refusal or failure shall operate to relieve Tenant of any liability under this Lease or otherwise affect any such liability, and Landlord, at Landlord’s option, may make such repairs, replacements, alterations, additions, improvements, decorations and other physical changes in and to the Premises as Landlord, in its sole discretion, considers advisable or necessary in connection with any such reletting or proposed reletting, without relieving Tenant of any liability under this Lease or otherwise affecting any such liability.

(b) Tenant hereby waives the service of any notice of intention to re-enter or to institute legal proceedings to that end which may otherwise be required to be given under any present or future law. Tenant, on its own behalf and on behalf of all Persons claiming through or under Tenant, including all creditors, does further hereby waive any and all rights which Tenant and all such Persons might otherwise have under any present or future law to redeem the Premises, or to re-enter or repossess the Premises, or to restore the operation of this Lease, after (i) Tenant shall have been dispossessed by a judgment or by warrant of any court or judge, (ii) any re-entry by Landlord, or (iii) any expiration or termination of this Lease and the Term, whether such dispossess, re-entry, expiration or termination shall be by operation of law or pursuant to the provisions of this Lease. The words “re-enter,” re-entry” and “re-entered” as used in this Lease shall not be deemed to be restricted to their technical legal meanings. In the event

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of a breach or threatened breach by Tenant, or any Persons claiming through or under Tenant, of any term, covenant or condition of this Lease, Landlord shall have the right to enjoin such breach and the right to invoke any other remedy allowed by law or in equity as if re-entry, summary proceedings and other special remedies were not provided in this Lease for such breach. The rights to invoke the remedies hereinbefore set forth are cumulative and shall not preclude Landlord from invoking any other remedy allowed at law or in equity.

Section 17.2 (a) If this Lease and the Term shall expire and come to an end as provided in Article 16, or by or under any summary proceeding or any other action or proceeding, or if Landlord shall re-enter the Premises as provided in Section 17.1, or by or under any summary proceeding or any other action or proceeding, then, in any of such events:

(i) Tenant shall pay to Landlord all Fixed Rent and Additional Rent payable under this Lease by Tenant to Landlord to the date upon which this Lease and the Term shall have expired and come to an end or to the date of re-entry upon the Premises by Landlord, as the case may be;

(ii) Tenant also shall be liable for and shall pay to Landlord, as damages, any deficiency (the “Deficiency”) between (A) Fixed Rent and Additional Rent for the period which otherwise would have constituted the unexpired portion of the Term (conclusively presuming the Additional Rent for each year thereof to be the same as was payable for the year immediately preceding such termination or re-entry), and (B) the net amount, if any, of rents collected under any reletting effected pursuant to the provisions of Section 17.1(a)(ii) for any part of such period (first deducting from the rents collected under any such reletting all of Landlord’s expenses in connection with the termination of this Lease, Landlord’s re-entry upon the Premises and with such reletting including all repossession costs, brokerage commissions, legal expenses, attorneys’ fees and disbursements, alteration costs and other expenses of preparing the Premises for such reletting). Tenant shall pay the Deficiency in monthly installments on the days specified in this Lease for payment of installments of Fixed Rent, and Landlord shall be entitled to recover from Tenant each monthly Deficiency as the same shall arise. No suit to collect the amount of the Deficiency for any month shall prejudice Landlord’s right to collect the Deficiency for any subsequent month by a similar proceeding; and

(iii) whether or not Landlord shall have collected any monthly Deficiency as aforesaid, Landlord shall be entitled to recover from Tenant, and Tenant shall pay to Landlord, on demand, in lieu of any further Deficiency as and for liquidated and agreed final damages, a sum equal (A) to the amount by which the Fixed Rent and Additional Rent for the period which otherwise would have constituted the unexpired portion of the Term (conclusively presuming the Additional Rent for each year thereof to be the same as was payable for the year immediately preceding such termination or re-entry) exceeds (B) the then fair and reasonable rental value of the Premises, including Additional Rent for the same period, both discounted to present value at the rate of four percent (4%) per annum less (C) the aggregate amount of Deficiencies previously collected by Landlord pursuant to the provisions of Section 17.2(a)(ii) for the same period. If, before presentation of proof of such liquidated damages to any court, commission or tribunal, Landlord shall have relet the Premises or any part thereof for the

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period which otherwise would have constituted the unexpired portion of the Term, or any part thereof, the amount of net rents collected in connection with such reletting shall be deemed, prima facie, to be the fair and reasonable rental value for the part or the whole of the Premises so relet during the term of the reletting.

(b) If Landlord shall relet the Premises, or any part thereof, together with other space in the Building, the net rents collected under any such reletting and the expenses of any such reletting shall be equitably apportioned for the purposes of this Section 17.2. Tenant shall in no event be entitled to any rents collected or payable under any reletting, whether or not such rents shall exceed the Fixed Rent reserved in this Lease. Nothing contained in Article 16 or this Article 17 shall be deemed to limit or preclude the recovery by Landlord from Tenant of the maximum amount allowed to be obtained as damages by any statute or rule of law, or of any sums or damages to which Landlord may be entitled in addition to the damages set forth in this Section 17.2.

ARTICLE 18. FEES AND EXPENSES

Section 18.1 If an Event of Default shall occur under this Lease or if Tenant shall do or permit to be done any act or thing upon the Premises which would cause Landlord to be in default under any Superior Lease or Mortgage, or if Tenant shall fail to comply with its obligations under this Lease and the preservation of property or the safety of any tenant, occupant or other person is threatened, Landlord may, after reasonable prior notice to Tenant except in an emergency, perform the same for the account of Tenant or make any expenditure or incur any obligation for the payment of money for the account of Tenant. All amounts expended by Landlord in connection with the foregoing, including reasonable attorneys’ fees and disbursements in instituting, prosecuting or defending any action or proceeding or recovering possession, and the cost thereof, with interest thereon at the Default Rate, shall be deemed to be Additional Rent hereunder and shall be paid by Tenant to Landlord within ten (10) days of rendition of any bill or statement to Tenant therefor.

Section 18.2 If Tenant shall fail to pay any installment of Fixed Rent and/or Additional Rent when due, Tenant shall pay to Landlord, in addition to such installment of Fixed Rent and/or Additional Rent, as the case may be, as a late charge and as Additional Rent, a sum equal to interest at the Default Rate on the amount unpaid, computed from the date such payment was due to and including the date of payment.

ARTICLE 19. NO REPRESENTATIONS BY LANDLORD

Except as expressly set forth in this Lease, Landlord and Landlord’s agents have made no warranties, representations, statements or promises with respect to (a) the rentable and usable areas of the Premises or the Building, (b) the amount of any current or future Labor Rates or Taxes, (c) the compliance with applicable Requirements of the Premises or the Building, or (d) the suitability of the Premises for any particular use or purpose. No rights, easements or licenses are acquired by Tenant under this Lease, by implication or otherwise, except as expressly set forth herein. This Lease (including any Exhibits referred to herein and all supplementary agreements provided for herein) contains the entire agreement between the parties and all understandings and agreements previously made between Landlord and Tenant are

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merged in this Lease, which alone fully and completely expresses their agreement. Tenant is entering into this Lease after full investigation, and is not relying upon any statement or representation made by Landlord not embodied in this Lease.

ARTICLE 20. END OF TERM

Section 20.1 Upon the expiration or other termination of this Lease, Tenant shall quit and surrender to Landlord the Premises, vacant, broom-clean, in good order and condition, ordinary wear and tear and damage for which Tenant is not responsible under the terms of this Lease excepted, and Tenant shall remove all of Tenant’s Property and the Designated Alterations from the Premises as required under Section 3.3, and this obligation shall survive the expiration or sooner termination of the Term. If the last day of the Term or any renewal thereof falls on Saturday or Sunday, this Lease shall expire on the Business Day immediately preceding. Tenant expressly waives, for itself and for any Person claiming through or under Tenant, any rights which Tenant or any such Person may have under the provisions of Section 2201 of the New York Civil Practice Law and Rules and of any successor law of like import then in force in connection with any holdover summary proceedings which Landlord may institute to enforce the foregoing provisions of this Article 20.

Section 20.2 Tenant acknowledges that Tenant or any subtenant of Tenant remaining in possession of the Premises after the expiration or earlier termination of this Lease would create an unusual hardship for Landlord and for any prospective tenant. Tenant, therefore, covenants that if for any reason Tenant or any subtenant of Tenant shall fail to vacate and surrender possession of the Premises or any part thereof on or before the expiration or earlier termination of this Lease and the Term, then Tenant’s continued possession of the Premises shall be as a “month-to-month” tenant, during which time, without prejudice and in addition to any other rights and remedies Landlord may have hereunder or at law, Tenant shall pay to Landlord for each month and for each portion of any month during which Tenant holds over, an amount equal to (i) one hundred fifty percent (150%) of the total monthly amount of Fixed Rent and Additional Rent payable hereunder immediately prior to such termination (the “Existing Rent”) for the first thirty (30) days during which Tenant holds over, and (ii) two hundred percent (200%) of the Existing Rent thereafter. The provisions of this Section 20.2 shall not in any way be deemed to (a) permit Tenant to remain in possession of the Premises after the Expiration Date or sooner termination of this Lease or (b) imply any right of Tenant to use or occupy the Premises upon expiration or termination of this Lease and the Term, and no acceptance by Landlord of payments from Tenant after the Expiration Date or sooner termination of the Term shall be deemed to be other than on account of the amount to be paid by Tenant in accordance with the provisions of this Article 20. Tenant’s obligations under this Article shall survive the expiration or earlier termination of this Lease.

ARTICLE 21. QUIET ENJOYMENT

Provided no Event of Default has occurred and is continuing, Tenant may peaceably and quietly enjoy the Premises without hindrance by Landlord or any Person lawfully claiming through or under Landlord, subject, nevertheless, to the terms and conditions of this Lease.

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ARTICLE 22. NO WAIVER; NON-LIABILITY

Section 22.1 No act or thing done by Landlord or Landlord’s agents during the Term shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept such surrender shall be valid unless in writing and signed by Landlord. No employee of Landlord or of Landlord’s agents shall have any power to accept the keys of the Premises prior to the termination of this Lease. The delivery of keys to any employee of Landlord or of Landlord’s agents shall not operate as a termination of this Lease or a surrender of the Premises. Any Building employee to whom any property shall be entrusted by or on behalf of Tenant shall be deemed to be acting as Tenant’s agent with respect to such property and, subject to the provisions of Section 10.2, neither Landlord nor its agents shall be liable for any damage to property of Tenant or of others entrusted to employees of the Building, nor for the loss of or damage to any property of Tenant by theft or otherwise.

Section 22.2 The failure of Landlord to seek redress for violation of, or to insist upon the strict performance of, any covenant or condition of this Lease, or any of the Rules and Regulations set forth or hereafter adopted by Landlord, shall not prevent a subsequent act, which would have originally constituted a violation, from having all of the force and effect of an original violation. The receipt by Landlord of Fixed Rent and/or Additional Rent with knowledge of the breach of any covenant of this Lease shall not be deemed a waiver of such breach. The failure of Landlord to enforce any of the Rules and Regulations set forth, or hereafter adopted, against Tenant or any other tenant in the Building shall not be deemed a waiver of any such Rules and Regulations. Landlord shall not enforce the Rules and Regulations against Tenant in a discriminatory manner. No provision of this Lease shall be deemed to have been waived by Landlord, unless such waiver be in writing signed by Landlord. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly Fixed Rent or any Additional Rent shall be deemed to be other than on account of the next installment of Fixed Rent or Additional Rent, as the case may be, or as Landlord may elect to apply same, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as Fixed Rent or Additional Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Fixed Rent or Additional Rent or pursue any other remedy in this Lease provided. Any executory agreement hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of this Lease in whole or in part unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification, discharge or abandonment is sought. All references in this Lease to the consent or approval of Landlord shall be deemed to mean the written consent or approval of Landlord and no consent or approval of Landlord shall be effective for any purpose unless such consent or approval is set forth in a written instrument executed by Landlord.

Section 22.3 (a) Neither Landlord nor its agents shall be liable for any injury or damage to persons or property or interruption of Tenant’s business resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or snow or leaks from any part of the Building or from the pipes, appliances or plumbing works or from the roof, street or subsurface or from any other place or by dampness or by any other cause of whatsoever nature; nor shall Landlord or its agents be liable for any such damage caused by other tenants or persons in the Building or caused by construction of any private, public or quasi-public work; nor shall Landlord be liable

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for any latent defect in the Premises or in the Building (except that Landlord shall be required to repair the same to the extent provided in Article 5). Nothing in the foregoing shall affect any right of Landlord to the indemnity from Tenant to which Landlord may be entitled under Article 28 in order to recoup for payments made to compensate for losses of third parties.

(b) If, at any time or from time to time, any windows of the Premises are temporarily closed, darkened or bricked-up for any reason whatsoever, or any of such windows are permanently closed, darkened or bricked-up if required by any Legal Requirement or related to any construction upon property adjacent to the Real Property by parties other than Landlord, Landlord shall not be liable for any damage Tenant may sustain thereby and Tenant shall not be entitled to any compensation therefor nor abatement of Fixed Rent or Additional Rent nor shall the same release Tenant from its obligations hereunder nor constitute an eviction or constructive eviction of Tenant from the Premises.

ARTICLE 23. WAIVER OF TRIAL BY JURY

The respective parties hereto shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other (except for personal injury or property damage) on any matters whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy of the Premises, or for the enforcement of any remedy under any statute, emergency or otherwise. If Landlord commences any summary proceeding against Tenant, Tenant will not interpose any counterclaim of whatever nature or description in any such proceeding (unless failure to impose such counterclaim would preclude Tenant from asserting in a separate action the claim which is the subject of such counterclaim), and will not seek to consolidate such proceeding with any other action which may have been or will be brought in any other court by Tenant.

ARTICLE 24. INABILITY TO PERFORM

This Lease and the obligation of Tenant to pay Fixed Rent and Additional Rent hereunder and perform all of the other covenants and agreements hereunder on the part of Tenant to be performed will not be affected, impaired or excused because Landlord is unable to fulfill any of its obligations under this Lease expressly or impliedly to be performed by Landlord or because Landlord is unable to make, or is delayed in making any repairs, additions, alterations, improvements or decorations or is unable to supply or is delayed in supplying any equipment or fixtures, if Landlord is prevented or delayed from so doing by reason of strikes or labor troubles or by accident, or by any cause whatsoever reasonably beyond Landlord’s control, including laws, governmental preemption in connection with a national emergency or by reason of any Legal Requirements or by reason of the conditions of supply and demand which have been or are affected by war or other emergency (“Unavoidable Delays”).

ARTICLE 25. BILLS AND NOTICES

Except as otherwise expressly provided in this Lease, any bills, statements, consents, notices, demands, requests or other communications given or required to be given under this Lease shall be in writing and shall be deemed sufficiently given or rendered if

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delivered by hand (against a signed receipt), sent by a nationally recognized overnight courier service, or sent by registered or certified mail (return receipt requested) and addressed:

if to Tenant, (a) at Tenant’s address at the Premises, with a copy to: Global Crossing Telecommunications, Inc., 1080 Pittsford-Victor Road, Pittsford, New York 14534, Attention: Real Estate Group, with a copy to: Global Crossing Ltd., 200 Park Avenue, Florham Park, New Jersey 07932, Attention: Office of the General Counsel, or (b) at any place where Tenant or any agent or employee or Tenant may be found if mailed subsequent to Tenant’s abandoning or surrendering the Premises; or

if to Landlord, as follows: 111 Chelsea LLC, c/o Taconic Investment Partners LLC, 111 Eighth Avenue, New York, New York 10011, Attention: Mr. Paul Pariser, with a copy to: Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022, Attention: Eric Asmundsson, Esq.

Any such bill, statement, consent, notice, demand, request or other communication given as provided in this Article 25 shall be deemed to have been rendered or given (i) on the date when it shall have been hand delivered, (ii) three (3) Business Days from the date when it shall have been mailed, or (iii) one (1) Business Day from the date when it shall have been sent by overnight courier service.

ARTICLE 26. RULES AND REGULATIONS

Landlord reserves the right, from time to time, to adopt additional reasonable and non-discriminatory Rules and Regulations and to amend the Rules and Regulations then in effect. Tenant and Tenant’s contractors, employees, agents, and licensees shall comply with the Rules and Regulations, as so supplemented or amended. Nothing contained in this Lease shall be construed to impose upon Landlord any duty or obligation to enforce the Rules and Regulations or terms, covenants or conditions in any other lease against any other tenant, and Landlord shall not be liable to Tenant for violation of the same by any other tenant, its employees, agents, visitors or licensees. Landlord will not discriminate against Tenant in its enforcement of the Rules and Regulations. If there shall be any inconsistencies between this Lease and the Rules and Regulations, the provisions of this Lease shall prevail.

ARTICLE 27. BROKER

Section 27.1 Each of Landlord and Tenant represents and warrants to the other that it has not dealt with any broker in connection with this Lease other than CB/Richard Ellis, Inc. (“Broker”) and that to the best of its knowledge and belief, no other broker, finder or similar Person procured or negotiated this Lease or is entitled to any fee or commission in connection herewith. Landlord has agreed to pay a commission to Broker pursuant to a separate written agreement.

Section 27.2 Each of Landlord and Tenant shall indemnify, defend, protect and hold the other party harmless from and against any and all losses, liabilities, damages, claims, judgments, fines, suits, demands, costs, interest and expenses of any kind or nature (including reasonable attorneys’ fees and disbursements) which the indemnified party may incur by reason of any claim of or liability to any broker, finder or like agent (other than Broker) arising out of

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any dealings claimed to have occurred between the indemnifying party and the claimant in connection with this Lease, or the above representation being false. The provisions of this Article 27 shall survive the expiration or earlier termination of the Term of this Lease.

ARTICLE 28. INDEMNITY

Section 28.1 Tenant shall not do or permit any act or thing to be done upon the Premises which may subject Landlord to any liability or responsibility for injury, damages to persons or property or to any liability by reason of any violation of law or of any Legal Requirement, but shall exercise such control over the Premises as to fully protect Landlord against any such liability. Tenant shall defend, indemnify and save harmless Landlord from and against (a) all claims of whatever nature against Landlord arising from any act, omission or negligence of Tenant, its contractors, licensees, agents, servants, employees, invitees or visitors, (b) all claims against Landlord arising from any accident, injury or damage whatsoever caused to any person or to the property of any person and occurring during the Term in or about the Premises, except to the extent resulting from the gross negligence or willful misconduct of Landlord, its employees, agents, or contractors, (c) all claims against Landlord arising from any accident, injury or damage occurring outside of the Premises but anywhere within or about the Real Property, where such accident, injury or damage results or is claimed to have resulted from an act, omission or negligence of Tenant or Tenant’s agents, employees, and (d) any breach, violation or nonperformance of any covenant, condition or agreement in this Lease set forth and contained on the part of Tenant to be fulfilled, kept, observed and performed. This indemnity and hold harmless agreement shall include indemnity from and against any and all liability, fines, suits, demands, costs and expenses of any kind or nature (including attorneys’ fees and disbursements) incurred in or in connection with any such claim or proceeding brought thereon, and the defense thereof.

Section 28.2 Tenant agrees to defend, indemnify and hold harmless Landlord and any partner, shareholder, director, officer, principal, employee or agent, directly and indirectly, of Landlord, from and against all obligations (including removal and remedial actions), losses, claims, suits, judgments, liabilities, penalties, damages (including consequential and punitive damages), costs and expenses (including attorneys’ and consultants’ fees and expenses) of any kind or nature whatsoever that may at any time be incurred by, imposed on or asserted against Landlord or any such party directly or indirectly based on, or arising or resulting from (a) the actual or alleged presence of Hazardous Materials on the Premises or in the Building which is caused or permitted by Tenant, and (b) any Environmental Claim relating in any way to Tenant’s operation or use of the Premises or the Building. The provisions of this Section 28.2 shall survive the expiration or sooner termination of this Lease.

ARTICLE 29. GUARANTY

Section 29.1 On or before the date of execution and delivery of this Lease, Tenant will deliver to Landlord the Guaranty, in the form of Exhibit C to this Lease. If such date is prior to the Effective Date, then the Guarantor shall be Global Crossing Holdings Ltd.; provided that within ten (10) Business Days after the Effective Date, Tenant shall cause Successor to execute and deliver to Landlord a replacement Guaranty, in the form of Exhibit C (the “Replacement Guaranty”), along with proof, reasonably satisfactory to Landlord, that

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Successor is the successor to all of the assets and business of Global Crossing Holdings Ltd. Time shall be of the essence as to Tenant’s obligation to deliver the Replacement Guaranty within ten (10) Business Days after the Effective Date.

ARTICLE 30. SECURITY DEPOSIT

Section 30.1 Tenant has deposited with Landlord the sum of Five Hundred Thousand and 00/100 Dollars ($500,000.00) as security for the full and faithful performance of all of the obligations of Tenant under this Lease (all or any part of such amount, the “Security Deposit”). If an Event of Default shall occur under this Lease, Landlord may use, apply or retain all or any part of the Security Deposit for the payment of any Fixed or Additional Rent or any other sum in default or for the payment of any other amount which Landlord may spend or become obligated to spend by reason of such Event of Default, or to compensate Landlord for any other loss, cost or damage which Landlord may suffer by reason of such Event of Default. Tenant shall, within five (5) Business Days after notice from Landlord, deposit with Landlord cash or a letter of credit in an amount sufficient to restore the Security Deposit to the amount then required pursuant to the terms of this Article 30. Tenant’s obligation to make such payment shall be deemed a requirement that Tenant pay an item of Additional Rent, and Tenant’s failure to do so shall be a breach of this Lease. Landlord shall not, unless otherwise required under applicable Law, pay interest to Tenant on the Security Deposit, and if Landlord is required to maintain the Security Deposit in an interest bearing account, Landlord will retain the maximum amount permitted under applicable Laws as a bookkeeping and administrative charge. Tenant shall not assign or encumber any part of the Security Deposit, and no assignment or encumbrance by Tenant of all of any part of the Security Deposit shall be binding upon Landlord, whether made prior to, during, or after the Term. Landlord shall not be required to exhaust its remedies against Tenant or against the Security Deposit before having recourse to any other form of security held by Landlord, and recourse by Landlord to any portion of the Security Deposit shall not affect any remedies of Landlord provided in this Lease or available to Landlord under applicable Laws. So long as no Event of Default shall then have occurred and be continuing, the Security Deposit or any balance thereof shall be returned to Tenant reasonably promptly after the expiration or sooner termination (other than a termination pursuant to Article 16) of the Term and Tenant’s surrender to Landlord of the Premises.

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Section 30.2 Tenant shall use all commercially reasonable efforts, subject to any required consents, approvals or authorizations from the Bankruptcy Court, to replace the cash Security Deposit deposited with Landlord pursuant to Section 30.1 with a clean, irrevocable, non-documentary and unconditional letter of credit (the “Letter of Credit”) issued by and drawn upon any commercial bank, trust company, national banking association or savings and loan association having offices for banking and drawing purposes in the City of New York and which is a member of the New York Clearinghouse Association (the “Issuing Bank”). The Issuing Bank (or its parent company) shall have outstanding unsecured, uninsured and unguaranteed indebtedness, or shall have issued a letter of credit or other credit facility that constitutes the primary security for any outstanding indebtedness (which is otherwise uninsured and unguaranteed), that is then rated, without regard to qualification of such rating by symbols such as “+” or “-” or numerical notation, “Aa” or better by Moody’s Investors Service and “AA” or better by Standard & Poor’s Corporation, and has combined capital, surplus and undivided profits of not less than $500,000,000.00. The Letter of Credit shall have a term of not less than one year, be in form and content satisfactory to Landlord (and substantially as shown on Exhibit F to this Lease), be for the account of Landlord, be in the amount of the Security Deposit then required to be deposited hereunder, and be fully transferable by Landlord to successor owners of the Building without the payment of any fees or charges, it being agreed that if any such fees or charges shall be so imposed, then such fees or charges, shall be paid by Tenant. The Letter of Credit shall provide that it shall be deemed automatically renewed, without amendment, for consecutive periods of one year each thereafter during the Term, unless the Issuing Bank sends notice (the “Non-Renewal Notice”) to Landlord by certified mail, return receipt requested, not less than thirty (30) days prior to the then expiration date of the Letter of Credit that the Issuing bank elects not to have such Letter of Credit renewed. Additionally, the Letter of Credit shall provide that Landlord shall have the right, exercisable at any time after Landlord’s receipt of the Non-Renewal Notice, by sight draft on the Issuing Bank, to receive the monies represented by the existing Letter of Credit and to hold such proceeds pursuant to the terms of this Article 30 as a cash security deposit pending the replacement Letter of Credit. If an Event of Default shall have occurred and be continuing under any provision of this Lease, including the provisions relating to the payment of Fixed Rent and Additional Rent, Landlord may apply or retain the whole or any pan of the cash security so deposited or may notify the Issuing Bank and thereupon receive all the monies represented by the Letter of Credit and use, apply, or retain the whole or any part of such proceeds as provided in this Section 30.2. Any portion of the cash proceeds of the Letter of Credit not so used or applied by Landlord in satisfaction of the obligations of Tenant as to which such Event of Default shall have occurred shall be deposited by Landlord and retained as a cash security deposit as provided in Section 30.1. If Landlord applies or retains any part of the cash security or proceeds of the Letter of Credit, as the case may be, Tenant shall, within five (5) Business Days after written demand, deposit with Landlord the amount so applied or retained so that Landlord shall have the full Security Deposit required pursuant to Section 30.1 on hand at all times during the Term. So long as no Event of Default shall then have occurred and be continuing, the Letter of Credit shall be returned to Tenant after the Expiration Date and after delivery of possession of the Premises to Landlord. In the event of a sale or lease of Landlord’s interest in the Premises, within thirty (30) days of notice of such sale or leasing, Tenant, at Tenant’s expense, shall arrange for the transfer of the Letter of Credit to the new landlord, as designated by Landlord, or have the Letter of Credit reissued in the name of the new landlord, and Landlord shall thereupon be released by Tenant from all liability for the return of the Letter of Credit; provided, however, that if the Letter of Credit is reissued, Landlord shall return the original Letter of Credit issued in Landlord’s name to Tenant.

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ARTICLE 31. RENT MODIFICATIONS

Section 31.1 In consideration of certain transactions associated with the termination of the lease with Prior Tenant, Landlord hereby agrees that, so long as no Event of Default shall have occurred and be continuing under this Lease, Landlord hereby agrees to be responsible for, and Tenant shall not be obligated to pay, a portion of the Fixed Rent payable by Tenant hereunder, in the following amounts during the following periods:

(a) Seven Hundred Thousand Nine Hundred Fifty-Two and 00/100 Dollars ($700,952.00) per annum ($58,412.67 per month) for the period commencing on the Commencement Date and ending on June 30, 2004;

(b) One Hundred Thousand Nine Hundred Fifty-Two and 00/100 Dollars ($100,952.00) per annum ($8,412.67 per month) for the period commencing on July 1, 2004 and ending on December 31, 2004;

(c) During the period commencing on January 1, 2005 and ending on April 30, 2005, Zero and 00/100 Dollars ($0.00);

(d) One Thousand Thirty-Six and 00/100 Dollars ($1,036.00) per annum ($86.33 per month) for the period commencing on May 1, 2005 and ending on December 31, 2008;

(e) During the period commencing on January 1, 2009 and ending on April 30, 2009, Zero and 00/100 Dollars ($0.00); and

(f) One Thousand One Hundred Forty-Eight and 00/100 Dollars ($1,148.00) per annum ($95.67 per month) for the period commencing on May 1, 2009 and ending on the Expiration Date.

Section 31.2 Upon the occurrence and during the continuation of an Event of Default, and following any termination of this Lease as a consequence of any Event of Default, Tenant shall be obligated to pay Fixed Rent in the full amounts set forth in Section 1.1, without giving effect to the provisions of this Section 31.2.

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ARTICLE 32. MISCELLANEOUS

Section 32.1 (a) The obligations of Landlord under this Lease shall not be binding upon Landlord named herein after the sale, conveyance, assignment or transfer by such Landlord (or upon any subsequent landlord after the sale, conveyance, assignment or transfer by such subsequent landlord) of its interest in the Building or the Real Property, as the case may be, and in the event of any such sale, conveyance, assignment or transfer, Landlord shall be and hereby is entirely freed and relieved of all covenants and obligations of Landlord hereunder, and the transferee of Landlord’s interest in the Building or the Real Property, as the case may be, shall be deemed to have assumed all obligations under this Lease. Prior to any such sale, conveyance, assignment or transfer, the liability of Landlord for Landlord’s obligations under this Lease shall be limited to Landlord’s interest in the Real Property and Tenant shall not look to any other property or assets of Landlord or the property or assets of any of the Exculpated Parties (defined below) in seeking either to enforce Landlord’s obligations under this Lease or to satisfy a judgment for Landlord’s failure to perform such obligations.

(b) Notwithstanding anything contained herein to the contrary, Tenant shall look solely to Landlord to enforce Landlord’s obligations hereunder and no partner, shareholder, director, officer, principal, employee or agent, directly or indirectly, of Landlord (collectively, the “Exculpated Parties”) shall be personally liable for the performance of Landlord’s obligations under this Lease. Tenant shall not seek any damages against any of the Exculpated Parties.

Section 32.2 Wherever in this Lease Landlord’s consent or approval is required, if Landlord shall refuse such consent or approval, Tenant in no event shall be entitled to make, nor shall Tenant make, any claim, and Tenant hereby waives any claim, for money damages (nor shall Tenant claim any money damages by way of set-off, counterclaim or defense) based upon any claim or assertion by Tenant that Landlord unreasonably withheld or unreasonably delayed its consent or approval. Tenant’s sole remedy shall be an action or proceeding to enforce any such provision, for specific performance, injunction or declaratory judgment.

Section 32.3 (a) All of the Exhibits attached to this Lease are incorporated in and made a part of this Lease, but in the event of any conflict or inconsistency between the provisions of this Lease and the Exhibits, the provisions of this Lease shall control. As used in this Lease, unless expressly stated to the contrary: (i) the words “include”, “includes”, or “including” shall be deemed to be followed by the words “without limitation”, (ii) personal pronouns shall be deemed to include the other genders and the singular to include the plural, (iii) all references to notices to be given by or to a party shall be deemed to refer to written notices, (iv) all Article, Section and Exhibit references shall be deemed references to the Articles, Sections and Exhibits of this Lease, (v) if a party has agreed in this Lease that it will not unreasonably withhold its consent or approval, such consent or approval shall not be unreasonably conditioned or delayed, (vi) whenever a financial obligation is stated to be at a party’s expense, such obligation shall be at such party’s sole cost and expense, and (vii) when a period of time is stated in this Lease as commencing or ending on specified dates, such period of time shall be deemed (A) inclusive of such stated commencement and ending dates, and (B) to commence at 12:00 a.m. Eastern Time on such stated commencement date and to end at 11:59 p.m. Eastern Time on such stated ending date. The captions used in this Lease are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this Lease nor the intent of any provision hereof.

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(b) This Lease shall be governed in all respects by the laws of the State of New York applicable to agreements executed in and to be performed wholly within said State.

(c) If any term, covenant, condition or provision of this Lease, or the application thereof to any person or circumstance, shall ever be held to be invalid or unenforceable, then in each such event the remainder of this Lease or the application of such term, covenant, condition or provision to any other person or any other circumstance (other than those as to which it shall be invalid or unenforceable) shall not be thereby affected, and each term, covenant, condition and provision hereof shall remain valid and enforceable to the fullest extent permitted by law.

(d) If at the commencement of, or at any time or times during the Term of this Lease, the Fixed Rent and Additional Rent reserved in this Lease shall not be fully collectible by reason of any Legal Requirement, Tenant shall enter into such agreements and take such other steps (without additional expense to Tenant) as Landlord may request and as may be legally permissible to permit Landlord to collect the maximum rents which may from time to time during the continuance of such legal rent restriction be legally permissible (and not in excess of the amounts reserved therefor under this Lease). Upon the termination of such legal rent restriction prior to the expiration of the Term, (i) Fixed Rent and Additional Rent shall become and thereafter be payable hereunder in accordance with the amounts reserved in this Lease for the periods following such termination, and (ii) Tenant shall pay to Landlord, if legally permissible, an amount equal to (A) the items of Fixed Rent and Additional Rent which would have been paid pursuant to this Lease but for such legal rent restriction less (B) the rents paid by Tenant to Landlord during the period or periods such legal rent restriction was in effect.

(e) The covenants, conditions and agreements contained in this Lease shall bind and inure to the benefit of Landlord and Tenant and their respective legal representatives, successors, and, except as otherwise provided in this Lease, their assigns.

Section 32.4 Except as expressly provided to the contrary in this Lease, Tenant agrees that all disputes arising, directly or indirectly, out of or relating to this Lease, and all actions to enforce this Lease, shall be dealt with and adjudicated in the state courts of New York or the Federal courts sitting in New York City; and for that purpose hereby expressly and irrevocably submits itself to the jurisdiction of such courts. Tenant hereby irrevocably appoints the Secretary of the State of New York as its authorized agent upon which process may be served in any such action or proceeding.

Section 32.5 Tenant hereby irrevocably waives, with respect to itself and its property, any diplomatic or sovereign immunity of any kind or nature, and any immunity from the jurisdiction of any court or from any legal process, to which Tenant may be entitled, and agrees not to assert any claims of any such immunities in any action brought by Landlord under or in connection with this Lease. Tenant acknowledges that the making of such waivers, and Landlord’s reliance on the enforceability thereof, is a material inducement to Landlord to enter into this Lease.

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IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this Lease as of the day and year first above written.

LANDLORD:	111 CHELSEA LLC
	By:	Taconic Chelsea Holdings LLC, managing member
		By:	Taconic SL Principals LLC, managing member
			By:	/s/ Paul Pariser
				Paul E. Pariser, Principal
TENANT:	GLOBAL CROSSING TELECOMMUNICATIONS, INC.
	By:	/s/ David J. Showerman
	Name:	David J. Showerman
	Title:	VP, Real Estate

Tenant’s Federal Tax Identification Number:

36-3098226

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EXHIBIT 10.13

EXHIBIT A

FLOOR PLAN OF THE PREMISES

The floor plan that follows is intended solely to identify the general outline of the Premises, and should not be used for any other purpose. All areas, dimensions and locations are approximate, and any physical conditions indicated may not exist as shown.

[DEPICTION OF FLOOR PLAN]

EXHIBIT B

RULES AND REGULATIONS

1. The rights of tenants in the entrances, corridors, elevators of the Building are limited to ingress to and egress from tenants’ premises for tenants and their employees, licenses and invitees, and no tenant shall use, or permit the use of, the entrances, corridors, or elevators for any other purpose. No tenant shall invite to such tenant’s premises, or permit the visit of, persons in such numbers or under such conditions as to interfere with the use and enjoyment of any of the entrances, corridors, elevators and other facilities of the Building by other tenants. Fire exits and stairways are for emergency use only, and shall not be used for any other purposes by the tenants, their employees, licensees or invitees. No tenant shall encumber or obstruct, or permit the encumbrance or obstruction of, any of the sidewalks, entrances, corridors, elevators, fire exits or stairways of the Building. Landlord reserves the right to control and operate the public portions of the Building and the public facilities, as well as facilities furnished for the common use of tenants, in such manner as it reasonably deems best for the benefit of tenants generally.

2. Tenant’s employees shall not loiter around the hallways, stairways, elevators, front, roof or any other part of the Building used in common by the occupants thereof.

3. Tenant shall not alter the exterior appearance of the Building by installing signs, advertisements, notices or other graphics on exterior walls, without prior written permission from Landlord. Similarly, electrical fixtures hung in offices or other spaces along the perimeter of the Building which affect its exterior appearance must be fluorescent and a quality, type, design and bulb color, previously approved in writing by Building management.

4. Subject to Section 11.2 of this Lease, the cost of repairing any damage to the public portions of the Building or the public facilities or to any facilities used in common with other tenants, caused by a tenant or the employees, licensees or invitees of the tenant, shall be paid by such tenant.

5. Except as specifically provided in the Lease, Tenant shall have no right of access to the roof of the Building and shall not install, repair or replace any satellite dish, antennae, fan, air conditioner or other devices on the roof of the Building without the prior written consent of Landlord. Any such device installed without such written consent shall be subject to removal, at Tenant’s expense, without notice, at any time.

6. Exterior signs on doors and any directory tablet must be approved by Landlord, which approval shall not be unreasonably withheld.

7. No awnings or other projections over or around the windows shall be installed by any tenant and only such window blinds as are permitted by Landlord shall be used in any tenant’s premises.

8. No acids, vapors or other materials shall be discharged or permitted to be discharged into the waste lines, vents or flues of the Building. The water and service closets and other plumbing fixtures in or serving any tenant’s premises shall not be used for any purpose other than the purpose for which they were designed or constructed and no sweepings, rubbish, rags, acids or other foreign substances shall be deposited therein. All damages resulting from any misuse of the fixtures shall be borne by the tenant who, or whose servants, employees, agents, visitors or licensees, shall have caused the same.

9. Tenant shall not disturb others. This rule prohibits any noise audible from the hallway, adjoining office suites or outside whether created by musical instruments, radios, television sets, group activities or any other source. Notwithstanding the foregoing, Tenant may hold holiday parties and other parties and receptions in the Premises, provided that Tenant shall not unreasonably disturb any other tenants or other occupants of the Building.

10. All hand trucks used in the Building shall be equipped with rubber tires and side guards.

11. No tenant shall install wires, conduit, sleeves or similar installations in Building shaftways without prior written consent of Landlord, and as Landlord may direct.

12. Each tenant shall, at its expense, provide artificial light in the premises demised to such tenant for Landlord’s agents, contractors and employees while performing janitorial or other cleaning services and making repairs or alterations therein.

13. Tenants shall not permit any cooking or food odors emanating from their demised premises to be detectable in any other portions of the Building.

14. Tenants shall coordinate entrance door locks with the Building’s master lock system. Upon vacating the Building, tenants must return keys to storerooms, offices and toilets or pay replacement costs.

15. All entrance doors in each tenant’s premises shall be left locked when the tenant’s premises are not in use. Entrance doors shall not be left open at any time.

16. Tenants shall not keep pets, bicycles, or other vehicles in their premises without prior written approval by Landlord. Exceptions are made for seeing-eye dogs and conveyances required by handicapped persons.

17. Regular suppliers of outside services must be approved by Building management, which may establish hours or other conditions for entrance to the Building. Such suppliers include vendors of food, spring water, ice, towels, barbering, shoe shining and other products and services.

18. Canvassing, soliciting and peddling of products or services are prohibited in the Building, and tenants shall cooperate with Landlord in attempting to prevent such acts in the Building.

19. Landlord may refuse admission to the Building outside of normal hours to any person not having a pass issued by Landlord or not properly identified, and may require all persons admitted to or leaving the Building outside of normal business hours to register. Tenant’s employees, agents and visitors shall be permitted to enter and leave the Building whenever appropriate arrangements have been previously made between Landlord and Tenant. Each tenant shall be responsible for all persons for whom such person requests such permission and shall be liable to Landlord for all acts of such persons. Any person whose presence in the Building at any time shall, in the reasonable judgment of Landlord, be prejudicial to the safety, character, reputation and interests of the Building or its tenants may be denied access to the Building or may be rejected therefrom. In case of invasion, riot, public excitement or other commotion, Landlord may prevent all access to the Building during the continuance of the same, by closing the doors or otherwise, for the safety of the tenants and protection of property in the Building. Landlord may require any person leaving the Building with any package or other object to exhibit a pass from the tenant from whose premises the package or object is being removed, but the establishment and enforcement of such requirements shall not impose any responsibility on Landlord for the protection of any tenant against the removal of property from the premises of the tenant. Landlord shall in no way be liable to any tenant for injury or loss arising from the admission, exclusion or ejection of any person to or from the tenant’s premises or the Building under the provisions of this rule.

20. Tenant, at its expense, shall cause the Premises to be exterminated from time to time to the reasonable satisfaction of the Building Management Office, and shall employ such exterminators therefor as shall be approved by the Building Management Office. Such service may be provided by Tenant’s own employees, subject to the provisions of Section 4.5.

21. Tenant shall not serve alcoholic beverages in the premises unless Tenant shall have procured host liquor liability insurance, issued by companies and in amounts reasonably satisfactory to Landlord, naming Landlord and its managing agent as additional insureds.

22. The Building loading docks may be used only for loading and unloading procedures. Tenants may not use the loading dock area for parking. Tenants may not place any dumpsters at the loading docks or any other portion of the Building without the prior written approval of Landlord.

23. No shutdowns of any Building systems will be permitted without prior written approval of Landlord and supervision by the Building engineer.

24. Tenant’s contractors or vendors may not use any space within the Building outside the Premises for storage or moving of materials or equipment or for the location of a field office or facilities for the employees of such contractors or vendors without obtaining Landlord’s prior written approval for each such use. Landlord shall have the right to terminate such use and remove all such contractor’s or vendor’s materials, equipment and other property from such space, without Landlord being liable to tenant or to such contractor or vendor, and the cost of such termination and removal shall be paid by Tenant to Landlord.

25. Tenants are required to have a full service maintenance contract covering their supplemental HVAC, Uninterrupted Power Supply (UPS) and Automatic Transfer systems, and to provide copies of such contracts to the Building management office.

26. The Building reserves the right to restrict the use of certain materials (for example, Omega heads and piping manufactured in The Republic of China) in the Building based on notifications that declare the materials unsafe.

27. Trucks using the Tenant Shipping Platforms on the ground floor of the Building, and the upper floor truck lobbies, will load and discharge at the place or places thereat and therein as indicated by the duly authorized representative of Landlord in charge of such operation.

28. Elevators for freight handling service will be operated during Business Hours on Business Days, unless special arrangement is made with Landlord for operation at other times.

29. The use of the private right of way and the truck elevators will be subject to and under the reasonable direction and control of the duly authorized representative of Landlord in charge of such operation. When in the interest of continuity of service or in the interest of the common service, Tenant’s freight departing from or arriving at the Building by truck may at the direction of Landlord be handled over and through the Tenant Shipping Platforms on the ground floor and the freight elevators. Landlord reserves the right to direct such handling in lieu of truck elevator service.

30. In the interest of preserving the continuity of freight elevator service, freight will not be floored upon the freight elevator, but will at all times be handled and moved upon suitable vehicles of the indoor industrial wheeler type permitting such freight to be economically and expeditiously wheeled on and off the freight elevators. Freight which cannot be handled upon such equipment will be handled in such alternative manner as may be approved by Landlord.

31. (a) The Tenant Shipping Platforms located on first or ground floor of the Building are designed to accomplish the immediate transfer and movement of freight between the freight elevators and trucks. The use of such facility by Tenant or any of its agents, servants, employees, representatives or contractors will be confined to such purpose, under the reasonable direction and control of the duly authorized representative of Landlord in charge of such operation.

(b) No storage or holding of freight on such Tenant Shipping Platforms awaiting the arrival of trucks, or awaiting transfer by Tenant from such Tenant Shipping Platforms to the Premises, will be permitted. No automobiles of Tenant or any Tenant Party may enter on or be stored in any portion of the Building, except in areas designated by Landlord, and provided Tenant pays for such parking at rates designated by Landlord, its agents or parking lessees.

(c) Any violation of this rule or disregard of directions issued by Landlord will give Landlord the right to handle, transfer, remove or store such freight in or to other premises in the Building. When such handling, transfer, removal or storage is performed by Landlord, and when it shall be deemed necessary by Landlord to preserve the continuity of common service provided by this facility, any and all expense will be at Tenant’s expense. Landlord will not be responsible for any loss or damage which any such freight may suffer by such handling, removing or storage.

32. Neither Tenant nor any Tenant Party will at any time be permitted to operate any freight, passenger or truck elevator.

33. The Building is equipped with scuppers for carrying off water which may result from sprinkler operation or other causes. Tenant shall not, under any circumstances, deposit or permit to be deposited sweepings or any other rubbish in such scuppers, and Tenant will keep the scuppers within the Premises at all times free of any and all rubbish, sweepings, and other obstructions of any nature whatsoever.

34. Tenant shall not, under any circumstances, permit the accumulation of sweepings or any other rubbish in the expansion joints of the Building, or in any other portions of the Building outside of the Premises, and all such sweepings or rubbish shall be removed daily by Tenant in such manner as Landlord shall direct. Tenant will keep the Building’s expansion joints free of any and all rubbish, sweepings and any other obstruction of any nature whatsoever. Tenant will not place machinery or equipment in a position so that such machinery or equipment straddles an expansion joint, or erect a partition which intersects an expansion joint, unless one end of such machinery, equipment or partition is free to permit the expansion and contraction of such expansion joint.

35. If any electrical or telephone installations made or operated by Tenant shall emit any electromagnetic interference, Tenant shall immediately discontinue use of such installations until such electromagnetic interference is eliminated to Landlord’s satisfaction.

36. Landlord reserves the right at any time and from time to time, to rescind, alter, waive, modify, add to or delete, in whole or in part, any of these Rules and Regulations in order to protect the comfort, convenience and safety of all tenants at the Building. Tenant shall not have any rights or claims against Landlord by reason of non- enforcement of these rules and regulations against any tenant, and such non-enforcement will not constitute a waiver as to Tenant.

37. If there shall be any inconsistencies between the text of the main body of the Lease and these Rules and Regulations, the provisions of the Lease shall prevail.

EXHIBIT C

FORM OF GUARANTY

AGREEMENT AND GUARANTY

AGREEMENT AND GUARANTY (this “Guaranty”) made as of October     , 2003, by [GLOBAL CROSSING HOLDINGS LTD.] [SUCCESSOR GUARANTOR], a Bermuda company with an office at Wessex House, 45 Reid Street, Hamilton, HM12, Bermuda (“Guarantor”) to 111 CHELSEA LLC, a Delaware limited liability company with an address c/o Taconic Investment Partners LLC, 111 Eighth Avenue, New York, New York 10011 (“Landlord”).

WITNESSETH:

WHEREAS:

A. Landlord has been requested by Global Crossing Telecommunications, Inc., a Michigan corporation with an address at 1080 Pittsford-Victor Road, Pittsford, New York 14534 (“Tenant”), to enter into an Agreement of Lease, dated as of the date hereof (the “Lease”), whereby Landlord would lease to Tenant, and Tenant would hire and rent from Landlord a portion of the second (2nd) floor, as more particularly described in the Lease (the “Premises”), in the building known as 111 Eighth Avenue, New York, New York.

B. Guarantor owns, directly or indirectly, all of the issued and outstanding stock of Tenant, and will derive substantial benefit from the execution and delivery of the Lease.

C. Guarantor acknowledges that Landlord would not enter into the Lease unless this Guaranty accompanied the execution and delivery of the Lease.

NOW, THEREFORE, in consideration of the execution and delivery of the Lease and of other good and valuable consideration, the receipt and sufficiency whereof are hereby acknowledged by Guarantor:

1. DEFINITIONS. Defined terms used in this Guaranty and not otherwise defined have the meanings assigned to them in the Lease. For purposes of this Guaranty, the term “Governmental Authorities” shall, supplementing and in addition to the definition of such term in the Lease, be deemed to include Bermuda, a dependency of the United Kingdom, and any political subdivision, agency, department, commission, board, bureau or instrumentality thereof, now existing or hereafter created, having jurisdiction over Guarantor.

2. COVENANTS OF GUARANTOR

(a) Guarantor absolutely, unconditionally and irrevocably guarantees, as a primary obligor and not merely as a surety: (i) the full and prompt payment of all Fixed Rent, Additional Rent and all other sums and charges payable by Tenant under the Lease, and (ii) the full and timely performance of all covenants, terms, conditions, obligations and agreements to be performed by Tenant under the Lease (all of the obligations described in clauses (i) and (ii), collectively, the “Obligations”). If an Event of Default shall occur under the Lease, Guarantor will, without notice or demand, promptly pay and perform all of the Obligations, and pay to

Landlord when due all Fixed Rent and Additional Rent payable by Tenant under the Lease, together with all damages, costs and expenses to which Landlord is entitled pursuant to the Lease or under applicable Legal Requirements.

(b) Guarantor agrees with Landlord that (i) any action, suit or proceeding of any kind or nature whatsoever (an “Action”) commenced by Landlord against Guarantor to collect Fixed Rent, Additional Rent and any other sums and charges due under the Lease for any month or months shall not prejudice in any way Landlord’s rights to collect any such amounts due for any subsequent month or months throughout the Term in any subsequent Action, (ii) Landlord may, at its option, without prior notice or demand, join Guarantor in any Action against Tenant in connection with or based upon the Lease or any of the Obligations, (iii) Landlord may seek and obtain recovery against Guarantor in an Action against Tenant or in any independent Action against Guarantor without Landlord first asserting, prosecuting, or exhausting any remedy or claim against Tenant or against any security of Tenant held by Landlord under the Lease, and (iv) Guarantor will be conclusively bound in any jurisdiction by a judgment in any Action by Landlord against Tenant, as if Guarantor were a party to such Action, even though Guarantor is not joined as a party in such Action.

3. GUARANTOR’S OBLIGATIONS UNCONDITIONAL

(a) This Guaranty is an absolute and unconditional guaranty of payment and of performance, and not of collection, and shall be enforceable against Guarantor without the necessity of the commencement by Landlord of any Action against Tenant, and without the necessity of any notice of nonpayment, nonperformance or nonobservance, or any notice of acceptance of this Guaranty, or of any other notice or demand to which Guarantor might otherwise be entitled, all of which Guarantor hereby expressly waives in advance.

(b) If the Lease is renewed, or the Term extended, for any period beyond the Expiration Date, either pursuant to any option granted under the Lease or otherwise, or if Tenant holds over beyond the Expiration Date, the obligations of Guarantor hereunder shall extend and apply to the full and faithful performance and observance of all of the Obligations under the Lease during any renewal, extension or holdover period.

(c) This Guaranty is a continuing guarantee and will remain in full force and effect notwithstanding, and the liability of Guarantor hereunder shall be absolute and unconditional irrespective of: (i) any modifications or amendments of the Lease, (ii) any releases or discharges of Tenant other than the complete satisfaction and/or full release and complete discharge of all of the Obligations, (iii) any extension of time that may be granted by Landlord to Tenant, (iv) any assignment or transfer of all of any part of Tenant’s interest under the Lease, (v) any subletting of the Premises, (vi) any changed or different use of the Premises, (vii) any other dealings or matters occurring between Landlord and Tenant, (viii) the taking by Landlord of any additional guarantees from other persons or entities, (ix) the releasing by Landlord of any other guarantor, (x) Landlord’s release of any security provided under the Lease, or (xi) Landlord’s failure to perfect any landlord’s lien or other security interest available under applicable Legal Requirements. Guarantor hereby consents, prospectively, to Landlord’s taking or entering into any or all of the foregoing actions.

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4. WAIVERS OF GUARANTOR

(a) Guarantor waives (i) notice of acceptance of this Guaranty, (ii) notice of any actions taken by Landlord or Tenant under the Lease or any other agreement or instrument relating thereto, (iii) notice of any and all defaults by Tenant in the payment of Fixed Rent, Additional Rent or other charges, or of any other defaults by Tenant under the Lease, (iv) all other notices, demands and protests, and all other formalities of every kind in connection with the enforcement of the Obligations, omission of or delay in which, but for the provisions of this Section 4, might constitute grounds for relieving Guarantor of its obligations hereunder, and (v) any requirement that Landlord protect, secure, perfect or insure any security interest or lien, or any property subject thereto, or exhaust any right or take any action against Tenant or any other Person or any collateral.

(b) Guarantor waives trial by jury of any and all issues arising in any Action upon, under or in connection with this Guaranty, the Lease, the Obligations, and any and all negotiations or agreements in connection therewith.

5. SUBROGATION. Until such time as the Obligations shall be satisfied in full, Guarantor waives and disclaims any claim or right against Tenant by way of subrogation or otherwise in respect of any payment that Guarantor may be required to make hereunder, to the extent that such claim or right would cause Guarantor to be a “creditor” of Tenant for purposes of the United States Bankruptcy Code (11 U.S.C. §101 et seq., as amended), or any other Federal, state or other bankruptcy, insolvency, receivership or similar Legal Requirement. If any amount shall be paid to Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid and performed in full, Guarantor shall hold such amount in trust for Landlord and shall pay such amount to Landlord immediately following receipt by Guarantor, to be applied against the Obligations, whether matured or unmatured, in such order as Landlord may determine. Guarantor hereby subordinates any liability or indebtedness of Tenant now or hereafter held by Guarantor to the obligations of Tenant to Landlord under the Lease.

6. REPRESENTATIONS AND WARRANTIES OF GUARANTOR. Guarantor represents and warrants that:

(a) Guarantor is a corporation duly organized, validly existing and in good standing under the laws of Bermuda, is duly qualified to do business in each jurisdiction where the conduct of its business requires such qualification and has full requisite corporate power and authority to enter into and perform its obligations under this Guaranty. Guarantor’s principal offices are located at the address set forth in the opening paragraph of this Guaranty.

(b) The execution, delivery and performance by Guarantor of this Guaranty does not and will not (i) contravene applicable Legal Requirements or any contractual restriction binding on or affecting Guarantor or any of its properties, or (ii) result in or require the creation of any lien, security interest or other charge or encumbrance upon or with respect to any of its properties.

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(c) No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or other regulatory body is required for the due execution, delivery and performance by Guarantor of this Guaranty.

(d) This Guaranty is a legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms.

(e) There is no action, suit or proceeding pending or threatened against or otherwise affecting Guarantor before any court or other Governmental Authority or any arbitrator which may adversely affect Guarantor’s ability to perform its obligations under this Guaranty.

(f) Guarantor owns, directly or indirectly, all of the issued and outstanding stock of Tenant.

(g) Guarantor has reviewed and approved the Lease and each of the documents, agreements and instruments executed and delivered in connection with the Lease.

(h) All necessary consents, approvals and authorizations, if any, to the execution and delivery of this Guaranty and to the transactions contemplated hereby, of each of (i) the United States Bankruptcy Court for the Southern District of New York in the consolidated cases entitled Global Crossing Ltd, et al., Case No. 02-40188 (REG) et seq., and (ii) Singapore Technologies Telemedia PTE Ltd. (“STT”), a party to the Purchase Agreement, dated as of August 9, 2002, among STT, Guarantor and Global Crossing Ltd., among others, have been duly obtained, and no consents or approvals of any other parties are or will be necessary in connection therewith.

(i) (i) The Lease constitutes a transaction entered into in the ordinary course of Tenant’s business, (ii) this Guaranty constitutes a transaction entered into in the ordinary course of Guarantor’s business, and (iii) the creditors’ committee in the Bankruptcy Case has been given the opportunity to review the Lease prior to its execution by Tenant, and this Guaranty prior to its execution by Guarantor. In reliance on the foregoing representation, and without limitation of the provisions of Section 6(h), Landlord has agreed to waive any requirement that Guarantor and/or Tenant obtain the approval of the Bankruptcy Court, and/or of any creditors’ committee or any other parties to the Bankruptcy Case other than STT, to the entering into of the Lease and/or this Guaranty.

[(j) [Successor Guarantor] is the successor to all of the assets and business of Global Crossing Holdings Ltd.]

7. NOTICES. All consents, notices, demands, requests, approvals or other communications given under this Guaranty shall be given as provided the Lease, as follows:

(a) if to Guarantor at Guarantor’s address set forth on the first page of this Guaranty, with a copy to: Global Crossing Ltd., 200 Park Avenue, Florham Park, New Jersey 07932, Attention: Office of the General Counsel; and

(b) if to Landlord, as follows: 111 Chelsea LLC, c/o Taconic Investment Partners LLC, 111 Eighth Avenue, New York, New York 10011, Attention: Mr. Paul Pariser, with a copy to: Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022, Attention: Eric Asmundsson, Esq.; or

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to such other addresses as either Landlord or Guarantor may designate by notice given to the other in accordance with the provisions of this Section 7.

8. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES

(a) Guarantor hereby irrevocably (i) submits to the jurisdiction of any New York State or Federal court sitting in New York County, New York in any Action arising out of or relating to this Guaranty, and (ii) agrees that all claims in respect of such Action may be heard and determined in such New York State or Federal court. Guarantor hereby irrevocably appoints Global Crossing Ltd., 200 Park Avenue, Florham Park, New Jersey 07932, Attention: Corporate Secretary (the “Process Agent”), as its agent to receive, on behalf of Guarantor, service of copies of the summons and complaint and any other process which may be served in any such Action. Such service may be made by mailing or delivering a copy of such process to Guarantor in care of the Process Agent at the Process Agent’s address, and Guarantor hereby irrevocably authorizes and directs the Process Agent to accept such service on its behalf. As an alternative method of service, Guarantor also irrevocably consents to the service of any and all process in any such Action by the mailing of copies of such process to Guarantor at its address specified in Section 7. Guarantor agrees that a final judgment in any such Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner permitted under Legal Requirements.

(b) Guarantor irrevocably waives, to the fullest extent permitted by Legal Requirements, and agrees not to assert, by way of motion, as a defense or otherwise (i) any objection which it may have or may hereafter have to the laying of the venue of any such Action brought any of the courts described in Section 8(a), (ii) any claim that any such Action brought in any such court has been brought in an inconvenient forum, or (iii) any claim that Guarantor is not personally subject to the jurisdiction of any such courts. Guarantor agrees that final judgment in any such Action brought in any such court shall be conclusive and binding upon Guarantor and may be enforced by Landlord in the courts of any state, in any federal court, and in any other courts having jurisdiction over Guarantor or any of its property, and Guarantor agrees not to assert any defense, counterclaim or right of set-off in any Action brought by Landlord to enforce such judgment.

(c) Nothing in this Section 8 shall limit or affect Landlord’s right to (i) serve legal process in any other manner permitted by Legal Requirements, or (ii) bring any Action against Guarantor or its property in the courts of any other jurisdictions.

(d) Guarantor hereby irrevocably waives, with respect to itself and its property, any diplomatic or sovereign immunity of any kind or nature, and any immunity from the jurisdiction of any court or from any legal process, to which Guarantor may be entitled, and agrees not to assert any claims of any such immunities in any Action brought by Landlord under or in connection with this Guaranty. Guarantor acknowledges that the making of such waivers, and Landlord’s reliance on the enforceability thereof, is a material inducement to Landlord to enter into the Lease.

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(e) Guarantor agrees to execute, deliver and file all such further instruments as may be necessary under the laws of the State of New York, in order to make effective (i) the appointment of the Process Agent, (ii) the consent by Guarantor to jurisdiction of the state courts of New York and the federal courts sitting in New York County, New York, and (iii) all of the other provisions of this Section 8.

9. MISCELLANEOUS

(a) The provisions, covenants and guaranties of this Guaranty shall be binding upon Guarantor and its successors and assigns, and shall inure to the benefit of Landlord and its successors and assigns, and shall not be deemed waived or modified unless such waiver or modification is specifically set forth in writing, executed and delivered by each of Landlord or its successors and assigns and Guarantor or its successors and assigns.

(b) Whenever the words “include”, “includes”, or “including” are used in this Guaranty, they shall be deemed to be followed by the words “without limitation”, and, whenever the circumstances or the context requires, the singular shall be construed as the plural, the masculine shall be construed as the feminine and/or the neuter and vice versa. All Section references shall be deemed references to the Sections of this Guaranty. This Guaranty shall be interpreted and enforced without the aid of any canon, custom or rule of law requiring or suggesting construction against the party drafting or causing the drafting of the provision in question.

(c) The provisions of this Guaranty shall be governed by and interpreted solely in accordance with the internal laws of the State of New York, without giving effect to the principles of conflicts of law.

IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as of October     , 2003.

GUARANTOR:

[GLOBAL CROSSING HOLDINGS LTD.]

[SUCCESSOR GUARANTOR]

By:

Name:

Title:

6

STATE OF NEW YORK	)
	) ss.:
COUNTY OF	)

On the     day of                     , 2003, before me, the undersigned, personally appeared                                          , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in its capacity, and that by its signature on the instrument, the individual or the person upon behalf of which the individual acted, executed the instrument.

Notary Public

(Affix Notarial Stamp)

EXHIBIT D

INTENTIONALLY OMITTED

EXHIBIT E

FLOOR PLAN OF THE RAMP SPACE

The floor plan that follows is intended solely to identify the general outline of the Ramp Space, and should not be used for any other purpose. All areas, dimensions and locations are approximate, and any physical conditions indicated may not exist as shown.

[DEPICTION OF FLOOR PLAN]

EXHIBIT F

FORM OF LETTER OF CREDIT

[LETTERHEAD OF ISSUING BANK]

LETTER OF CREDIT DEPARTMENT

Issue Date:             , 200  

Our Number:                             

111 Chelsea LLC

c/o Taconic Investment Partners LLC

111 Eighth Avenue, New York, NY 10011

No.                            

Irrevocable Commercial Letter of Credit

Applicant:	[Tenant]
Beneficiary:	111 Chelsea LLC
c/o Taconic Investment Partners LLC
111 Eighth Avenue, New York, NY 10011
Amount (U.S.): $
Expiry:                                 , 200
[The initial expiry date must occur at least             one year after the Commencement Date.]

Gentlemen:

For the account of Applicant we hereby establish this Irrevocable Letter of Credit No.                     in your favor for an amount of up to $                     effective immediately, available by your drafts at sight when accompanied by this Irrevocable Letter of Credit and Beneficiary’s statement, purportedly signed by an officer of Beneficiary or Beneficiary’s authorized managing agent, stating:

“The amount of this drawing under Irrevocable Letter of Credit No. is being drawn pursuant to Lease dated                                                200  , by and between 111 Chelsea LLC as Landlord and                              as Tenant.”

All drafts must be marked “Drawn under                      Bank, Irrevocable Letter of Credit No.                      dated                          , 200  .”

It is a condition of this Irrevocable Letter of Credit that it shall be fully transferable by Beneficiary without any fees or charges payable by Beneficiary in connection therewith.

It is a condition of this Irrevocable Letter of Credit that it shall be automatically extended for additional periods of one year from the present or any future expiry date, unless at least thirty (30) days prior to such expiry date we notify you in writing by certified or registered mail, return receipt requested, at the above address, that we elect not to renew this Irrevocable Letter of Credit for such additional period. Upon receipt by you of such notice you may draw drafts on us at sight for an amount not to exceed the balance remaining in this Irrevocable Letter of Credit within the then applicable expiry date.

We hereby agree with you that drafts drawn under and in accordance with the terms of this Irrevocable Letter of Credit will be duly honored by us on delivery of this Irrevocable Letter of Credit and the document so specified, when presented at                                                                                   [address of Bank issuing this Letter of Credit - THIS ADDRESS MUST BE LOCATED IN NEW YORK CITY].

This credit is subject to the International Standby Practices 1998, International Chamber of Commerce Publication No. 590; provided, however, that in the event the expiry date occurs during an interruption of our business of the type described in Article 17 of such publication, then such expiry date shall be deemed to be automatically extended until the date that is five (5) days after the resumption of our business.

Authorized Signature

EX-10.15

EXHIBIT 10.15

Execution Copy

SUBLEASE AGREEMENT

THIS SUBLEASE AGREEMENT (the “Sublease”) is entered into by and between ABOVENET COMMUNICATIONS, INC., a Delaware corporation (“Sublessor”), and SWITCH & DATA/NY FACILITIES COMPANY LLC, a Delaware limited liability company (“Sublessee” or “Switch & Data”).

RECITALS:

A. Pursuant to that certain Purchase and Sale Agreement, dated November 6, 2002, by and among Switch and Data Facilities Company, Inc., (an affiliate of Switch & Data), Switch and Data Acquisition Company, Inc., (an affiliate of Switch & Data ), Metromedia Fiber Network, Inc. (“MFN”), Sublessee and PAIX.net, Inc., as amended from time to time, (the “Purchase Agreement”) the lease for the PAIX site located at 111 8th Avenue in New York, New York was to be assumed and amended by Switch & Data and 111 Chelsea LLC (“Landlord”) and Switch & Data executed a new lease agreement in accordance with the terms of the Stipulation of Settlement Between Debtors and 111 Chelsea LLC, and Metromedia Fiber Network Services, Inc. (“MFNS”) entered into a sublease, whereby MFNS sublet 3,855 square feet of rentable space (the “Interim Sublease”).

B. Pursuant to a certain Agreement of Lease, dated April 23, 1999, between MFNS and 111 Eighth Avenue LLC, predecessor in interest to Landlord (as such agreement of lease was modified and amended pursuant to that certain First Amendment to Lease, dated October 18, 2000, collectively, the “MFNS Lease”), MFNS leased the following space in the building located at 111 Eighth Avenue, New York, New York: (i) approximately 16,530 square feet of space on the 7^th floor (the “7^th Floor Space”) and (ii) approximately 14,592 square feet of space on the 12^th floor (the “12^th Floor Space”).

C. Simultaneously with the Interim Sublease, and pursuant to that Second Amendment of Lease and Partial Termination Agreement of even date by and between Landlord and MFN (parent of Sublessee), MFNS surrendered possession of approximately 10,617 square feet of the 7^th Floor Space to Landlord (the “Surrendered Space”), and with the intent and purpose that the term of the MFNS Lease with respect to the Surrendered Space only shall be merged and extinguished.

D. Simultaneously with the Interim Sublease, and pursuant to that certain Agreement of Lease of same date by and between Landlord and Switch & Data (the “Interim Base Lease”), Switch & Data leased the Surrendered Space from the Landlord (the “Leased Premises”).

E. MFNS and MFN have emerged from bankruptcy as AboveNet Communications, Inc., and AboveNet, Inc., respectively, and, along with Switch & Data, desire to terminate the Interim Sublease and the Interim Base Lease and switch positions and replace the Interim

Sublease with this Sublease, and on even date herewith Sublessor shall enter into a new Base Lease with the Landlord by executing agreements virtually identical to the Interim Sublease and the Interim Base Lease but with the parties’ respective positions reversed and adjusted.

F. Sublessee desires to sublease from Sublessor and Sublessor desires to sublease to Sublessee the Subleased Premises (as hereinafter defined) subject to the terms and conditions hereof.

AGREEMENTS:

NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, and for other good and valuable consideration paid by each party hereto to the other, Sublessor and Sublessee agree as follows:

1. Terms. Capitalized terms used herein but not defined herein shall have the meanings specified in the Base Lease.

2. Sublease Grant.

(a) Agreement to Sublease. Sublessor subleases to Sublessee, and Sublessee subleases from Sublessor, a portion of the Leased Premises located on the 7th Floor of the Building (the “Subleased Premises”) in accordance with and subject to the Base Lease and the terms, conditions and provisions of this Sublease. Sublessor and Sublessee agree that the Subleased Premises consist of 6,762 rentable square feet of space. A floor plan depicting the Subleased Premises is attached hereto as Exhibit A.

(b) Related Rights. Sublessee shall have the following rights related to its use and enjoyment of the Subleased Premises, to the extent permitted under the Base Lease, but such rights shall always be subject to the terms and conditions of the Base Lease, the rules and regulations from time to time established by Landlord, and the right of Landlord to designate and change from time to time the areas and facilities to be so used:

(i) the Cabling Equipment of way and related rights described in Section 9.10 of the Base Lease (the “Conduit Rights”);

(ii) the right to heat as provided to Sublessor through the Building Heating System (as defined in the Base Lease) in the Subleased Premises pursuant to Section 9.3 of the Base Lease;

(iii) the non-exclusive right to use the elevators in the Building pursuant to Section 9.4 of the Base Lease;

(iv) the non-exclusive right to hot and cold water furnished by Landlord pursuant to Section 9.6 of the Base Lease; and

(v) the non-exclusive right to offer and provide Telecommunications Services (as defined in the Base Lease) pursuant to Section 9.11 of the Base Lease.

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(c) Appurtenant Rights. Sublessee shall have, as appurtenant to the Subleased Premises, the non-exclusive right to use all parking areas, driveways, sidewalks and other common facilities to the extent permitted under the Base Lease, but such rights shall always be subject to the terms and conditions of the Base Lease, the rules and regulations from time to time established by Landlord, and the right of Landlord to designate and change from time to time the areas and facilities to be so used.

3. Term. The term (the “Sublease Term”) of this Sublease shall commence on March 13, 2003 (the “Commencement Date”) and shall expire on September 29, 2014, unless earlier terminated pursuant to the terms of this Sublease.

4. Rent.

(a) Sublessee agrees to pay to Sublessor, or as directed by Sublessor, commencing on the Commencement Date, without offset, abatement (except as provided herein), deduction or demand, as rent (the “Base Rental”) for the Subleased Premises, the following amounts for the following periods of time:

Monthly Base Rent:
Commencement Date - April 30, 2005	Nineteen Thousand Seven Hundred Thirty Nine and 41/100 Dollars ($19,739.41) per month.
May 1, 2005 - April 30, 2009	Twenty One Thousand Four Hundred Thirty Five and 54/100 Dollars ($21,435.54) per month.
May 1, 2009 - September 29, 2014	Twenty Three Thousand One Hundred Three and 60/100 Dollars ($23,103.60) per month.

Such Base Rental shall be payable monthly, in advance, on or before the first day of each and every calendar month during the Sublease Term, at Abovenet Communications, Inc., 360 Hamilton Avenue, White Plains, NY 10601 Attn: Accounts Payable Dept., or at such other place as Sublessor shall from time to time designate by notice, in lawful money of the United States. In the event that any installment of Base Rental or any other amounts required to be paid by Sublessee hereunder are not paid within ten (10) days of the date due, Sublessee shall pay to Sublessor an administrative fee equal to ten percent (10%) of the overdue payment. Sublessor and Sublessee agree that all amounts due from Sublessee under or in respect of this Sublease, whether labeled Base Rental, Additional Charges (as defined in Section 5(a)) or otherwise, shall be considered as rental reserved under this Sublease for all purposes, including without limitation, regulations promulgated pursuant to the United States Bankruptcy Code, including further without limitation, Section 502(b) thereof.

(b) Base Rental for any partial month shall be prorated on a daily basis, and if the Commencement Date shall be other than the first day of a calendar month, the first payment which Sublessee shall make to Sublessor shall be equal to a proportionate part of the monthly installment of Base Rental for the partial month from the Commencement Date to the last day of the month in which the Commencement Date occurs, plus the installment of Base Rental for the succeeding calendar month.

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5. Additional Charges.

(a) Sublessee shall pay to Sublessor, as monthly Additional Charges (herein so called) in consideration for the Related Rights and other rights granted herein, the following amounts:

(i) an amount equal to Sublessee’s Proportionate Share of both Tenant’s Labor Rate Payment and Tenant’s Tax Payment each as payable by Sublessor under the Base Lease (the “Operating Expenses”), as such amounts as are or may be set forth on Schedule 1 attached hereto; and

(ii) an amount equal to Sublessee’s Power Proportionate Percentage of the charges payable by Sublessor pursuant to Section 9.2 of the Base Lease for Basic Capacity (“Power Charges”). As used herein, “Sublessee’s Power Proportionate Percentage” shall be equal to 40.91%, which percentage is Sublessee’s pro rata share of rentable square feet of the Leased Premises (which is 16,530 sq. ft.).

As used herein, “Sublessee’s Proportionate Share” shall mean the quotient which is obtained by dividing the number of rentable square feet in the Subleased Premises by the number of rentable square feet in the Leased Premises.

The Additional Charges shall be apportioned for any portion of a lease year in which the Sublease Term begins or ends. All such payments of Additional Charges shall be payable monthly, in advance, on or before the first day of each and every calendar month during the Sublease at the address provided herein for payment of Base Rental. The amount of the Additional Charges set forth on Schedule 1 shall change immediately upon a change by the Landlord pursuant to the exercise of its rights under the Base Lease of the charges payable by Sublessor thereunder. Sublessor shall notify Sublessee as soon as reasonably practicable, at the address for Sublessee set forth in Section 17 below, of any such change in the amount of the Additional Charges and shall provide Sublessee with a revised Schedule 1 detailing the current amount of each Additional Charge. Thereafter, monthly installments of Additional Charges payable by Sublessor under this Section 5(a) shall be appropriately adjusted in accordance with the revised Schedule 1. After the end of each calendar year during the Sublease Term, Sublessor will forward to Sublessee any documents submitted to Sublessor by Landlord for the purpose of showing the actual Operating Expenses for such lease year. If Sublessee has paid more in estimated Additional Charges related to Operating Expenses than the actual amount payable under this Section 5(a) for the year for which such statement was prepared, the Sublessor shall credit such excess against subsequent obligations of Sublessee with respect to Base Rental and Additional Charges (or refund within 30 days if the Sublease Term has ended and Sublessee has no further obligation to Sublessor); likewise, if Sublessee paid less in estimated Additional Charges related to Operating Expenses than the actual amount payable under this Section 5(a), then Sublessee shall promptly pay to Sublessor such deficiency.

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(b) In the event Sublessor shall be obligated under the Base Lease to pay to Landlord any amounts for any additional services provided by Landlord to Sublessee (in connection with Sublessee’s use and occupancy of the Subleased Premises) or the Subleased Premises (for example, additional air-conditioning service), Sublessee shall pay to Sublessor, as Additional Charges, the amount of such additional services in accordance with the provisions of Section 5(a) hereof and the Base Lease. Except as otherwise set forth in Section 5(a) hereof, to the extent that any utilities provided to the Subleased Premises are not separately metered, Sublessee shall pay to Sublessor, as Additional Charges, the cost of all such utilities provided to the Subleased Premises, other than the cost of utilities provided to the Subleased Premises on account of Sublessor’s use of such utilities, as allocated to the Subleased Premises by Sublessor on a reasonable basis. All payments of Additional Charges payable by Sublessee under this Section 5(b) shall be made by Sublessee to Sublessor at the address provided herein for payment of Base Rental, in the manner and at the times upon which payments of the amounts for such services are due and payable by Sublessor to Landlord under the Base Lease.

(c) Additional Power and Cooling.

(i) Sublessor shall pay Sublessee a connection charge of then current connection charge, if any, imposed by the Landlord per the terms of the Base Lease for each additional ampere of Building Power Sublessor requires in excess of what is breakered to Sublessor (as agreed by Sublessee and Sublessor to be 400 AMPS of Essential Power) off of the Leased Premises’ main distribution panel as of the date hereof (“Excess Power”).

(ii) In addition to the connection charge set forth above, if any, if the Sublessee requires Excess Power, Sublessee shall pay for any and all infrastructure costs associated with providing additional power to the Leased Premises (whether assessed directly to Sublessor by Landlord for Building infrastructure costs, or incurred directly by Sublessor for infrastructure costs associated solely with the Leased Premises), provided, however, if both Sublessor and Sublessee require Excess Power, the costs for such Excess Power shall be shared by both Sublessor and Sublessee in proportion to the Excess Power added by both parties.

(iii) Sublessee shall pay Sublessor the then current connection charge, if any, imposed by the Landlord under the terms of the Base Lease for any additional cooling for the Subleased Premises required by Sublessee, provided, however, Sublessee shall not exceed the design capacity of the Leased Premises’ existing HVAC system.

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(iv) Sublessor shall be entitled to receive the greater of (i) 100 AMPS of breakered DC power or (ii) the amount of AMPS currently breakered to live equipment in the non-Subleased Premises (the AMPS set forth in clause (i) and clause (ii) herein, the “Sublessor’s Existing DC Power”) off of Sublessee’s existing DC plant, provided, however, Sublessor shall pay any and all costs associated with distributing the Sublessor’s Existing DC Power from Sublessee’s plant to Sublessor’s equipment. Sublessor shall pay Eleven dollars ($11) each month for each additional ampere of DC power Sublessor requires over Sublessor’s Existing DC Power, plus any and all costs associated with distributing such additional DC power from Sublessee’s plant to Sublessor’s equipment.

6. Condition. SUBLESSEE AGREES THAT IT HAS INSPECTED THE SUBLEASED PREMISES AND THAT THE SUBLEASED PREMISES ARE SUITABLE FOR ITS PURPOSE. SUBLESSEE ACCEPTS THE SUBLEASED PREMISES IN ITS “AS IS” CONDITION AND ACKNOWLEDGES THAT NO REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, HAS BEEN MADE BY SUBLESSOR WITH RESPECT TO THE CONDITION OF THE SUBLEASED PREMISES OR ITS SUITABILITY FOR ANY USE OR PURPOSE BY SUBLESSEE.

7. Improvements to the Subleased Premises. Sublessee acknowledges and agrees that Sublessor has no obligation with regard to any improvements made or required to be made by Landlord to the Subleased Premises. Sublessee shall not make any improvements, alterations or additions to the Subleased Premises without the prior written consent of and approval of the plans and specifications therefore by (a) Sublessor, whose consent shall not be unreasonably withheld, and (b) if required under the Base Lease, Landlord.

8. Agreement to Abide by Base Lease. Except as otherwise expressly set forth herein to the contrary, Sublessee hereby agrees, for the benefit of Sublessor, to comply with and be bound by all of the provisions of the Base Lease with respect to the Subleased Premises that are to be observed or performed during the Sublease Term by Sublessor as “Tenant” thereunder, including the rules and regulations applicable to the Building, except as otherwise inconsistent with the agreements and understandings expressly provided herein.

9. Assignment and Subletting.

(a) Sublessee shall not assign this Sublease or sublease the Subleased Premises or any part thereof without first obtaining the prior written consent of Landlord and Sublessor.

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(b) Any assignment or sublease shall be in accordance with and subject to the terms of the Base Lease, including, without limitation, Landlord’s right of consent and approval of any assignment or sublease. Notwithstanding any assignment or sublease by Sublessee, Sublessee shall remain primarily liable and shall continue to make all rental payments and all other payments that may become due and payable hereunder to Sublessor in a timely manner. Any assignment or subletting by Sublessee in violation of this Section 9 shall constitute an Event of Default under this Sublease, entitling Sublessor to exercise any and all of the remedies herein provided for an Event of Default by Sublessee, including, but not limited to, termination of this Sublease. Sublessee shall reimburse Sublessor and Landlord, upon request, for each such party’s reasonable attorneys’ fees incurred in connection with considering (and documentation of) any request for consent to an assignment or subletting to the same extent that Sublessor is required to reimburse Landlord for such fees under the Base Lease.

10. Sublessee Default. Any one or more of the following events will constitute an event of default (“Event of Default”) by Sublessee under this Sublease:

(a) failure or refusal by Sublessee to timely pay any installment of Base Rental, any adjustments thereto, any Additional Charges or any other amount herein provided to be paid by Sublessee to Sublessor, where such failure shall continue for three (3) business days after the receipt of written notice from Sublessor; or

(b) failure or refusal by Sublessee to perform or observe any other term, covenant or provision of this Sublease required to be performed or observed by Sublessee, where such failure continues for twenty-seven (27) days after the receipt of written notice to Sublessee from Sublessor; or

(c) the institution in a court of competent jurisdiction of proceedings for the liquidation of Sublessee under Chapter 7 of the U.S. Bankruptcy Code; or

(d) the performance or non-performance of any other obligation hereunder, or the occurrence of any other event which, if it remains uncured, could result in an event of default of Sublessor under the Base Lease, and such event is not cured at least five (5) days in advance of the time required (if any) for a cure thereof under the Base Lease, provided, however, that if the nature of such default is such that the same cannot reasonably be cured in such period (other than any default related to the non-payment of Base Rent, Additional Charges or any other fees payable by Sublessee to Sublessor or Landlord hereunder), and to the extent that Sublessor has the right under the Base Lease to extend the cure period with respect to such potential event of default under the Base Lease, Sublessee shall not be deemed to be in default hereunder if Sublessee shall within such period commence to cure the default and thereafter diligently prosecute same to completion.

At any time after such an Event of Default has occurred under this Sublease, Sublessor may exercise all rights and remedies provided under the Base Lease for a default of Tenant thereunder, including, but not limited to, declaring this Sublease terminated, and Sublessor may immediately or at any time thereafter re-enter the Subleased Premises and remove all persons therefrom with or without legal process, and without prejudice to any of its other legal rights, and all claims for damages by reason of such re-entry are expressly waived, as well as all claims for

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damages by reason of any eviction proceedings or proceedings by way of sequestration or any other legal proceedings which Sublessor may employ to recover unpaid rents or possession of the Subleased Premises. In addition, without limiting the foregoing, in the event Sublessor reasonably believes that Sublessee’s failure to cure a breach under subparagraphs (b) or (d) above shall cause an event of default by Sublessor to occur under the Base Lease, Sublessor shall specifically have the right, upon giving Sublessee not less than five (5) business days prior written notice thereof, to cure such breach or default and be reimbursed by Sublessee for all reasonable expenses incurred by Sublessor in connection therewith upon demand and presentation of invoices therefor. All rights and remedies of Sublessor herein enumerated shall be cumulative and none shall exclude any other right or remedy allowed by law or in equity, and said rights and remedies may be exercised and enforced concurrently and whenever and as often as occasion therefor arises. Notwithstanding the foregoing, Sublessor’s administrative claim arising from Sublessee’s default under or breach of this Sublease while Sublessee’s Chapter 11 Bankruptcy Case is still pending shall be limited to six months Base Rental under this Sublease following the date Sublessee vacates the Subleased Premises, plus all Base Rental and Additional Charges incurred prior to the date Sublessee vacates the Subleased Premises.

11. Relationship of Parties, Building Services. Sublessee recognizes that Sublessor is not the owner of the Subleased Premises, and that the Landlord is the party with whom Sublessee would normally deal regarding matters concerning the Subleased Premises and the Building, and that Sublessor shall have no obligation to deliver or provide any services (including repairs) to Sublessee or the Subleased Premises. Notwithstanding the foregoing, if the Landlord shall fail to perform any of its obligations to Sublessor with respect to the Leased Premises, then, at Sublessee’s request and at Sublessee’s cost, to the extent Landlord is not obligated to reimburse Sublessor under the Lease, Sublessor shall exercise any right under the Base Lease, at law or in equity, that it deems, in its commercially prudent judgment, necessary to enforce the performance by Landlord of such obligations under the Base Lease. Sublessee shall be entitled to participate, at its sole cost and expense, with Sublessor in the enforcement of Sublessor’s rights under the Base Lease with respect to the Subleased Premises. Specifically, but without limitation, with regard to the services and repairs to be provided by the Landlord under Article 9 of the Base Lease, Sublessee acknowledges that Landlord shall be solely responsible for providing such services and repairs, and in the event Sublessee desires any extra services (for example, additional air-conditioning services) other than those provided to the Subleased Premises under the Base Lease, has any complaints concerning any services or repairs required to be provided by Landlord under the Base Lease to the Subleased Premises, or the improvements thereto, or has any other matters which would normally be discussed with a landlord, Sublessee agrees to contact Landlord directly to handle such matters; it being the intention of the parties hereto that, as to such matters, the only connection between Sublessee and Sublessor shall be (a) the flow-through of rights and obligations of Sublessor under the Base Lease, and (b) the payment of all amounts payable hereunder by Sublessee to Sublessor as herein provided. Sublessee also acknowledges that all of the covenants and obligations of Sublessor hereunder are expressly subject to the terms and conditions of the Base Lease. As provided in Section 5 above, in the event Sublessee acquires any additional services from Landlord for which additional costs are incurred and Sublessee does not pay Landlord directly for such services, then Sublessee shall pay Sublessor such amounts incurred by Sublessee within ten (10) days following receipt from Sublessor of Landlord’s invoice for such services. If for any reason Sublessor receives an abatement of Base Rent under the Base Lease, Sublessee shall receive an

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abatement of Base Rental under this Sublease for the same period as Sublessor receives such abatement under the Base Lease, to the extent the abatement received by Sublessor is attributable to the Subleased Premises during the Sublease Term.

12. Holding Over. In the event Sublessee remains in possession of the Subleased Premises after the expiration or earlier termination of this Sublease, then Sublessee, at Sublessor’s option, shall be deemed to be occupying the Subleased Premises as a Sublessee at sufferance at a base rental equal to one hundred and fifty percent (150%) of the Base Rental in effect prior to expiration or termination, and shall otherwise remain subject to all the conditions, provisions and obligations of this Sublease insofar as the same are applicable to a tenancy at sufferance, including without limitation, the payment of all additions to Base Rental provided and all other sums payable hereunder. No holding over by Sublessee after the expiration or termination of this Sublease shall be construed to extend or renew the Sublease Term or in any other manner be construed as permission by Sublessor to holdover. Sublessee shall indemnify and hold Sublessor harmless from and against any and all actual damages, losses, costs and expenses, including reasonable attorneys’ fees, incurred by Sublessor arising out of or in any way attributable to such holding over. Upon the occurrence of an Event of Default under this Paragraph 12, actual damages shall be deemed to include the loss of any rental payment that would have been paid from Sublessee to Sublessor had Sublessee not defaulted under this Sublease.

13. Care of the Subleased Premises by Sublessee. Sublessee shall maintain and repair the Subleased Premises in the manner required of Sublessor by the Base Lease and shall not commit or allow any waste to be committed on any portion of the Subleased Premises. At the expiration or earlier termination of this Sublease, Sublessee shall surrender the Subleased Premises to Sublessor broom clean and in good condition and state of repair, reasonable wear and tear only excepted, and otherwise in the condition required under Section 20.1 of the Base Lease.

14. Incorporation of Base Lease Terms. Except for the Excluded Provisions (defined below) (none of which shall apply to this Sublease except as otherwise expressly provided herein), to the extent not otherwise inconsistent with the agreements and understandings expressed in this Sublease, the Purchase Agreement or applicable only to the original parties to the Base Lease, the terms, provisions, covenants and conditions of the Base Lease are hereby incorporated into this Sublease by reference as fully as if completely reproduced herein, and for purposes of this Sublease:

(a) The term “Owner” as used in the Base Lease shall refer to Sublessor hereunder and its successors and assigns; the term “Tenant” as used in the Base Lease shall refer to Sublessee hereunder; the term “Leased Premises” as used therein shall refer to Subleased Premises herein;

(b) In any case where Landlord reserves the right to enter the Subleased Premises, said right shall inure to the benefit of Sublessor as well as to Landlord;

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(c) Sublessee shall, with respect to the Subleased Premises only, (i) maintain insurance as required under the Base Lease in the amounts stated in the Base Lease, with Sublessor and Landlord named as additional insureds and (ii) furnish to Sublessor certificates of such insurance and other evidence satisfactory to Sublessor of the maintenance of all insurance coverage required hereunder;

(d) Except as otherwise provided herein, Sublessee agrees (i) to perform all of the terms, obligations, covenants and conditions to be performed by Sublessor pursuant to the Base Lease with respect to the Subleased Premises or any of the common areas identified therein, and (ii) not to do, suffer or permit anything to be done which would result in a default under the Base Lease or cause the Base Lease to be terminated or forfeited, and, accordingly, except as otherwise provided herein, Sublessee shall be entitled to all of the rights and benefits of Sublessor as Tenant under the Base Lease with respect to the Subleased Premises;

(e) All indemnity obligations (i) of Sublessee under the Base Lease, as incorporated herein, shall be for the benefit of Sublessor, Landlord and their employees, and (ii) of Sublessor under the Base Lease, as incorporated herein, shall be for the benefit of Sublessee, Landlord and their employees;

(f) To the extent that any notice or consent is required under this Sublease, Sublessee shall provide copies of all such notices to Landlord;

(g) The parties to this Sublease agree to promptly provide the other party with any notices received from or sent to the Landlord which affect the Subleased Premises;

(h) With regard to Article 5 of the Base Lease, Sublessor shall have no obligations thereunder to repair or restore the Building or the Leased Premises. With regard to Article 12 of the Base Lease, Sublessor shall have no obligations thereunder.

(i) As used herein, the term “Excluded Provisions” means Article 1 and Sections 4.2 and 6.1(b).

(j) Wherever the term “Premises” is used under the Base Lease it shall be deemed to mean the Subleased Premises and wherever the term “Premises Area” is used under the Base Lease it shall be deemed to mean the rentable square feet under this Sublease.

15. Security Deposit. Contemporaneously with the execution of this Sublease, Sublessee will deposit with Sublessor a security deposit in the amount of $12,682.77 (Sublessee’s Proportionate Share of $31,001.64 (the “Security Deposit”), as security for the faithful performance of Sublessee’s obligations hereunder. Sublessee’s failure to do so shall constitute an Event of Default hereunder. The Security Deposit and any amount drawn thereon shall not be considered an advance payment of Base Rental or Additional Charges, and the Security Deposit shall not be

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considered a measure of Sublessor’s damages in case of the occurrence of any default under this Sublease. In the event Sublessee defaults in respect to any of the terms, provisions, agreements, covenants and conditions of this Sublease including, but not limited to, the payment of any amounts owed by Sublessee for Base Rental or Additional Charges and such default continues uncured after the expiration of all applicable notice and cure periods herein provided, Sublessor may, at Sublessor’s option, from time to time, without prejudice to any other remedy, apply the amounts necessary to make good any arrears of amounts owing in relation to Base Rental or Additional Charges or for any damage, injury, expense or liability caused by such default. Following any such application, Sublessee shall pay to Landlord on demand the amount so applied in order to restore the Security Deposit to its original amount.

16. Representations and Warranties.

(a) Sublessor warrants and represents to Sublessee as follows:

(i) Sublessor is a corporation duly organized under the laws of Delaware and has full right, power and authority to enter into this Sublease and to carry out its obligations hereunder and all required corporate actions necessary to authorize Sublessor to enter into this Sublease and to carry out its obligations hereunder have been taken.

(ii) Attached hereto as Exhibit B is a true and complete copy of the Base Lease, including all amendments or modifications thereto, which constitute all written agreements between Landlord and Sublessor affecting the Subleased Premises.

(iii) Sublessor covenants and agrees to timely perform its obligations under this Sublease and to indemnify and hold Sublessee harmless from any and all costs, expenses, liabilities or damages which Sublessee may incur as a direct consequence of Sublessor’s failure to perform any such obligations hereunder.

(b) Sublessee warrants and represents to Sublessor as follows:

(i) Sublessee is a corporation duly organized under the laws of Delaware and has full right power and authority to enter into this Sublease and to carry out its obligations hereunder and all required corporate actions necessary to authorize Sublessee to enter into this Sublease and to carry out its obligations hereunder have been taken.

(ii) Sublessee has reviewed the terms of the Base Lease.

(iii) Sublessee covenants and agrees to timely perform its obligations under this Sublease and to indemnify and hold Sublessor harmless from any and all costs, expenses, liabilities or damages which Sublessor may incur as a direct consequence of Sublessee’s failure to perform any such obligations.

17. Notices. All notices or requests provided for hereunder shall be in writing and shall be delivered by any of the following methods: (a) hand, (b) United States Registered or

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Certified Mail, return receipt requested, postage prepaid, or (c) prepaid nationally recognized overnight carrier, and if to Sublessor, to Abovenet Communications, Inc., 360 Hamilton Avenue, White Plains, New York 10601, Attention: President and General Counsel; or if to Sublessee to Switch & Data/NY Facilities Company, LLC, 1715 N. Westshore Blvd., Suite 650, Tampa, FL 33607, Attn: Glenn Todd. A copy of all such notices shall be sent to Legal Department, Switch and Data, 1715 N. Westshore Blvd., Suite 650, Tampa, FL 33607, Attn: General Counsel and to Kronish Lieb Weiner & Hellman LLP, 1114 Avenue of the Americas, New York, New York 10036, Attention: Lawrence C. Gottlieb, Esq. All such notices shall be deemed received either when hand delivered if sent in the manner provided in (a) above, two (2) business days after being placed in the United States Mail if sent in the manner set forth in (b) above or upon delivery or attempted delivery if sent in the manner provided in (c) above. The parties hereto shall have the right from time to time to change their respective address by at least five (5) days prior written notice to the other party.

18. Governing Law. THIS SUBLEASE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

19. Interest on Sublessee’s Obligations. Unless otherwise provided for, all amounts owed by Sublessee to Sublessor under this Sublease shall bear interest from the date due until paid at the lesser of (i) the Prime Rate (defined below) + 2% or (ii) the maximum lawful contract rate per annum. For purposes of this Section 19, “Prime Rate” means the “prime” rate in the East Coast edition of The Wall Street Journal as of the first day for which a prime rate is so reported in such month.

20. Severability. In the event that any one or more of the provisions contained in this Sublease shall be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and this Sublease shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein.

21. Attorneys’ Fees. If any action at law or in equity, including an action for declaratory relief, is brought to enforce or interpret the provisions of this Sublease, the prevailing party shall be entitled to recover reasonable attorneys’ fees from the other party.

22. Amendments. This Sublease may not be altered, changed or amended, except by an instrument in writing executed by all parties hereto.

23. NO REPRESENTATIONS OR WARRANTIES. SUBLESSEE HEREBY EXPRESSLY ACKNOWLEDGES AND AGREES THAT SUBLESSOR HAS MADE NO REPRESENTATIONS OR WARRANTIES TO SUBLESSEE AS TO THE USE OR CONDITION OF THE SUBLEASED PREMISES OR THE BUILDING OR AS TO THE ADEQUACY OF ANY EQUIPMENT (INCLUDING THE HEATING, VENTILATING OR AIR CONDITIONING EQUIPMENT), EITHER EXPRESS OR IMPLIED, AND SUBLESSOR EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTY THAT THE SUBLEASED PREMISES ARE SUITABLE FOR SUBLESSEE’S INTENDED COMMERCIAL PURPOSE OR ANY OTHER IMPLIED WARRANTY REGARDING THE SUBLEASED PREMISES. IN ADDITION, EXCEPT AS HEREIN EXPRESSLY PROVIDED, SUBLESSEE EXPRESSLY

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ACKNOWLEDGES AND AGREES THAT SUBLESSEE’S OBLIGATION TO PAY BASE RENTAL OR ANY OTHER SUMS DUE HEREUNDER IS NOT DEPENDENT UPON THE CONDITION OF THE SUBLEASED PREMISES OR THE PERFORMANCE BY SUBLESSOR OF ITS DUTIES OR OBLIGATIONS HEREUNDER (OR BY LANDLORD OF ITS DUTIES OR OBLIGATIONS UNDER THE BASE LEASE), AND THAT SUBLESSEE WILL CONTINUE TO PAY BASE RENTAL AND ALL OTHER SUMS PROVIDED FOR HEREIN TO BE PAID BY SUBLESSEE WITHOUT ABATEMENT, SET-OFF, OR DEDUCTION, NOTWITHSTANDING ANY BREACH BY SUBLESSOR OF ITS DUTIES OR OBLIGATIONS HEREUNDER (OR BY LANDLORD OF ITS DUTIES OR OBLIGATIONS UNDER THE BASE LEASE), EXPRESS OR IMPLIED. SUBLESSOR AND SUBLESSEE EXPRESSLY AGREE THAT THERE ARE AND SHALL BE NO IMPLIED WARRANTIES OF MERCHANTABILITY, HABITABILITY, FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER KIND ARISING OUT OF THIS SUBLEASE AND THAT ALL EXPRESS OR IMPLIED WARRANTIES IN CONNECTION HEREWITH ARE EXPRESSLY DISCLAIMED.

24. Quiet Enjoyment. Provided Sublessee has performed all of the terms, covenants, agreements and conditions of this Sublease Agreement, Sublessee shall peaceably and quietly hold and enjoy the Subleased Premises against Sublessor and all persons claiming by, through or under Sublessor, for the Sublease Term herein described, subject to the provisions and conditions of this Sublease and of the Base Lease.

25. Entire Agreement. This Sublease and the Purchase Agreement constitute the entire agreement between Sublessee and Sublessor and supersedes all prior agreements (whether written or otherwise) that may exist between the parties with regard to the Sublease and use of the Subleased Premises by Sublessee.

26. Landlord Consent. In connection with any consent of Landlord required hereunder, notwithstanding anything herein to the contrary and provided that a written request (and all other items required to be delivered in connection therewith) for such consent was delivered to Landlord, then, if Landlord gives its consent, Sublessor shall be deemed to have likewise given its consent; provided, in no event shall Sublessor be deemed or compelled to consent to any transaction which would have the effect of increasing Sublessor’s liabilities or decreasing Sublessor’s rights under the Base Lease or this Sublease. If the Base Lease and Sublease conflict as to any consent standard applicable to Sublessee’s rights under this Sublease or with respect to the Subleased Premises, then such terms and conditions of the Base Lease shall prevail.

27. Brokers. Each of Sublessor and Sublessee represents and warrants to the other that it has dealt with no broker, agent or other person in connection with this Sublease. Each of Sublessor and Sublessee agrees to indemnify and hold the other harmless from and against any claims by any broker, agent or other person claiming a commission or other form of compensation by virtue of having dealt with the indemnifying party with regard to this Sublease. The provisions of this Section 27 shall survive the expiration or earlier termination of the Sublease.

[Signature Page Follows]

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EXECUTED in multiple counterparts, each of which shall have the force and effect of an original, as of the 13th day of March, 2003.

SUBLESSOR:
ABOVENET COMMUNICATIONS, INC.
	a Delaware corporation
By:	/s/ Michael A. Dory
	Name:	Michael A. Dory
	Title:	SVP & CFO

SUBLESSEE:
SWITCH & DATA/NY FACILITIES COMPANY, LLC,
a Delaware limited liability company
By:	/s/ George A. Pollock, Jr.
	Name:	George A. Pollock, Jr.
	Title:	Senior Vice President

ACKNOWLEDGED:
111 CHELSEA LLC,
	a New York limited liability company
By:	[Blank]
	Name:
	Title:

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EXHIBIT A

[DEPICTION OF SUBLEASED PREMISES]

A-1

EXHIBIT B

[BASE LEASE ATTACHED]

2

AGREEMENT OF LEASE

111 EIGHTH AVENUE LLC

LANDLORD

AND

METROMEDIA FIBER NETWORK SERVICES, INC.

TENANT

Premises:	Portion of the Seventh (7th) Floor 111 Eighth Avenue New York, New York 10011
Dated:	as of April 23, 1999

3

TABLE OF CONTENTS

		Page
DEFINITIONS		1
Article 1.	Demise, Premises, Term, Rent	4
Article 2.	Use And Occupancy	5
Article 3.	Alterations:	6
Article 4.	Condition of the Premises	8
Article 5.	Repairs; Floor Load	9
Article 6.	Real Estate Taxes and Labor Rate Increases	10
Article 7.	Legal Requirements	15
Article 8.	Subordination and Non-Disturbance; Estoppel Certificates	16
Article 9.	Services	18
Article 10.	Insurance	30
Article 11.	Destruction of the Premises: Property Loss or Damage	31
Article 12.	Eminent Domain	33
Article 13.	Assignment and Subletting	34
Article 14.	Access to Premises	41
Article 15.	Certificate of Occupancy	42
Article 16.	Default	42
Article 17.	Remedies and Damages,	45
Article 18.	Fees and Expenses	47
Article 19.	No Representations By Landlord	47
Article 20.	End Of Term	47
Article 21.	Quiet Enjoyment	48
Article 22.	No Waiver: Non-Liability	48
Article 23.	Waiver Of Trial By Jury	50
Article 24.	Inability To Perform	50
Article 25.	Bills And Notices	50
Article 26.	Rules And Regulations	50
Article 27.	Broker	51
Article 28.	Indemnity	51
Article 29.	Reduced Premises	52
Article 30.	Miscellaneous	53

Exhibit A:	Floor Plan of the Premises
Exhibit B:	Rules and Regulations
Exhibit C:	Approved Contractors
Exhibit D:	Initial Alterations
Exhibit E:	Roof Plan

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AGREEMENT OF LEASE, made as of April 23, 1999, between 111 EIGHTH AVENUE LLC, a Delaware limited liability company with an address c/o Taconic Investment Partners LLC, 1500 Broadway, New York, New York 10036 (“Landlord”), and METROMEDIA FIBER NETWORK SERVICES, INC., a Delaware corporation with an address at One North Lexington Avenue, Fourth (4th) Floor, White Plains, New York 10601 (“Tenant”).

WlTNESSETH:

The parties hereto, for themselves, their legal representatives, successors and assigns, hereby covenant as follows.

DEFINITIONS

“Additional Rent” means Tenant’s Tax Payment, Tenant’s Labor Rate Payment, and any and all other sums, other than Fixed Rent, payable by Tenant to Landlord under this Lease.

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, through one or more intermediaries. Controls, is Controlled by, or is under common Control with, such first Person.

“Alterations” means alterations, installations, improvements, additions or other physical changes (other than decorations, movable fixtures and equipment) in or about the Premises.

“Base Rate” means the annual rate of interest publicly announced from time to time by Citibank, N.A., New York, New York (or any successor thereto) as its “base rate”, or such other term as may be used by Citibank, N.A. from time to time for the rate presently referred to as its base rate.

“Building” means all the buildings, equipment and other improvements and appurtenances of every kind and description now located or hereafter erected, constructed or placed upon the land and any and all alterations, renewals, replacements, additions and substitutions thereto, presently known by the address of 111 Eighth Avenue, New York, New York.

“Building Systems” means the mechanical, electrical, heating, ventilating, air conditioning, elevator, plumbing, fuel, sanitary, life-safety and other service systems of the Building, but shall not include the portions of such systems installed in the Premises by Tenant.

“Business Days” means all days, excluding Saturdays, Sundays, and all days observed by either the State of New York, the Federal Government or by the labor unions servicing the Building as legal holidays.

“Commencement Date” means the date upon which Landlord delivers possession of the Premises with Landlord’s Work Substantially Completed as provided in Section 4.2. Landlord anticipates that the Commencement Date will occur on or about May 1, 1999.

“Control” means: (i) the ownership, directly or indirectly, of more than fifty per cent (50%) of the voting stock of a corporation, or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person.

“Default Rate” means a rate at all times four (4) percentage points above the Base Rate.

“Environmental Laws” means any Legal Requirements now or hereafter in effect relating to the environment, health, safety or Hazardous Materials.

“Expiration Date” means the last day of the month in which occurs the day before the day which is fifteen (15) years and three (3) months following the Commencement Date.

“Governmental Authority” means any of the United States of America, the State of New York, the City of New York, any political subdivision thereof and any agency, department, commission, board, bureau or instrumentality of any of the foregoing, now existing or hereafter created, having jurisdiction over the Real Property or any portion thereof or the curbs, sidewalks, and areas adjacent thereto.

“Hazardous Materials” means any substances, materials or wastes regulated by any Governmental Authority or deemed or defined as a “hazardous substance”, “hazardous material”, “toxic substance”, “toxic pollutant”, “contaminant”, “pollutant”, “solid waste”, “hazardous waste” or words of similar import under applicable Legal Requirements, including oil and petroleum products, natural or synthetic gas, polychlorinated biphenyls, asbestos in any form, urea formaldehyde, radon gas, or the emission of non-ionizing radiation, microwave radiation or electromagnetic fields at levels in excess of those (if any) specified by any Governmental Authority or which may cause a health hazard or danger to property, or the emission of any form of ionizing radiation.

“HVAC” means heat, ventilation and air-conditioning.

“Initial Alterations” are defined in Section 4.3.

“Landlord’s Work” is defined in Section 4.2.

“Legal Requirements” means all present and future laws, rules, orders, ordinances, regulations, statutes, requirements, codes, executive orders, rules of common law, and any judicial interpretations thereof, extraordinary as well as ordinary, of all Governmental Authorities, including the Americans with Disabilities Act (42 U.S.C. §12,101 et seq.), New York City Local Law 58 of 1987, and any law of like import, and all rules, regulations and government orders with respect thereto, and any of the foregoing relating to environmental matters, Hazardous Materials, public health and safety matters, and of any applicable fire rating bureau, or other body exercising similar functions, affecting the Real Property or the maintenance, use or occupation thereof, or any street or sidewalk comprising a part of or in front thereof or any vault in or under the same.

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“Mortgage” means any mortgage or trust indenture which may now or hereafter affect the Real Property, the Building or any Superior Lease and the leasehold interest created thereby, and all renewals, extensions, supplements, amendments, modifications, consolidations and replacements thereof or thereto, substitutions therefor, and advances made thereunder; “Mortgagee” means any mortgagee, trustee or other holder of a Mortgage.

“Permitted Use” means the use of the Premises by Tenant as a telecommunications switching center, and incidental technical equipment, and other uses normally related thereto, and office and support facilities in connection therewith, and for no other purposes.

“Person” means any individual, corporation, partnership, limited liability company, limited liability partnership, joint venture, estate, trust, unincorporated association, business trust, tenancy-in-common or other entity, or any Governmental Authority.

“Premises” means a portion of the seventh (7th) floor of the Building, as shown on the floor plan attached to this Lease as Exhibit A.

“Premises Area” means the Rentable Square Foot area of the Premises, consisting of a total of 16,530 Rentable Square Feet, as such Premises Area may be increased or decreased from time to time pursuant to this Lease.

“Real Property” means the Building, together with the plot of land upon which it stands.

“Rentable Square Feet” is deemed to be the rentable area of the Building or any portion thereof, computed on the basis of the current standard employed by Landlord on the date hereof with respect to the calculation of the deemed Rentable Square Foot area of the Building; provided, however, that in no event shall such deemed Rentable Square Footage constitute or imply any representation or warranty by Landlord as to the actual size of any floor or other portion of the Building, including the Premises.

“Rules and Regulations” means the rules and regulations annexed hereto and made a part hereof as Exhibit B to this Lease, and such other and further rules and regulations as Landlord may from time to time adopt.

“Substantial Completion” means, as to any construction performed by any party in the Premises, including the Initial Alterations, any other Alterations, that such work has been completed substantially in accordance with (i) the provisions of this Lease applicable thereto, (ii) the plans and specifications for such work, and (iii) all applicable Legal Requirements and Insurance Requirements, except for minor details of construction, decoration and mechanical adjustments, if any, the noncompletion of which does not materially interfere with Tenant’s use of the Premises, or which, in accordance with good construction practice, should be completed after the completion of other work to be performed in the Premises.

“Superior Lease(s)” means any ground or underlying lease of the Real Property or any part thereof heretofore or hereafter made by Landlord and all renewals, extensions, supplements, amendments and modifications thereof; “Lessor” means a lessor under a Superior Lease.

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“Tenant’s Alterations” means all Alterations, including the Initial Alterations, in and to the Premises which may be made by or on behalf of Tenant prior to and during the Term, or any renewal thereof.

“Tenant’s Property” means Tenant’s movable fixtures and movable partitions, telephone and other communications equipment, computer systems, furniture, trade fixtures, furnishings and other items of personal property whether or not attached or built into the Premises, and which are removable without material damage to the Premises or Building.

“Unavoidable Delays” are defined in Article 24.

“Term” means the term of this Lease, which shall commence on the Commencement Date and shall expire on the Expiration Date.

ARTICLE 1. Demise, Premises, Term, Rent

Section 1.1 Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord, the Premises, for the Term to commence on the Commencement Date and to end on the Expiration Date, at an annual rent (“Fixed Rent”) as follows:

(a) Five Hundred Forty-Five Thousand Four Hundred Ninety and 00/100 Dollars ($545,490.00) per annum ($45,457.50 per month) for the period commencing on the Commencement Date and ending one day prior to the third (3rd) anniversary of the Commencement Date;

(b) Five Hundred Seventy-Eight Thousand Five Hundred Fifty and 00/100 Dollars ($578,550.00) per annum ($48,212.50 per month) for the period commencing on the third (3rd) anniversary of the Commencement Date and ending one day prior to the sixth (6th) anniversary of the Commencement Date;

(c) Six Hundred Twenty-Eight Thousand One Hundred Forty and 00/100 Dollars ($628,140.00) per annum ($52,345.00 per month) for the period commencing on the sixth (6th) anniversary of the Commencement Date and ending one day prior to the tenth (10th) anniversary of the Commencement Date; and

(d) Six Hundred Seventy-Seven Thousand Seven Hundred Thirty and 00/100 Dollars ($677,730.00) per annum ($56,477.75 per month) for the period commencing on the tenth (10th) anniversary of the Commencement Date and ending on the Expiration Date; which Tenant agrees to pay to Landlord, without notice or demand, in lawful money of the United States, in monthly installments in advance on the first (1st) day of each calendar month during the Term, at the office of Landlord or such other place as Landlord may designate, without any set-off, offset, abatement or deduction whatsoever. Fixed Rent and Additional Rent shall be payable by check drawn upon a bank which is a member of the New York Clearinghouse Association, or on any other bank reasonably acceptable to Landlord either having an office in New York City or which is chartered as a national banking association, or by wire transfer of immediately available funds.

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Section 1.2 Notwithstanding anything to the contrary contained herein, upon execution and delivery of this Lease, Tenant shall pay to Landlord the sum of Forty-Five Thousand Four Hundred Fifty-Seven and 50/100 Dollars ($45,457.50) representing the installment of Fixed Rent for the first (1st) full calendar month of the Term after the Commencement Date, to be credited against the first installment of Fixed Rent becoming payable by Tenant under the Lease. If the Commencement Date shall occur on a date other than the first (1st) day of any calendar month. Tenant shall also pay to Landlord, on the Commencement Date, a sum equal to One Thousand Five Hundred Fifteen and 25/100 Dollars ($1,515.25), multiplied by the number of calendar days in the period from the Commencement Date to the last day of the month in which the Commencement Date shall occur, both inclusive.

Section 1.3 Notwithstanding anything to the contrary set forth in Section 1.1, so long as Tenant is not in default beyond applicable grace or notice periods under any of the terms, covenants or conditions of the Lease on Tenant’s part to be observed or performed. Tenant shall have no obligation to pay Fixed Rent on account of the period commencing on the Commencement Date and ending on the date which is one day prior to the date which is three (3) months following the Commencement Date. Nothing contained herein shall affect Tenant’s obligation to make any other payment under this Lease during the aforementioned period.

ARTICLE 2. Use And Occupancy

Section 2.1 Tenant shall use and occupy the Premises for the Permitted Use and for no other purpose. Tenant shall not use or occupy or permit the use or occupancy of any part of the Premises in any manner, not permitted hereunder, or which in Landlord’s judgment would adversely affect (a) the proper and economical rendition of any service required to be furnished to any tenant or other occupant of the Building, (b) the use or enjoyment of any part of the Building by any other tenant or other occupant, or (c) the appearance, character or reputation of the Building.

Section 2.2 Tenant shall not use or permit the Premises or any part thereof to be used: (a) for the business of printing or other manufacturing of any kind, (b) as a retail branch of a bank or savings and loan association, or as a retail loan company, as a retail stock broker’s or dealer’s office, (c) for the storage of merchandise, (d) for the distribution, by mail-order or otherwise, of merchandise, (e) as a restaurant or bar or for the sale of food or beverages, (f) as a news or cigar stand, (g) as an employment agency; labor union office, school, physician’s or dentist’s office, dance or music studio, (h) as a barber shop or beauty salon, (i) for the sale, at retail or otherwise, of any goods or products, (j) by the United States Government, the City or State of New York, any Governmental Authority, any foreign government, the United Nations or any agency or department of any of the foregoing or any Person having sovereign or diplomatic immunity, (k) for the rendition of medical, dental or other therapeutic or diagnostic services, or (1) for the conduct of an auction.

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Section 2.3 Landlord shall not be subject to any liability for failure to give possession of the Premises on the Commencement Date and the validity of this Lease shall not be impaired under such circumstances, nor shall the same be construed to extend the term of this Lease, except that Fixed Rent and Additional Rent shall be abated until possession of the Premises shall be delivered to Tenant with Landlord’s Work Substantially Completed as provided in Section 4.2. The foregoing shall constitute an express negation of Section 223-a of the New York Real Property Law or any successor law or ordinance, which shall be inapplicable hereto, and Tenant hereby waives any right to rescind this Lease which Tenant might otherwise have thereunder.

ARTICLE 3. Alterations

Section 3.1 Tenant shall not make any Alterations without Landlord’s prior written consent in each instance, provided that Tenant’s changing of wall coverings, carpeting or paint shall not be deemed to be Alterations requiring such consent. Landlord’s consent shall be granted or denied in Landlord’s sole discretion; provided, however, that Landlord shall not unreasonably withhold, delay or condition its consent to Alterations proposed to be made by Tenant to adapt the Premises for the Permitted Use (including any Initial Alterations), provided that such Alterations (a) are non-structural and do not affect the Building Systems or services, (b) are performed only by contractors approved in writing by Landlord, (c) do not affect any part of the Building other than the Premises, (d) do not adversely affect any service required to be furnished by Landlord to Tenant or to any other tenant or occupant of the Building, and (e) do not reduce the value or utility of the Building.

Section 3.2(a) Prior to making any Alterations (including any Initial Alterations), Tenant shall (i) submit to Landlord, for Landlord’s written approval, detailed plans and specifications therefor in form satisfactory to Landlord, (ii) if such Alterations require a filing with Governmental Authority or require the consent of such authority, then such plans and specifications shall (A) be prepared and certified by a registered architect or licensed engineer, and (B) comply with all Legal Requirements to the extent necessary for such governmental filing or consent, (iii) at its expense, obtain all required permits, approvals and certificates, (iv) furnish to Landlord duplicate original policies or certificates of worker’s compensation (covering all persons to be employed by Tenant, and all contractors and subcontractors supplying materials or performing work in connection with such Alterations) and comprehensive public liability (including property damage coverage) insurance and Builder’s Risk coverage (issued on a completed value basis) all in such form, with such companies, for such periods and in such amounts as Landlord may require, naming Landlord and its employees and agents, and any Lessor and any Mortgagee as additional insureds, and (v) with respect to any Alteration costing more than $50,000.00 to complete, furnish to Landlord such evidence of Tenant’s ability to complete and to fully and completely pay for such Alteration as is satisfactory to Landlord. All Alterations shall be performed by Tenant at Tenant’s sole cost and expense (A) in a good and workmanlike manner using new materials of first class quality, (B) in compliance with all Legal Requirements, and (C) in accordance with the plans and specifications previously approved by Landlord. Tenant shall at its cost and expense obtain all approvals, consents and permits from every Governmental Authority having or claiming jurisdiction prior to, during and upon completion of such Alterations. Tenant shall promptly reimburse Landlord, as Additional Rent

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and upon demand, for any and all costs and expenses incurred by Landlord in connection with Landlord’s review of Tenant’s plans and specifications for any such Alteration.

(b) Landlord shall not unreasonably withhold, condition or delay its approval of the contractors proposed to be used by Tenant for Tenant’s Alterations, provided that in the case of the mechanical, electrical, plumbing and fire safety trades, Tenant shall select its contractors and sub-contractors from Landlord’s list of approved contractors. Attached hereto as Exhibit C is a list of contractors currently approved by Landlord for the performance of work in the Building, which list may be modified by Landlord from time to time.

(c) Notwithstanding the foregoing provisions of this Article 3, Tenant shall be permitted to make minor, non-structural alterations to the Premises (“Minor Alterations”) upon prior notice to Landlord, but without the necessity of procuring Landlord’s consent thereto. provided that the estimated cost of each such Minor Alteration does not exceed $25,000.00 in any one instance. The provisions of subsections 3.2(a) and (b) shall be applicable to Minor Alterations. Prior to commencing any Minor Alteration, Tenant shall furnish Landlord with (i) working drawings or plans for such Minor Alteration in sufficient detail to permit Landlord to determine that such Alteration complies with the requirements hereof, and (ii) the names of the contractors proposed to be used by Tenant for such Minor Alteration.

(d) Upon completion of any Alterations, Tenant, at its expense, shall promptly obtain certificates of final approval of such Alterations as may be required by any Governmental Authority, and shall furnish Landlord with copies thereof, together with “as-built” plans and specifications for such Alterations prepared on an Autocad Computer Assisted Drafting and Design System (or such other system or medium as Landlord may accept) using naming conventions issued by the American Institute of Architects in June, 1990 (or such other naming convention as Landlord may accept) and magnetic computer media of such record drawings and specifications, translated into DXF format or another format acceptable to Landlord.

Section 3.3 All Alterations in and to the Premises which may be made by or on behalf of Tenant, prior to and during the Term or any renewal thereof, shall become the property of Landlord upon the expiration or sooner termination of this Lease, and upon the Expiration Date or earlier termination of the Term or any renewal thereof (a) Tenant shall remove Tenant’s Property from the Premises, and (b) unless Landlord notifies Tenant no later than twenty (20) days prior to the Expiration Date that any or all items of Tenant’s Alterations shall not be removed from the Premises, Tenant shall remove Tenant’s Alterations from the Premises, at Tenant’s sole cost and expense. Tenant shall repair and restore in a good and workmanlike manner (reasonable wear and tear excepted) any damage to the Premises and the Building caused by such removal of Tenant’s Property and Tenant’s Alterations. Any of Tenant’s Alterations or Tenant’s Property not so removed by Tenant at or prior to the Expiration Date or earlier termination of the Term shall be deemed abandoned and may, at the election of Landlord, either be retained as Landlord’s property or be removed from the Premises by Landlord at Tenant’s expense. The covenants and agreements set forth in this Section 3.3 shall survive the expiration or earlier termination of this Lease.

Section 3.4 If, because of any act or omission of Tenant, its employees, agents, contractors, or subcontractors, any mechanic’s lien, U.C.C. financing statement or other lien,

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charge or order for the payment of money shall be filed against Landlord, or against all or any portion of the Premises, the Building or the Real Property, Tenant shall, at its own cost and expense, cause the same to be discharged of record, by bonding or otherwise, within sixty (60) days after the filing thereof, and Tenant shall indemnify, defend and save Landlord harmless against and from all costs, expenses, liabilities, suits, penalties, claims and demands (including reasonable attorneys’ fees and disbursements) resulting therefrom.

Section 3.5 Tenant shall not, at any time prior to or during the Term, directly or indirectly employ, or permit the employment of any contractor, mechanic or laborer in the Premises, whether in connection with any Alteration or otherwise, if in Landlord’s sole judgment such employment will interfere or cause any conflict with other contractors, mechanics, or laborers engaged in the construction, maintenance or operation of the Building by Landlord, Tenant or others, or the use and enjoyment of other tenants or occupants of the Building.

ARTICLE 4. CONDITION OF THE PREMISES

Section 4.1 Tenant has examined the Premises and agrees to accept possession of the Premises in their “as is” condition on the Commencement Date, and further agrees that, Landlord shall have no obligation to perform any work, supply any materials, incur any expenses or make any installations in order to prepare the Premises for Tenant’s occupancy. The taking of possession of the Premises by Tenant shall be conclusive evidence as against Tenant that at the time such possession was so taken, the Premises were in good and satisfactory condition.

Section 4.2 Landlord shall perform the following work at the Premises, at Landlord’s sole cost and in accordance with all Legal Requirements (“Landlord’s Work”): (a) demolish all existing improvements within the Premises, remove, encapsulate or otherwise abate any asbestos-containing materials within the Premises in accordance with Legal Requirements, and provide Tenant with a New York City Department of Environmental Protection Form ACP-5 in connection therewith, and deliver the Premises in broom-clean condition, (b) construct a demising wall in a Building standard manner to separate the Premises from adjacent rentable space and common areas, and (c) install Building standard entrance doors of at least 5’ x 7’ with 3’ active leaf and 2’ inactive leaf to the Premises. Upon the request of Tenant, made at any time prior to Landlord’s commencement of Landlord’s Work, Landlord shall as part of Landlord’s Work demolish all improvements to the Building’s life safety systems within the Premises. Notwithstanding anything to the contrary contained in this Lease, but subject to Landlord’s obligations set forth in Section 9.11, Landlord shall have no obligation to abate, encapsulate or remove any asbestos-containing materials located in the Building’s core or perimeter, behind perimeter heating units or in shafts, columns, beams or wet stacks, and the work, if any, to be performed by Landlord in the Building’s core or perimeter, in shafts, columns, beams or wet stacks pursuant to this Section 4.2 shall not require such abatement, encapsulation or removal in order for an ACP-5 Certificate to be issued with respect to the Premises. Without limitation of the provisions of Section 2.3, Landlord agrees to use commercially reasonable efforts to complete Landlord’s Work within thirty (30) days after the execution and delivery of this Lease by Landlord and Tenant.

Section 4.3 Landlord acknowledges that Tenant intends to perform certain Alterations, including the Alterations described in Exhibit D attached hereto and made a part

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hereof, in order to prepare the Premises for its occupancy, which alterations shall be satisfactory to Landlord and shall comply with applicable Legal Requirements (the “Initial Alterations”).

Section 4.4 Upon the request of Tenant, Landlord, at Tenant’s cost and expense, shall join in any applications for any permits, approvals or certificates from any Governmental Authority required to be obtained by Tenant, and shall sign such applications reasonably promptly after request by Tenant (provided that (i) the provisions of the applicable Legal Requirement shall require that Landlord join in such application, and (ii) such application is acceptable to Landlord) and shall otherwise cooperate with Tenant in connection therewith, provided that Landlord shall not be obligated to incur any cost or expense, including attorneys’ fees and disbursements, or suffer or incur any liability, in connection therewith.

ARTICLE 5. Repairs; Floor Load

Section 5.1 Landlord shall maintain and repair the Building Systems and the public portions of the Building, both exterior and interior, and the structural elements thereof, including the roof, foundation and curtain wall. Tenant, at Tenant’s expense, shall take good care of the Premises and the fixtures, systems, equipment and appurtenances therein, and make all non-structural repairs thereto as and when needed to preserve them in good working order and condition, except for reasonable wear and tear, obsolescence and damage for which Tenant is not responsible pursuant to the provisions of Articles 10 and 11. Notwithstanding the foregoing, all damage or injury to the Premises or to any other part of the Building, or to its fixtures, equipment and appurtenances, caused by or resulting from carelessness, omission, neglect or improper conduct of, or Alterations made by Tenant, Tenant’s agents, employees or licensees, shall be repaired at Tenant’s expense, (a) by Tenant to the satisfaction of Landlord (if the required repairs are non-structural and do not affect any Building System), or (b) by Landlord (if the required repairs are structural or affect any Building System). Tenant also shall repair all damage to the Building and the Premises caused by the making of any Alterations by Tenant or by the moving of Tenant’s Property. All of such repairs shall be of quality or class equal to the original work or construction. If Tenant fails after fifteen (15) days notice to proceed with due diligence to make repairs required to be made by Tenant, Landlord may make such repairs at the expense of Tenant, and Tenant shall pay the costs and expenses thereof incurred by Landlord, with interest at the Default Rate, as Additional Rent within ten (10) days after rendition of a bill or statement therefor.

Section 5.2 Tenant shall not place a load upon any floor of the Premises exceeding the floor load per square foot which such floor was designed to carry and which is allowed by law. Landlord represents to Tenant that the Certificate of Occupancy for the Building states that the Premises has a floor load of 200 pounds per square foot of the Premises. Tenant shall not move any safe, heavy equipment, business machines, freight, bulky matter or fixtures into or out of the Building without Landlord’s prior consent. If such safe, equipment, freight, bulky matter or fixtures requires special handling, Tenant shall employ only persons holding a Master Rigger’s license to do such work.

Section 5.3 There shall be no allowance to Tenant for a diminution of rental value, no constructive eviction of Tenant and no liability on the part of Landlord by reason of inconvenience, annoyance or injury to business arising from Landlord making, or failing to

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make, any repairs, alterations, additions or improvements in or to any portion of the Building or the Premises, or in or to fixtures, appurtenances or equipment thereof. Landlord shall use reasonable efforts to minimize interference with Tenant’s access to and use and occupancy of the Premises in making any repairs, alterations, additions or improvements; provided, however, that Landlord shall have no obligation to employ contractors or labor at overtime or other premium pay rates or to incur any other overtime costs or additional expenses whatsoever.

Section 5.4 Tenant shall not require, permit, suffer or allow the cleaning of any window in the Premises from the outside in violation of Section 202 of the New York Labor Law or any successor statute thereto, or of any other Legal Requirement.

ARTICLE 6 Real Estate Taxes And Labor Rate Increases

Section 6.1 The following terms shall have the meanings set forth below:

(a) “Taxes” shall include the aggregate amount of (i) all real estate taxes, assessments (special or otherwise), sewer and water rents, rates and charges and any other governmental levies, impositions or charges, whether general, special, ordinary, extraordinary, foreseen or unforeseen, which may be assessed, levied or imposed upon all or any part of the Real Property, and (ii) any expenses including attorneys fees and disbursements and experts’ and other witness’ fees) incurred in contesting any of the foregoing or the Assessed Valuation (as defined in Section 6.1(d)) of all or any part of the Real Property. If at any time after the date hereof the methods of taxation prevailing at the date hereof shall be altered so that in lieu of or as an addition to or as a substitute for the whole or any part of the taxes, assessments, rents, rates, charges, levies or impositions now assessed, levied or imposed upon all or any part of the Real Property, there shall be assessed, levied or imposed (A) a tax, assessment, levy, imposition or charge based on the rents received therefrom whether or not wholly or partially as a capital levy or otherwise, (B) a tax, assessment, levy, imposition or charge measured by or based in whole or in part upon all or any part of the Real Property and imposed upon Landlord, (C) a license fee measured by the rents or (D) any other tax, assessment, levy, imposition, charges or license fee however described or imposed, then all such taxes, assessments, levies, impositions, charges or license fees or the part thereof so measured or based shall be deemed to be Taxes. Taxes shall not include franchise, gift, inheritance, estate, sales, income or profit taxes imposed upon Landlord, any Lessor or any Mortgagee by any Governmental Authority.

(b) “Tenant’s Share” means 72/100 of one percent (.72%).

(c) “Base Taxes” means an amount equal to the Taxes payable for the Tax Year commencing on July 1, 1998 and ending on June 30, 1999.

(d) “Assessed Valuation” mains the amount for which the Real Property is assessed pursuant to applicable provisions of the New York City Charter and of the Administrative Code of the City of New York for the purpose of imposition of Taxes.

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(e) “Tax Year” means the period July 1 through June 30 (or such other period as may be duly adopted by the City of New York as its fiscal year for real estate tax purposes).

(f) “Comparison Year” means (i) with respect to Taxes, any Tax Year commencing subsequent to 1998/1999 Tax Year, and (ii) with respect to Labor Rates, any calendar year commencing subsequent to the Base Labor Year.

(g) “Landlord’s Statement” means an instrument or instruments containing a comparison of either (i) the Base Taxes and the Taxes payable for any Comparison Year, or (ii) the Base Labor Rates and the Labor Rates applicable to any Comparison Year.

(h) “Tennant’s Projected Share of Taxes” means Tenant’s Tax Payment (as defined in Section 6.1(i)), if any, made by Tenant for the prior Comparison Year, plus an amount equal to Landlord’s estimate of the amount of increase in Tenant’s Tax Payment for the then current Comparison Year, divided by twelve (12) and payable monthly by Tenant to Landlord as Additional Rent.

(i) “Tenant’s Tax Payment” means Tenant’s Share of the excess of the Taxes payable for any Comparison Year over the Base Taxes.

Section 6.2 (a) If the Taxes payable for any Comparison Year (any part or all of which falls within the Term) shall exceed the Base Taxes, Tenant shall pay Tenant’s Tax Payment to Landlord, as Additional Rent, within ten (10) Business Days after demand from Landlord therefor, which demand shall be accompanied by Landlord’s Statement. Before or after the start of each Comparison Year, Landlord shall furnish to Tenant a Landlord’s Statement in respect of Taxes. If there shall be any increase in Taxes payable for any Comparison Year, whether during or after such Comparison Year or if there shall be any decrease in the Taxes payable for any Comparison Year during such Comparison Year, Landlord may furnish a revised Landlord’s Statement for such Comparison Year, and Tenant’s Tax Payment for such Comparison Year shall be adjusted and, within ten (10) Business Days after Tenant’s receipt of such revised Landlord’s Statement, Tenant shall (i) with respect to any increase in Taxes payable for such Comparison Year, pay such increase in Tenant’s Tax Payment to Landlord, or (ii) with respect to any decrease in Taxes payable for such Comparison Year, Landlord shall credit such decrease in Tenant’s Tax Payment against the next installment of Tenant’s Share of Taxes payable by Tenant pursuant to this Section 6.2(a), provided that if such decrease in Taxes is attributable to the final Comparison Year of the Term, Landlord shall pay the amount of such decrease in Tenant’s Tax Payment to Tenant. If, during the Term, Landlord shall elect to collect Tenant’s Tax Payments in full or in quarterly or bi-annual or other installments on any other date or dates than as presently required, then following Landlord’s notice to Tenant, Tenant’s Tax Payments shall be correspondingly revised. The benefit of any discount for any early payment or prepayment of Taxes relating to all or any part of the Real Property shall accrue solely to the benefit of Landlord and Taxes shall be computed without subtracting such discount.

(b) With respect to each Comparison Year, on account of which Landlord shall (or anticipates that it may) be entitled to receive Tenant’s Tax Payment, Tenant shall pay to Landlord, as Additional Rent for the then current Tax Year, Tenant’s Projected Share of Taxes. Upon each date that a Tax Payment or an installment on account thereof shall be due from

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Tenant pursuant to the terms of this Section 6.2, Landlord shall apply the aggregate of the installments of Tenant’s Projected Share of Taxes then on account with Landlord against Tenant’s Tax Payment or installment thereof then due from Tenant. In the event that such aggregate amount shall not be sufficient to discharge such Tax Payment or installment. Landlord shall so notify Tenant, and the amount of Tenant’s payment obligation with respect to such Tax Payment or installment pursuant to this Section 6.2, shall be equal to the amount of the insufficiency and shall be payable within ten (10) Business Days of demand by Landlord. If, however, such aggregate amount shall be greater than the Tax Payment or installment, Landlord shall credit the amount of such excess against the next payment of Tenant’s Projected Share of Taxes due hereunder.

(c) Only Landlord shall be eligible to institute Tax reduction or other proceedings to reduce the Assessed Valuation of the Real Property, and the filings of any such proceeding by Tenant without Landlord’s prior written consent shall constitute a default hereunder. If the Taxes payable for the 1998/1999 Tax Year are reduced by final determination of legal proceedings, settlement or otherwise, then the Base Taxes shall be correspondingly revised, the Additional Rent theretofore paid or payable on account of Tenant’s Tax Payment hereunder for all Comparison Years shall be recomputed on the basis of such reduction, and Tenant shall pay to Landlord, as Additional Rent within ten (10) Business Days after being billed therefor, any deficiency between the amount of such Additional Rent theretofore computed and paid by Tenant to Landlord and the amount thereof due as a result of such recomputations. If the Taxes payable for the 1998/1999 Tax Year are increased by such final determination of legal proceedings, settlement or otherwise, then, Landlord shall either pay to Tenant, or at Landlord’s election, credit against subsequent payments due under this Section 6.2, an amount equal to the excess of the amounts of such Additional Rent theretofore paid by Tenant over the amount thereof actually due as a result of such recomputations. If Landlord shall receive a refund or reduction of Taxes for any Comparison Year, Landlord shall, within a reasonable time after such refund is actually received or such credit is actually applied against Taxes then due and payable, either pay to Tenant, or, at Landlord’s election, credit against subsequent payments under this Section 6.2, an amount equal to Tenant’s Share of the refund or reduction, provided that such amount shall not exceed Tenant’s Tax Payment paid for such Comparison Year. Nothing herein contained shall obligate Landlord to file any application or institute any proceeding seeking a reduction in Taxes or Assessed Valuation.

(d) Tenant’s Tax Payment shall be made as provided in this Section 6.2 regardless of the fact that Tenant may be exempt, in whole or in part, from the payment of any taxes by reason of Tenant’s diplomatic or other tax exempt status or for any other reason whatsoever.

(e) Tenant shall pay to Landlord, as Additional Rent upon demand, any occupancy tax or rent tax now in effect or hereafter enacted, if payable by Landlord in the first instance or hereafter required to be paid by Landlord.

(f) If the Commencement Date or the Expiration Date shall occur on a date other than July 1 or June 30, respectively, any Additional Rent payable by Tenant to Landlord under this Section 6.2 for the Comparison Year in which such Commencement Date or Expiration Date shall occur, shall be apportioned in that percentage which the number of days in

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the period from the Commencement Date to June 30 or from July 1 to the Expiration Date, as the case may be, both inclusive, shall bear to the total number of days in such Comparison Year. In the event of a termination of this Lease, any Additional Rent under this Section 6.2 shall be paid or adjusted within thirty (30) days after submission of Landlord’s Statement. In no event shall Fixed Rent ever be reduced by operation of this Section 6.2 and the rights and obligations of Landlord and Tenant under the provisions of this Section 6.2 with respect to any Additional Rent shall survive the expiration or earlier termination of this Lease.

Section 6.3 The following terms shall have the meanings set forth below:

(a) “Comparison Year” shall mean any calendar year subsequent to the Base Labor Year.

(b) “R.A.B.” shall mean the Realty Advisory Board on Labor Relations, Incorporated, or its successor.

(c) “Local 32B-32J” shall mean Local 32B-32J of the Building Service Employees International Union, AFL-CIO, or its successor.

(d) “Class A Office Buildings” shall mean office buildings so categorized under any agreement between R.A.B. and Local 32B-32J, regardless of the designation given to such office buildings in any such agreement.

(e) “Labor Rates” shall mean a sum equal to the regular hourly wage rate required to be paid to Others (hereinafter defined) employed in Class A Office Buildings pursuant to an agreement between R.A.B. and Local 32B-32J; provided, however, that:

(i) if, as of October 1st of any Comparison Year, any such agreement shall require Others in Class A Office Buildings to be regularly employed on days or during hours when overtime or other premium pay rates are in effect pursuant to such agreement, then the term “regular hourly wage rate”, as used in this Section 6.3 shall mean the average hourly wage rate for the hours in a calendar week during which Others are required to be regularly employed;

(ii) if no such agreement is in effect as of October 1st of any Comparison Year with respect to Others, then the term “regular hourly wage rate”, as used in this Section 6.3 shall mean the regular hourly wage rate actually paid to Others employed in the Building by Landlord or by an independent contractor engaged by Landlord; and

(iii) the term “regular hourly wage rate” shall exclude all benefits of any kind, including those payable directly to taxing authorities or others on account of the employment and all welfare, pension and fringe employee benefits and payments of any kind paid or given pursuant to such agreement.

(f) “Others” shall mean that classification of employee engaged in the general maintenance and operation of Class A Office Buildings most nearly comparable to the classification now applicable to “others” in the current agreement between R.A.B. and Local 32B-32J.

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(g) “Base Labor Year” shall mean the calendar year 1998.

(h) “Base Labor Rates” shall mean the Labor Rates in effect for the Base Labor Year.

(i) “Tenant’s Labor Rate Payment” is defined in Section 6.4(a).

Section 6.4 (a) If the Labor Rates in effect for any Comparison Year (any part or all of which falls within the Term) shall be greater than the Base Labor Rates, then Tenant shall pay, as Additional Rent for such Comparison Year and continuing thereafter until a new Landlord’s Statement is rendered to Tenant, an amount (“Tenant’s Labor Rate Payment”) equal to (i) 16,530 multiplied by, (ii) the number of cents (inclusive of any fractions of a cent) by which the Labor Rates in effect for such Comparison Year exceed the Base Labor Rates.

(b) At any time prior to, during or after any Comparison Year Landlord shall render to Tenant a Landlord’s Statement showing (i) a comparison of the Labor Rates for the Comparison Year with the Base Labor Rates, and (ii) the amount of Tenant’s Labor Rate Payment resulting from such comparison. Landlord’s failure to render a Landlord’s Statement during or with respect to any Comparison Year shall not prejudice Landlord’s right to render a Landlord’s Statement during or with respect to any subsequent Comparison Year and shall not eliminate or reduce Tenant’s obligation to pay Tenant’s Labor Rate Payment pursuant to this Article 6 for such Comparison Year.

(c) Tenant’s Labor Rate Payment shall be payable by Tenant on the first day of the month following the furnishing to Tenant of a Landlord’s Statement, in equal monthly installments, each such installment to be equal to l/12th of Tenant’s Labor Rate Payment for such Comparison Year multiplied by the number of months (and any fraction thereof) of the Term then elapsed since the commencement of such Comparison Year, continuing monthly thereafter until rendition of the next succeeding Landlord’s Statement.

(d) The provisions of this Section 6.4 shall be effective irrespective of whether or not (i) the Building is classified as a Class A office building from time to time, or (ii) any Building employees are members of Local 32B-32J. Tenant acknowledges and agrees that the computation of Labor Rates hereunder is intended to serve solely as a formula for an agreed rental adjustment, rather than an actual operating expense calculation, and is not intended to reflect the actual cost to Landlord of wages at the Building or any increases or decreases in such cost.

Section 6.5 (a) If the Commencement Date or the Expiration Date shall occur on a date other than January 1 or December 31, respectively, any Additional Rent under this Article 6 for the Comparison Year in which such Commencement Date or Expiration Date shall occur shall be apportioned in that percentage which the number of days in the period from the Commencement Date to December 31 or from January 1 to the Expiration Date, as the case may be, both inclusive, shall bear to the total number of days in such Comparison Year. In the event of a termination of this Lease, any Additional Rent under this Article 6 shall be paid or adjusted within thirty (30) days after submission of a Landlord’s Statement. In no event shall Fixed Rent ever be reduced by operation of this Section 6.5 and the rights and obligations of

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Landlord and Tenant under the provisions of this Article 6 with respect to any Additional Rent shall survive the expiration or earlier termination of this Lease.

(b) The computations of Additional Rent under this Article 6 are intended to constitute a formula for an agreed rental adjustment and may or may not constitute an actual reimbursement to Landlord for costs and expenses paid by Landlord with respect to the building.

Section 6.6 Landlord’s failure to render a Landlord’s Statement with respect to any Comparison Year shall not prejudice Landlord’s right to thereafter render a Landlord’s Statement with respect thereto or with respect to any subsequent Comparison Year, nor shall the rendering of a Landlord’s Statement prejudice Landlord’s right to thereafter render a corrected Landlord’s Statement for that Comparison Year. Nothing herein contained shall, restrict Landlord from issuing a Landlord’s Statement at any time there is an increase in Taxes or Labor Rates during any Comparison Year or any time thereafter.

Section 6.7 If any capital improvement is made to the Real Property during any calendar year during the Term in compliance with any Legal Requirements enacted or imposed subsequent to the date of this Lease (including reinterpretations, modifications or amendments to existing Legal Requirements), then Tenant shall pay to Landlord, immediately upon demand therefor, Tenant’s Proportionate Share of the reasonable annual amortization, with interest, of the cost of such improvement in each calendar year during the Term during which such amortization occurs.

ARTICLE 7. Legal Requirements

Section 7.1 Tenant, at its sole expense, shall comply with all Legal Requirements applicable to the Premises or the use and occupancy thereof by Tenant, and make all repairs or Alterations required thereby, whether structural or nonstructural, ordinary or extraordinary, unless otherwise expressly provided herein. Tenant shall not do or permit to be done any act or thing upon the Premises which will invalidate or be in conflict with Landlord’s insurance policies, and shall not do or permit anything to be done in or upon the Premises, or use the Premises in a manner, or bring or keep anything therein, which shall increase the rates for casualty or liability insurance applicable to the Building. If, as a result of any act or omission by Tenant or by reason of Tenant’s failure to comply with the provisions of this Article, the insurance rates for the Building shall be increased, then Tenant shall desist from doing or permitting to be done any such act or thing and shall reimburse Landlord, as Additional Rent hereunder, for that part of all insurance premiums thereafter paid by Landlord which shall have been charged because of such act, omission or failure by Tenant, and shall make such reimbursement upon demand by Landlord.

Section 7.2 Tenant, at its expense, shall comply with all Environmental Laws and with any directive of any Governmental Authority which shall impose any violation, order or duty upon Landlord or Tenant under any Environmental Laws with respect to the Premises or the use or occupation thereof. Tenant’s obligations hereunder with respect to Hazardous Materials shall extend only to those matters directly or indirectly based on, or arising or resulting from (a) the actual or alleged presence of Hazardous Materials on the Premises or in the Building which is

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caused or permitted by Tenant, and (b) any Environmental Claim (defined below) relating in any way to Tenant’s operation or use of the Premises or the Building.

Section 7.3 Tenant shall provide Landlord with copies of all communications and related materials regarding the Premises which Tenant shall receive from or send to (a) any Governmental Authority relating in any way to any Environmental Laws, or (b) any Person with respect to any claim based upon any Environmental Laws or relating in any way to Hazardous Materials (any such claim, an “Environmental Claim”). Landlord or its agents may perform an environmental inspection of the Premises at any time during the Term, upon prior notice to Tenant except in an emergency.

ARTICLE 8. SUBORDINATION AND NON-DISTURBANCE; ESTOPPEL CERTIFICATES

Section 8.1 This Lease, and all rights of Tenant hereunder, are and shall be subject and subordinate in all respects to all Mortgages and Superior Leases. This Section 8.1 shall be self-operative and no further instrument of subordination shall be required. In confirmation of such subordination, Tenant shall promptly execute and deliver any instrument that Landlord or any Lessor or Mortgagee may reasonably request to evidence such subordination. Without limitation of the provisions of this Section 8.1, Landlord agrees to request a subordination, non-disturbance and attornment agreement from all existing and future Mortgagees and Lessors, in the standard form customarily employed by such Mortgagee or Lessor, provided that Landlord shall have no liability to Tenant in the event that such Mortgagee or Lessor fails to provide Tenant with any such agreements. Tenant shall reimburse Landlord, within ten (10) days after demand therefor, for Landlord’s reasonable out-of-pocket costs, including reasonable attorney’s fees and disbursements, incurred in connection with such request.

Section 8.2 In the event of any act or omission of Landlord which would give Tenant the right, immediately or after lapse of a period of time, to cancel or terminate this lease, or to claim a partial or total eviction, Tenant shall not exercise such right (a) until it has given written notice of such act or omission to each Mortgagee and Lessor whose name and address shall previously have been furnished to Tenant in writing, and (b) unless such act or omission shall be one which is not capable of being remedied by Landlord or such Mortgagee or Lessor within a reasonable period of time, until a reasonable period for remedying such act or omission shall have elapsed following the giving of such notice and following the time when such Mortgagee or Lessor shall have become entitled under such Mortgage or Superior Lease, as the case may be, to remedy the same (which reasonable period shall in no event be less than the period to which Landlord would be entitled under this Lease or otherwise, after similar notice, to effect such remedy), provided such Mortgagee or Lessor shall with due diligence give Tenant written notice of its intention to remedy such act or omission, and such Mortgagee or Lessor shall commence and thereafter continue with reasonable diligence to remedy such act or omission. If more than one Mortgagee or Superior Lessor shall become entitled to any additional cure period under this Section 8.2, such cure periods shall run concurrently, not consecutively.

Section 8.3 If a Mortgagee or Lessor shall succeed to the rights of Landlord under this Lease, whether through possession or foreclosure action or delivery of a new lease or

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deed, then at the request of such party so succeeding to Landlord’s rights (“Successor Landlord”) and upon Successor Landlord’s written agreement to accept Tenant’s attornment. Tenant shall attorn to and recognize Successor Landlord as Tenant’s landlord under this Lease, and shall promptly execute and deliver any instrument that Successor Landlord may reasonably request to evidence such attornment. Upon such attornment this Lease shall continue in full force and effect as, or as if it were, a direct lease between Successor Landlord and Tenant upon all of the terms, conditions and covenants as are set forth in this Lease and shall be applicable after such attornment except that Successor Landlord shall not:

(a) be liable for any previous act or omission of Landlord under this Lease;

(b) be subject to any offset, not expressly provided for in this Lease, which shall have theretofore accrued to Tenant against Landlord; or

(c) be bound by any previous modification of this Lease, not expressly provided for in this Lease, or by any previous prepayment of more than one month’s fixed rent, unless such modification or prepayment shall have been expressly approved in writing by such Mortgagee or Lessor.

Section 8.4 Each party agrees, at any time and from time to time, as requested by the other party, upon not less than ten (10) days’ prior notice, to execute and deliver to the other a written statement executed and acknowledged by such party (a) stating that this Lease is then in full force and effect and has not been modified (or if modified, setting forth all modifications), (b) setting forth the then annual Fixed Rent, (c) setting forth the date to which the Fixed Rent and Additional Rent have been paid, (d) stating whether or not, to the best knowledge of the signatory, the other party is in default under this Lease, and if so, setting forth the specific nature of all such defaults, (e) stating whether there are any subleases affecting the Premises, (f) stating the address of the signatory to which all notices and communication under the Lease shall be sent, the Commencement Date and the Expiration Date, and (g) as to any other matters reasonably requested by the party requesting such certificate. The parties acknowledge that any statement delivered pursuant to this Section 8.4 may be relied upon by others with whom the party requesting such certificate may be dealing, including any purchaser or owner of the Real Property or the Building, or of Landlord’s interest in the Real Property or the Building or any Superior Lease, or by any Mortgagee or Lessor, or by any prospective or actual sublessee of the Premises or assignee of this Lease, or permitted transferee of or successor to Tenant.

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ARTICLE 9. SERVICES

Section 9.1 Landlord shall provide, at Landlord’s expense, except as otherwise set forth herein, the following services:

Section 9.2 Electricity.

(a) Landlord, at Landlord’s expense, subject to the provisions of this Article 9, shall make available to Tenant, at a location in the basement of the Building to be designated by Landlord. AC electric capacity at a level not less than 600 amperes, 480 volt, 3-phase, 4-wire, dedicated to Tenant (the “Basic Capacity”). Tenant shall pay to Landlord the following amounts for the installation of the Basic Capacity: (i) $126,350.00 (i.e., a one-time charge equal to $350.00 multiplied by each ampere in excess of 239 amperes), and (ii) Landlord’s actual out-of-pocket costs for the installation of a bus duct on the seventh (7th) floor of the Building and connections from such bus duct to the Premises. In the event that Tenant shall require electric capacity in excess of the Basic Capacity, then upon request, and subject to the availability of additional electrical capacity in the Building, as such availability shall be determined by Landlord in its sole judgment, Landlord shall make additional electric power available to Tenant, at a location in the basement of the Building to be designated by Landlord, and Tenant shall pay to Landlord a one-time charge equal to Landlord’s then-applicable rate per ampere for additional power, multiplied by each ampere in excess of the Basic Capacity so provided by Landlord. Tenant shall be solely responsible, at Tenant’s sole cost and expense, for the installation of all risers and other electrical facilities and equipment required in order to deliver such additional electric power to the Premises, and to distribute it therein. Tenant covenants that Tenant’s use and consumption of electric current shall not at any time exceed the Basic Capacity supplied to the Premises as the same may be increased from time to time pursuant to this Section 9.2, nor exceed the capacity of any of the electrical facilities and installations in or otherwise serving or being used in the Premises. Tenant shall pay Landlord, as Additional Rent, at any time and from time to time, but no more frequently than monthly, for its consumption of electrical energy at the Premises, as provided herein. Tenant may, at Tenant’s sole cost and expense and subject to the provisions of Article 3 and Section 5.2, install equipment to convert the AC electric power supplied by Landlord pursuant to this Article 9 to DC electric power. In the event that Tenant requires electric power in excess of the Basic Capacity and Landlord is unable or unwilling to provide such excess electric power, then Tenant shall have the right to obtain, at its sole cost and expense, such excess electric power from the Electricity Provider (as defined in Section 9.2(d)).

(b) In the event that Tenant’s total power requirements at the Premises, based on an annual review of Tenant’s consumption following the first anniversary of the Commencement Date, shall be less than the Basic Capacity, Tenant shall pay to Landlord an annual sum equal to the fee, if any, which Landlord is obligated to pay to the Electricity Provider, commonly known as a “use it or lose it” fee, for the availability of such capacity, presently payable by Landlord to the Electricity Provider at the rate of $12.50 per unused ampere per annum. Further, if as of the third (3rd) anniversary of the Commencement Date, Tenant shall continue to require less than the Basic Capacity, then Landlord shall have the right to reduce the level of electric power supplied to the Premises to Tenant’s actual power requirements as reasonably determined by Landlord.

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(c) The calculations and determinations of the charges for electric energy consumed by Tenant shall be based on the readings of one or more submeters to be installed by Landlord at Tenant’s sole expense, applied to Landlord’s Electricity Cost, as defined in Section 9.2(d). Tenant shall pay for electricity consumed as determined thereunder as measured and calculated from time to time by such submeter or submeters, plus Landlord’s charge for overhead and supervision, which charge shall not exceed seven percent (7%) of such payment by Tenant. In addition, Tenant shall pay to Landlord, as Additional Rent (i) the fees and expenses of Landlord’s electrical contractor for services rendered by such contractor in the maintenance and repair of such submeter(s), and (ii) the amount of any taxes imposed by any Governmental Authority on Landlord’s receipts from the sale of electricity to Tenant. In the event that more than one submeter is used to measure Tenant’s consumption of electricity in the Premises. Tenant shall be billed only on the basis of the “totalized” demand, i.e., as though a single meter were measuring such usage.

(d) “Landlord’s Electricity Cost” means the cost per kilowatt hour and cost per kilowatt demand, adjusted by time of day factors, fuel adjustment charges and other applicable rate adjustments, to Landlord for the purchase of electricity from the public utility or other electricity provider furnishing electricity service to the Building from time to time (the “Electricity Provider”), including sales and other taxes imposed by any Governmental Authority on Landlord’s purchase of electricity. If at any time during the Term the cost elements comprising Landlord’s Electricity Cost shall be increased by the Electricity Provider, or Landlord’s Electricity Cost shall be increased for any other reason, then effective as of the date of such increase. Tenant’s payment for submetered electricity under this Section 9.2 shall be proportionately increased. Landlord reserves the right to contract with different Electricity Providers from time to time in its sole judgment, and without reference to whether any Electricity Provider selected by Landlord provides lower rates than any other electricity supplier. Currently, Landlord’s Electricity Cost is based upon Consolidated Edison Company’s Service Classification rate schedule S.C. #4 Rate II as in effect on the Commencement Date.

(e) During the period beginning on the Commencement Date and ending on the date upon which the submeters to be installed by Landlord in the Premises become operational, Tenant shall pay to Landlord a fixed fee for electric energy supplied to the Premises of (i) during the period prior to the date upon which Tenant first occupies all or any portion of the Premises for the conduct of its business, an amount per annum equal to One and 00/100 Dollar ($1.00) multiplied by the Premises Area, in equal monthly installments on the first (1st) day of each month during such period, and (ii) from and after the date upon which Tenant first occupies all or any portion of the Premises for the conduct of its business, an amount per annum equal to Four and 00/100 Dollars ($4.00) multiplied by the Premises Area, in equal monthly installments on the first (1st) day of each month during such period, through the date upon which such submeters become operational.

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(f) Tenant covenants that Tenant’s use and consumption of electric current shall not at any time exceed the capacity of any of the electrical facilities and installations in or otherwise serving or being used in the Premises and Tenant shall, upon the submission by Landlord to Tenant of written notice, promptly cease the use of any of Tenant’s electrical equipment which Landlord believes will cause Tenant to exceed such capacity. Any additional feeders, risers, electrical facilities and other such installations required for electric service to the Premises will be supplied by Landlord, at Tenant’s expense, upon Landlord’s prior consent in each instance, provided that, in Landlord’s judgment, such additional electrical facilities and installations, feeders or risers are necessary and are permissible under Legal Requirements (including the New York State Energy Conservation Construction Code) and insurance regulations and the installation of such feeders or risers will not cause permanent damage or injury to the Building or the Premises or cause or create a dangerous or hazardous condition or entail excessive or unreasonable alterations or repairs or interfere with, or disturb, other tenants or occupants of the Building. In addition, Landlord shall have no obligation to consent to such additional feeders, risers, electrical facilities and installations if in Landlord’s judgment, the same would give Tenant a disproportionate amount of the electrical current supplied to the Building at the expense of, or in derogation of the needs of other tenants or occupants of the Building.

(g) Except as otherwise expressly provided herein, Landlord shall not in any way be liable or responsible to Tenant for any loss, damage or expense which Tenant may sustain or incur as a result of the unavailability of or interruption in the supply of electric current to the Premises or a change in the quantity or character or nature of such current and such change, interruption or unavailability shall not constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent (except that Tenant’s liability to pay Landlord for electricity under this Section 9.2 shall cease as of the date of such disturbance), or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Landlord or its agents, by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant’s business, or otherwise.

(h) Landlord reserves the right to discontinue furnishing electricity to Tenant in the Premises on not less than sixty (60) days’ notice to Tenant. If Landlord exercises such right to discontinue, or is compelled to discontinue furnishing electricity to Tenant, this Lease shall continue in full force and effect and shall be unaffected thereby, except only that from and after the effective date of such discontinuance, Landlord shall not be obligated to furnish electricity to Tenant, and Tenant shall have no further obligation to pay Landlord for electricity supplied to the Premises. If Landlord so discontinues furnishing electricity to Tenant, Tenant shall arrange to obtain electricity directly from the Electricity Provider. Such electricity may be furnished to Tenant by means of the then existing electrical facilities serving the Premises to the extent that the same are available, suitable and safe for such purposes. All meters and all additional panel boards, feeders, risers, wiring and other equipment which may be required by Tenant to obtain electricity directly from the Electricity Provider shall be installed by Landlord, at Tenant’s sole cost and expense.

(i) If submetering of electricity in the Building is hereafter prohibited by any Legal Requirement, or by any order or ruling of the Public Service Commission of the State of New York, then Tenant shall apply, within ten (10) days of Tenant’s receiving notice thereof, to

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the Electricity Provider in order to obtain direct electric service, and Tenant shall bear all costs and expenses, as set forth in Section 9.2(h), necessary to comply with all rules and regulations of the Electricity Provider pertinent thereto, and from and after the date upon which Tenant procures direct electric service, Landlord shall be relieved of any further obligation to furnish electricity to Tenant pursuant to this Section 9.2. Such electricity may be furnished to Tenant by means of the then existing electrical facilities serving the Premises, including Building feeders and risers, to the extent that the same are suitable and safe for such purposes.

Section 9.3 Heat.

(a) Provided that no Event of Default shall have occurred and be continuing, Landlord shall provide heat to the Premises on Business Days during the Term from 8:00 A.M. to 6:00 P.M., when required in Tenant’s judgment for the comfortable use and occupancy of the Premises, through use of the Building standard heating system (the “Building Heating System”). If Tenant determines that heat is not required at the Premises, then Tenant shall have the right to remove any or all of the Building Heating System from the Premises, provided that Tenant shall restore any damage to the Building and the Premises resulting from such removal and at the end of the Term, restore the Building Heating System in the Premises.

(b) Anything in this Section 9.3 to the contrary notwithstanding, Landlord shall not be responsible if the normal operation of the Building Heating System shall fail to provide heat at reasonable temperatures uniformly to all interior portions of the Premises. Tenant at all times shall cooperate fully with Landlord and shall abide by the regulations and requirements which Landlord may prescribe for the proper functioning and protection of the Building Heating System.

(c) Landlord shall not be required to furnish heat during periods other than the hours and days set forth in Section 9.3(a) for the furnishing and distributing of such services (“Overtime Periods”), unless Landlord has received advance notice from Tenant requesting such service not less than twenty-four (24) hours prior to the time when such service shall be required. Accordingly, if Landlord shall furnish heat to the Premises at the request of Tenant during Overtime Periods, Tenant shall pay Landlord, as Additional Rent within ten (10) days after demand, for such services at the standard rate then fixed by Landlord for the Building, which rate as of the date of this lease is $250.00 per hour, subject to increase during the term due to increases in Landlord’s costs. Failure by Landlord to furnish or distribute heat or any other services during Overtime Periods shall not constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of Fixed Rent or Additional Rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Landlord or its agents by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant’s business or otherwise.

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(d) Landlord shall have no obligation to provide air-conditioning or ventilation services to the Premises. Landlord agrees that if Tenant desires to install an air-conditioning system, as part of the Initial Alterations or otherwise, and if Landlord shall approve such an Alteration pursuant to Article 3, then Tenant may install, at Tenant’s sole cost and expense, a water or air-cooled package air conditioning unit (“Tenant’s HVAC System”) at a location to be designated by Landlord. In addition, Tenant may install, as part of its Initial Alterations or otherwise, ventilating and air-conditioning louvers in the north exterior wall of the Building and drains from the Premises to the Building’s sanitary waste system serving Tenant’s HVAC System, subject to applicable Legal Requirements and Landlord’s review and approval of plans, equipment, methods and materials, which approval shall not be unreasonably withheld or delayed. Upon the expiration or sooner termination of the Term of this Lease, at Landlord’s request, Tenant shall, at Tenant’s expense, remove Tenant’s HVAC System and restore any damage to the Building and the Premises resulting from such removal.

Section 9.4 Elevators.

(a) Landlord shall provide passenger elevator service to the Premises on Business Days from 8:00 A.M. to 6:00 P.M. and freight elevator facilities on a non-exclusive basis, on Business Days from 8:00 A.M. to 4:45 P.M. (“Freight Business Hours”), and shall have one passenger elevator available at all other times. Tenant shall have access to the Building and the Premises twenty-four (24) hours a day, seven (7) days per week. Such elevator service shall be subject to such rules and regulations as Landlord may promulgate from time to time with respect thereto. Landlord shall have the right to change the operation or manner of operation of any of the elevators in the Building and/or to discontinue, temporarily or permanently, the use of any one or more cars in any of the passenger, freight or truck elevator banks. Tenant shall have the non-exclusive right to use the Building’s loading platform in common with Landlord and the other tenants of the Building during regular business hours, in accordance with rules and regulations therefore promulgated by Landlord, and on a “first come first served” basis.

(b) Tenant shall not use the freight elevator during Freight Business Hours for the delivery of construction materials or for moving into or out of the Premises. Landlord will make the freight elevator available to Tenant during other than Freight Business Hours, upon not less than 48 hours prior request by Tenant, and Tenant shall pay as Additional Rent the charge therefor established by Landlord from time to time, payable within ten (10) days of rendition of a bill therefor. As of the date hereof, Landlord’s current charge for freight elevator service during other than Freight Business Hours is $115.00/hour, which charge is subject to increase to reflect increases in Landlord’s costs of providing such service (including the charges for a hoisting engineer). Notwithstanding anything set forth to the contrary in this Section 9.4(b), subject to the rights of other tenants in the Building and during the performance of Tenant’s Initial Alterations only, Tenant shall be entitled to use the Building’s freight elevators for the delivery of construction materials and transport of construction workers to the Premises during Freight Business Hours.

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Section 9.5 Cleaning and Rubbish Removal.

(a) Tenant shall, at Tenant’s sole cost, provide cleaning services at the Premises pursuant to reasonable rules and regulations established by Landlord from time to time, and use a cleaning contractor approved by Landlord.

(b) Landlord shall, at Tenant’s sole cost, provide refuse and rubbish removal services at the Premises for ordinary office refuse and rubbish at times, and pursuant to regulations, established by Landlord from time to time. Tenant shall reimburse Landlord as Additional Rent, within twenty (20) days of delivery of Landlord’s statement therefor, for Landlord’s out-of-pocket costs in removing Tenant’s refuse and rubbish from the Premises and the Building. During the period of Tenant’s Initial Alterations only, Tenant shall, at Tenant’s sole cost, provide refuse and rubbish removal service at the Premises for construction-related refuse and rubbish at times and pursuant to reasonable rules and regulations established by Landlord from time to time.

Section 9.6 Water. Landlord shall furnish hot and cold water in such quantities as Landlord deems sufficient for ordinary drinking, lavatory and cleaning purposes to the Premises. If Tenant requires, uses or consumes water for any purpose in addition to ordinary lavatory, cleaning and drinking purposes, including for Tenant’s HVAC System, Landlord may install a hot water meter and a cold water meter and thereby measure Tenant’s consumption of water for all purposes. Tenant shall (a) pay to Landlord the cost of any such meters and their installation, (b) at Tenant’s sole cost and expense, keep any such meters and any such installation equipment in good working order and repair, and (c) pay to Landlord, as Additional Rent, as and when billed therefor for water consumed, together with a charge for any required pumping or heating thereof, all sewer rents, charges or any other taxes, rents, levies or charges which now or hereafter are assessed, imposed or shall become a lien upon the Premises or the Real Property pursuant to law, order or regulation made or issued in connection with any such metered use, consumption, maintenance or supply of water, water system, or sewage or sewage connection or system, and in default in making such payment Landlord may pay such charges and collect the same from Tenant.

Section 9.7 No Warranty of Landlord. Landlord does not warrant that any of the services to be provided by Landlord to Tenant hereunder, or any other services which Landlord may supply (a) will be adequate for Tenant’s particular purposes or as to any other particular need of Tenant or (b) will be free from interruption, and Tenant acknowledges that any one or more such services may be interrupted or suspended by reason of Unavoidable Delays. In addition, Landlord reserves the right to stop, interrupt or reduce service of the Building Systems by reason of Unavoidable Delays, or for repairs, additions, alterations, replacements, decorations or improvements which are, in the judgment of Landlord, necessary to be made, until said repairs, alterations, replacements or improvements shall have been completed. Any such interruption or discontinuance of service, or the exercise of such right by Landlord to suspend or interrupt such service shall not (i) constitute an actual or constructive eviction, or disturbance of Tenant’s use and possession of the Premises, in whole or in part, (ii) entitle Tenant to any compensation or to any abatement or diminution of Fixed Rent or Additional Rent, (iii) relieve Tenant from any of its obligations under this Lease, or (iv) impose any responsibility or liability upon Landlord or its agents by reason of inconvenience or annoyance to Tenant, or injury to or

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interruption of Tenant’s business, or otherwise. Landlord shall use reasonable efforts to minimize interference with Tenant’s access to and use and occupancy of the Premises in making any repairs, alterations, additions, replacements, decorations or improvements; provided, however, that Landlord shall have no obligation to employ contractors or labor at “overtime” or other premium pay rates or to incur any other “overtime” costs or additional expenses whatsoever. Landlord shall not be required to furnish any services except as expressly provided in this Article 9.

Section 9.8 Emergency Generator.

(a) Landlord shall provide 600 amperes of emergency electric power service (“EPS”) to Tenant for use in the Premises from the Building emergency electric generator (the “Generator”) as provided in this Section 9.8. Landlord shall install, at Tenant’s sole cost and expense (i) an automatic transfer switch (the “Transfer Switch”), in the Premises at a location to be designated by Landlord, sufficient to supply a total connected load of 600 amperes of EPS at 480 volts to the Premises, and (ii) a connection from the Generator to the Transfer Switch. Tenant shall pay to Landlord a one-time connection fee an amount equal to Landlord’s actual costs for the installation of the Transfer Switch and the connection from the Generator to the Transfer Switch.

(b) Tenant shall pay to Landlord an annual fee (the “EPS Fee”) for the period commencing on the date on which Landlord makes EPS available to the Premises through the Expiration Date of this Lease, irrespective of whether or not emergency power is ever required or used by Tenant, in the amount of $150.00 per ampere per year, subject to increase pursuant to Section 9.8(c) below. The EPS Fee shall be payable by Tenant to Landlord as Additional Rent in advance in equal monthly installments on the first day of each month during the Term. Tenant shall be responsible for the payment of any occupancy tax, or any other tax (other than Landlord’s income tax) imposed upon the Additional Rent paid by Tenant pursuant to this Section 9.8.

(c) For purposes of this Lease, (i) the term “CPI” means the Consumer Price Index for All Urban Consumers, New York, N.Y. - Northeastern, N.J., 1982-84=100; provided, however, that if the CPI or any successor index shall cease to be published, Landlord shall substitute therefor such other comparable index as Landlord shall reasonably determine, and (ii) the term “CPI Fraction” means, as of each January 1st during the Term (an “Adjustment Date”), a fraction (A) the numerator of which is the sum of (1) the CPI in effect on the immediately previous Adjustment Date (the “Base Index”) plus (2) the amount by which the CPI in effect on the Adjustment Date exceeds the Base Index, and (B) the denominator of which is the Base Index. If, as of each Adjustment Date, the CPI then in effect is greater than the Base Index, then the EPS Fee shall be increased as of such Adjustment Date to an amount equal to the product of (I) the EPS Fee then in effect for the immediately previous calendar year, multiplied by (II) the CPI Fraction. In no event shall the EPS Fee ever be reduced pursuant to this Section 9.8(c).

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(d) Tenant understands and agrees that EPS will be supplied to Tenant only if there is an interruption or failure in the supply of electric current to the Premises, and under no other circumstances. The privilege of using the EPS service described in this Section 9.8 cannot be transferred or assigned by Tenant except with the express written consent of Landlord, which may be withheld in Landlord’s sole discretion, and under no circumstances can this privilege be transferred or assigned to any party who is not a tenant under this Lease.

(e) Landlord shall have the right, in Landlord’s sole discretion, at any time and from time to time during the term of this Lease, upon not less than thirty (30) days prior written notice to Tenant, to relocate the Generator to another area of the Building, and/or to substitute another Building generator in lieu of the Generator, provided that there shall be no interruption in the availability of EPS to Tenant at the level provided in Section 9.8(a). Tenant shall cooperate with Landlord to effectuate any such relocation or substitution of the Generator. All costs involved in such relocation or substitution shall be borne by Landlord. Tenant acknowledges that the Generator (and any replacement or substitute therefor), the Transfer Switch, and all connections thereto, are and shall remain the sole property of Landlord and may not be removed by Tenant.

(f) Upon and subject to the provisions of this Lease, Landlord shall maintain and repair the Generator. Landlord shall maintain all service contracts and take such other actions as may be necessary to keep the Generator in good working order. Landlord shall not be liable in any way to Tenant for any delay, interruption, failure, variation or defect in or with regard to the Generator and/or EPS, except to the extent arising from the gross negligence or willful misconduct of Landlord, and in no event shall Landlord be liable to Tenant for special, indirect or consequential damages which may result from any such delay, interruption, failure, variation or defect.

(g) Upon and subject to the provisions of this Lease, Landlord shall (i) maintain, repair and test the Generator in accordance with the manufacturer’s recommended procedures and sound industry practice, and (ii) at all times maintain all service contracts and take such other actions as may be necessary to keep the Generator in good working order.

(h) Unless caused by Landlord’s gross negligence or willful misconduct, or by Landlord’s failure to diligently comply with the provisions of subsection (g) above, Landlord shall not be liable in any way to Tenant for any delay, interruption, failure, variation or defect in or with regard to the Generator and/or the Generator Power, and in no event shall Landlord be liable to Tenant for special, indirect or consequential damages which may result from any such delay, interruption, failure, variation or defect.

Section 9.9 Roof Equipment.

(a) Landlord hereby grants to Tenant, for Tenant’s own use and not for resale purposes, a license of sufficient space on the roof of the Building, at a location to be designated by Landlord in its sole discretion and more particularly described on Exhibit E to be annexed hereto (the “Roof Space”), for the installation by Tenant of (i) Tenant’s HVAC System, including dry coolant condensers, chillers and related HVAC equipment for Tenant’s equipment in the Premises, (ii) Tenant’s computer system, and (iii) Tenant’s Generator (as defined in

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Section 9.10) (together with related cabling, pumps, mountings and supports for all of the foregoing, collectively, the “Roof Equipment”). In connection therewith, and subject to the rights of other existing tenants in the Building, Landlord shall make available to Tenant reasonable access to the roof for the construction, installation, upgrade, maintenance, repair, operation and use of the Roof Equipment. If any of the Roof Equipment generates noise likely, in Landlord’s reasonable judgment, to disturb other tenants or occupants of the Building, then Tenant shall install sound attenuated acoustic enclosures reasonably satisfactory to Landlord designed to eliminate such noise or reduce such noise to acceptable levels. If Tenant requires riser space for conduits connecting the Premises to the Roof Equipment. Landlord shall make available to Tenant, in accordance with Section 9.11, for Tenant’s use solely in connection with the Roof Equipment, at a location or locations determined by Landlord in its sole judgment, riser space sufficient for the installation, at Tenant’s expense, of electrical conduits, a fuel line, and telecommunications, cabling, and supply and return lines reasonably required for the operation of the Roof Equipment. Tenant shall pay Landlord’s annual charge for such conduit as provided in Section 9.11, and all work in connection with the installation of such conduit shall be performed as provided in Section 9.11. References herein to the Roof Equipment shall be deemed to include such riser and any conduit therein.

(b) The installation of the Roof Equipment shall constitute an Alteration and shall be performed by Tenant at Tenant’s sole cost and expense (including any actual costs and expenses in connection with reinforcing the roof of the Building, if required) in accordance with and subject to the provisions of Article 3. Tenant shall pay a license fee to Landlord for the Roof Space, as Additional Rent in advance on the first day of each month during the Term, as follows (i) during the period from the Commencement Date through the day before the fifth (5th) anniversary of the Commencement Date, the product of the square foot area of the Roof Space, multiplied by Eighteen and 00/100 Dollars ($18.00), and (ii) during the period from the fifth (5th) anniversary of the Commencement Date through the Expiration Date, the product of the square foot area of the Roof Space, multiplied by Twenty-One and 00/100 Dollars ($21.00). All of the provisions of this Lease shall apply to the installation, use and maintenance of the Roof Equipment, including all provisions relating to compliance with Legal Requirements, insurance, indemnity, repairs and maintenance. The license granted to Tenant in this Section 9.9 shall not be assignable by Tenant separately from this Lease. The Roof Equipment shall be treated for all purposes of this Lease as Tenant’s Property.

(c) Landlord retains the right to use the portion of the roof on which the Roof Equipment is located for any purpose whatsoever, provided such use shall not materially interfere with the functioning of the Roof Equipment. Tenant shall have reasonable access to the Roof Equipment at all times, and Landlord shall not interfere with, the use of the Roof Equipment so as to cause the operation thereof to be materially interrupted or impaired. Tenant shall use the Roof Equipment so as not to cause any interference to Landlord’s use of the roof, including the use by Landlord or other tenants or occupants of the Building of other equipment thereon (including data transmission or other similar or dissimilar equipment), or damage to or

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interference with the operation of the Building or the Building Systems. If any of Tenant’s Roof Equipment interferes with any equipment installed by Landlord or any other tenant in the Building, or interferes with the operation of the Building or the Building Systems, then Tenant, at its sole cost and expense, shall take all steps necessary to eliminate such interference, and if Tenant shall fail to eliminate such interference, Tenant shall relocate the Roof Equipment to another area on the roof designated by Landlord. In the event Tenant fails, within thirty (30) days after notice, to relocate or remove the Roof Equipment, Landlord may do so, and Tenant shall promptly reimburse Landlord for any costs and expenses incurred by Landlord in connection therewith.

(d) Landlord may at its option, at any time during the Term upon not less than forty-five (45) days prior notice to Tenant (except in the event of an emergency) relocate the Roof Equipment to another area on the roof designated by Landlord, provided that such relocation of the Roof Equipment does not cause the operation thereof to be interrupted or impaired, other than temporarily, and except as set forth in Section 9.9(c), such relocation is performed at Landlord’s sole cost and expense. Landlord shall use reasonable efforts to minimize the duration of such interruption provided that Landlord shall have no obligation to employ contractors or labor at overtime or other premium pay rates or to incur any other overtime costs or additional expenses whatsoever, unless Tenant shall first pay to Landlord Landlord’s reasonable estimate of all incremental cost increases to do so. In such event Tenant shall pay, as Additional Rent upon presentation of appropriate invoices, all additional costs incurred by Landlord in connection therewith.

(e) Landlord shall not have any obligations with respect to the Roof Equipment or compliance with any Legal Requirements (including the obtaining of any required permits or licenses, or the maintenance thereof) relating thereto, nor shall Landlord be responsible for any damage that may be caused to Tenant or the Roof Equipment by any other tenant or occupant of the Building.

(f) Tenant shall (i) be solely responsible for any damage caused as a result of the use of the Roof Equipment, (ii) promptly pay any tax, license, permit or other fees or charges imposed pursuant to any Legal Requirements relating to the installation, maintenance or use of the Roof Equipment, (iii) promptly comply with all precautions and safeguards recommended by Landlord’s insurance company and all Governmental Authorities, and (iv) promptly and diligently perform all necessary repairs or replacements to, or maintenance of, the Roof Equipment, provided, however, that if Tenant’s failure after twenty (20) days’ notice from Landlord to so repair, replace or maintain the Roof Equipment materially jeopardizes in any way Landlord’s or any other tenant’s property located on the roof or within the Building, Landlord may, at Landlord’s option, elect to perform such repairs, replacements or maintenance at Tenant’s sole cost and expense. Landlord shall give Tenant reasonable prior notice of its election to perform such repairs, except in an emergency.

(g) The privileges granted Tenant under this Section 9.9 merely constitute a license and shall not, now or at any time after the installation of the Roof Equipment, be deemed to grant Tenant a leasehold or other real property interest in the Building or any portion thereof, including the Building’s roof. The license granted to Tenant in this Section 9.9 shall continue until and automatically terminate and expire upon the expiration or earlier termination of this Lease and the termination of such license shall be self-operative and no further instrument shall

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be required to effect such termination. For so long as this Lease shall be in full force and effect, Landlord will not terminate the license granted to Tenant hereby. Notwithstanding the foregoing, upon request by Landlord, Tenant, at Tenant’s sole cost and expense, shall promptly execute and deliver to Landlord, in recordable form, any certificate or other document reasonably required by Landlord confirming the termination of Tenant’s right to use the roof of the Building.

(h) The Roof Equipment shall be treated for all purposes of this Lease as Tenant’s Alterations, provided that Tenant shall in no event remove the Roof Equipment on the Expiration Date or sooner termination of this Lease. If requested by Landlord, Tenant shall cause Roof Equipment and all equipment and installations appurtenant thereto to be designated as one or more separate tax lots by the City of New York for all purposes of assessment and payment of Taxes, and Tenant shall pay all Taxes imposed thereon directly to the taxing authorities, without deduction or offset against Rent under this Lease. If for any reason Tenant fails (with or without Landlord’s consent thereto) to so cause Roof Equipment to be designated as one or more separate tax lots. Tenant shall pay to Landlord monthly, as Additional Rent upon demand, the amount determined by Landlord in its reasonable discretion, by which Taxes imposed upon the Building have been increased on account of Tenant’s installation of the Roof Equipment.

Section 9.10 Tenant’s Emergency Generator.

(a) Subject to the provisions of Section 9.9, Tenant shall have the right to construct, install, operate, and use on a portion of the Roof Space reasonable acceptable to Landlord, a diesel-powered electric generator and other related equipment, including mountings and supports (collectively, “Tenant’s Generator”). Tenant shall have the right to connect Tenant’s Generator to one of the Building’s diesel fuel tanks as designated by Landlord, and Landlord shall make diesel fuel available to Tenant from such fuel tank. Tenant shall notify Landlord, within 90 days after the Commencement Date, of the capacity of Tenant’s Generator and the number of gallons of diesel fuel Tenant desires Landlord to reserve for Tenant’s consumption. Tenant shall pay to Landlord for making such diesel fuel available to Tenant a one-time fee equal to Fifty and 00/100 Dollars ($50.00) multiplied by the number of gallons of diesel fuel so reserved for Tenant of fuel on the date on which Landlord makes such diesel fuel available to Tenant. Tenant shall reimburse Landlord for Landlord’s actual cost for diesel fuel consumed by Tenant’s Generator, as indicated on a meter to be installed by Landlord, at Tenant’s expense, at a point designated by Landlord along the fuel line connecting such fuel tank to Tenant’s Generator. In addition, Tenant shall pay for all fuel lines, pumps, piping, meters and other equipment or installations necessary for the operation of Tenant’s Generator as provided in this Section 9.10. Subject to the rights of other tenants in the Building, Landlord shall make available to Tenant access to the roof for the construction, installation, maintenance, repair, operation and use of Tenant’s Generator. Tenant shall be responsible for all reinforcement and bracing necessary to enable the roof of the Building to support Tenant’s Generator. If Tenant requires riser space for electrical conduits connecting Tenant’s Generator to the Premises, or for fuel lines connection Tenant’s Generator to the Building fuel tank designated by Landlord, then, subject to the rights of other tenants in the Building, Landlord shall make such riser space available to Tenant as provided in Section 9.11. References herein to Tenant’s Generator shall be deemed to include such riser and the electrical conduits and fuel line appurtenant thereto.

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(b) The installation of Tenant’s Generator shall constitute an Alteration and shall be performed at Tenant’s sole cost and expense (including any costs and expenses in connection with reinforcing the roof of the Building, if required) as provided in Section 9.9, and Tenant shall pay, as Additional Rent, an annual sum based upon the number of square feet of space occupied by Tenant’s Generator, at the same rate as provided in Section 9.9(b). All of the provisions of this Lease shall apply to the installation, use and maintenance of Tenant’s Generator, including all provisions relating to compliance with Legal Requirements and Insurance Requirements, insurance, indemnity, repairs and maintenance. The license granted to Tenant in this Section 9.10 shall not be assignable by Tenant separately from this Lease. Tenant’s Generator shall be treated for all purposes of this Lease as Tenant’s Property. If requested by Landlord, Tenant shall cause Tenant’s Generator and all equipment and installations appurtenant thereto to be designated as a separate tax lot by the City of New York for all purposes of assessment and payment of Taxes, and Tenant shall pay all Taxes imposed thereon directly to the taxing authorities, without deduction or offset against Rent under this Lease. If for any reason Tenant fails (with or without Landlord’s consent thereto) to so cause Tenant’s Generator to be designated as a separate tax lot, Tenant shall pay to Landlord monthly, as Additional Rent upon demand, the amount determined by Landlord in its reasonable discretion, by which Taxes imposed upon the Building have been increased on account of Tenant’s installation of Tenant’s Generator.

SECTION 9.11 Conduit; Telecommunications Entrances.

(a) Tenant may, subject to the rights of other tenants in the Building, install, operate, repair, maintain and replace fiber optic cables and related equipment (the “Cabling Equipment”) and telecommunications lines in riser conduit sleeves within the Building for Tenant’s business operational purposes and for the purpose of providing the Telecommunications Services (as defined in Section 9.12) to other tenants in the Building. Landlord will make available to Tenant, without additional charge, up to six (6) four-inch (4”) diameter riser conduit sleeves for the Cabling Equipment and telecommunications lines or for use in connection with the Roof Equipment running from the basement of the Building to the Premises. If Tenant requires additional riser space for the Cabling Equipment and telecommunications lines or for use in connection with the Roof Equipment, then upon request by Tenant, subject to availability of riser space in the Building, Landlord will make available to Tenant riser space at Landlord’s then-current rates for riser space in the Building, which rates are currently as follows: (i) for riser space not exceeding two inches (2”) in diameter, an annual charge of $5.00 per lineal foot, and (ii) for riser space in excess of two inches (2”) in diameter but not exceeding four inches (4”) in diameter, an annual charge of $7.50 per lineal foot. All annual fees for riser space shall be payable by Tenant to Landlord as Additional Rent in advance in equal monthly installments on the first day of each month during the Term. All work in connection with the installation of such conduit, including core drilling, if required, shall be performed by Tenant at Tenant’s sole cost and expense, including the cost of a fire watch and related supervisory costs relating to any core drilling, which shall be performed in such a manner and at such times as Landlord shall prescribe. Landlord shall make available to Tenant reasonable access within the Building core for purposes of such installation work. In addition, Landlord shall remove, encapsulate or otherwise abate any asbestos-containing materials within the shafts, risers or pathways within the Building which Landlord provides to Tenant for Tenant’s use in accordance with all Legal Requirements.

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(b) If Tenant requires telecommunications entrances to the Building in addition to those entrances to be installed by Tenant as part of its Initial Alterations, then, subject to the provisions of Article 3 and the availability of space in the Building for such entrances as determined by Landlord in its reasonable discretion, Tenant may install, at Tenant’s sole cost and expense, additional telecommunications entrances to the Building at a location or locations designated by Landlord.

SECTION 9.12 Telecommunications Services. Landlord agrees that so long as this Lease is in full force and effect, Tenant shall have a non-exclusive right to offer and provide telecommunications services to other tenants in the Building (the “Telecommunication Services”). Nothing contained herein shall require any Building tenant to elect to obtain the Telecommunications Services from Tenant and Landlord makes no representations to the quality or adequacy of the Telecommunications Services.

ARTICLE 10. Insurance.

Section 10.1 Tenant, at its expense, shall obtain and keep in full force and effect a policy of commercial general liability insurance under which Tenant is named as the insured and Landlord, Landlord’s managing agent for the Building, and any Lessors and any Mortgagees (whose names shall have been furnished to Tenant) are named as additional insureds, which insurance shall provide primary coverage without contribution from any other insurance carried by or for the benefit of Landlord, Landlord’s managing agent or any Lessors or Mortgagees named as additional insureds. Tenant’s primary commercial general liability policy shall contain a provision that the policy shall be noncancellable unless twenty (20) days’ written notice shall have been given to Landlord and Landlord shall similarly receive twenty (20) days’ notice of any material change in coverage. The minimum limits of liability shall be a combined single limit with respect to each occurrence in an amount of not less than $5,000,000 per location general aggregate limit; provided, however, that Landlord shall retain the right to require Tenant to increase said coverage to that amount of insurance which in Landlord’s reasonable judgment is then being customarily required by prudent landlords of comparable buildings in the City of New York, and provided further that Landlord shall require similar increases of other tenants of space in the Building comparable to the Premises, to the extent Landlord shall then have the right to do so under applicable leases. Tenant shall also obtain and keep in full force and effect during the Term, (a) insurance against loss or damage by fire, and such other risks and hazards as are insurable under then available standard forms of “all risk” insurance policies with extended coverage, to Tenant’s Property and Tenant’s Alterations for the full insurable value thereof or on a replacement cost basis; (b) Workers’ Compensation Insurance, as required by law; (c) New York Disability Benefits Law Policy; and (d) such other insurance in such amounts as Landlord, any Mortgagee or Lessor may reasonably require from time to time. All insurance required to be carried by Tenant pursuant to the terms of this Lease shall be effected under valid and enforceable policies issued by reputable and independent insurers permitted to do business in the State of New York, and rated in Best’s Insurance Guide, or any successor thereto (or if there be none, an organization having a national reputation) as having a Best’s Rating” of “A-” and a “Financial Size Category” of at least “XI” or if such ratings are not then in effect, the equivalent thereof.

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Section 10.2 (a) The parties hereto do hereby waive, any and all rights of recovery against the other, or against the officers, employees, partners, agents and representatives of the other, for loss of or damage to the property of the waiving party to the extent such loss or damage is insured against under any insurance policy carried by Landlord or Tenant hereunder. In addition, the parties hereto shall procure an appropriate clause in, or endorsement on, any fire or extended coverage insurance covering the Premises, the Building and personal property, fixtures and equipment located thereon or therein, pursuant to which the insurance companies waive subrogation or consent to a waiver of right of recovery and subject to obtaining such clauses or endorsements of waiver of subrogation or consent to a waiver of right of recovery, hereby agree not to make any claim against or seek to recover from the other for any loss or damage to its property or the property of others resulting from fire or other hazards covered by such fire and extended coverage insurance; provided, however, that the release, discharge, exoneration and covenant not to sue herein contained shall be limited by and coextensive with the terms and provisions of the waiver of subrogation clause or endorsements or clauses or endorsements consenting to a waiver of right of recovery. If the payment of an additional premium is required for the inclusion of such waiver of subrogation or consent to waiver provision, each party shall advise the other of the amount of any such additional premiums and the other party at its own election may, but shall not be obligated to, pay the same. If such other party shall not elect to pay such additional premium, the first party shall not be required to obtain such waiver of subrogation or consent to waiver provision. Tenant acknowledges that Landlord shall not carry insurance on and shall not be responsible for damage to, Tenant’s Alterations (if any) or Tenant’s Property, and that Landlord shall not carry insurance against, or be responsible for any loss suffered by Tenant due to, interruption of Tenant’s business.

(b) As to each party hereto, provided such party’s right of full recovery under the applicable insurance policy is not adversely affected, such party hereby releases the other (its servants, agents, contractors, employees and invitees) with respect to any claim (including a claim for negligence) which it might otherwise have against the other party for loss, damages or destruction of the type covered by such insurance with respect to its property by fire or other casualty i.e. in the case of Landlord, as to the Building, and in the case of Tenant, as to Tenant’s Property and Tenant’s Alterations (including rental value or business interruption, as the case may be) occurring during the Term of this Lease.

Section 10.3 On or prior to the Commencement Date, Tenant shall deliver to Landlord appropriate certificates of insurance required to be carried by Tenant pursuant to this Article 10, including evidence of waivers of subrogation required pursuant to Section 10.2. Evidence of each renewal or replacement of a policy shall be delivered by Tenant to Landlord at least twenty (20) days prior to the expiration of such policy.

ARTICLE 11. Destruction Of The Premises; Property Loss Or Damage

Section 11.1(a) If the Premises shall be damaged by fire or other casualty, or if the Building shall be so damaged that Tenant shall be deprived of reasonable access to the Premises, Tenant shall give prompt notice thereof to Landlord, and the damage shall be repaired by and at the expense of Landlord to substantially the condition prior to the damage, including

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Tenant’s Alterations, but excluding Tenant’s Property. Until such repairs shall be substantially completed, Fixed Rent and Additional Rent shall, so long as Tenant shall not be in default beyond applicable grace or notice provisions in the payment or performance of its obligations under this Section 11.1, be reduced in the proportion which the area of the part of the Premises which is neither usable nor used by Tenant bears to the total area of the Premises. Tenant shall pay to Landlord all proceeds of insurance policies covering Tenant’s Alterations, and such proceeds shall be used by Landlord in the repair of Tenant’s Alterations. Landlord shall have no obligation to repair any damage to, or to replace, any of Tenant’s Property.

(b) Concurrently with the collection of any insurance proceeds attributable to damage to Tenant’s Alterations (or the payment by the Tenant to Landlord of an amount equal to such insurance proceeds, pending collection of such proceeds from its insurer), and as a condition precedent to Landlord’s obligation to commence those repairs to Tenant’s Alterations required to be performed by Landlord pursuant to this Section 11.1, Tenant shall pay to Landlord (i) the amount of any deductible under the policy insuring Tenant’s Alterations, and (ii) the amount, if any, by which the cost of repairing and restoring Tenant’s Alterations, as estimated by a reputable independent contractor designated by Landlord, exceeds the available insurance proceeds therefor. The amounts due in accordance with the preceding sentence constitute Additional Rent under this Lease and shall be payable by Tenant to Landlord upon demand.

Section 11.2 (a) Anything contained in Section 11.1 to the contrary notwithstanding, if the Premises are totally damaged or are rendered wholly untenantable, and if Landlord shall decide not to restore the Premises, or if the Building shall be so damaged by fire or other casualty that, in Landlord’s opinion, substantial alteration, demolition, or reconstruction of the Building shall be required (whether or not the Premises shall have been damaged or rendered untenantable), then in any of such events, Landlord may, not later than sixty (60) days following the date of the damage, give Tenant a notice in writing terminating this Lease. If this Lease is so terminated, the Term shall expire upon the tenth (10th) day after such notice is given, and Tenant shall vacate the Premises and surrender the same to Landlord. Upon the termination of this Lease under the conditions provided for in this Section 11.2, Tenant’s liability for Fixed Rent and Additional Rent shall cease as of the date of such fire or other casualty, and any prepaid portion of Fixed Rent or Additional Rent for any period after such date shall be refunded by Landlord to Tenant.

(b) If this Lease is terminated pursuant to the provisions of this Article 11, then Landlord shall collect the insurance proceeds of policies providing coverage for Tenant’s Alterations as provided in Section 11(a). Landlord shall retain such proceeds to the extent of sums, if any, advanced by Landlord to Tenant with respect to any of Tenant’s Alterations. The balance of such proceeds, if any, shall be paid to Tenant.

Section 11.3 If the Premises are damaged by fire or other casualty and are rendered wholly untenantable thereby, or if the Building shall be so damaged that Tenant shall be deprived of reasonable access to the Premises, and if Landlord shall elect to restore the Premises, Landlord shall, within sixty (60) days following the date of the damage, cause a contractor or architect selected by Landlord to give notice (the “Restoration Notice”) to Tenant of the date by which such contractor or architect believes the restoration of the Premises shall be substantially completed. If the Restoration Notice shall indicate that the restoration shall not be substantially

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completed on or before the date which shall be six (6) months following the date of such damage or destruction, Tenant shall have the right to terminate this Lease by giving written notice (the “Termination Notice”) to Landlord not later than thirty (30) days following receipt of the Restoration Notice. If Tenant gives a Termination Notice, this Lease shall be deemed canceled and terminated as of the date of the giving of the Termination Notice as if such date were the Expiration Date, and Fixed Rent and Additional Rent shall be apportioned and shall be paid or refunded, as the case may be up to and including the date of such damage or destruction. Notwithstanding anything set forth to the contrary in this Article 11, in the event that a fire or other casualty rendering the Premises wholly untenantable shall occur during the final year of the Term, either Landlord or Tenant may terminate this Lease by giving the other parry a Termination Notice as set forth herein.

Section 11.4 This Article 11 constitutes an express agreement governing any case of damage or destruction of the Premises or the Building by fire or other casualty, and Section 227 of the Real Property Law of the State of New York, which provides for such contingency in the absence of an express agreement, and any other law of like nature and purpose now or hereafter in force shall have no application in any such case.

ARTICLE 12. Eminent Domain

Section 12.1 If (a) all of the floor area of the Premises, or so much thereof as shall render the Premises wholly untenantable, shall be acquired or condemned for any public or quasi-public use or purpose, or (b) a portion of the Real Property, not including the Premises, shall be so acquired or condemned, but by reason of such acquisition or condemnation, Tenant no longer has means of access to the Premises, then this Lease and the Term shall end as of the date of the vesting of title with the same effect as if that date were the Expiration Date. In the event of any termination of this Lease and the Term pursuant to the provisions of this Article 12, Fixed Rent and Additional Rent shall be apportioned as of the date of sooner termination and any prepaid portion of Fixed Rent or Additional Rent for any period after such date shall be refunded by Landlord to Tenant.

Section 12.2 In the event of any such acquisition or condemnation of all or any part of the Real Property, Landlord shall be entitled to receive the entire award for any such acquisition or condemnation. Tenant shall have no claim against Landlord or the condemning authority for the value of any unexpired portion of the Term or Tenant’s Alterations, and Tenant hereby expressly assigns to Landlord all of its right in and to any such award. Nothing contained in this Section 12.2 shall be deemed to prevent Tenant from making a separate claim in any condemnation proceedings for the then value of any Tenant’s Property included in such taking and for any moving expenses, provided such award shall be made by the condemning authority in addition to, and shall not result in a reduction of, the award made by it to Landlord.

Section 12.3 If only a part of the Real Property shall be so acquired or condemned then, subject to Section 12.1, this Lease and the Term shall continue in force and effect. If a part of the Premises shall be so acquired or condemned and this Lease and the Term shall not be terminated, Landlord, at Landlord’s expense, shall restore that part of the Premises not so acquired or condemned so as to constitute tenantable Premises. From and after the date of the vesting of title, Fixed Rent and Additional Rent shall be reduced in the proportion which the

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area of the part of the Premises so acquired or condemned bears to the total area of the Premises immediately prior to such acquisition or condemnation.

ARTICLE 13. Assignment And Subletting

Section 13.1 (a) Except as otherwise expressly provided herein, Tenant, for itself, its heirs, distributees, executors, administrators, legal representatives, successors and assigns, expressly covenants that it shall not assign, mortgage, pledge, encumber, or otherwise transfer this Lease, nor sublet (nor underlet), nor suffer, nor permit the Premises or any part thereof to be used or occupied by others (whether for desk space, mailing privileges or otherwise), without the prior written consent of Landlord in each instance. If this Lease is assigned, or if the Premises or any part thereof are sublet or occupied by anybody other than Tenant, or if this Lease or the Premises or Tenant’s personal property are encumbered (whether by operation of law or otherwise) without Landlord’s consent, then Landlord may, after default by Tenant, collect rent from the assignee, subtenant or occupant, and apply the net amount collected to Fixed Rent and Additional Rent, but no assignment, subletting, occupancy or collection shall be deemed a waiver by Landlord of the provisions hereof, the acceptance by Landlord of the assignee, subtenant or occupant as a tenant, or a release by Landlord of Tenant from the further performance by Tenant its obligations under this Lease, and Tenant shall remain fully liable therefor. The consent by Landlord to any assignment or subletting shall not in any way be construed to relieve Tenant from obtaining the express consent in writing of Landlord to any further assignment or subletting. In no event shall any permitted subtenant assign or encumber its sublease or further sublet all or any portion of its sublet space, or otherwise suffer or permit the sublet space or any part thereof to be used or occupied by others, without Landlord’s prior written consent in each instance. Any assignment, sublease, mortgage, pledge, encumbrance or transfer in contravention of the provisions of this Article 13 shall be void.

(b) Landlord acknowledges that the collocation of communications equipment not owned by Tenant at the Premises shall not constitute an assignment or sublease requiring the consent of Landlord hereunder; provided, however, that Tenant shall give Landlord not less than ten (10) Business Days prior notice of any such collocation arrangement. For purposes of this Lease, “collocation” means the installation by Tenant’s customers of telecommunications equipment in Tenant’s facilities therefor, in the ordinary course of Tenant’s business, for which such customers pay fees based upon access to such facilities, as distinct from the renting of floor area. In no event shall any collocation arrangement entered into by Tenant entail the construction of a separate entrance to the Premises from the Building common corridor for any party thereto other than Tenant. Notwithstanding anything to the contrary contained in this Section 13.1(b), Tenant shall not enter into any collocation agreement with (A) any tenant, subtenant or other occupant of the Building at the time Tenant seeks to enter into such collocation agreement, or any Affiliate of any such Person, or (ii) any Person with whom Landlord has negotiated for space in the Building within the six-month period prior to the time Tenant seeks to enter into such collocation agreement, or any Affiliate of any such Person.

Section 13.2 If Tenant shall, at any time or from time to time, during the Term desire to assign this Lease or sublet all or part of the Premises, Tenant shall give notice (a “Tenant’s Notice”) thereof to Landlord, which Tenant’s Notice shall set forth: (a) with respect to an assignment of this Lease, the date Tenant desires the assignment to be effective and any

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consideration Tenant would receive under such assignment, (b) with respect to a sublet of all or a part of the Premises (i) the dates upon which Tenant desires the sublease term to commence and expire, (ii) the rental rate and other material business terms upon which Tenant would sublet such premises, and (iii) a description of the Premises showing the portion to be sublet, the effective or commencement date of which shall be not less than six (60) nor more than one hundred and eighty (180) days after the giving of such notice, (c) a statement setting forth in reasonable detail the identity of the proposed assignee or subtenant, the nature of its business and its proposed use of the Premises, (d) current financial information with respect to the proposed assignee or subtenant, including its most recent financial report, (e) a true and complete copy of the proposed assignment or sublease and any other agreements relating thereto, and (f) an agreement by Tenant to indemnify Landlord against liability resulting from any claims that may be made against Landlord by the proposed assignee or subtenant or by any brokers or other Persons claiming a commission or similar compensation in connection with the proposed assignment or sublease. Tenant’s Notice shall be deemed an offer from Tenant to Landlord whereby Landlord (or Landlord’s designee) may, at its option, (I) sublease such space (the “Leaseback Space”) from Tenant upon the terms and conditions set forth in Section 13.3, or terminate the Lease with respect to only the Leaseback Space, or (II) if the proposed transaction is (1) an assignment of this Lease or (2) a subletting of fifty percent (50%) or more of the rentable area of the Premises, terminate this Lease. Said options may be exercised by Landlord by notice given to Tenant at any time within sixty (60) days after Tenant’s Notice has been given by Tenant to Landlord, and during such sixty-day period, Tenant shall not assign this Lease nor sublet such space to any Person other than Landlord.

Section 13.3 If Landlord exercises its option to sublet the Leaseback Space, such sublease to Landlord or its designee (as subtenant) shall be at a rental rate equal to the product of (i) the lesser of (A) the rental rate per rentable square foot of Fixed Rent and Additional Rent then payable pursuant to this Lease, or (B) the rental rate per rentable square foot of rent and additional rent set forth in Tenant’s Notice, multiplied by (ii) the number of rentable square feet of the Leaseback Space, and shall be for the same term as that of the proposed subletting, and such sublease shall:

(a) be upon such other terms and conditions as are contained in Tenant’s Notice, and be expressly subject to all of the covenants, agreements, terms, provisions and conditions of this Lease, except such as are irrelevant or inapplicable, and except as expressly set forth in this Article 13 to the contrary;

(b) give the subtenant the unqualified and unrestricted right, without Tenant’s permission, to assign such sublease or any interest therein and/or to sublet the space covered by such sublease or any part or parts of such space and to make any and all changes, alterations and improvements in the space covered by such sublease, and if the proposed sublease will result in all or substantially all of the Premises being sublet, grant Landlord or its designee the option to extend the term of such sublease for the balance of the Term of this Lease less one day;

(c) provide that any assignee or further subtenant of Landlord or its designee, may, at Landlord’s option, be permitted to make alterations, decorations and installations in such space or any part thereof and shall also provide in substance that any such alterations, decorations and installations in such space therein made by any assignee or subtenant of

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Landlord or its designee may be removed, in whole or in part, by such assignee or subtenant, at its option, prior to or upon the expiration or other termination of such sublease; provided, however, that such assignee or subtenant shall, at its sole cost and expense, repair any damage and injury caused by such removal; and

(d) provide that (i) the parties to such sublease expressly negate any intention that any estate created under such sublease be merged with any other estate held by either of said parties, (ii) any assignment or sublease by Landlord or its designee (as the subtenant) may be for any purpose or purposes that Landlord, in Landlord’s uncontrolled discretion, shall deem suitable or appropriate, (iii) Tenant shall, at Tenant’s sole cost and expense, at all times provide and permit reasonably appropriate means of ingress to and egress from such space so sublet by Tenant to Landlord or its designee, (iv) Landlord may, at Tenant’s sole cost and expense, make such alterations as may be required or deemed necessary by Landlord to physically separate the subleased space from the balance of the Premises and to comply with any legal or insurance requirements relating to such separation, and (v) that at the expiration of the term of such sublease, Tenant will accept the space covered by such sublease in its then existing condition, subject to the obligations of the subtenant to make such repairs thereto as may be necessary to preserve the premises demised by such sublease in good order and condition.

Section 13.5 (a) If Landlord exercises its option to sublet the Leaseback Space, Landlord shall indemnify and save Tenant harmless from all obligations under this Lease as to the Leaseback Space during the period of time it is so sublet to Landlord, except as to any obligation which arises out of or results from the negligence or willful misconduct of Tenant, or any of its agents, servants or employees.

(b) Performance by Landlord, or its designee, under a sublease of the Leaseback Space shall be deemed performance by Tenant of any similar obligation under this Lease and any default under any such sublease shall not give rise to a default under a similar obligation contained in this Lease nor shall Tenant be liable for any default under this Lease or deemed to be in default hereunder if such default is occasioned by or arises from any act or omission of the tenant under such sublease or is occasioned by or arises from any act or omission of any occupant holding under or pursuant to any such sublease.

(c) Tenant shall have no obligation, at the expiration or earlier termination of the Term, to remove any alteration, installation or improvement made in the Leaseback Space by Landlord (or Landlord’s designee).

(d) Any consent required of Tenant, as Landlord under the sublease, shall be deemed granted if consent with respect thereto is granted by Landlord under this Lease, and any failure of Landlord (or its designee) to comply with the provisions of the sublease other than with respect to the payment of Fixed Rent and Additional Rent to Tenant, shall not constitute a default thereunder or hereunder if Landlord shall have consented to such non-compliance.

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Section 13.6 In the event Landlord does not exercise either option provided to it pursuant to Section 13.2, and provided that no Event of Default shall have occurred and be continuing under this Lease as of the time Landlord’s consent is requested by Tenant, Landlord’s consent (which must be in writing and in form and substance satisfactory to Landlord) to the proposed assignment or sublease shall not be unreasonably withheld or delayed; provided, however, that:

(a) Tenant shall have complied with the provisions of Section 13.2 and Landlord shall not have exercised any of its options thereunder within the time permitted therefor;

(b) In Landlord’s judgment, the proposed assignee or subtenant is engaged in a business or activity, and the Premises, or the relevant part thereof, will be used in a manner, which (i) is in keeping with the then standards of the Building, and (ii) does not violate the restrictions set forth in Article 2;

(c) The proposed assignee or subtenant is a reputable Person with sufficient financial worth considering the responsibility involved, and Landlord has been furnished with evidence thereof;

(d) In the event Landlord has space in the Building available for lease, then (i) neither the proposed assignee or subtenant nor any Person which, directly or indirectly, controls, is controlled by, or is under common control with, the proposed assignee or subtenant, is then an occupant of any part of the Building, and (ii) the proposed assignee or subtenant is not a Person (or Affiliate of a Person) with whom Landlord or Landlord’s agent is then, or has been within the previous six (6) month period, negotiating in connection with rental of space in the Building;

(e) The form of the proposed sublease or instrument of assignment shall be satisfactory to Landlord and shall comply with the applicable provisions of this Article 13, and Tenant shall deliver a true and complete original, fully executed counterpart of such sublease or other instrument to Landlord promptly upon the execution and delivery thereof;

(f) Tenant and its proposed subtenant or assignee, as the case may be, shall execute and deliver to Landlord an agreement, in form and substance satisfactory to Landlord, setting forth the terms and conditions upon which Landlord shall have granted its consent to such assignment or subletting, and the agreement of Tenant and such subtenant or assignee, as the case may be, to be bound by the provisions of this Article 13;

(g) There shall not be more than two (2) subtenants of the Premises;

(h) The amount of the aggregate rent to be paid by the proposed subtenant shall not be less than the then current market rent per rentable square foot for the Premises, determined as though the Premises were vacant, and the rental and other terms and conditions of the sublease shall be substantially the same as those contained in Tenant’s Notice;

(i) Tenant shall reimburse Landlord, as Additional Rent upon demand, for (A) the costs and expenses incurred by Landlord in connection with the assignment or sublease, including the costs of making investigations as to the acceptability of the proposed assignee or subtenant and the cost of reviewing plans and specifications proposed to be made in connection therewith, and (B) Landlord’s legal fees and disbursements incurred in connection with the granting of any requested consent and the preparation of Landlord’s written consent to the sublease or assignment;

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(j) Tenant shall not have (i) advertised or publicized in any way the availability of the Premises without prior notice of and approval by Landlord, or (ii) listed the Premises for sublease or assignment with a broker, agent or otherwise at a rental rate less than the fixed rent and additional rent at which Landlord is then offering to lease comparable space in the Building;

(k) The proposed occupancy shall not impose an extra burden upon services to be supplied by Landlord to Tenant, unless Tenant and such proposed subtenant or assignee shall agree with Landlord in writing to pay the costs of such additional services; and

(l) The proposed subtenant or assignee shall not be entitled, directly or indirectly, to diplomatic or sovereign immunity and shall be subject to the service of process in, and the jurisdiction of the courts of New York State.

Except for any sublease by Tenant to Landlord or its designee pursuant to this Article 13, each sublease pursuant to this Section 13.6 shall be subject to all of the covenants, agreements, terms, provisions and conditions contained in this Lease. Notwithstanding any such sublease to Landlord or any such sublease to any other subtenant, or any acceptance of Fixed Rent or Additional Rent by Landlord from any subtenant, Tenant will remain fully liable for the payment of the Fixed Rent and Additional Rent due and to become due hereunder and for the performance of all the covenants, agreements, terms, provisions and conditions contained in this Lease on Tenant’s part to be observed and performed, and for all acts and omissions of any licensee or subtenant or anyone claiming under or through any subtenant which shall be in violation of any of the obligations of this Lease, and any such violation shall be deemed to be a violation by Tenant. If Landlord shall decline to give its consent to any proposed assignment or sublease, or if Landlord shall exercise either of its options under Section 13.2, Tenant shall indemnify, defend and hold harmless Landlord against and from any and all losses, liabilities, damages, costs, and expenses (including attorneys’ fees and disbursements) resulting from any claims that may be made against Landlord by the proposed assignee or subtenant arising from or in connection with such proposed assignment or subletting, or by any brokers or other Persons (with whom Tenant or its proposed assignee or subtenant may have dealt) claiming a commission or similar compensation in connection with the proposed assignment or sublease.

Section 13.7 In the event that (a) Landlord fails to exercise either of its options under Section 13.2 and consents to a proposed assignment or sublease, and (b) Tenant fails to execute and deliver the assignment or sublease to which Landlord consented within one hundred twenty (120) days after the giving of such consent, then Tenant shall again comply with all of the provisions and conditions of Section 13.2 before assigning this Lease or subletting all or part of the Premises.

Section 13.8 With respect to each and every sublease authorized by Landlord under the provisions of this Lease, it is further agreed that:

(a) No sublease shall be for a term ending later than one day prior to the Expiration Date of this Lease;

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(b) No sublease shall be delivered, and no subtenant shall take possession of the Premises or any part thereof, until an executed counterpart of such sublease has been delivered to Landlord and approved in writing by Landlord; and

(c) Each sublease shall be subject and subordinate to this Lease and to the matters to which this Lease is or shall be subordinate, and each subtenant by entering into a sublease is deemed to have agreed that in the event of termination, re-entry or dispossession by Landlord under this Lease, Landlord may, at its option, take over all of the right, title and interest of Tenant as sublandlord, under such sublease, and such subtenant shall, at Landlord’s option, attorn to Landlord pursuant to the then executory provisions of such sublease, except that Landlord shall not (i) be liable for any previous act or omission of Tenant under such sublease, (ii) be subject to any counterclaim, offset or defense, not expressly provided in such sublease, which theretofore accrued to such subtenant against Tenant, (iii) be bound by any previous modification of such sublease or by any previous prepayment of more than one month’s Fixed Rent or of any Additional Rent, or (iv) be obligated to perform any work in the subleased space or to prepare it for occupancy, and in connection with such attornment, the subtenant shall execute and deliver to Landlord any instruments Landlord may reasonably request to evidence and confirm such attornment. Each subtenant or licensee of Tenant shall be deemed, automatically upon and as a condition of its occupying or using the Premises or any part thereof, to have agreed to be bound by the terms and conditions set forth in this Article 13. The provisions of this Article 13 shall be self-operative and no further instrument shall be required to give effect to this provision.

Section 13.9 If Landlord shall consent to any assignment of this Lease or to any sublease, or if Tenant shall enter into any other assignment or sublease permitted hereunder, Tenant shall, in consideration therefor, pay to Landlord, as Additional Rent:

(a) In the case of an assignment, on the effective date of the assignment, an amount equal to (i) all sums and other consideration paid to Tenant by the assignee for or by reason of such assignment (including sums paid for Tenant’s Property, less, in the case of a sale thereof, the then net unamortized or undepreciated cost thereof, determined on the basis of Tenant’s federal income tax returns) less (ii) all expenses reasonably and actually incurred by Tenant on account of brokerage commissions and attorneys’ fees in connection with such assignment; or

(b) In the case of a sublease, an amount equal to (i) all rents, additional charges or other consideration payable to Tenant under the sublease in excess of the Fixed Rent and Additional Rent accruing during the term of the sublease in respect of the subleased space (at the rate per square foot payable by Tenant hereunder) pursuant to the terms hereof (including sums paid for the sale or rental of Tenant’s Property, less, in the case of the sale thereof, the then net unamortized or undepreciated cost thereof, determined on the basis of Tenant’s federal income tax returns) less (ii) all expenses reasonably and actually incurred by Tenant on account of brokerage commissions and attorneys’ fees in connection with such sublease. The sums payable under this clause shall be paid by Tenant to Landlord as Additional Rent as and when payable by the subtenant to Tenant.

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Section 13.10 (a) If Tenant is a corporation (but not a public corporation), the provisions of Section 13.1 shall apply to a transfer (by one or more transfer(s)), of a majority of the stock of Tenant as if such transfer of a majority of the stock of Tenant were an assignment of this Lease. It is expressly understood that the term “transfer(s)” shall be deemed to include the issuance of new stock which results in a majority of the stock of Tenant being held by Persons which do not hold a majority of the stock of Tenant on the date hereof. The provisions of this Article 13 shall not apply to transactions with a corporation into or with which Tenant is merged or consolidated or to which substantially all of Tenant’s assets are transferred; provided, however, that (i) such transfer shall have been made for a legitimate independent business purpose and not for the principal purpose of transferring this Lease, (ii) the successor to Tenant shall have a net worth, computed in accordance with generally accepted accounting principles, at least equal to the greater of (A) the net worth of Tenant immediately prior to such merger, consolidation or transfer, or (B) the net worth of Tenant herein named on the date of this Lease, and (iii) proof satisfactory to Landlord of such net worth shall have been delivered to Landlord at least ten (10) days prior to the effective date of any such transaction.

(b) If Tenant is a partnership, the provisions of Section 13.1 shall apply to a transfer (by one or more transfers) of a majority interest in the partnership, as if such transfer were an assignment of this Lease.

(c) The limitations set forth in this Section 13.10 shall be deemed to apply to subtenant(s), assignee(s) and guarantor(s) of this Lease, if any, and any transfer by any such Person in violation of this Section 13.10 shall be deemed to be a transfer in violation of Section 13.1.

(d) A modification, amendment or extension of a sublease shall be deemed a sublease for the purposes of Section 13.1, and a takeover agreement shall be deemed a transfer of this Lease for the purposes of Section 13.1.

Section 13.11 Tenant may, without Landlord’s consent, but upon not less than ten (10) days’ prior notice to Landlord, permit any Affiliate of Tenant to sublet all or part of the Premises for any Permitted Use, or assign this Lease to any Affiliate, subject however to compliance with Tenant’s obligations under this Lease. No such sublease shall be deemed to vest in any such Affiliate any right or interest in this Lease or the Premises nor shall it relieve, release, impair or discharge any of Tenant’s obligations hereunder.

Section 13.12 (a) Any assignment or transfer, whether made with Landlord’s consent pursuant to Section 13.1 or without Landlord’s consent to the extent permitted under Sections 13.10 and 13.11, shall be made only if, and shall not be effective until, the assignee shall execute, acknowledge and deliver to Landlord an agreement in form and substance satisfactory to Landlord whereby the assignee shall assume the obligations of this Lease on the part of Tenant to be performed or observed from and after the effective date of such assignment or transfer, and whereby the assignee shall agree that the provisions in Section 13.1 shall, notwithstanding such assignment or transfer, continue to be binding upon it in respect of all future assignments and transfers.

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(b) The joint and several liability of Tenant and any immediate or remote successor in interest of Tenant and the due performance of the obligations of this Lease on Tenant’s part to be performed or observed shall not be discharged, released or impaired in any respect by any agreement or stipulation made by Landlord, or any grantee or assignee of Landlord by way of mortgage or otherwise, extending the time, or modifying any of the obligations of this Lease, or by any waiver or failure of Landlord, or any grantee or assignee of Landlord by way of mortgage or otherwise, to enforce any of the obligations of this Lease.

(c) The listing of any name other than that of Tenant, whether on the doors of the Premises or the Building directory, or otherwise, shall not operate to vest any right or interest in this Lease or in the Premises, nor shall it be deemed to be the consent of Landlord to any assignment or transfer of this Lease or to any sublease of Premises or to the use or occupancy thereof by others. Any such listing shall constitute a privilege extended by Landlord, revocable at Landlord’s will by notice to Tenant, provided that Landlord shall not unreasonably revoke such privilege as to any Affiliate of Tenant, or any subtenant of Tenant or assignee of this Lease approved by Landlord pursuant to this Article 13.

ARTICLE 14. Access To Premises

Section 14.1 Tenant shall permit Landlord, Landlord’s agents and public utilities servicing the Building to erect, use and maintain concealed ducts, pipes and conduits in and through the Premises. Landlord or Landlord’s agents shall have the right to enter the Premises at all reasonable times upon reasonable prior notice (except no such prior notice shall be required in case of emergency), which notice may be oral, to examine the same, to show them to prospective purchasers. Mortgagees, Lessors or lessees of the Building and their respective agents and representatives or prospective tenants of the Premises, and to make such repairs, alterations, improvements or additions (a) as Landlord may deem necessary or desirable to the Premises or to any other portion of the Building, or (b) which Landlord may elect to perform following Tenant’s failure to make repairs or perform any work which Tenant is obligated to make or perform under this Lease, or (c) for the purpose of complying with Legal Requirements, and Landlord shall be allowed to take all material into and upon the Premises that may be required therefor without the same constituting an eviction or constructive eviction of Tenant in whole or in part and Fixed Rent and Additional Rent will not be abated while said repairs, alterations, improvements or additions are being made, by reason of loss or interruption of business of Tenant, or otherwise. Landlord, in making any such repairs, alterations, additions or improvements, shall use reasonable efforts to minimize interference with Tenant’s access to and use and occupancy of the Premises for the Permitted Uses; provided, however, that Landlord shall have no obligation to employ contractors or labor at overtime or other premium pay rates or to incur any other overtime costs or additional expenses whatsoever, unless Tenant requests the use of such overtime labor and agrees to pay the additional costs to Landlord upon demand.

Section 14.2 If Tenant shall not be present when for any reason entry into the Premises shall be necessary or permissible, Landlord or Landlord’s agents may enter the same without rendering Landlord or such agents liable therefor (if during such entry Landlord or Landlord’s agents shall accord reasonable care to Tenant’s property), and without in any manner affecting this Lease. Nothing herein contained, however, shall be deemed or construed to

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impose upon Landlord any obligation, responsibility or liability whatsoever for the care, supervision or repair of the Building or any part thereof, other than as herein provided.

Section 14.3 Subject to the final sentence of Section 14.1, Landlord shall have the right from tune to time to alter the Building and, without the same constituting an actual or constructive eviction and without incurring any liability to Tenant therefor, to change the arrangement or location of entrances or passageways, doors and doorways, and corridors, elevators, stairs, toilets, or other public parts of the Building and to change the name, number or designation by which the Building is commonly known. All parts (except surfaces facing the interior of the Premises) of all walls, windows and doors bounding the Premises (including exterior Building walls, exterior core corridor walls, exterior doors and entrances other than doors and entrances solely servicing the Premises), all balconies, terraces and roofs adjacent to the Premises, all space in or adjacent to the Premises used for shafts, stacks, stairways, chutes, pipes, conduits, ducts, fan rooms, heating, air cooling, plumbing and other mechanical facilities, service closets and other Building facilities are not part of the Premises, and Landlord shall have the use thereof, as well as access thereto through the Premises for the purposes of operation, maintenance, alteration and repair.

ARTICLE 15. Certificate Of Occupancy

Tenant shall not at any time use or occupy the Premises in violation of the certificate of occupancy at such time issued for the Premises or for the Building and in the event that any department of the City or State of New York shall hereafter contend or declare by notice, violation, order or in any other manner whatsoever that the Premises are used for a purpose which is a violation of such certificate of occupancy. Tenant shall, upon five (5) days’ written notice from Landlord or any Governmental Authority, immediately discontinue such use of the Premises. Failure by Tenant to discontinue such use after such notice shall be considered a default in the fulfillment of a material covenant of this Lease and Landlord shall have the right to terminate this Lease immediately, and in addition thereto shall have the right to exercise any and all rights and privileges and remedies given to Landlord by and pursuant to the provisions of Articles 16 and 17.

ARTICLE 16. Default

Section 16.1 Each of the following events shall be an “Event of Default” hereunder:

(a) if Tenant defaults in the payment when due of any installment of Fixed Rent, and such default shall continue for a period of five (5) Business Days, or in the payment when due of any Additional Rent, and such default continues for a period of five (5) Business Days after notice thereof from Landlord; provided, however, that if Tenant shall default in the timely payment of Fixed Rent or Additional Rent, and any such default shall occur more than two times in any period of twelve (12) consecutive months, then, notwithstanding that such defaults shall have each been cured within the applicable period provided above, upon any further similar default, Landlord may serve a three days’ notice of termination upon Tenant without affording to Tenant an opportunity to cure such further default; or

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(b) if Tenant’s interest in this Lease is transferred in violation of Article 13; or

(c) if the Premises or a substantial portion thereof becomes vacant or abandoned; or

(d)(i) if Tenant admits in writing its inability to pay its debts as they become due; or

(ii) if Tenant commences or institutes any case, proceeding or other action (A) seeking relief as a debtor, or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property; or

(iii) if Tenant makes a general assignment for the benefit of creditors; or

(iv) if any case, proceeding or other action is commenced or instituted against Tenant (A) seeking to have an order for relief entered against it as debtor or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property, which either (1) results in any such entry of an order for relief, adjudication of bankruptcy or insolvency or such an appointment or the issuance or entry of any other order having a similar effect, or (2) remains undismissed for a period of ninety (90) days; or

(v) if any case, proceeding or other action is commenced or instituted against Tenant or any Guarantor seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its property which results in the entry of an order for any such relief which has not been vacated, discharged, or stayed or bonded pending appeal within ninety (90) days from the entry thereof; or

(vi) if Tenant takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clauses (ii), (iii), (iv) or (v) of this Section 16.1(d); or

(vii) if a trustee, receiver or other custodian is appointed for any substantial part of the assets of Tenant, which appointment is not vacated or effectively stayed within seven (7) Business Days, or if any such vacating or stay does not thereafter remain in effect; or

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(e) if Tenant defaults in the observance or performance of any other term, covenant or condition of this Lease on Tenant’s part to be observed or performed and Tenant fails to remedy such default within thirty (30) days after notice by Landlord to Tenant of such default, or, if such default is of such a nature that it cannot be completely remedied within said period of thirty (30) days, if Tenant fails to commence to remedy such default within such thirty-day period, or fails thereafter to diligently prosecute to completion all steps necessary to remedy such default; or

(f) if Tenant or any Affiliate of Tenant defaults beyond applicable grace and notice periods in the payment of any fixed rent or additional rent under the Lease, dated as of December 18, 1998, between Landlord and Tenant for a portion of the third (3rd) floor of the Building or any other lease of space in the Building, or if any such lease is terminated by Landlord as a result of a default by the tenant thereunder.

Section 16.2 (a) If an Event of Default occurs, Landlord may at any time thereafter give written notice to Tenant stating that this Lease and the Term shall expire and terminate on the date specified in such notice, which date shall not be less than seven (7) days after the giving of such notice. If Landlord gives such notice, this Lease and the Term and all rights of Tenant under this Lease shall expire and terminate as if the date set forth in such notice were the Fixed Expiration Date and Tenant immediately shall quit and surrender the Premises, but Tenant shall remain liable as hereinafter provided. Anything contained herein to the contrary notwithstanding, if such termination shall be stayed by order of any court having jurisdiction over any proceeding described in Section 16.1(d), or by federal or state statute, then, following the expiration of any such stay, or if the trustee appointed in any such proceeding, Tenant or Tenant as debtor-in-possession shall fail to assume Tenant’s obligations under this Lease within the period prescribed therefor by law or within one hundred twenty (120) days after entry of the order for relief or as may be allowed by the court, or if said trustee, Tenant or Tenant as debtor-in-possession shall fail to provide adequate protection of Landlord’s right, title and interest in and to the Premises or adequate assurance of the complete and continuous future performance of Tenant’s obligations under this Lease. Landlord, to the extent permitted by law or by leave of the court having jurisdiction over such proceeding, shall have the right, at its election, to terminate this Lease on seven (7) days’ notice to Tenant, Tenant as debtor-in-possession or said trustee and upon the expiration of said seven (7) day period this Lease shall cease and expire as set forth above and Tenant, Tenant as debtor-in-possession or said trustee shall immediately quit and surrender the Premises as aforesaid.

Section 16.3 If, at any time, (a) Tenant shall comprise two (2) or more Persons, (b) Tenant’s obligations under this Lease shall have been guaranteed by any Person other than Tenant, or (c) Tenant’s interest in this Lease shall have been assigned, the word “Tenant,” as used in Section 16.1(d), shall be deemed to mean any one or more of the Persons primarily or secondarily liable for Tenant’s obligations under this Lease. Any monies received by Landlord from or on behalf of Tenant during the pendency of any proceeding of the types referred to in Section 16(d) shall be deemed paid as compensation for the use and occupation of the Premises and the acceptance of any such compensation by Landlord shall not be deemed an acceptance of Fixed Rent and/or Additional Rent or a waiver on the part of Landlord of any rights under this Lease.

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ARTICLE 17. Remedies And Damages

Section 17.1 (a) If an Event of Default shall occur, and this Lease and the Term shall expire and come to an end as provided in Article 16:

(i) Tenant shall quit and peacefully surrender the Premises to Landlord, and Landlord and its agents may immediately, or at any time after such Event of Default or after the date upon which this Lease and the Term shall expire and come to an end, re-enter the Premises or any part thereof, without notice, either by summary proceedings, or by any other applicable action or proceeding, or by legal force or other legal means (without being liable to indictment, prosecution or damages therefor), and may repossess the Premises and dispossess Tenant and any other Persons from the Premises and remove any and all of their property and effects from the Premises; and

(ii) Landlord, at Landlord’s option, may relet the whole or any part or parts of the Premises from time to time, either in the name of Landlord or otherwise, to such tenant or tenants, for such term or terms ending before, on or after the Expiration Date, at such rental or rentals and upon such other conditions, which may include concessions and free rent periods, as Landlord, in its sole discretion, may determine; provided, however, that Landlord shall have no obligation to relet the Premises or any part thereof and shall in no event be liable for refusal or failure to relet the Premises or any part thereof, or, in the event of any such reletting. for refusal or failure to collect any rent due upon any such reletting, and no such refusal or failure shall operate to relieve Tenant of any liability under this Lease or otherwise affect any such liability, and Landlord, at Landlord’s option, may make such repairs, replacements, alterations, additions, improvements, decorations and other physical changes in and to the Premises as Landlord, in its sole discretion, considers advisable or necessary in connection with any such reletting or proposed reletting, without relieving Tenant of any liability under this Lease or otherwise affecting any such liability.

(b) Tenant hereby waives the service of any notice of intention to re-enter or to institute legal proceedings to that end which may otherwise be required to be given under any present or future law. Tenant, on its own behalf and on behalf of all Persons claiming through or under Tenant, including all creditors, does further hereby waive any and all rights which Tenant and all such Persons might otherwise have under any present or future law to redeem the Premises, or to re-enter or repossess the Premises, or to restore the operation of this Lease, after (i) Tenant shall have been dispossessed by a judgment or by warrant of any court or judge, (ii) any re-entry by Landlord, or (iii) any expiration or termination of this Lease and the Term, whether such dispossess, re-entry, expiration or termination shall be by operation of law or pursuant to the provisions of this Lease. The words “re-enter,” re-entry” and “re-entered” as used in this Lease shall not be deemed to be restricted to their technical legal meanings. In the event of a breach or threatened breach by Tenant, or any Persons claiming through or under Tenant, of any term, covenant or condition of this Lease, Landlord shall have the right to enjoin such breach and the right to invoke any other remedy allowed by law or in equity as if re-entry, summary proceedings and other special remedies were not provided in this Lease for such breach. The rights to invoke the remedies herein before set forth are cumulative and shall not preclude Landlord from invoking any other remedy allowed at law or in equity.

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Section 17.2 (a) If this Lease and the Term shall expire and come to an end as provided in Article 16, or by or under any summary proceeding or any other action or proceeding, or if Landlord shall re-enter the Premises as provided in Section 17.1, or by or under any summary proceeding or any other action or proceeding, then, in any of such events:

(i) Tenant shall pay to Landlord all Fixed Rent and Additional Rent payable under this Lease by Tenant to Landlord to the date upon which this Lease and the Term shall have expired and come to an end or to the date of re-entry upon the Premises by Landlord, as the case may be;

(ii) Tenant also shall be liable for and shall pay to Landlord, as damages, any deficiency (the “Deficiency”) between (A) Fixed Rent and Additional Rent for the period which otherwise would have constituted the unexpired portion of the Term (conclusively presuming the Additional Rent for each year thereof to be the same as was payable for the year immediately preceding such termination or re-entry), and (B) the net amount if any, of rents collected under any reletting effected pursuant to the provisions of Section 17.1(a)(ii) for any part of such period (first deducting from the rents collected under any such reletting all of Landlord’s expenses in connection with the termination of this Lease, Landlord’s re-entry upon the Premises and with such reletting including all repossession costs, brokerage commissions, legal expenses, attorneys’ fees and disbursements, alteration costs and other expenses of preparing the Premises for such reletting). Tenant shall pay the Deficiency in monthly installments on the days specified in this Lease for payment of installments of Fixed Rent, and Landlord shall be entitled to recover from Tenant each monthly Deficiency as the same shall arise. No suit to collect the amount of the Deficiency for any month shall prejudice Landlord’s right to collect the Deficiency for any subsequent month by a similar proceeding; and

(iii) whether or not Landlord shall have collected any monthly Deficiency as aforesaid, Landlord shall be entitled to recover from Tenant, and Tenant shall pay to Landlord, on demand, in lieu of any further Deficiency as and for liquidated and agreed final damages, a sum equal (A) to the amount by which the Fixed Rent and Additional Rent for the period which otherwise would have constituted the unexpired portion of the Term (conclusively presuming the Additional Rent for each year thereof to be the same as was payable for the year immediately preceding such termination or re-entry) exceeds (B) the then fair and reasonable rental value of the Premises, including Additional Rent for the same period, both discounted to present value at the rate of four percent (4%) per annum less (C) the aggregate amount of Deficiencies previously collected by Landlord pursuant to the provisions of Section 17.2(a)(ii) for the same period. If, before presentation of proof of such liquidated damages to any court, commission or tribunal, Landlord shall have relet the Premises or any part thereof for the period which otherwise would have constituted the unexpired portion of the Term, or any part thereof, the amount of net rents collected in connection with such reletting shall be deemed, prima facie, to be the fair and reasonable rental value for the part or the whole of the Premises so relet during the term of the reletting.

(b) If Landlord shall relet the Premises, or any part thereof, together with other space in the Building, the net rents collected under any such reletting and the expenses of

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any such reletting shall be equitably apportioned for the purposes of this Section 17.2. Tenant shall in no event be entitled to any rents collected or payable under any reletting, whether or not such rents shall exceed the Fixed Rent reserved in this Lease. Nothing contained in Article 16 or this Article 17 shall be deemed to limit or preclude the recovery by Landlord from Tenant of the maximum amount allowed to be obtained as damages by any statute or rule of law, or of any sums or damages to which Landlord may be entitled in addition to the damages set forth in this Section 17.2.

ARTICLE 18. Fees And Expenses

Section 18.1 If an Event of Default shall occur under this Lease or if Tenant shall do or permit to be done any act or thing upon the Premises which would cause Landlord to be in default under any Superior Lease or Mortgage, or if Tenant shall fail to comply with its obligations under this Lease and the preservation of property or the safety of any tenant, occupant or other person is threatened, Landlord may, after reasonable prior notice to Tenant except in an emergency, perform the same for the account of Tenant or make any expenditure or incur any obligation for the payment of money for the account of Tenant. All amounts expended by Landlord in connection with the foregoing, including reasonable attorneys’ fees and disbursements in instituting, prosecuting or defending any action or proceeding or recovering possession, and the cost thereof, with interest thereon at the Default Rate, shall be deemed to be Additional Rent hereunder and shall be paid by Tenant to Landlord within ten (10) days of rendition of any bill or statement to Tenant therefor.

Section 18.2 If Tenant shall fail to pay any installment of Fixed Rent and/or Additional Rent when due, Tenant shall pay to Landlord, in addition to such installment of Fixed Rent and/or Additional Rent, as the case may be, as a late charge and as Additional Rent, a sum equal to interest at the Default Rate on the amount unpaid, computed from the date such payment was due to and including the date of payment.

ARTICLE 19. No Representations By Landlord

Landlord and Landlord’s agents have made no warranties, representations, statements or promises with respect to (a) the rentable and usable areas of the Premises or the Building, (b) the amount of any current or future Labor Rates or Taxes, (c) the compliance with applicable Requirements of the Premises or the Building, or (d) the suitability of the Premises for any particular use or purpose. No rights, easements or licenses are acquired by Tenant under this Lease, by implication or otherwise, except as expressly set forth herein. This Lease (including any Exhibits referred to herein and all supplementary agreements provided for herein) contains the entire agreement between the parties and all understandings and agreements previously made between Landlord and Tenant are merged in this Lease, which alone fully and completely expresses their agreement. Tenant is entering into this Lease after full investigation, and is not relying upon any statement or representation made by Landlord not embodied in this Lease.

ARTICLE 20. End Of Term

Section 20.1 Upon the expiration or other termination of this Lease, Tenant shall quit and surrender to Landlord the Premises, vacant, broom clean, in good order and

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condition, ordinary wear and tear and damage for which Tenant is not responsible under the terms of this Lease excepted, and Tenant shall remove all of Tenant’s Property from the Premises, and this obligation shall survive the expiration or sooner termination of the Term. If the last day of the Term or any renewal thereof falls on Saturday or Sunday, this Lease shall expire on the Business Day immediately preceding. Tenant expressly waives, for itself and for any Person claiming through or under Tenant, any rights which Tenant or any such Person may have under the provisions of Section 2201 of the New York Civil Practice Law and Rules and of any successor law of like import then in force in connection with any holdover summary proceedings which Landlord may institute to enforce the foregoing provisions of this Article 20.

Section 20.2 Tenant acknowledges that Tenant or any subtenant of Tenant remaining in possession of the Premises after the expiration or earlier termination of this Lease would create an unusual hardship for Landlord and for any prospective tenant. Tenant, therefore, covenants that if for any reason Tenant or any subtenant of Tenant shall fail to vacate and surrender possession of the Premises or any part thereof on or before the expiration or earlier termination of this Lease and the Term, then Tenant’s continued possession of the Premises shall be as a “month-to-month” tenant, during which time, without prejudice and in addition to any other rights and remedies Landlord may have hereunder or at law, Tenant shall pay to Landlord for each month and for each portion of any month during which Tenant holds over, an amount equal to two (2) times the total monthly amount of Fixed Rent and Additional Rent payable hereunder. The provisions of this Section 20.2 shall not in any way be deemed to (a) permit Tenant to remain in possession of the Premises after the Expiration Date or sooner termination of this Lease or (b) imply any right of Tenant to use or occupy the Premises upon expiration or termination of this Lease and the Term, and no acceptance by Landlord of payments from Tenant after the Expiration Date or sooner termination of the Term shall be deemed to be other than on account of the amount to be paid by Tenant in accordance with the provisions of this Article 20. Tenant’s obligations under this Article shall survive the expiration or earlier termination of this Lease.

ARTICLE 21. Quiet Enjoyment

Provided no Event of Default has occurred and is continuing, Tenant may peaceably and quietly enjoy the Premises without hindrance by Landlord or any Person lawfully claiming through or under Landlord, subject, nevertheless, to the terms and conditions of this Lease.

ARTICLE 22. No Waiver; Non-Liability

Section 22.1 No act or thing done by Landlord or Landlord’s agents during the Term shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept such surrender shall be valid unless in writing and signed by Landlord. No employee of Landlord or of Landlord’s agents shall have any power to accept the keys of the Premises prior to the termination of this Lease. The delivery of keys to any employee of Landlord or of Landlord’s agents shall not operate as a termination of this Lease or a surrender of the Premises. Any Building employee to whom any property shall be entrusted by or on behalf of Tenant shall be deemed to be acting as Tenant’s agent with respect to such property and neither Landlord nor its agents shall be liable for any damage to property of Tenant or of others entrusted to employees of the Building, nor for the loss of or damage to any property of Tenant by theft or otherwise.

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Section 22.2 The failure of Landlord to seek redress for violation of, or to insist upon the strict performance of, any covenant or condition of this Lease, or any of the Rules and Regulations set forth or hereafter adopted by Landlord, shall not prevent a subsequent act, which would have originally constituted a violation, from having all of the force and effect of an original violation. The receipt by Landlord of Fixed Rent and/or Additional Rent with knowledge of the breach of any covenant of this Lease shall not be deemed a waiver of such breach. The failure of Landlord to enforce any of the Rules and Regulations set forth, or hereafter adopted, against Tenant or any other tenant in the Building shall not be deemed a waiver of any such Rules and Regulations. Landlord shall not enforce the Rules and Regulations against Tenant in a discriminatory manner. No provision of this Lease shall be deemed to have been waived by Landlord, unless such waiver be in writing signed by Landlord. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly Fixed Rent or any Additional Rent shall be deemed to be other than on account of the next installment of Fixed Rent or Additional Rent, as the case may be, or as Landlord may elect to apply same, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as Fixed Rent or Additional Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Fixed Rent or Additional Rent or pursue any other remedy in this Lease provided. Any executory agreement hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of this Lease in whole or in part unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification, discharge or abandonment is sought. All references in this Lease to the consent or approval of Landlord shall be deemed to mean the written consent or approval of Landlord and no consent or approval of Landlord shall be effective for any purpose unless such consent or approval is set forth in a written instrument executed by Landlord.

Section 22.3 (a) Neither Landlord nor its agents shall be liable for any injury or damage to persons or property or interruption of Tenant’s business resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or snow or leaks from any part of the Building or from the pipes, appliances or plumbing works or from the roof, street or subsurface or from any other place or by dampness or by any other cause of whatsoever nature; nor shall Landlord or its agents be liable for any such damage caused by other tenants or persons in the Building or caused by construction of any private, public or quasi-public work; nor shall Landlord be liable for any latent defect in the Premises or in the Building (except that Landlord shall be required to repair the same to the extent provided in Article 5). Nothing in the foregoing shall affect any right of Landlord to the indemnity from Tenant to which Landlord may be entitled under Article 28 in order to recoup for payments made to compensate for losses of third parties.

(b) If, at any time or from time to time, any windows of the Premises are temporarily closed, darkened or bricked-up for any reason whatsoever, or any of such windows are permanently closed, darkened or bricked-up if required by any Legal Requirement or related to any construction upon property adjacent to the Real Property by parties other than Landlord, Landlord shall not be liable for any damage Tenant may sustain thereby and Tenant shall not be

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entitled to any compensation therefor nor abatement of Fixed Rent or Additional Rent nor shall the same release Tenant from its obligations hereunder nor constitute an eviction or constructive eviction of Tenant from the Premises.

ARTICLE 23. Waiver Of Trial By Jury

The respective parties hereto shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other (except for personal injury or property damage) on any matters whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant. Tenant’s use or occupancy of the Premises, or for the enforcement of any remedy under any statute, emergency or otherwise. If Landlord commences any summary proceeding against Tenant. Tenant will not interpose any counterclaim of whatever nature or description in any such proceeding (unless failure to impose such counterclaim would preclude Tenant from asserting in a separate action the claim which is the subject of such counterclaim), and will not seek to consolidate such proceeding with any other action which may have been or will be brought in any other court by Tenant.

ARTICLE 24. Inability To Perform

This Lease and the obligation of Tenant to pay Fixed Rent and Additional Rent hereunder and perform all of the other covenants and agreements hereunder on the part of Tenant to be performed will not be affected, impaired or excused because Landlord is unable to fulfill any of its obligations under this Lease expressly or impliedly to be performed by Landlord or because Landlord is unable to make, or is delayed in making any repairs, additions, alterations, improvements or decorations or is unable to supply or is delayed in supplying any equipment or fixtures, if Landlord is prevented or delayed from so doing by reason of strikes or labor troubles or by accident, or by any cause whatsoever reasonably beyond Landlord’s control, including laws, governmental preemption in connection with a national emergency or by reason of any Legal Requirements or by reason of the conditions of supply and demand which have been or are affected by war or other emergency (“Unavoidable Delays”).

ARTICLE 25. Bills And Notices

Except as otherwise expressly provided in this Lease, any bills, statements, consents, notices, demands, requests or other communications given or required to be given under this Lease shall be in writing and shall be deemed sufficiently given or rendered if delivered by hand (against a signed receipt), sent by a nationally recognized overnight courier service, or sent by registered or certified mail (return receipt requested) and addressed:

if to Tenant, (a) 1 North Lexington Avenue, White Plains, New York 10601, Attention: President, with a copy to the same address, Attention: Vice President, Legal Affairs, or (b) at any place where Tenant or any agent or employee or Tenant may be found if mailed subsequent to Tenant’s abandoning or surrendering the Premises; or

if to Landlord, as follows: 111 Eighth Avenue LLC, c/o Taconic Investment Partners LLC, 1500 Broadway, New York, New York 10036, Attention: Mr. Paul Pariser, with a copy to: Schulte Roth & Zabel LLP, 900 Third Avenue, New York, New York 10022, Attention: Robert S. Nash, Esq.

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Any such bill, statement, consent, notice, demand, request or other communication given as provided in this Article 25 shall be deemed to have been rendered or given (i) on the date when it shall have been hand delivered, (ii) three (3) Business Days from the date when it shall have been mailed, or (iii) one (1) Business Day from the date when it shall have been sent by overnight courier service.

ARTICLE 26. Rules And Regulations

Landlord reserves the right, from time to time, to adopt additional reasonable and non-discriminatory Rules and Regulations and to amend the Rules and Regulations then in effect. Tenant and Tenant’s contractors, employees, agents, and licensees shall comply with the Rules and Regulations, as so supplemented or amended. Nothing contained in this Lease shall be construed to impose upon Landlord any duty or obligation to enforce the Rules and Regulations or terms, covenants or conditions in any other lease against any other tenant, and Landlord shall not be liable to Tenant for violation of the same by any other tenant, its employees, agents, visitors or licensees; provided, however, that Landlord shall not enforce such Rules and Regulations against Tenant in a discriminatory manner. If there shall be any inconsistencies between this Lease and the Rules and Regulations, the provisions of this Lease shall prevail.

ARTICLE 27. Broker

Section 27.1 Each of Landlord and Tenant represents and warrants to the other that it has not dealt with any broker in connection with this Lease other than Insignia/Edward S. Gordon Company, Inc. (“Broker”) and that to the best of its knowledge and belief, no other broker, finder or similar Person procured or negotiated this Lease or is entitled to any fee or commission in connection herewith.

Section 27.2 Each of Landlord and Tenant shall indemnify, defend, protect and hold the other party harmless from and against any and all losses, liabilities, damages, claims, judgments, fines, suits, demands, costs, interest and expenses of any kind or nature (including reasonable attorneys’ fees and disbursements) which the indemnified party may incur by reason of any claim of or liability to any broker, finder or like agent (other than Broker) arising out of any dealings claimed to have occurred between the indemnifying party and the claimant in connection with this Lease, or the above representation being false. The provisions of this Article 27 shall survive the expiration or earlier termination of the Term of this Lease.

ARTICLE 28. Indemnity

Section 28.1 Tenant shall not do or permit any act or thing to be done upon the Premises which may subject Landlord to any liability or responsibility for injury, damages to persons or property or to any liability by reason of any violation of law or of any Legal Requirement, but shall exercise such control over the Premises as to fully protect Landlord against any such liability. Tenant shall defend, indemnify and save harmless Landlord from and against (a) all claims of whatever nature against Landlord arising from any act, omission or

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negligence of Tenant, its contractors, licensees, agents, servants, employees, invitees or visitors, (b) all claims against Landlord arising from any accident, injury or damage whatsoever caused to any person or to the property of any person and occurring during the Term in or about the Premises, (c) all claims against Landlord arising from any accident, injury or damage occurring outside of the Premises but anywhere within or about the Real Property, where such accident, injury or damage results or is claimed to have resulted from an act, omission or negligence of Tenant or Tenant’s agents, employees, and (d) any breach, violation or nonperformance of any covenant, condition or agreement in this Lease set forth and contained on the part of Tenant to be fulfilled, kept, observed and performed. This indemnity and hold harmless agreement shall include indemnity from and against any and all liability, fines, suits, demands, costs and expenses of any kind or nature (including attorneys’ fees and disbursements) incurred in or in connection with any such claim or proceeding brought thereon, and the defense thereof.

Section 28.2 Tenant agrees to defend, indemnify and hold harmless Landlord and any partner, shareholder, directed officer, principal, employee or agent, directly and indirectly, of Landlord, from and against all obligations (including removal and remedial actions), losses, claims, suits, judgments, liabilities, penalties, damages (including consequential and punitive damages), costs and expenses (including attorneys’ and consultants’ fees and expenses) of any nature whatsoever that may at any time be incurred by, imposed on or asserted against Landlord or any such party directly or indirectly based on, or arising or resulting from (a) the actual or alleged presence of Hazardous Materials on the Premises or in the Building which is caused or permitted by Tenant (and expressly excluding any Hazardous Materials present in the Premises on the Commencement Date), and (b) any Environmental Claim relating in any way to Tenant’s operation or use of the Premises or the Building. The provisions of this Section 28.2 shall survive the expiration or sooner termination of this Lease.

ARTICLE 29. Reduced Premises. Throughout the Term of this Lease, including renewals and extensions, Tenant agrees that Landlord shall have the right, upon Landlord’s giving Tenant not less than thirty (30) days prior written notice, to recapture a portion or portions of the Premises solely for the purpose of (a) installing additional elevators) in the Building, together with such space as may be required for lobbies and other common areas, (b) improving the Building Systems, or (c) constructing public corridors to create access to rentable space now existing or to be constructed in the future on the floor on which the Premises are located (any or all of the foregoing work, “Building Improvements”). The amount of such recaptured space which may be taken by Landlord pursuant to this Article 29 shall be limited to such space as is reasonably and actually required for the proper installation, access and operation of such Building Improvements. Tenant shall provide Landlord with access to the Premises to perform the work to install and maintain the Building Improvements, including the right to take all necessary materials and equipment into the Premises, without the same constituting an eviction, and Tenant shall not be entitled to any abatement of rent while such work is in progress or any damages by reason of loss or interruption of business or otherwise. Landlord shall use reasonable efforts to minimize interference with Tenant’s access to and use and occupancy of the Premises in making any Building Improvements; provided, however, that Landlord shall have no obligation to employ contractors or labor at overtime or other premium pay rates or to incur any other overtime costs or additional expenses whatsoever. Promptly following the completion of any Building Improvements, Landlord shall make such repairs to and restoration of the Premises as may be reasonably required as a direct result thereof. Upon the date set forth for such

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recapture in Landlord’s notice described above, the Lease shall be deemed automatically amended by the deletion of such recaptured space from the Premises, Fixed Rent and Additional Rent shall be reduced in the proportion which the area of the part of the Premises so recaptured bears to the total area of the Premises immediately prior thereto, and Tenant shall promptly vacate and surrender such portion of the Premises to Landlord, and except as otherwise specifically set forth in this Article 29, the terms and conditions of this Lease shall not be modified by reason of any such Building Improvements or the maintenance thereof.

ARTICLE 30. Miscellaneous

Section 30.1 (a) The obligations of Landlord under this Lease shall not be binding upon Landlord named herein after the sale, conveyance, assignment or transfer by such Landlord (or upon any subsequent landlord after the sale, conveyance, assignment or transfer by such subsequent landlord) of its interest in the Building or the Real Property, as the case may be, and in the event of any such sale, conveyance, assignment or transfer, Landlord shall be and hereby is entirely freed and relieved of all covenants and obligations of Landlord hereunder. and the transferee of Landlord’s interest in the Building or the Real Property, as the case may be, shall be deemed to have assumed all obligations under this Lease. Prior to any such sale, conveyance, assignment or transfer, the liability of Landlord for Landlord’s obligations under this Lease shall be limited to Landlord’s interest in the Real Property and Tenant shall not look to any other property or assets of Landlord or the property or assets of any of the Exculpated Parties (defined below) in seeking either to enforce Landlord’s obligations under this Lease or to satisfy a judgment for Landlord’s failure to perform such obligations.

(b) Notwithstanding anything contained herein to the contrary, Tenant shall look solely to Landlord to enforce Landlord’s obligations hereunder and no partner, shareholder, director, officer, principal, employee or agent, directly and indirectly, of Landlord (collectively, the “Exculpated Parties”) shall be personally liable for the performance of Landlord’s obligations under this Lease. Tenant shall not seek any damages against any of the Exculpated Parties.

Section 30.2 Wherever in this Lease Landlord’s consent or approval is required, if Landlord shall refuse such consent or approval, Tenant in no event shall be entitled to make, nor shall Tenant make, any claim, and Tenant hereby waives any claim, for money damages (nor shall Tenant claim any money damages by way of set-off, counterclaim or defense) based upon any claim or assertion by Tenant that Landlord unreasonably withheld or unreasonably delayed its consent or approval. Tenant’s sole remedy shall be an action or proceeding to enforce any such provision, for specific performance, injunction or declaratory judgment.

Section 30.3 (a) All of the Exhibits attached to this Lease are incorporated in and made a part of this Lease, but, in the event of any inconsistency between the terms and provisions of this Lease and the terms and provisions of the Exhibits hereto, the terms and provisions of this Lease shall control. This Lease may not be changed, modified, terminated or discharged, in whole or in part, except by writing, executed by the party against whom enforcement of the change, modification, termination or discharge is to be sought. Wherever appropriate in this Lease, personal pronouns shall be deemed to include the other genders and the singular to include the plural. The captions hereof are inserted only as a matter of convenience

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and for reference and in no way define, limit or describe neither the scope of this Lease nor the intent of any provision thereof. All Article and Section references set forth herein shall, unless the context otherwise specifically requires, be deemed references to the Articles and Sections of this Lease. Whenever the words “include”, “includes”, or “including” are used in this Lease, they shall be deemed to be followed by the words “without limitation”.

(b) This Lease shall be governed in all respects by the laws of the State of New York applicable to agreements executed in and to be performed wholly within said State.

(c) If any term, covenant, condition or provision of this Lease, or the application thereof to any person or circumstance, shall ever be held to be invalid or unenforceable, then in each such event the remainder of this Lease or the application of such term, covenant, condition or provision to any other person or any other circumstance (other than those as to which it shall be invalid or unenforceable) shall not be thereby affected, and each term, covenant, condition and provision hereof shall remain valid and enforceable to the fullest extent permitted by law.

(d) If at the commencement of, or at any time or times during the Term of this Lease, the Fixed Rent and Additional Rent reserved in this Lease shall not be fully collectible by reason of any Legal Requirement, Tenant shall enter into such agreements and take such other steps (without additional expense to Tenant) as Landlord may request and as may be legally permissible to permit Landlord to collect the maximum rents which may from time to time during the continuance of such legal rent restriction be legally permissible (and not in excess of the amounts reserved therefor under this Lease). Upon the termination of such legal rent restriction prior to the expiration of the Term, (i) Fixed Rent and Additional Rent shall become and thereafter be payable hereunder in accordance with the amounts reserved in this Lease for the periods following such termination, and (ii) Tenant shall pay to Landlord, if legally permissible, an amount equal to (A) the items of Fixed Rent and Additional Rent which would have been paid pursuant to this Lease but for such legal rent restriction less (B) the rents paid by Tenant to Landlord during the period or periods such legal rent restriction was in effect.

(e) The covenants, conditions and agreements contained in this Lease shall bind and inure to the benefit of Landlord and Tenant and their respective legal representatives, successors, and, except as otherwise provided in this Lease, their assigns.

Section 30.4 Except as expressly provided to the contrary in this Lease, Tenant agrees that all disputes arising, directly or indirectly, out of or relating to this Lease, and all actions to enforce this Lease, shall be dealt with and adjudicated in the state courts of New York or the Federal courts sitting in New York City; and for that purpose hereby expressly and irrevocably submits itself to the jurisdiction of such courts. Tenant hereby irrevocably appoints the Secretary of the State of New York as its authorized agent upon which process may be served in any such action or proceeding.

[Signature Page Follows]

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IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this Lease as of the day and year first above written.

111 EIGHTH AVENUE LLC, Landlord
By:	Taconic Investment Partners LLC, Authorized Signatory
	By:	/s/ Paul Pariser
		Name:	Paul Pariser
		Title:	Principal

METROMEDIA FIBER NETWORK SERVICES, INC., Tenant
By:	/s/ Gerard Benedetto
	Name:	Gerard Benedetto
	Title:	Vice President

Tenant’s Federal Tax Identification Number:

13-3982836

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STATE OF NEW YORK	)
	) ss.:
COUNTY OF WESTCHESTER

On the 20^th day of April, 1999, before me personally came Gerard Benedetto, to me known, who being by me duly sworn, did depose and say: that he resides at 1 No. Lexington Avenue, White Plains, New York 10601; that he is the Vice President and Chief Financial Officer of METROMEDIA FIBER NETWORK SERVICES, INC., the corporation described in the foregoing instrument; and that he signed his name thereto by order of the board of directors of said corporation.

/s/ Yvette Kitrosser

Notary Public

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EXHIBIT A

FLOOR PLAN OF THE PREMISES

The floor plan which follows is intended solely to identify the general outline of the Premises, and should not be used for any other purpose. All areas, dimensions and locations are approximate, and any physical conditions indicated may not exist as shown.

[Depiction of Floor Plan]

EXHIBIT B

EXHIBITS RULES AND REGULATIONS

1. The sidewalks, entrances, passages, courts, elevators, vestibules, stairways, corridors, or hails shall not be obstructed or encumbered by any Tenant or used for any purpose other than ingress and egress to and from the Premises.

2. No awnings, air-conditioning units, fans or other projections shall be attached to the outside walls of the Building. No curtains, blinds, shades, or screens shall be attached to or hung in, or used in connection with, any exterior window or entry door of the Premises, without the prior written consent of Landlord. Such awnings, projections, curtains, blinds, shades, screens or other fixtures must be of a quality, type, design and color, and attached in the manner approved by Landlord. All electrical fixtures hung in offices or spaces along the perimeter of the demised premises must be fluorescent, of a quality, type, design and bulb color approved by Landlord.

3. No sign, advertisement, notice or other lettering shall be exhibited, inscribed, painted or affixed by any Tenant on any part of the Building without the prior written consent of Landlord except that the name of Tenant may appear on the entrance door of the Premises. In the event of the violation of the foregoing by Tenant, Landlord may remove same without any liability, and may charge the expense incurred by such removal to the Tenant or Tenants violating this rule. Interior signs on doors and directory tablets shall be inscribed, painted or affixed for each Tenant by Landlord at the expense of such Tenant, and shall be of a size, color and style acceptable to Landlord. Landlord will provide directory listings in the directory maintained by Landlord in the lobby of the Building for Tenant and each partner and professional employee of Tenant, not to exceed six (6) such listings.

4. The sashes, sash doors, skylights, windows, and doors that reflect or admit light and air into the halls, passageways or other public places in the Building, shall not be covered or obstructed by any Tenant, nor shall any bottles, parcels, or other articles be placed on the windowsills.

5. No show cases or other articles shall be put in front of or affixed to any part of the exterior of the Building, nor placed in the halls, corridors or vestibules without the prior written consent of Landlord.

6. The water and wash closets and other plumbing fixtures shall not be used for any purposes other than those for which they were constructed, and no sweepings, rubbish, rags, acids or other substances shall be deposited therein. All damages resulting from any misuse of the fixtures shall be borne by the Tenant who, or whose servants, employees, agents, visitors or licensees, shall have caused the same.

7. No space in the Building shall be used for manufacturing, for the storage of merchandise, or for the storage of merchandise, or for the sale of merchandise, goods or property of any kind at auction or otherwise.

8. No Tenant shall make, or permit to be made, any unseemly or disturbing noises or disturb or interfere with occupants of this or neighboring buildings or premises or those having business with them whether by the use of any musical instrument, radio, television, stereo system, unmusical noise, whistling, singing, or in any other way. No Tenant shall throw anything out of the doors, windows or skylights or down the passageways.

9. No Tenant, or any of Tenant’s servants, employees, agents, visitors or licensees, shall at any time bring or keep upon the Premises any inflammable, combustible or explosive fluid, chemical or substance.

10. Each Tenant must, upon the termination of its tenancy, return to Landlord all keys of stores, offices and toilet rooms, either furnished to, or otherwise procured by such Tenant, and in the event of the loss of any keys, so furnished, such Tenant shall pay to Landlord the cost thereof.

11. All removals, or the carrying in or out of any safes, freight, furniture or bulky matter of any description must take place in the manner and during the hours which Landlord or its agent may determine from time to time. Landlord reserves the right to inspect all safes, freight or other bulky articles to be brought into the Building and to exclude from the Building all safes, freight or other bulky articles which violate any of these Rules and Regulations or the lease of which these Rules and Regulations are a part Landlord shall have the exclusive right to prescribe the hours of operation of the freight elevator and Tenant shall pay, as Additional Rent Landlord’s standard fee for operating the freight elevator after normal hours. No bicycles, vehicles, animals, birds or fish of any kind shall be brought into or kept by any Tenant in or about the Premises or the Building.

12. No Tenant shall occupy or permit any portion of the Premises demised to it to be occupied as an office for a public stenographer or public typist, or for the possession, storage, manufacture, or sale of narcotics, dope, tobacco in any form, or as a barber or manicure shop, or as an employment bureau. No Tenant shall engage or pay any employees on the Premises, except those actually working for such Tenant on the Premises, nor advertise for labor giving an address at the Premises.

13. No Tenant shall purchase spring water, ice, towels or other like service from any company or persons not approved by Landlord.

14. Landlord shall have the right to prohibit any advertising by any Tenant which, in Landlord’s opinion, tends to impair the reputation of the Building or its desirability as a building for offices, and upon written notice from Landlord, Tenant shall refrain from or discontinue such advertising.

15. Landlord reserves the right to exclude from the Building between the hours of 6 P.M. and 3 A.M. and at all hours on Sundays and legal holidays all persons who do not present a pass to the Building signed by Landlord. Landlord will furnish passes to persons for whom any Tenant requests the same in writing. Each Tenant shall be responsible for all persons for whom it requests such pass and shall be liable to Landlord for all acts of such persons.

16. Each Tenant shall, at its expense, provide artificial light for the employees of Landlord while doing janitor service or other cleaning, and in making repairs or alterations in the Premises.

17. The requirements of Tenants will be attended to only upon written application at the office of the Building. Employees shall not perform any work or do anything outside of the regular duties, unless under special instructions from the office of Landlord.

18. Canvassing, soliciting and peddling in the Building is prohibited and each Tenant shall co-operate to prevent the same.

19. There shall not be used in any space, or in the public halls of the Building, either by any Tenant or by jobbers or others, in the delivery or receipt of merchandise, any hand trucks, except those equipped with rubber tires and side guards.

20. Tenant shall not do any cooking, conduct any restaurant, luncheonette or cafeteria for the sale or service of food or beverages to its employees or to others, or cause or permit any orders of cooking or other processes or any unusual or objectionable odors to emanate from the demised premises. Tenant shall not install or permit the installation or use of any food, beverage, cigarette, cigar or stamp dispensing machine; or permit the delivery of any food or beverage to the Premises, except by such persons delivering the same as shall be approved by Landlord.

21. If there shall be any inconsistencies between the text of this Lease and these Rules and Regulations, the provisions of the Lease shall prevail.

EXHIBIT C

APPROVED CONTRACTORS

Mr. Frank Sciame President F.J. Sciame Construction Co., Inc. 80 South Street New York, N.Y. 10038 Tel: (212) 232-2200 Fax: (212) 248-5299	Mr. Al Hot President Fast Track Construction 450 West 33rd Street New York, N.Y. 10001 Tel: (212) 279-0110 Fax: (212) 279-9239
Mr. Anthony Genovese Executive Vice President HRH Construction Interiors, Inc. One Park Avenue New York, N.Y, 10016 Tel. (212) 616-3100 Fax; (212) 696-4091	Christopher H. Gallin John Gallin &, Sons, Inc. 40 Gold Street New York, N.Y. 10018 Tel: (212) 267-8624 Fax: (212) 962-7201
Mr. Irving Koven Ambassador Construction Co., Inc. 41 East 42nd Street New York, N.Y. 10017 Tel: (212) 922-1020 Fax: (212) 949-9762	Mr. Peter Dove Dominant Construction 523 Route 33, Orangeburg, N.Y. 10962 Tel: (914) 398-3900 Fax: (914) 398-3106
Mr. Chris Philips Vice President Tishman Construction Corp. 666 Fifth Avenue New York, N.Y. 10103 Tel (212) 708-6824 Fax: (212) 399-3643	Mr. Stephen S. Thomsen Thomsen Construction Co., Inc. 180 Varick Street 12th Floor New York, N.Y. 10014 Tel: (212) 647-1412 Fax: (212) 647-1249
Leher McGovern Bovis 200 Park Avenue New York, N.Y. 10166 Tel: (212) 592-6700 Fax (212) 592-6988	Mr. George J. Figliolia New York City Builders Group One Wall Street, 4th Floor New York, N.Y. 10005 Tel: (212) 635-0760 Tel: (212) 635-0767

B-1

John Berry Westside Interiors 462 Beattie Road Rock Tavern, N.Y. 12575 Tel: (914) 496-8005 Fax: (914) 496-2912 Alfred J. Tosto Regional Manager Gnome Group, Inc. Ill 8th Avenue New York, N.Y. 10011 Tel: (212) 807-1991 Fax: (212) 807-6266

B-2

EXHIBIT D

Initial Alterations

1. Conduit/Riser Space: Tenant may install the following electrical and telecommunications conduits at locations reasonably determined by Landlord, subject to Tenant’s obligation to pay for riser space as set forth in Section 9.11:

(a) Ten (10) four-inch (4”) diameter EMT conduits from the basement to the Premises, containing three (3) one and one-quarter-inch (1 1/4”) innerducts. Landlord agrees to use reasonable efforts to provide Tenant with conduit/riser space to allow a minimum bending radius of twenty-four inches (24”) for the above-described conduits.

(b) One (1) three-inch (3”) EMT conduit from the Building master ground to the Premises, containing a 750 MCM conductor.

(c) One (1) two-inch (2”) EMT conduit from the Premises to the Roof to house coaxial cables for Tenant’s Transmission Equipment.

(d) Five (5) telecommunications entrances to the Building for fiber optic lines, at a location or locations designated by Landlord, with connections to the ten (10) four-inch (4”) conduits referred to in subparagraph l(a)above.

All of the work necessary to install the conduits described in Paragraphs 1(a) through l(d) above shall be performed by Tenant in compliance with all applicable Legal Requirements, and are subject to Landlord’s review and approval of plans and of the amount of space required, which approval shall not be unreasonably withheld or delayed. All such work, including core drilling, if required, shall be performed at Tenant’s sole cost and expense, including the cost of a fire watch and related supervisory costs relating to any core drilling, which shall be performed in such a manner and at such times as Landlord shall prescribe.

2. Life Safety Equipment: Tenant may demolish the existing sprinkler system within the Premises and install a preaction sprinkler system or other fire suppression system, together with sprinkler riser drains, independent of the Building’s sprinkler and life safety systems, subject to applicable Legal Requirements and Landlord’s review and approval of plans, equipment, methods and materials, which approval shall not be unreasonably withheld or delayed. Such system shall be connected to the Building’s sprinkler or life safety system, if compatible, at Tenant’s sole cost and expense.

3. Thermal Insulation: Tenant may install, as part of its Initial Alterations or otherwise, insulation in the Premises on the inside of the exterior walls and windows, subject to applicable Legal Requirements and Landlord’s review and approval of plans, equipment, methods and materials, which approval shall not be unreasonably withheld or delayed, except to the extent such installations would be visible from outside of the Premises, in which event Landlord’s approval may be granted or withheld in Landlord’s sole discretion.

B-3

EXHIBIT E

ROOF PLAN

[Depiction of Roof Plan]

B-4

SCHEDULE 1

Schedule of Monthly Additional Charges

Capitalized terms not otherwise defined in this schedule shall have the meanings assigned to such terms in the Sublease Agreement.

1. To be defined at a later date

B-5

EX-10.16

EXHIBIT 10.16

LEASE

BY AND BETWEEN

529 BRYANT STREET PARTNERS LLC,

a Delaware limited liability company

as Landlord

and

SWITCH AND DATA CA NINE LLC,

a Delaware limited liability company

as Tenant

January 31, 2005

TABLE OF CONTENTS

		PAGE
ARTICLE 1 REFERENCE		1
1.1	References	1
ARTICLE 2 LEASED PREMISES, TERM AND POSSESSION		4
2.1	Demise Of Leased Premises	4
2.2	Right To Use Outside Areas	4
2.3	Lease Commencement Date And Lease Term	4
2.4	Delivery Of Possession	4
2.5	Performance of Improvement Work	5
2.6	Surrender Of Possession	5
ARTICLE 3 RENT, LATE CHARGES AND SECURITY DEPOSITS		5
3.1	Base Monthly Rent	5
3.2	Additional Rent	5
3.3	Year-End Adjustments	6
3.4	Late Charge, And Interest On Rent In Default.	7
3.5	Payment Of Rent	7
3.6	Prepaid Rent	7
3.7	Security Deposit	7
ARTICLE 4 USE OF LEASED PREMISES AND OUTSIDE AREA		8
4.1	Permitted Use	8
4.2	General Limitations On Use	8
4.3	Noise And Emissions	9
4.4	Trash Disposal	9
4.5	Parking	9
4.6	Signs	9
4.7	Compliance With Laws And Restrictions	9
4.8	Compliance With Insurance Requirements	10
4.9	Landlord’s Right To Enter	10
4.10	Use Of Outside Areas	10
4.11	Environmental Protection	10
4.12	Rules And Regulations	13
4.13	Reservations	13
4.14	Roof	13
ARTICLE 5 REPAIRS, MAINTENANCE, SERVICES AND UTILITIES		14

i.

TABLE OF CONTENTS

(CONTINUED)

		PAGE
5.1	Repair And Maintenance	14
5.2	Utilities	14
5.3	Security	15
5.4	Energy And Resource Consumption	15
5.5	Limitation Of Landlord’s Liability	15
ARTICLE 6 ALTERATIONS AND IMPROVEMENTS		15
6.1	By Tenant	15
6.2	Ownership Of Improvements	16
6.3	Alterations Required By Law	16
6.4	Liens	17
ARTICLE 7 ASSIGNMENT AND SUBLETTING BY TENANT		17
7.1	By Tenant	17
7.2	Merger, Reorganization, or Sale of Assets	18
7.3	Landlord’s Election	19
7.4	Conditions To Landlord’s Consent	19
7.5	Assignment Consideration And Excess Rentals Defined	20
7.6	Payments	21
7.7	Good Faith	21
7.8	Effect Of Landlord’s Consent	21
7.9	Co-Location Use	21
ARTICLE 8 LIMITATION ON LANDLORD’S LIABILITY AND INDEMNITY		22
8.1	Limitation On Landlord’s Liability And Release	22
8.2	Tenant’s Indemnification Of Landlord	22
ARTICLE 9 INSURANCE		23
9.1	Tenant’s Insurance	23
9.2	Landlord’s Insurance	24
9.3	Mutual Waiver Of Subrogation	25
ARTICLE 10 DAMAGE TO LEASED PREMISES		25
10.1	Landlord’s Duty To Restore	25
10.2	Insurance Proceeds	25
10.3	Tenant’s Waiver	26
10.4	No Abatement Of Rent	26

ii.

TABLE OF CONTENTS

(CONTINUED)

		PAGE
ARTICLE 11 CONDEMNATION		26
11.1	Tenant’s Right To Terminate	26
11.2	Landlord’s Right To Terminate	26
11.3	Restoration	26
11.4	Temporary Taking	26
11.5	Division Of Condemnation Award	26
11.6	No Abatement Of Rent	27
11.7	Taking Defined	27
ARTICLE 12 DEFAULT AND REMEDIES		27
12.1	Events Of Tenant’s Default	27
12.2	Landlord’s Remedies	28
12.3	Landlord’s Default And Tenant’s Remedies	30
12.4	Limitation Of Tenant’s Recourse	30
12.5	Tenant’s Waiver	30
ARTICLE 13 GENERAL PROVISIONS		31
13.1	Taxes On Tenant’s Property	31
13.2	Holding Over	31
13.3	Subordination To Mortgages	31
13.4	Tenant’s Attornment Upon Foreclosure	32
13.5	Mortgagee Protection	32
13.6	Estoppel Certificate	32
13.7	Tenant’s Financial Information	33
13.8	Transfer By Landlord	33
13.9	Force Majeure	33
13.10	Notices	33
13.11	Attorneys’ Fees and Costs	34
13.12	Definitions	34
	(a) Real Property Taxes	34
	(b) Landlord’s Insurance Costs	35
	(c) Property Maintenance Costs	35
	(d) Property Operating Expenses	36
	(e) Law	36

iii.

TABLE OF CONTENTS

(CONTINUED)

		PAGE
	(f) Lender	36
	(g) Restrictions	36
	(h) Rent	36
13.13	General Waivers	36
13.14	Miscellaneous	36
ARTICLE 14 CORPORATE AUTHORITY BROKERS AND ENTIRE AGREEMENT		37
14.1	Corporate Authority	37
14.2	Brokerage Commissions	37
14.3	Entire Agreement	37
14.4	Landlord’s Representations	38
ARTICLE 15 OPTION TO EXTEND		38
ARTICLE 16 TELEPHONE SERVICE		40
ARTICLE 17 RIGHT OF FIRST OFFER		42

iv.

LEASE

THIS LEASE, dated January 31, 2005, for reference purposes only, is made by and between 529 BRYANT STREET PARTNERS LLC, a Delaware limited liability company (“Landlord”) and SWITCH AND DATA CA NINE LLC, a Delaware limited liability company (“Tenant”), to be effective and binding upon the parties as of the date the last of the designated signatories to this Lease shall have executed this Lease (the “Effective Date of this Lease”).

ARTICLE 1

REFERENCE

1.1 References. All references in this Lease (subject to any further clarifications contained in this Lease) to the following terms shall have the following meaning or refer to the respective address, person, date, time period, amount, percentage, calendar year or fiscal year as below set forth:

Tenant’s Address for Notice:	As provided in Section 13.10 below
Tenant’s Representative:	George Pollock/Glenn Todd
	(813) 207-7700
Landlord’s Address for Notices:	As provided in Section 13.10 below
Landlord’s Representative:	Henry Bullock/Richard Holmstrom
Phone Number:	(650) 326-9300
Anticipated Lease Commencement
Date:	March 1, 2005
Intended Term:	Twenty (20) years
Lease Expiration Date:	Twenty (20 years years from the Lease Commencement Date as defined in Paragraph 2.3 below (i.e., February 29, 2025 if the Lease Commencement Date is March 1, 2005), unless earlier terminated by Landlord in accordance with the terms of this Lease, or extended by Tenant pursuant to Article 15.
Option to Extend:	One (1) option to extend, for a term of ten (10) years.
First Month’s Prepaid Rent:	None
Tenant’s Security Deposit:	None
Late Charge Amount:	Five Percent (5%) of the Delinquent Amount

Tenant’s Required Liability Coverage:	$10,000,000 Combined Single Limit
Tenant’s Broker(s):	None
Property:	That certain real property situated in the City of Palo Alto, County of Santa Clara, State of California, as presently improved with one building(s), which real property is shown on the Site Plan attached hereto as Exhibit “A” and is commonly known as or otherwise described as follows: 529 Bryant Street, Palo Alto, California.
Building:	That certain building on the Property in which the Leased Premises are located commonly known as 529 Bryant Street, Palo Alto, California (the “Building”) located on the Property, which Building is shown outlined on Exhibit “A” hereto.
Outside Areas:	The “Outside Areas” shall mean all areas within the Property which are located outside the Building, such as pedestrian walkways, parking areas, landscaped areas, open areas and enclosed trash disposal areas.
Parking:	None
Leased Premises:	The roof of, and all the interior space within, the Building, including stairwells, connecting walkways, and atriums, consisting of approximately 45,319 square feet and, for purposes of this Lease, agreed to contain said number of square feet.
Tenant’s Expense Share:	The term “Tenant’s Expense Share” shall mean the percentage obtained by dividing the rentable square footage of the Leased Premises at the time of calculation by the rentable square footage of all buildings located on the Property at the time of calculation. Such percentage is currently 100%. In the event that any portion of the Property is sold by Landlord, or the rentable square footage of the Leased Premises or the Property is otherwise changed, Tenant’s Expense Share shall be recalculated to equal the percentage described in the first sentence of this paragraph, so that the aggregate Tenant’s Expense Share of all tenants of the Property shall equal 100%. Tenant’s Expense Share is subject to adjustment as set forth in Paragraphs 13.12(b) and 13.12(c).

2.

Base Monthly Rent:	The term “Base Monthly Rent” shall mean the following:
	Lease Month	Base Monthly Rent
	Months 1 through 12	$168,679.26
	Months 13 through 24	$180,044.28
	Months 25 through 36	$183,355.83
	Months 37 through 48	$186,870.79
	Months 49 through 60	$189,096.27
	Months 61 through 72	$192,539.64
	Months 73 through 84	$199,208.52
	Months 85 through 96	$206,110.82
	Months 97 through 108	$213,254.70
	Months 109 through 120	$220,648.61
	Months 121 through 132	$228,301.32
	Months 133 through 144	$236,221.86
	Months 145 through 156	$244,419.63
	Months 157 through 168	$252,904.31
	Months 169 through 180	$261,685.96
	Months 181 through 192	$270,774.97
	Months 193 through 204	$280,182.10
	Months 205 through 216	$289,918.47
	Months 217 through 228	$299,995.62
	Months 229 through 240	$310,425.46
Permitted Use:	Office, research and development, communications facilities, and co-location facilities, and uses ancillary thereto, to the extent permitted by applicable Law and the Private Restrictions.
Exhibits:	The term “Exhibits” shall mean the Exhibits of this Lease which are described as follows:
	Exhibit “A” - Site Plan showing the Property and delineating the Building in which the Leased Premises are located.
	Exhibit “B” - Work Letter
	Exhibit “C” - Subordination, Nondisturbance and Attornment Provisions
	Exhibit “D” - Form of Tenant Estoppel Certificate
	Schedule 1 - Landlord Repairs

3.

ARTICLE 2

LEASED PREMISES, TERM AND POSSESSION

2.1 Demise Of Leased Premises. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord for Tenant’s own use in the conduct of Tenant’s business and not for purposes of speculating in real estate, for the Lease Term and upon the terms and subject to the conditions of this Lease, that certain interior space described in Article 1 as the Leased Premises, reserving and excepting to Landlord the right to fifty percent (50%) of all assignment consideration and excess rentals as provided in Article 7 below. Tenant’s lease of the Leased Premises, together with the appurtenant right to use the Outside Areas as described in Paragraph 2.2 below, shall be conditioned upon and be subject to the continuing compliance by Tenant with (i) all the terms and conditions of this Lease, (ii) all Laws and Restrictions governing the use or occupancy of the Leased Premises and the Property, (iii) all easements and other matters now of public record respecting the use of the Leased Premises and Property, and (iv) all reasonable rules and regulations from time to time established by Landlord.

2.2 Right To Use Outside Areas. As an appurtenant right to Tenant’s right to the use and occupancy of the Leased Premises, Tenant shall have the right to use the Outside Areas in conjunction with its use of the Leased Premises solely for the purposes for which they were designated and intended and for no other purposes whatsoever. Tenant’s right to so use the Outside Areas shall be subject to the limitations on such use as set forth in Article 1 and shall terminate concurrently with any termination of this Lease.

2.3 Lease Commencement Date And Lease Term. The term of this Lease shall begin, and the Lease Commencement Date shall be deemed to have occurred, on the later to occur of (a) the Anticipated Lease Commencement Date, as set forth in Article 1, and (b) one day after the existing tenant, Digeo Interactive LLC, vacates the Leased Premises (such later date, the “Lease Commencement Date”). The term of this Lease shall in all events end on the Lease Expiration Date (as set forth in Article 1). The Lease Term shall be that period of time commencing on the Lease Commencement Date and ending on the Lease Expiration Date (the “Lease Term”).

2.4 Delivery Of Possession. On the Lease Commencement Date, Landlord shall deliver and Tenant shall accept possession of the Leased Premises in their then “AS IS” condition, “WITH ALL FAULTS.” Landlord shall have no construction or preparation obligations relating to the Leased Premises. Landlord and Tenant anticipate that possession of the Leased Premises will be delivered on the Anticipated Lease Commencement Date. However, if Landlord is unable to so deliver possession of the Leased Premises to Tenant on or before the Anticipated Commencement Date, Landlord shall not be in default under this Lease, nor shall this Lease be void, voidable or cancelable by Tenant until the lapse of three hundred sixty (360) days after the Anticipated Commencement Date (the “delivery grace period”). If Landlord is unable to deliver possession of the Leased Premises to Tenant within the described delivery grace period (including any extension thereof by reason of Force Majeure or the actions or inactions of Tenant), then Tenant’s sole remedy shall be to terminate this Lease by written notice delivered to Landlord within ten days after the expiration of the delivery grace period (as extended, if applicable), and in no event shall Landlord be liable in damages to Tenant for such delay. Notwithstanding the foregoing, in the event that Tenant authorizes, via a written agreement signed by Tenant, Digeo Interactive LLC to remain in occupancy of all or any portion of the Leased Premises for which Tenant claims that Landlord failed to deliver possession of to Tenant, then Tenant shall have no such right of termination.

2.5 Performance of Improvement Work. Tenant shall, pursuant to the Work Letter attached to this Lease as Exhibit B and made a part hereof (the “Work Letter”), perform the work and make the installations in the Leased Premises substantially as set forth in the Work Letter (such work and installations hereinafter referred to as the “Improvement Work”).

4.

2.6 Surrender Of Possession. Immediately prior to the expiration or upon the sooner termination of this Lease, Tenant shall remove all of Tenant’s signs from the exterior of the Building and shall remove all of Tenant’s equipment (excluding telecommunications wiring and cabling), trade fixtures, furniture, supplies, wall decorations and other personal property from within the Leased Premises, the Building and the Outside Areas, and shall vacate and surrender the Leased Premises, the Building, the Outside Areas and the Property to Landlord in the same condition, broom clean, as existed at the Lease Commencement Date, reasonable wear and tear excepted. Tenant shall repair all damage to the Leased Premises, the exterior of the Building and the Outside Areas caused by Tenant’s removal of Tenant’s property. Tenant shall, with respect to telecommunications wiring and cabling, leave the same in good condition and repair and labeled and/or coded sufficiently so that Landlord can readily determine the origin, destination and function of the wires and cables. Tenant shall patch and refinish, to Landlord’s reasonable satisfaction, all penetrations made by Tenant or its employees to the floor, walls or ceiling of the Leased Premises, whether such penetrations were made with Landlord’s approval or not. Tenant shall repair or replace all stained or damaged ceiling tiles, wall coverings and floor coverings to the reasonable satisfaction of Landlord. Tenant shall repair all damage caused by Tenant to the exterior surface of the Building and the paved surfaces of the Outside Areas and, where necessary, replace or resurface same. Additionally, to the extent that Landlord shall have notified or is deemed to have notified Tenant in writing at the time the improvements were completed that it desired to have certain improvements made by Tenant or at the request of Tenant removed at the expiration or sooner termination of the Lease, Tenant shall, upon the expiration or sooner termination of the Lease, remove any such improvements constructed or installed by Landlord or Tenant and repair all damage caused by such removal. If the Leased Premises, the Building, the Outside Areas and the Property are not surrendered to Landlord in the condition required by this paragraph at the expiration or sooner termination of this Lease, Landlord may, at Tenant’s expense, so remove Tenant’s signs, property and/or improvements not so removed and make such repairs and replacements not so made or hire, at Tenant’s expense, independent contractors to perform such work. Tenant shall be liable to Landlord for all costs incurred by Landlord in returning the Leased Premises, the Building and the Outside Areas to the required condition, together with interest on all costs so incurred from the date paid by Landlord at the then maximum rate of interest not prohibited or made usurious by law until paid. Tenant shall pay to Landlord the amount of all costs so incurred plus such interest thereon, within ten (10) days of Landlord’s billing Tenant for same. Tenant shall indemnify Landlord against loss or liability resulting from delay by Tenant in surrendering the Leased Premises, including, without limitation, any claims made by any succeeding Tenant or any losses to Landlord with respect to lost opportunities to lease to succeeding tenants.

ARTICLE 3

RENT, LATE CHARGES AND SECURITY DEPOSITS

3.1 Base Monthly Rent. Commencing on the Lease Commencement Date (as determined pursuant to Paragraph 2.3 above) and continuing throughout the Lease Term, Tenant shall pay to Landlord, without prior demand therefor, in advance on the first day of each calendar month, the amount set forth as “Base Monthly Rent” in Article 1 (the “Base Monthly Rent”).

3.2 Additional Rent. Commencing on the Lease Commencement Date (as determined pursuant to Paragraph 2.3 above) and continuing throughout the Lease Term, in addition to the Base Monthly Rent and to the extent not required by Landlord to be contracted for and paid directly by Tenant, Tenant shall pay to Landlord as additional rent (the “Additional Rent”) the following amounts:

(a) An amount equal to all Property Operating Expenses (as defined in Article 13) incurred or to be incurred by Landlord. Payment shall be made by whichever of the following methods (or combination of methods) is (are) from time to time designated by Landlord:

(i) Landlord may forward invoices or bills for such expenses to Tenant, and Tenant shall, no later than ten (10) days prior to the due date, pay such invoices or bills and deliver satisfactory evidence of such payment to Landlord, and/or

5.

(ii) Landlord may bill to Tenant, on a periodic basis not more frequently than monthly, the amount of such expenses (or group of expenses) as paid or incurred by Landlord, and Tenant shall pay to Landlord the amount of such expenses within ten days after receipt of a written bill therefor from Landlord, and/or

(iii) Landlord may deliver to Tenant Landlord’s reasonable estimate of any given expense (such as Landlord’s Insurance Costs or Real Property Taxes), or group of expenses, which it anticipates will be paid or incurred for the ensuing calendar or fiscal year, as Landlord may determine, and Tenant shall pay to Landlord an amount equal to the estimated amount of such expenses for such year in equal monthly installments during such year with the installments of Base Monthly Rent. Landlord reserves the right to revise such estimate from time to time.

Landlord initially elects to bill Tenant for Landlord’s Insurance Costs and Real Property Taxes in accordance with subparagraph (iii) above. Tenant hereby agrees that unless and until notified in writing by Landlord that Landlord has elected to contract and/or pay for any other services relating to the Real Property, Tenant shall contract directly with the applicable service providers, and pay directly, for all other services relating to the Real Property. Landlord reserves the right to change from time to time the methods of billing Tenant for any given expense or group of expenses or the periodic basis on which such expenses are billed.

(b) Landlord’s share of the consideration received by Tenant upon certain assignments and sublettings as required by Article 7.

(c) Any legal fees and costs that Tenant is obligated to pay or reimburse to Landlord pursuant to Article 13; and

(d) Any other charges or reimbursements due Landlord from Tenant pursuant to the terms of this Lease.

Notwithstanding the foregoing, Landlord may elect by written notice to Tenant to have Tenant pay Real Property Taxes or any portion thereof directly to the applicable taxing authority, in which case Tenant shall make such payments and deliver satisfactory evidence of payment to Landlord no later than ten (10) days before such Real Property Taxes become delinquent. So long as Tenant is paying any portion of Real Property Taxes directly to the applicable taxing authority, Landlord shall not also be collecting such portion from Tenant pursuant to Paragraph 3.2(a)(ii) above. In the event Tenant is responsible to pay taxes directly, Landlord shall have no obligation to make such payments, whether or not Landlord receives evidence of payment from Tenant, and Tenant shall in all cases be responsible for any fines, penalties, interest and damages for late payment.

3.3 Year-End Adjustments. If Landlord shall have elected to bill Tenant for the Property Operating Expenses (or any group of such expenses) on an estimated basis in accordance with the provisions of Paragraph 3.2(a)(iii) above, Landlord shall furnish to Tenant within four months following the end of the applicable calendar or fiscal year, as the case may be, a statement setting forth (i) the amount of such expenses paid or incurred during the just ended calendar or fiscal year, as appropriate, and (ii) the amount that Tenant has paid to Landlord for credit against such expenses for such period. If Tenant shall have paid more than its obligation for such expenses for the stated period, Landlord shall, at its election, either (i) credit the amount of such overpayment toward the next ensuing payment or payments of Additional Rent that would otherwise be due or (ii) refund in cash to Tenant the amount of such overpayment. If

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such year-end statement shall show that Tenant did not pay its obligation for such expenses in full, then Tenant shall pay to Landlord the amount of such underpayment within thirty (30) days from Landlord’s billing of same to Tenant. The provisions of this Paragraph shall survive the expiration or sooner termination of this Lease.

3.4 Late Charge, And Interest On Rent In Default. Tenant acknowledges that the late payment by Tenant of any monthly installment of Base Monthly Rent or any Additional Rent will cause Landlord to incur certain costs and expenses not contemplated under this Lease, the exact amounts of which are extremely difficult or impractical to fix. Such costs and expenses will include without limitation, administration and collection costs and processing and accounting expenses. Therefore, if any installment of Base Monthly Rent is not received by Landlord from Tenant within five (5) calendar days after the same becomes due, Tenant shall immediately pay to Landlord a late charge in an amount equal to the amount set forth in Article 1 as the “Late Charge Amount,” and if any Additional Rent is not received by Landlord when the same becomes due, Tenant shall immediately pay to Landlord a late charge in an amount equal to 5% of the Additional Rent not so paid. Landlord and Tenant agree that this late charge represents a reasonable estimate of such costs and expenses and is fair compensation to Landlord for the anticipated loss Landlord would suffer by reason of Tenant’s failure to make timely payment. In no event shall this provision for a late charge be deemed to grant to Tenant a grace period or extension of time within which to pay any rental installment or prevent Landlord from exercising any right or remedy available to Landlord upon Tenant’s failure to pay each rental installment due under this Lease when due, including the right to terminate this Lease. If any rent remains delinquent for a period in excess of five (5) calendar days, then, in addition to such late charge, Tenant shall pay to Landlord interest on any rent that is not so paid from said fifth day at the then maximum rate of interest not prohibited or made usurious by Law until paid.

3.5 Payment Of Rent. Except as specifically provided otherwise in this Lease, all rent shall be paid in lawful money of the United States, without any abatement, reduction or offset for any reason whatsoever, to Landlord at such address as Landlord may designate from time to time. Tenant’s obligation to pay Base Monthly Rent and all Additional Rent shall be appropriately prorated at the commencement and expiration of the Lease Term. The failure by Tenant to pay any Additional Rent as required pursuant to this Lease when due shall be treated the same as a failure by Tenant to pay Base Monthly Rent when due, and Landlord shall have the same rights and remedies against Tenant as Landlord would have had Tenant failed to pay the Base Monthly Rent when due.

3.6 Prepaid Rent. Tenant shall, upon execution of this Lease, pay to Landlord the amount set forth in Article 1 as “First Month’s Prepaid Rent” as prepayment of rent for credit against the first payment of Base Monthly Rent and Additional Rent due hereunder.

3.7 Security Deposit. Tenant has deposited or shall deposit concurrently with Tenant’s execution of this Lease, with Landlord the amount set forth in Article 1 as the “Security Deposit” as security for the performance by Tenant of the terms of this Lease to be performed by Tenant, and not as prepayment of rent. Tenant hereby grants to Landlord a security interest in the Security Deposit, including but not limited to replenishments thereof. Landlord may apply such portion or portions of the Security Deposit as are reasonably necessary for the following purposes: (i) to remedy any default by Tenant in the payment of Base Monthly Rent or Additional Rent or a late charge or interest on defaulted rent, or any other monetary payment obligation of Tenant under this Lease; (ii) to repair damage to the Leased Premises, the Building or the Outside Areas caused or permitted to occur by Tenant; (iii) to clean and restore and repair the Leased Premises, the Building or the Outside Areas following their surrender to Landlord if not surrendered in the condition required pursuant to the provisions of Article 2, (iv) to remedy any other default of Tenant to the extent permitted by Law including, without limitation, paying in full on Tenant’s behalf any sums claimed by materialmen or contractors of Tenant to be owing to them by Tenant for work done or improvements made at Tenant’s request to the Leased Premises, and (v) to cover any other

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expense, loss or damage which Landlord may suffer due to Tenant’s default. In this regard, Tenant hereby waives any restriction on the uses to which the Security Deposit may be applied as contained in Section 1950.7(c) of the California Civil Code and/or any successor statute. In the event the Security Deposit or any portion thereof is so used, Tenant shall pay to Landlord, promptly upon demand, an amount in cash sufficient to restore the Security Deposit to the full original sum. If Tenant fails to promptly restore the Security Deposit and if Tenant shall have paid to Landlord any sums as “Last Month’s Prepaid Rent,” Landlord may, in addition to any other remedy Landlord may have under this Lease, reduce the amount of Tenant’s Last Month’s Prepaid Rent by transferring all or portions of such Last Month’s Prepaid Rent to Tenant’s Security Deposit until such Security Deposit is restored to the amount set forth in Article 1. Landlord shall not be deemed a trustee of the Security Deposit. Landlord may use the Security Deposit in Landlord’s ordinary business and shall not be required to segregate it from Landlord’s general accounts. Tenant shall not be entitled to any interest on the Security Deposit. If Landlord transfers the Building or the Property during the Lease Term, Landlord may pay the Security Deposit to any subsequent owner in conformity with the provisions of Section 1950.7 of the California Civil Code and/or any successor statute, in which event the transferring landlord shall be released from all liability for the return of the Security Deposit. Tenant specifically grants to Landlord (and Tenant hereby waives the provisions of California Civil Code Section 1950.7 to the contrary) a period of ninety days following a surrender of the Leased Premises by Tenant to Landlord within which to inspect the Leased Premises, make required restorations and repairs, receive and verify workmen’s billings therefor, and prepare a final accounting with respect to the Security Deposit. In no event shall the Security Deposit or any portion thereof, be considered prepaid rent.

ARTICLE 4

USE OF LEASED PREMISES AND OUTSIDE AREA

4.1 Permitted Use. Tenant shall be entitled to use the Leased Premises solely for the “Permitted Use” as set forth in Article 1 and for no other purpose whatsoever. Tenant shall have the right to vacate the Leased Premises at any time during the Term of this Lease, provided Tenant maintains the Leased Premises in the same condition as if fully occupied and as otherwise required by the terms of this Lease. Tenant shall have the right to use the Outside Areas in conjunction with its Permitted Use of the Leased Premises solely for the purposes for which they were designed and intended and for no other purposes whatsoever.

4.2 General Limitations On Use. Tenant shall not do or permit anything to be done in or about the Leased Premises, the Building, the Outside Areas or the Property which does or could (i) jeopardize the structural integrity of the Building or (ii) cause damage to any part of the Leased Premises, the Building, the Outside Areas or the Property. Tenant shall not operate any equipment within the Leased Premises which does or could (A) injure, vibrate or shake the Leased Premises or the Building, (B) damage, overload or impair the efficient operation of any electrical, plumbing, heating, ventilating or air conditioning systems within or servicing the Leased Premises or the Building, or (C) damage or impair the efficient operation of the sprinkler system (if any) within or servicing the Leased Premises or the Building. Tenant shall not place any loads upon the floors, walls, ceiling or roof systems which could endanger the structural integrity of the Building or damage its floors, foundations or supporting structural components. Tenant shall not place any explosive, flammable or harmful fluids or other waste materials in the drainage systems of the Leased Premises, the Building, the Outside Areas or the Property. Tenant shall not drain or discharge any fluids in the landscaped areas or across the paved areas of the Property. Tenant shall not use any of the Outside Areas for the storage of its materials, supplies, inventory or equipment and all such materials, supplies, inventory or equipment shall at all times be stored within the Leased Premises. Tenant shall not commit nor permit to be committed any waste in or about the Leased Premises, the Building, the Outside Areas or the Property.

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4.3 Noise And Emissions. All noise generated by Tenant in its use of the Leased Premises shall be confined or muffled so that it does not interfere with the businesses of or annoy the occupants and/or users of adjacent properties. All dust, fumes, odors and other emissions generated by Tenant’s use of the Leased Premises shall be sufficiently dissipated in accordance with sound environmental practice and exhausted from the Leased Premises in such a manner so as not to interfere with the businesses of or annoy the occupants and/or users of adjacent properties, or cause any damage to the Leased Premises, the Building, the Outside Areas or the Property or any component part thereof or the property of adjacent property owners.

4.4 Trash Disposal. Tenant shall provide trash bins or other adequate garbage disposal facilities within the trash enclosure areas provided or permitted by Landlord outside the Leased Premises sufficient for the interim disposal of all of its trash, garbage and waste. All such trash, garbage and waste temporarily stored in such areas shall be stored in such a manner so that it is not visible from outside of such areas, and Tenant shall cause such trash, garbage and waste to be regularly removed from the Property. Tenant shall keep the Leased Premises and the Outside Areas in a clean, safe and neat condition free and clear of all of Tenant’s trash, garbage, waste and/or boxes, pallets and containers containing same at all times.

4.5 Parking. Tenant shall not, at any time, park or permit to be parked any recreational vehicles, inoperative vehicles or equipment in the Outside Areas or on any portion of the Property. So long as Tenant complies with all Laws and Restrictions and obtains any and all required approvals, consents, licenses, permits, or other items as may be required by the City of Palo Alto and/or any other governmental or quasi-governmental agency with jurisdiction over such parking, as well as the owners of the real property on which such parking spaces are located, Landlord agrees, in cases of emergencies or maintenance, not to object to the use by Tenant of the parking spaces in the vicinity of the Building for the placing of temporary roll-up generators and/or other equipment for reasonable periods of time. Tenant agrees to assume responsibility for compliance by its employees and invitees with the parking provisions contained herein.

4.6 Signs. Tenant shall not place or install on or within any portion of the Leased Premises, the exterior of the Building, the Outside Areas or the Property any sign, advertisement, banner, placard, or picture which is visible from the exterior of the Leased Premises. Tenant shall not place or install on or within any portion of the Leased Premises, the exterior of the Building, the Outside Areas or the Property any business identification sign which is visible from the exterior of the Leased Premises until Landlord shall have approved in writing and in its sole discretion the location, size, content, design, method of attachment and material to be used in the making of such sign; provided, however, that so long as such signs are normal and customary business directional or identification signs within the Building, Tenant shall not be required to obtain Landlord’s approval. Any sign, once approved by Landlord, shall be installed at Tenant’s sole cost and expense and only in strict compliance with Landlord’s approval and any applicable Laws and Restrictions, using a person approved by Landlord to install same. Landlord may remove any signs (which have not been approved in writing by Landlord), advertisements, banners, placards or pictures so placed by Tenant on or within the Leased Premises, the exterior of the Building, the Outside Areas or the Property and charge to Tenant the cost of such removal, together with any costs incurred by Landlord to repair any damage caused thereby, including any cost incurred to restore the surface (upon which such sign was so affixed) to its original condition. Tenant shall remove all of Tenant’s signs, repair any damage caused thereby, and restore the surface upon which the sign was affixed to its original condition, all to Landlord’s reasonable satisfaction, upon the termination of this Lease.

4.7 Compliance With Laws And Restrictions. Tenant shall abide by and shall promptly observe and comply with, at its sole cost and expense, all Laws and Restrictions respecting the use and occupancy of the Leased Premises, the Building, the Outside Areas or the Property including, without limitation,

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Title 24, building codes, the Americans with Disabilities Act and the rules and regulations promulgated thereunder, and all Laws governing the use and/or disposal of hazardous materials, and shall defend with competent counsel, indemnify and hold Landlord harmless from any claims, damages or liability resulting from Tenant’s failure to so abide, observe, or comply. Tenant’s obligations hereunder shall survive the expiration or sooner termination of this Lease.

4.8 Compliance With Insurance Requirements. With respect to any insurance policies required or permitted to be carried by Landlord in accordance with the provisions of this Lease, Tenant shall not conduct nor permit any other person to conduct any activities nor keep, store or use (or allow any other person to keep, store or use) any item or thing within the Leased Premises, the Building, the Outside Areas or the Property which (i) is prohibited under the terms of any such policies, (ii) could result in the termination of the coverage afforded under any of such policies, (iii) could give to the insurance carrier the right to cancel any of such policies, or (iv) could cause an increase in the rates (over standard rates) charged for the coverage afforded under any of such policies. Tenant shall comply with all requirements of any insurance company, insurance underwriter, or Board of Fire Underwriters which are necessary to maintain, at standard rates, the insurance coverages carried by either Landlord or Tenant pursuant to this Lease.

4.9 Landlord’s Right To Enter. Landlord and its agents shall have the right to enter the Leased Premises during normal business hours after giving Tenant reasonable notice and subject to Tenant’s reasonable security measures for the purpose of (i) inspecting the same; (ii) showing the Leased Premises to prospective purchasers, mortgagees or tenants; (iii) making necessary alterations, additions or repairs; and (iv) performing any of Tenant’s obligations when Tenant has failed to do so. Landlord shall have the right to enter the Leased Premises during normal business hours (or as otherwise agreed), subject to Tenant’s reasonable security measures, for purposes of supplying any maintenance or services agreed to be supplied by Landlord. Landlord shall have the right to enter the Outside Areas during normal business hours for purposes of (i) inspecting the exterior of the Building and the Outside Areas; (ii) posting notices of nonresponsibility (and for such purposes Tenant shall provide Landlord at least thirty days’ prior written notice of any work to be performed on the Leased Premises, except work which is reasonably anticipated to cost less than $5,000; and (iii) supplying any services to be provided by Landlord. Any entry into the Leased Premises or the Outside Areas obtained by Landlord in accordance with this paragraph shall not under any circumstances be construed or deemed to be a forcible or unlawful entry into, or a detainer of, the Leased Premises, or an eviction, actual or constructive of Tenant from the Leased Premises or any portion thereof.

4.10 Use Of Outside Areas. Tenant, in its use of the Outside Areas, shall at all times keep the Outside Areas in a safe condition free and clear of all materials, equipment, debris, trash (except within existing enclosed trash areas), inoperable vehicles, and other items which are not specifically permitted by Landlord to be stored or located thereon by Tenant. If, in the opinion of Landlord, unauthorized persons are using any of the Outside Areas by reason of, or under claim of, the express or implied authority or consent of Tenant, then Tenant, upon demand of Landlord, shall restrain, to the fullest extent then allowed by Law, such unauthorized use, and shall initiate such appropriate proceedings as may be required to so restrain such use. Subject to Paragraph 4.5 above, Landlord reserves the right to grant access rights to others for use of the Outside Areas and shall not be liable to Tenant for any diminution in Tenant’s right to use the Outside Areas as a result; provided, however, that such grants shall not unreasonably interfere with the use of the Leased Premises or Outside Areas by Tenant.

4.11 Environmental Protection. Tenant’s obligations under this Paragraph 4.11 shall survive the expiration or termination of this Lease.

(a) As used herein, the term “Hazardous Materials” shall mean any toxic or hazardous substance, material or waste or any pollutant or infectious or radioactive material, including but not

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limited to those substances, materials or wastes regulated now or in the future under any of the following statutes or regulations and any and all of those substances included within the definitions of “hazardous substances,” “hazardous materials,” “hazardous waste,” “hazardous chemical substance or mixture,” “imminently hazardous chemical substance or mixture,” “toxic substances,” “hazardous air pollutant,” “toxic pollutant,” or “solid waste” in the (a) Comprehensive Environmental Response, Compensation and Liability Act of 1990 (“CERCLA” or “Superfund”), as amended by the Superfund Amendments and Reauthorization Act of 1986 (“SARA”), 42 U.S.C. § 9601 et seq., (b) Resource Conservation and Recovery Act of 1976 (“RCRA”), 42 U.S.C. § 6901 et seq., (c) Federal Water Pollution Control Act (“FSPCA”), 33 U.S.C. § 1251 et seq., (d) Clean Air Act (“CAA”), 42 U.S.C. § 7401 et seq., (e) Toxic Substances Control Act (“TSCA”), 14 U.S.C. § 2601 et seq., (f) Hazardous Materials Transportation Act, 49 U.S.C. § 1801, et seq., (g) Carpenter-Presley-Tanner Hazardous Substance Account Act (“California Superfund”), Cal. Health & Safety Code § 25300 et seq., (h) California Hazardous Waste Control Act, Cal. Health & Safety code § 25100 et seq., (i) Porter-Cologne Water Quality Control Act (“Porter-Cologne Act”), Cal. Water Code § 13000 et seq., (j) Hazardous Waste Disposal Land Use Law, Cal. Health & Safety codes § 25220 et seq., (k) Safe Drinking Water and Toxic Enforcement Act of 1986 (“Proposition 65”), Cal. Health & Safety code § 25249.5 et seq., (l) Hazardous Substances Underground Storage Tank Law, Cal. Health & Safety code § 25280 et seq., (m) Air Resources Law, Cal. Health & Safety Code § 39000 et seq., and (n) regulations promulgated pursuant to said laws or any replacement thereof, or as similar terms are defined in the federal, state and local laws, statutes, regulations, orders or rules. Hazardous Materials shall also mean any and all other biohazardous wastes and substances, materials and wastes which are, or in the future become, regulated under applicable Laws for the protection of health or the environment, or which are classified as hazardous or toxic substances, materials or wastes, pollutants or contaminants, as defined, listed or regulated by any federal, state or local law, regulation or order or by common law decision, including, without limitation, (i) trichloroethylene, tetrachloroethylene, perchloroethylene and other chlorinated solvents, (ii) any petroleum products or fractions thereof, (iii) asbestos, (iv) polychlorinated biphenyls, (v) flammable explosives, (vi) urea formaldehyde, (vii) radioactive materials and waste, and (viii) materials and wastes that are harmful to or may threaten human health, ecology or the environment.

(b) Notwithstanding anything to the contrary in this Lease, Tenant, at its sole cost, shall comply with all Laws relating to the storage, use and disposal of Hazardous Materials; provided, however, that Tenant shall not be responsible for contamination of the Leased Premises by Hazardous Materials existing as of the date the Leased Premises are delivered to Tenant (whether before or after the Lease Commencement Date) except: (1) caused by Tenant, or (2) to the extent Tenant already has liability therefor, whether (A) under that certain Office Building Lease Agreement dated as of June 21, 1999, as amended (the “Prior Lease”), which Prior Lease was assumed by Tenant pursuant to and in accordance with that certain Assignment and Assumption of Leasehold Estate dated as of March 11, 2003, by and between AboveNet Communications, Inc. (as Assignor) and Tenant (as Assignee), or (B) otherwise. Tenant shall not store, use or dispose of any Hazardous Materials except for those Hazardous Materials listed in a Hazardous Materials management plan (“HMMP”) which Tenant shall deliver to Landlord upon execution of this Lease and update at least annually with Landlord (“Permitted Materials”) which may be used, stored and disposed of provided (i) such Permitted Materials are used, stored, transported, and disposed of in strict compliance with applicable laws, (ii) such Permitted Materials shall be limited to the materials listed on and may be used only in the quantities specified in the HMMP, and (iii) Tenant shall provide Landlord with copies of all material safety data sheets and other documentation required under applicable Laws in connection with Tenant’s use of Permitted Materials as and when such documentation is provided to any regulatory authority having jurisdiction. In connection with the foregoing, it is agreed that the HMMP may include provision for above-ground petroleum tanks, subject to the provisions of this Paragraph 4.11 and the other provisions of this Lease. In no event shall Tenant cause or permit to be discharged into the plumbing or sewage system of the Building or onto the land underlying or adjacent to the Building any Hazardous Materials. Tenant shall be solely responsible for and shall defend, indemnify, and hold Landlord and its agents harmless from and against all claims, costs

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and liabilities, including attorneys’ fees and costs, arising out of or in connection with Tenant’s (and any of its employees’, guests’, invitees’, licensees’, customers’, contracting parties’, or vendors’) storage, use and/or disposal of Hazardous Materials. If the presence of Hazardous Materials on the Leased Premises caused or permitted by Tenant results in contamination or deterioration of water or soil, then Tenant shall promptly take any and all action necessary to clean up such contamination, but the foregoing shall in no event be deemed to constitute permission by Landlord to allow the presence of such Hazardous Materials. At any time prior to the expiration of the Lease Term if Tenant has a reasonable basis to suspect that there has been any release or the presence of Hazardous Materials in the ground or ground water on the Leased Premises which did not exist upon commencement of the Lease Term, Tenant shall have the right to conduct appropriate tests of water and soil and to deliver to Landlord the results of such tests to demonstrate that no contamination in excess of permitted levels has occurred as a result of Tenant’s use of the Leased Premises. Tenant shall further be solely responsible for, and shall defend, indemnify, and hold Landlord and its agents harmless from and against all claims, costs and liabilities, including attorneys’ fees and costs, arising out of or in connection with any removal, cleanup and restoration work and materials required hereunder to return the Leased Premises and any other property of whatever nature to their condition existing prior to the appearance of the Hazardous Materials, subject, however, to the proviso in the first sentence of this Paragraph 4.11(b).

(c) Upon termination or expiration of the Lease Term, Tenant at its sole expense shall cause all Hazardous Materials placed in or about the Leased Premises, the Building and/or the Property by Tenant, its agents, contractors, or invitees, and all installations (whether interior or exterior) made by or on behalf of Tenant relating to the storage, use, disposal or transportation of Hazardous Materials to be removed from the property and transported for use, storage or disposal in accordance and compliance with all Laws and other requirements respecting Hazardous Materials used or permitted to be used by Tenant. Tenant shall apply for and shall obtain from all appropriate regulatory authorities (including any applicable fire department or regional water quality control board) all permits, approvals and clearances necessary for the closure of the Property and shall take all other actions as may be required to complete the closure of the Building and the Property, subject, however, to the proviso in the first sentence of Paragraph 4.11(b) above. In addition, prior to vacating the Leased Premises, Tenant shall undertake and submit to Landlord an environmental site assessment from an environmental consulting company reasonably acceptable to Landlord which site assessment shall evidence Tenant’s compliance with this Paragraph 4.11.

(d) At any time prior to expiration of the Lease Term, subject to reasonable prior notice (not less than forty-eight (48) hours) and Tenant’s reasonable security requirements and provided such activities do not unreasonably interfere with the conduct of Tenant’s business at the Leased Premises, Landlord shall have the right to enter in and upon the Property, Building and Leased Premises in order to conduct appropriate tests of water and soil to determine whether levels of any Hazardous Materials in excess of legally permissible levels has occurred as a result of Tenant’s use thereof. Landlord shall furnish copies of all such test results and reports to Tenant and, at Tenant’s option and cost, shall permit split sampling for testing and analysis by Tenant. Such testing shall be at Tenant’s expense if Landlord has a reasonable basis for suspecting and confirms the presence of Hazardous Materials in the soil or surface or ground water in, on, under, or about the Property, the Building or the Leased Premises, which has been caused by or resulted from the activities of Tenant, its agents, contractors, or invitees.

(e) Landlord may voluntarily cooperate in a reasonable manner with the efforts of all governmental agencies in reducing actual or potential environmental damage. Tenant shall not be entitled to terminate this Lease or to any reduction in or abatement of rent by reason of: (a) such voluntary cooperation, except to the extent Tenant is deprived of access to or use of the Leased Premises as a result thereof, or (b) any compliance required by Laws or Restrictions. Tenant agrees at all times to cooperate fully with the requirements and recommendations of governmental agencies regulating, or otherwise involved in, the protection of the environment.

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(f) Without representation or warranty, Landlord has delivered to Tenant, and Tenant hereby acknowledges receipt of, that certain Phase I Environmental Report prepared by Clayton Group Services dated 12/19/00 under its project no 70-01363.00, and that certain Groundwater Monitor Well Destruction report prepared by Clayton Group Services dated 7/23/01 under project no 70-01363.01.

4.12 Rules And Regulations. In the event Switch and Data CA Nine LLC is no longer the sole occupant of the Leased Premises, Landlord shall have the right from time to time to establish reasonable rules and regulations and/or amendments or additions thereto respecting the use of the Leased Premises and the Outside Areas for the care and orderly management of the Property. Upon delivery to Tenant of a copy of such rules and regulations or any amendments or additions thereto, Tenant shall comply with such rules and regulations, provided they do not unreasonably interfere with Tenant’s use of the Leased Premises. A violation by Tenant of any of such rules and regulations shall constitute a default by Tenant under this Lease, subject to any applicable notice and cure periods set forth in Paragraph 12.1 below. If there is a conflict between the rules and regulations and any of the provisions of this Lease, the provisions of this Lease shall prevail. Landlord shall not be responsible or liable to Tenant for the violation of such rules and regulations by any other tenant of the Property.

4.13 Reservations. Landlord reserves the right from time to time to grant, without the consent or joinder of Tenant, such easements, rights of way and dedications that Landlord deems necessary, and to cause the recordation of parcel maps and restrictions, so long as such easements, rights of way and dedications do not unreasonably interfere with the use of the Leased Premises by Tenant. Tenant agrees to execute any documents reasonably requested by Landlord to effectuate any such easement rights, dedications, maps or restrictions.

4.14 Roof. Subject to Tenant’s restoration and repair obligations under Paragraph 2.6 and the provisions of Paragraph 6.1 below, Tenant at its sole cost and expense shall have the right to install on the roof of the Building, satellite dishes, television antennas, microwave equipment and apparatus, and related receiving equipment, related cable connections and any and all other related equipment (collectively, “Roof Communications Equipment”) required in connection with Tenant’s business, provided such installation does not impact the structural integrity of the Building. Tenant shall supply Landlord with detailed plans and specifications of the Roof Communications Equipment prior to the installation thereof. Furthermore, Tenant shall have secured the approval of all governmental authorities and all permits required by governmental authorities having jurisdiction over such approvals and permits for the Roof Communications Equipment, and shall provide copies of such approvals and permits to Landlord prior to commencing any work with respect to such Roof Communications Equipment. Tenant shall pay for any and all costs and expenses in connection with, and shall repair all damage to the roof resulting from, the installation, maintenance, use and removal of the Roof Communications Equipment. Landlord hereby acknowledges that it does not object to the aesthetics of the communications equipment in place on the roof of the Building as of the Effective Date of this Lease.

4.15 Back Up Generator. During the Lease Term (as the same may be extended pursuant to Article 15 below), Tenant shall be permitted, at its own risk and sole expense, in accordance with all applicable Laws and Restrictions, to use the existing back-up generator(s) and fuel storage tank(s), and the existing conduit runs from such generator or generators to the Leased Premises (collectively, the “Generator(s)”). The Generator(s) shall be maintained and kept in good repair at Tenant’s sole expense. The specifications and engineering for any replacement of or modifications to the Generator(s) made by Tenant shall be subject to Owner’s prior written approval, and shall comply, at Tenant’s sole expense, with all applicable Laws and Restrictions. Tenant shall be permitted to test the Generator(s) no more frequently than once per week at a mutually agreed-upon time, subject to all Laws and Restrictions, at Tenant’s sole expense. At the expiration or sooner termination of this Lease, the Generator(s) shall, upon Landlord’s election: (a) become the property of Landlord and be surrendered to Landlord as part of the Leased Premises as required pursuant to Paragraph 2.6, or (b) be removed by Tenant in accordance with the provisions of Paragraph 2.6.

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ARTICLE 5

REPAIRS, MAINTENANCE, SERVICES AND UTILITIES

5.1 Repair And Maintenance. Subject to the final sentence of this Paragraph 5.1, Tenant shall, at all times during the Lease Term and at its sole cost and expense, maintain in good condition and repair the foundation, roof structure, roof membrane, load-bearing and exterior walls of the Building, and regularly clean and continuously keep and maintain in good order, condition and repair the Leased Premises and every part thereof including, without limiting the generality of the foregoing, (i) all interior walls, floors and ceilings, (ii) all windows, doors and skylights, (iii) all electrical wiring, conduits, connectors and fixtures, (iv) all plumbing, pipes, sinks, toilets, faucets and drains, (v) all lighting fixtures, bulbs and lamps, elevators, and all heating, ventilating and air conditioning equipment, and (vi) all entranceways to the Leased Premises. Tenant, if requested to do so by Landlord, shall hire, at Tenant’s sole cost and expense, a licensed heating, ventilating and air conditioning contractor to regularly and periodically (not less frequently than every three months) inspect and perform required maintenance on the heating, ventilating and air conditioning equipment and systems serving the Leased Premises, or alternatively, Landlord may, at its election, contract in its own name for such regular and periodic inspections of and maintenance on such heating, ventilating and air conditioning equipment and systems and charge to Tenant, as Additional Rent, the cost thereof. Tenant, if requested to do so by Landlord, shall hire, at Tenant’s sole cost and expense, a licensed roofing contractor to regularly and periodically (not less frequently than semi-annually) inspect and perform required maintenance on the roof of the Leased Premises, or alternatively, Landlord may, at its election, contract in its own name for such regular and periodic inspections of and maintenance on the roof and charge to Tenant, as Additional Rent, the cost thereof. Tenant shall, at all times during the Lease Term, keep in a clean and safe condition the Outside Areas. Tenant shall, at its sole cost and expense, repair all damage to the Leased Premises, the Building, the Outside Areas or the Property caused by the activities of Tenant, its employees, invitees or contractors promptly following written notice from Landlord to so repair such damages. If Tenant shall fail to perform the required maintenance or fail to make repairs required of it pursuant to this paragraph within a reasonable period of time following notice from Landlord to do so, then Landlord may, at its election and without waiving any other remedy it may otherwise have under this Lease or at law, perform such maintenance or make such repairs and charge to Tenant, as Additional Rent, the costs so incurred by Landlord for same. All glass within or a part of the Leased Premises, both interior and exterior, is at the sole risk of Tenant and any broken glass shall promptly be replaced by Tenant at Tenant’s expense with glass of the same kind, size and quality. Notwithstanding the foregoing: (1) Landlord shall cause to be completed at Landlord’s sole cost and expense the repair items for which Landlord is expressly responsible as designated on Schedule 1 hereto, if any, and (2) the provisions of Article 10 shall control with respect to damage to or destruction of the Leased Premises, the Building, the Outside Areas or the Property caused by an act of God or other peril.

5.2 Utilities. Tenant shall arrange at its sole cost and expense and in its own name, for the supply of gas and electricity to the Leased Premises. In the event that such services are not separately metered, Tenant shall, at its sole expense, cause such meters to be installed. Landlord shall maintain the water meter(s) in its own name; provided, however, that if at any time during the Lease Term Landlord shall require Tenant to put the water service in Tenant’s name, Tenant shall do so at Tenant’s sole cost. Tenant shall be responsible for determining if the local supplier of water, gas and electricity can supply the needs of Tenant and whether or not the existing water, gas and electrical distribution systems within the Building and the Leased Premises are adequate for Tenant’s needs. Tenant shall be responsible for determining if the existing sanitary and storm sewer systems now servicing the Leased Premises and the Property are adequate for Tenant’s needs. Tenant shall pay all charges for water, gas, electricity and storm and sanitary sewer services as so supplied to the Leased Premises, irrespective of whether or not the services are maintained in Landlord’s or Tenant’s name.

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5.3 Security. Tenant acknowledges that Landlord has not undertaken any duty whatsoever to provide security for the Leased Premises, the Building, the Outside Areas or the Property and, accordingly, Landlord is not responsible for the security of same or the protection of Tenant’s property or Tenant’s employees, invitees or contractors. To the extent Tenant determines that such security or protection services are advisable or necessary, Tenant shall arrange for and pay the costs of providing same.

5.4 Energy And Resource Consumption. Landlord may voluntarily cooperate in a reasonable manner with the efforts of governmental agencies and/or utility suppliers in reducing energy or other resource consumption within the Property. Tenant shall not be entitled to terminate this Lease or to any reduction in or abatement of rent by reason of such cooperation, except to the extent Tenant is deprived of access to or use of the Leased Premises as a result thereof. Tenant agrees at all times to cooperate fully with Landlord and to abide by all reasonable rules established by Landlord (i) in order to maximize the efficient operation of the electrical, heating, ventilating and air conditioning systems and all other energy or other resource consumption systems with the Property, provided they do not unreasonably interfere with Tenant’s use of the Leased Premises, and/or (ii) in order to comply with the recommendations of utility suppliers and governmental agencies regulating the consumption of energy and/or other resources.

5.5 Limitation Of Landlord’s Liability. Landlord shall not be liable to Tenant for injury to Tenant, its employees, agents, invitees or contractors, damage to Tenant’s property or loss of Tenant’s business or profits, nor shall Tenant be entitled to terminate this Lease or to any reduction in or abatement of rent by reason of (i) Landlord’s failure to provide security services or systems within the Property for the protection of the Leased Premises, the Building or the Outside Areas, or the protection of Tenant’s property or Tenant’s employees, invitees, agents or contractors, or (ii) Landlord’s failure to perform any maintenance or repairs to the Leased Premises, the Building, the Outside Areas or the Property, or (iii) any failure, interruption, rationing or other curtailment in the supply of water, electric current, gas or other utility service to the Leased Premises, the Building, the Outside Areas or the Property from whatever cause (other than Landlord’s active gross negligence or willful misconduct), or (iv) the unauthorized intrusion or entry into the Leased Premises by third parties (other than Landlord).

ARTICLE 6

ALTERATIONS AND IMPROVEMENTS

6.1 By Tenant. Tenant shall not make any alterations to or modifications of the Leased Premises or construct any improvements within the Leased Premises until Landlord shall have first approved, in writing, the plans and specifications therefor, which approval may be withheld in Landlord’s sole discretion. Tenant’s written request shall also contain a request for Landlord to elect whether or not it will require Tenant to remove the subject alterations, modifications or improvements at the expiration or earlier termination of this Lease. If such additional request is not included, Landlord may make such election at the expiration or earlier termination of this Lease (and for purposes of Tenant’s removal obligations set forth in Paragraph 2.6 above, Landlord shall be deemed to have made the election at the time the alterations, modifications or improvements were completed). All such modifications, alterations or improvements, once so approved, shall be made, constructed or installed by Tenant at Tenant’s expense (including all permit fees and governmental charges related thereto), using a licensed contractor first approved by Landlord, in substantial compliance with the Landlord-approved plans and specifications therefor. All work undertaken by Tenant shall be done in accordance with all Laws and Restrictions and in a good and workmanlike manner using new materials of good quality. Tenant shall not commence the making of any such modifications or alterations or the construction of any such

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improvements until (i) all required governmental approvals and permits shall have been obtained, (ii) all requirements regarding insurance imposed by this Lease have been satisfied, (iii) Tenant shall have given Landlord at least five (5) business days prior written notice of its intention to commence such work so that Landlord may post and file notices of non-responsibility, and (iv) if requested by Landlord, Tenant shall have obtained contingent liability and broad form builder’s risk insurance in an amount satisfactory to Landlord in its reasonable discretion to cover any perils relating to the proposed work not covered by insurance carried by Tenant pursuant to Article 9. In no event shall Tenant make any modification, alterations or improvements whatsoever to the Outside Areas or the exterior or structural components of the Building including, without limitation, any cuts or penetrations in the floor, roof or exterior walls of the Leased Premises. As used in this Article, the term “modifications, alterations and/or improvements” shall include, without limitation, the installation of additional electrical outlets, overhead lighting fixtures, drains, sinks, partitions, doorways, or the like. Notwithstanding the foregoing, Tenant, without Landlord’s prior written consent, shall be permitted to make non-structural alterations to the Building, provided that: (a) such alterations do not exceed $100,000 individually or $4,000,000 in the aggregate over the Lease Term, (b) Tenant shall timely provide Landlord the notice required pursuant to Paragraph 4.9 above, (c) Tenant shall notify Landlord in writing within thirty (30) days of completion of the alteration and deliver to Landlord a set of the plans and specifications therefor, either “as built” or marked to show construction changes made, and (d) Tenant shall, upon Landlord’s request, remove the alteration at the termination of the Lease and restore the Leased Premises to their condition prior to such alteration. This Paragraph 6.1 shall not be applicable to the Improvement Work (as defined in Paragraph 2.5 above).

6.2 Ownership Of Improvements. All modifications, alterations and improvements made or added to the Leased Premises by Tenant or any prior tenant (other than Tenant’s inventory, equipment, movable furniture, wall decorations and trade fixtures) shall be deemed real property and a part of the Leased Premises, but shall remain the property of Tenant during the Lease, and Tenant hereby covenants and agrees not to grant a security interest in any such items which are or may become the property of Landlord, to any party other than Landlord. Any such modifications, alterations or improvements, once completed, shall not be altered or removed from the Leased Premises during the Lease Term without Landlord’s written approval first obtained in accordance with the provisions of Paragraph 6.1 above. At the expiration or sooner termination of this Lease, all such modifications, alterations and improvements other than Tenant’s inventory, equipment, movable furniture, wall decorations and trade fixtures, shall automatically become the property of Landlord and shall be surrendered to Landlord as part of the Leased Premises as required pursuant to Article 2, unless Landlord shall require Tenant to remove any of such modifications, alterations or improvements in accordance with the provisions of Article 2, in which case Tenant shall so remove same. Landlord shall have no obligations to reimburse Tenant for all or any portion of the cost or value of any such modifications, alterations or improvements so surrendered to Landlord. All modifications, alterations or improvements which are installed or constructed on or attached to the Leased Premises by Landlord and/or at Landlord’s expense shall be deemed real property and a part of the Leased Premises and shall be property of Landlord. All lighting, plumbing, electrical, heating, ventilating and air conditioning fixtures, partitioning, window coverings, wall coverings and floor coverings installed by Tenant shall be deemed improvements to the Leased Premises and not trade fixtures of Tenant.

6.3 Alterations Required By Law. Tenant at its sole cost shall make all modifications, alterations and improvements to the Leased Premises, the Building, or the Property, that are required by any Law or any governmental authority. Notwithstanding the foregoing, so long as such modifications, alterations and improvements constitute capital repairs or replacements under generally accepted accounting principles, consistently applied, and are not required as a result of Tenant’s misuse, overuse, or alterations, improvements or modifications to the Leased Premises, the Outside Areas or the Building, then Landlord shall make such modifications, alterations or improvements and charge to Tenant, as Additional Rent, the cost thereof (provided that the cost of such modifications, alterations or

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improvements shall be amortized over their useful life employing an interest rate equal to the sum of that rate quoted by Wells Fargo Bank, N.T. & S.A. from time to time as its prime rate, plus two percent (2%), and only the amortizing portion of such cost shall be included in Additional Rent on a monthly basis).

6.4 Liens. Tenant shall keep the Property and every part thereof free from any lien, and shall pay when due all bills arising out of any work performed, materials furnished, or obligations incurred by Tenant, its agents, employees or contractors relating to the Property. If any such claim of lien is recorded against Tenant’s interest in this Lease, the Property or any part thereof, Tenant shall bond against, discharge or otherwise cause such lien to be entirely released within ten days after the same has been recorded. Tenant’s failure to do so shall be conclusively deemed a material default under the terms of this Lease.

ARTICLE 7

ASSIGNMENT AND SUBLETTING BY TENANT

7.1 By Tenant. Tenant shall not sublet the Leased Premises or any portion thereof or assign its interest in this Lease, or permit the occupancy of the Premises by other than Tenant, whether voluntarily or by operation of Law, without Landlord’s prior written consent which shall not be unreasonably withheld. Any attempted subletting or assignment, or occupancy of the Leased Premises by other than Tenant, without Landlord’s prior written consent, at Landlord’s election, shall constitute a default by Tenant under the terms of this Lease. The acceptance of rent by Landlord from any person or entity other than Tenant, or the acceptance of rent by Landlord from Tenant with knowledge of a violation of the provisions of this paragraph, shall not be deemed to be a waiver by Landlord of any provision of this Article or this Lease or to be a consent to any subletting by Tenant or any assignment of Tenant’s interest in this Lease. Without limiting the circumstances in which it may be reasonable for Landlord to withhold its consent to an assignment or subletting, Landlord and Tenant acknowledge that it shall be reasonable for Landlord to withhold its consent in the following instances:

(a) the proposed assignee or sublessee is a governmental agency;

(b) in Landlord’s reasonable judgment, the use of the Leased Premises by the proposed assignee or sublessee would involve occupancy by other than for a Permitted Use, would entail any alterations which would lessen the value of the leasehold improvements in the Leased Premises, or would require increased services by Landlord;

(c) in Landlord’s reasonable judgment, the credit-worthiness of the proposed assignee is less than that of Tenant or does not meet the credit standards applied by Landlord;

(d) the proposed assignee or sublessee (or any of its affiliates) has been in material default under a lease, has been in litigation with a previous landlord, or in the ten years prior to the assignment or sublease has filed for bankruptcy protection, has been the subject of an involuntary bankruptcy, or has been adjudged insolvent;

(e) Landlord has experienced a previous default by or is in litigation with the proposed assignee or sublessee;

(f) in Landlord’s reasonable judgment, the Leased Premises, or the relevant part thereof, will be used in a manner that will violate any negative covenant as to use contained in this Lease;

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(g) the use of the Leased Premises by the proposed assignee or sublessee will violate any applicable law, ordinance or regulation;

(h) the proposed assignee or sublessee is a tenant in the Project;

(i) the proposed assignment or sublease fails to include all of the terms and provisions required to be included therein pursuant to this Article 7;

(j) Tenant is in default of any obligation of Tenant under this Lease, or Tenant has defaulted under this Lease on three or more occasions during the 12 months preceding the date that Tenant shall request consent;

(k) in the case of a subletting of less than the entire Leased Premises, if the subletting would result in the division of the Leased Premises into more than two subparcels or would require improvements to be made outside of the Leased Premises; or

(l) the proposed sublessee is in the co-location (or a substantially similar) business.

7.2 Merger, Reorganization, or Sale of Assets.

(a) Subject to paragraph (b) below: Any dissolution, merger, consolidation or other reorganization of Tenant, or the sale or other transfer in the aggregate over the Lease Term of a controlling percentage of the capital stock of Tenant, or the sale or transfer of all or a substantial portion of the assets of Tenant, shall be deemed a voluntary assignment of Tenant’s interest in this Lease. The phrase “controlling percentage” means the ownership of and the right to vote stock possessing more than fifty percent of the total combined voting power of all classes of Tenant’s capital stock issued, outstanding and entitled to vote for the election of directors. If Tenant is a partnership, a withdrawal or change, voluntary, involuntary or by operation of Law, of any general partner, or the dissolution of the partnership, shall be deemed a voluntary assignment of Tenant’s interest in this Lease. Upon Landlord’s request from time to time, Tenant shall promptly provide Landlord with a statement certified by the Tenant’s chief operating officer, which shall provide the following information: (i) the names of all of Tenant’s shareholders and their ownership interests at the time thereof, provided Tenant’s shares are not publicly traded; (ii) the state in which Tenant is incorporated; (iii) the location of Tenant’s principal place of business; (iv) information regarding a material change in the corporate structure of Tenant, including, without limitation, a merger or consolidation; and (v) any other information regarding Tenant’s ownership that Landlord reasonably requests. In the event of an acquisition by one entity of the controlling percentage of the capital stock of Tenant where this Lease is not assigned to and assumed in full by such entity, it shall be a condition to Landlord’s consent to such change in control that such entity acquiring the controlling percentage assume, as a primary obligor, all rights and obligations of Tenant under this Lease (and such entity shall execute all documents reasonably required to effectuate such assumption).

(b) Notwithstanding subparagraph (a) above, over-the-counter stock market transactions shall not be deemed to be assignments under this Lease. In addition, provided that the conditions described below in this sentence have been satisfied prior to or upon such assignment or subleasing, Tenant may, without Landlord’s prior written consent, sublet the Leased Premises or assign this Lease to (i) a subsidiary, affiliate, division, corporation or joint venture controlling, controlled by or under common control with Tenant, (ii) a successor entity resulting from a merger, consolidation, or nonbankruptcy reorganization by Tenant, or (iii) a purchaser of substantially all of Tenant’s assets, provided in all cases (i), (ii) and (iii) that (A) the successor entity, assignee, purchaser or subtenant has a net worth equal to or greater than those of Tenant prior to the Effective Date of this Lease and a liquid net worth sufficient for Tenant to continually perform its obligations under the Lease, and assumes in writing for the benefit of Landlord, this Lease and all of Tenant’s obligations under this Lease, and (B) the entity

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with the greatest net worth involved directly or indirectly in the ownership and/or control of the acquiring, merged, reorganized, or consolidated entity (hereafter, the “Assignee Affiliate”) shall have unconditionally assumed in writing for the benefit of Landlord, this Lease and all of Tenant’s obligations under this Lease. If any assignment or subleasing occurs without such an assumption and/or without Landlord’s consent as provided in Paragraph 7.1 above, Tenant shall be deemed for all purposes to be in material default under this Lease and the Assignee Affiliate (and the successor entity, assignee, purchaser or subtenant) shall for all purposes be deemed to have unconditionally assumed in writing for the benefit of Landlord, this Lease and all of Tenant’s obligations under this Lease. In all events, Tenant shall remain fully liable under this Lease.

7.3 Landlord’s Election. If Tenant shall desire to assign its interest under the Lease or to sublet the Leased Premises, Tenant must first notify Landlord, in writing, of its intent to so assign or sublet, at least thirty (30) days in advance of taking any action with respect thereto. Once Tenant (or Landlord or both pursuant to the joint marketing election described below) has identified a potential assignee or sublessee, Tenant shall notify Landlord, in writing, of its intent to so assign or sublet, at least thirty (30) days in advance of the date it intends to so assign its interest in this Lease or sublet the Leased Premises but not sooner than one hundred eighty days in advance of such date, specifying in detail the terms of such proposed assignment or subletting, including the name of the proposed assignee or sublessee, the proposed assignee’s or sublessee’s intended use of the Leased Premises, current financial statements (including a balance sheet, income statement and statement of cash flow, all prepared in accordance with generally accepted accounting principles) of such proposed assignee or sublessee, the form of documents to be used in effectuating such assignment or subletting and such other information as Landlord may reasonably request. Landlord shall have a period of ten (10) business days following receipt of such notice and the required information within which to do one of the following: (i) consent to such requested assignment or subletting subject to Tenant’s compliance with the conditions set forth in Paragraph 7.4 below, or (ii) refuse to so consent to such requested assignment or subletting, provided that such consent shall not be unreasonably refused, or (iii) terminate this Lease as to the entirety of the Leased Premises, or, at Landlord’s sole option, as to only such portion of the Leased Premises as is the subject of the proposed assignment or subletting (such termination to be effective either (A) on the date specified in Tenant’s notice as the intended effective date of the assignment or subletting, or (B) on such tenth (10^th) business day after receipt of Tenant’s notice, at Landlord’s option). During such ten (10) business day period, Tenant covenants and agrees to supply to Landlord, upon request, all necessary or relevant information which Landlord may reasonably request respecting such proposed assignment or subletting and/or the proposed assignee or sublessee. In the event of an election by Landlord under clause (iii) above, Landlord shall have the right to enter into a direct lease with the proposed assignee or sublessee without payment of any consideration to Tenant. In addition, in the event Tenant desires to sublease all or a portion of the Leased Premises, Landlord shall have the right to elect to jointly market with Tenant the applicable portion (including all) of the Leased Premises for subleasing and/or direct leasing, such joint marketing election to be made, if at all, in writing and delivered to Tenant during the thirty (30) day period described in the first sentence of this Paragraph 7.3.

7.4 Conditions To Landlord’s Consent. If Landlord elects to consent, or shall have been ordered to so consent by a court of competent jurisdiction, to such requested assignment or subletting, such consent shall be expressly conditioned upon the occurrence of each of the conditions below set forth, and any purported assignment or subletting made or ordered prior to the full and complete satisfaction of each of the following conditions shall be void and, at the election of Landlord, which election may be exercised at any time following such a purported assignment or subletting but prior to the satisfaction of each of the stated conditions, shall constitute a material default by Tenant under this Lease until cured by satisfying in full each such condition by the assignee or sublessee. The conditions are as follows:

(a) Landlord having approved in form and substance the assignment or sublease agreement and any ancillary documents, which approval shall not be unreasonably withheld by Landlord if the requirements of this Article 7 are otherwise complied with.

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(b) Each such sublessee or assignee having agreed, in writing satisfactory to Landlord and its counsel and for the benefit of Landlord, to assume, to be bound by, and to perform the obligations of this Lease to be performed by Tenant which relate to space being subleased.

(c) Tenant having fully and completely performed all of its obligations under the terms of this Lease through and including the date of such assignment or subletting.

(d) Tenant having reimbursed to Landlord all reasonable costs and reasonable attorneys’ fees incurred by Landlord in conjunction with the processing and documentation of any such requested subletting or assignment. Tenant shall be obligated to so reimburse Landlord whether or not such subletting or assignment is completed.

(e) Tenant having delivered to Landlord a complete and fully-executed duplicate original of such sublease agreement or assignment agreement (as applicable) and all related agreements.

(f) Tenant having paid, or having agreed in writing to pay as to future payments, to Landlord fifty percent (50%) of all assignment consideration or excess rentals to be paid to Tenant or to any other on Tenant’s behalf or for Tenant’s benefit for such assignment or subletting as follows:

(i) If Tenant assigns its interest under this Lease and if all or a portion of the consideration for such assignment is to be paid by the assignee at the time of the assignment, that Tenant shall have paid to Landlord and Landlord shall have received an amount equal to fifty percent (50%) of the assignment consideration so paid or to be paid (whichever is the greater) at the time of the assignment by the assignee; or

(ii) If Tenant assigns its interest under this Lease and if Tenant is to receive all or a portion of the consideration for such assignment in future installments, that Tenant and Tenant’s assignee shall have entered into a written agreement with and for the benefit of Landlord satisfactory to Landlord and its counsel whereby Tenant and Tenant’s assignee jointly agree to pay to Landlord an amount equal to fifty percent (50%) of all such future assignment consideration installments to be paid by such assignee as and when such assignment consideration is so paid.

(iii) If Tenant subleases the Leased Premises, that Tenant and Tenant’s sublessee shall have entered into a written agreement with and for the benefit of Landlord satisfactory to Landlord and its counsel whereby Tenant and Tenant’s sublessee jointly agree to pay to Landlord fifty percent (50%) of all excess rentals to be paid by such sublessee.

7.5 Assignment Consideration And Excess Rentals Defined. For purposes of this Article, including any amendment to this Article by way of addendum or other writing, the term “assignment consideration” shall mean all consideration to be paid by the assignee to Tenant or to any other party on Tenant’s behalf or for Tenant’s benefit as consideration for such assignment (i.e., in excess of the Base Monthly Rent and Additional Rent payable by such assignee under this Lease), without deduction for any commissions paid by Tenant or any other costs or expenses (including, without limitation, tenant improvements, capital improvements, building upgrades, permit fees, attorneys’ fees, and other consultants’ fees) incurred by Tenant in connection with such assignment, and the term “excess rentals” shall mean all consideration to be paid by the sublessee to Tenant or to any other party on Tenant’s behalf or for Tenant’s benefit for the sublease of all or any portion of the Leased Premises in excess of the rent due to Landlord under the terms of this Lease for the portion so subleased for the same period, without

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deduction for any commissions paid by Tenant or any other costs or expenses (including, without limitation, tenant improvements, capital improvements, building upgrades, permit fees, attorneys’ fees, and other consultants’ fees) incurred by Tenant in connection with such sublease. Tenant agrees that the portion of any assignment consideration and/or excess rentals arising from any assignment or subletting by Tenant which is to be paid to Landlord pursuant to this Article now is and shall then be the property of Landlord and not the property of Tenant.

7.6 Payments. All payments required by this Article to be made to Landlord shall be made in cash in full as and when they become due. At the time Tenant, Tenant’s assignee or sublessee makes each such payment to Landlord, Tenant or Tenant’s assignee or sublessee, as the case may be, shall deliver to Landlord an itemized statement in reasonable detail showing the method by which the amount due Landlord was calculated and certified by the party making such payment as true and correct.

7.7 Good Faith. The rights granted to Tenant by this Article are granted in consideration of Tenant’s express covenant that all pertinent allocations which are made by Tenant between the rental value of the Leased Premises and the value of any of Tenant’s personal property which may be conveyed or leased (or services provided) generally concurrently with and which may reasonably be considered a part of the same transaction as the permitted assignment or subletting shall be made fairly, honestly and in good faith. If Tenant shall breach this covenant, Landlord may immediately declare Tenant to be in default under the terms of this Lease and terminate this Lease and/or exercise any other rights and remedies Landlord would have under the terms of this Lease in the case of a material default by Tenant under this Lease.

7.8 Effect Of Landlord’s Consent. No subletting or assignment, even with the consent of Landlord, shall relieve Tenant of its personal and primary obligation to pay rent and to perform all of the other obligations to be performed by Tenant hereunder. Consent by Landlord to one or more assignments of Tenant’s interest in this Lease or to one or more sublettings of the Leased Premises shall not be deemed to be a consent to any subsequent assignment or subletting. No subtenant shall have any right to assign its sublease or to further sublet any portion of the sublet premises or to permit any portion of the sublet premises to be used or occupied by any other party. No sublease may be terminated or modified without Landlord’s prior written consent, which shall not be unreasonably withheld or delayed. If Landlord shall have been ordered by a court of competent jurisdiction to consent to a requested assignment or subletting, or such an assignment or subletting shall have been ordered by a court of competent jurisdiction over the objection of Landlord, such assignment or subletting shall not be binding between the assignee (or sublessee) and Landlord until such time as all conditions set forth in Paragraph 7.4 above have been fully satisfied (to the extent not then satisfied) by the assignee or sublessee, including, without limitation, the payment to Landlord of all agreed assignment considerations and/or excess rentals then due Landlord. Upon a default while a sublease is in effect, Landlord may collect directly from the sublessee all sums becoming due to Tenant under the sublease and apply this amount against any sums due Landlord by Tenant, and Tenant authorizes and directs any sublessee to make payments directly to Landlord upon notice from Landlord. No direct collection by Landlord from any sublessee shall constitute a novation or release of Tenant or any guarantor, a consent to the sublease or a waiver of the covenant prohibiting subleases. Landlord, as Tenant’s agent, may endorse any check, draft or other instrument payable to Tenant for sums due under a sublease, and apply the proceeds in accordance with this Lease; this agency is coupled with an interest and is irrevocable.

7.9 Co-Location Use. Notwithstanding the foregoing, Tenant shall have the right, without the consent of Landlord, to enter into licenses or other similar arrangements with its customers, consistent with the custom and practice of the telecommunications industry in Silicon Valley (each, a “Co-Location Agreement”), to “co-locate” such customers’ telecommunications equipment within the Leased Premises and to allow such customers to avail themselves of the services offered by Tenant which are consistent with the Permitted Use. Each Co-Location Agreement shall be subject and subordinate in all respects to

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all of the terms of this Lease but shall not require any prior consent of the Landlord. Tenant shall from time to time, and upon the written request of Landlord, provide Landlord with a list of all such licensees or customers and copies of the applicable Co-Location Agreements.

ARTICLE 8

LIMITATION ON LANDLORD’S LIABILITY AND INDEMNITY

8.1 Limitation On Landlord’s Liability And Release. Landlord shall not be liable to Tenant for, and Tenant hereby releases and waives all claims and rights of recovery against Landlord and its partners, principals, members, officers, agents, employees, lenders, attorneys, contractors, invitees, consultants, predecessors, successors and assigns (including without limitation prior and subsequent owners of the Property or portions thereof) (collectively, the “Landlord Indemnitees”) from, any and all liability, whether in contract, tort or on any other basis, for any injury to or any damage sustained by Tenant, Tenant’s agents, employees, contractors or invitees, any damage to Tenant’s property, or any loss to Tenant’s business, loss of Tenant’s profits or other financial loss of Tenant resulting from or attributable to the condition of, the management of, the repair or maintenance of, the protection of, the supply of services or utilities to, the damage in or destruction of the Leased Premises, the Building, the Property or the Outside Areas, including without limitation (i) the failure, interruption, rationing or other curtailment or cessation in the supply of electricity, water, gas or other utility service to the Property, the Building or the Leased Premises; (ii) the vandalism or forcible entry into the Building or the Leased Premises; (iii) the penetration of water into or onto any portion of the Leased Premises; (iv) the failure to provide security and/or adequate lighting in or about the Property, the Building or the Leased Premises, (v) the existence of any design or construction defects within the Property, the Building or the Leased Premises; (vi) the failure of any mechanical systems to function properly (such as the HVAC systems); (vii) the blockage of access to any portion of the Property, the Building or the Leased Premises, except that Tenant does not so release Landlord from such liability to the extent such damage was proximately caused by Landlord’s active gross negligence or willful misconduct. In this regard, Tenant acknowledges that it is fully apprised of the provisions of Law relating to releases, and particularly to those provisions contained in Section 1542 of the California Civil Code which reads as follows:

“A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.”

Notwithstanding such statutory provision, and for the purpose of implementing a full and complete release and discharge, Tenant hereby (i) waives the benefit of such statutory provision and (ii) acknowledges that, subject to the exceptions specifically set forth herein, the release and discharge set forth in this paragraph is a full and complete settlement and release and discharge of all claims and is intended to include in its effect, without limitation, all claims which Tenant, as of the date hereof, does not know of or suspect to exist in its favor.

8.2 Tenant’s Indemnification Of Landlord. Tenant shall defend with competent counsel satisfactory to Landlord any claims made or legal actions filed or threatened against the Landlord Indemnitees with respect to the violation of any Law, or the death, bodily injury, personal injury, property damage, or interference with contractual or property rights suffered by any third party occurring within the Leased Premises, the Building, or the Outside Areas, or resulting from Tenant’s use or occupancy of the Leased Premises, the Building or the Outside Areas, or resulting from Tenant’s activities in or about the Leased Premises, the Building, or the Outside Areas, and Tenant shall indemnify and hold the Landlord Indemnitees harmless from any loss liability, penalties, or expense whatsoever (including any loss attributable to vacant space which otherwise would have been leased, but for such activities) resulting therefrom, except to the extent proximately caused by the active gross negligence or willful misconduct of Landlord. This indemnity agreement shall survive the expiration or sooner termination of this Lease.

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ARTICLE 9

INSURANCE

9.1 Tenant’s Insurance. Tenant shall maintain insurance complying with all of the following:

(a) Tenant shall procure, pay for and keep in full force and effect, at all times during the Lease Term, the following:

(i) Commercial general liability insurance insuring Tenant against liability for personal injury, bodily injury, death and damage to property occurring within the Leased Premises, or resulting from Tenant’s use or occupancy of the Leased Premises, the Building, the Outside Areas or the Property (including without limitation the use of petroleum storage tanks), or resulting from Tenant’s activities in or about the Leased Premises or the Property, with coverage in an amount equal to Tenant’s Required Liability Coverage (as set forth in Article 1), which insurance shall contain “contractual liability” and “broad form property damage” coverages insuring Tenant’s performance of Tenant’s obligations to indemnify Landlord as contained in this Lease.

(ii) Fire and property damage insurance in “special form” coverage insuring Tenant against loss from physical damage to Tenant’s personal property, inventory, trade fixtures and improvements within the Leased Premises with coverage for the full actual replacement cost thereof;

(iii) Business income/extra expense insurance sufficient to pay Base Monthly Rent and Additional Rent for a period of not less than twelve (12) months;

(iv) Plate glass insurance, at actual replacement cost;

(v) Boiler and machinery insurance (including equipment breakdown and rental loss coverage for covered perils), to limits sufficient to restore the Building;

(vi) Product liability insurance (including, without limitation, if food and/or beverages are distributed, sold and/or consumed within the Leased Premises, to the extent obtainable, coverage for liability arising out of the distribution, sale, use or consumption of food and/or beverages (including alcoholic beverages, if applicable) at the Leased Premises for not less than Tenant’s Required Liability Coverage (as set forth in Article 1);

(vii) Workers’ compensation insurance (statutory coverage) with employer’s liability in amounts not less than $1,000,000 insurance sufficient to comply with all laws, provided that these required coverage limits may, at Tenant’s election, be met through a combination of primary and excess policies; and

(viii) With respect to making of any alterations or modifications or the construction of improvements or the like undertaken by Tenant, course of construction, commercial general liability, automobile liability and workers’ compensation (to be carried by Tenant’s contractor), in an amount and with coverage reasonably satisfactory to Landlord.

(b) Each policy of liability insurance required to be carried by Tenant pursuant to this paragraph or actually carried by Tenant with respect to the Leased Premises or the Property: (i) shall, except with respect to insurance required by subparagraphs (a)(ii) and (a)(viii) above, name Landlord, and

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such others as are designated by Landlord, as additional insureds; (ii) shall, with respect to insurance required by subparagraph (a)(ii) above, name Landlord, and such others as are designated by Landlord, as loss payees, as their interests may appear; (iii) shall be primary insurance providing that the insurer shall be liable for the full amount of the loss, up to and including the total amount of liability set forth in the declaration of coverage, without the right of contribution from or prior payment by any other insurance coverage of Landlord; (iv) shall be in a form satisfactory to Landlord; (v) shall be carried with companies reasonably acceptable to Landlord with Best’s ratings of at least A and XI; (vi) shall provide that such policy shall not be subject to cancellation, lapse or change except after at least thirty (30) days prior written notice to Landlord, and (vii) shall contain a so-called “severability” or “cross liability” coverage. Each policy of property insurance maintained by Tenant with respect to the Leased Premises or the Property or any property therein (i) shall provide that such policy shall not be subject to cancellation, lapse or change except after at least thirty (30) days prior written notice to Landlord and (ii) shall contain a waiver and/or a permission to waive by the insurer of any right of subrogation against Landlord, its partners, principals, members, officers, employees, agents and contractors, which might arise by reason of any payment under such policy or by reason of any act or omission of Landlord, its partners, principals, members, officers, employees, agents and contractors.

(c) Prior to the time Tenant or any of its contractors enters the Leased Premises, Tenant shall deliver to Landlord, with respect to each policy of insurance required to be carried by Tenant pursuant to this Article, a copy of such policy (appropriately authenticated by the insurer as having been issued, premium paid) or a certificate of the insurer certifying in form satisfactory to Landlord that a policy has been issued, premium paid, providing the coverage required by this Paragraph and containing the provisions specified herein. With respect to each renewal or replacement of any such insurance, the requirements of this Paragraph must be complied with not less than thirty days prior to the expiration or cancellation of the policies being renewed or replaced. Landlord may, at any time and from time to time, inspect and/or copy any and all insurance policies required to be carried by Tenant pursuant to this Article. If Landlord’s Lender, insurance broker, advisor or counsel reasonably determines at any time that the amount of coverage set forth in Paragraph 9.1(a) for any policy of insurance Tenant is required to carry pursuant to this Article is not adequate, then Tenant shall increase the amount of coverage for such insurance to such greater amount as Landlord’s Lender, insurance broker, advisor or counsel reasonably deems adequate. In the event Tenant does not maintain said insurance, Landlord may, in its sole discretion and without waiving any other remedies hereunder, procure said insurance and Tenant shall pay to Landlord as additional rent the cost of said insurance plus a ten percent (10%) administrative fee.

9.2 Landlord’s Insurance. With respect to insurance maintained by Landlord:

(a) Landlord shall maintain, as the minimum coverage required of it by this Lease, fire and property damage insurance in so-called special form coverage insuring Landlord (and such others as Landlord may designate) against loss from physical damage to the Building with coverage of not less than one hundred percent (100%) of the full actual replacement cost thereof and against loss of rents for a period of not less than six months. Such fire and property damage insurance, at Landlord’s election but without any requirements on Landlord’s behalf to do so, (i) may be written in so-called “all risk” form, excluding only those perils commonly excluded from such coverage by Landlord’s then property damage insurer; (ii) may provide coverage for physical damage to the improvements so insured for up to the entire full actual replacement cost thereof; (iii) may be endorsed to cover loss or damage caused by any additional perils against which Landlord may elect to insure, including earthquake and/or flood; and/or (iv) may provide coverage for loss of rents for a period of up to twelve months. Landlord shall not be required to cause such insurance to cover any of Tenant’s personal property, inventory, and trade fixtures, or any modifications, alterations or improvements made or constructed by Tenant to or within the Leased Premises. Landlord shall use commercially reasonable efforts to obtain such insurance at competitive rates. If Tenant so desires, Tenant may at any time and from time to time seek to obtain (and pay directly for) a separate earthquake insurance policy for the Building with such policy limits as Tenant desires, so long as there is no effect on any insurance carried by Landlord.

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(b) Landlord shall maintain commercial general liability insurance insuring Landlord (and such others as are designated by Landlord) against liability for personal injury, bodily injury, death, and damage to property occurring in, on or about, or resulting from the use or occupancy of the Property, or any portion thereof, with combined single limit coverage of at least Ten Million Dollars ($10,000,000). Landlord may carry such greater coverage as Landlord or Landlord’s Lender, insurance broker, advisor or counsel may from time to time determine is reasonably necessary for the adequate protection of Landlord and the Property.

(c) Landlord may maintain any other insurance which in the opinion of its insurance broker, advisor or legal counsel is prudent to carry under the given circumstances, provided such insurance is commonly carried by owners of property similarly situated and operating under similar circumstances.

9.3 Mutual Waiver Of Subrogation. Landlord hereby releases Tenant, and Tenant hereby releases Landlord and its respective partners, principals, members, officers, agents, employees and servants, from any and all liability for loss, damage or injury to the property of the other in or about the Leased Premises or the Property which is caused by or results from a peril or event or happening which is covered by insurance actually carried and in force at the time of the loss by the party sustaining such loss; provided, however, that such waiver shall be effective only to the extent permitted by the insurance covering such loss and to the extent such insurance is not prejudiced thereby.

ARTICLE 10

DAMAGE TO LEASED PREMISES

10.1 Landlord’s Duty To Restore. If the Leased Premises, the Building or the Outside Area are damaged by any peril after the Effective Date of this Lease, Landlord shall restore the same, as and when required by this paragraph. Upon receipt of the insurance proceeds and any sums payable by Tenant as provided below, and the issuance of all necessary governmental permits, Landlord shall commence and diligently prosecute to completion the restoration of the Leased Premises, the Building or the Outside Area, as the case may be, to substantially the same condition in which it existed as of the Lease Commencement Date to the extent then allowed by law. Landlord’s obligation to restore shall be limited to the improvements constructed by Landlord. To the extent the insurance proceeds available from insurance actually carried by Landlord are less than the cost to restore, Landlord shall be responsible for paying such shortfall (except for insurance policy deductibles and shortfalls in earthquake insurance proceeds, both of which shall in all events be paid by Tenant). Landlord shall have no obligation to restore any alterations, modifications or improvements made by Tenant to the Leased Premises or any of Tenant’s personal property, inventory or trade fixtures. Upon completion of the restoration by Landlord, Tenant shall forthwith replace or fully repair all of Tenant’s personal property, inventory, trade fixtures and other improvements constructed by Tenant to like or similar conditions as existed at the time immediately prior to such damage or destruction.

10.2 Insurance Proceeds. All insurance proceeds available from the fire and property damage insurance carried by Landlord shall be paid to and become the property of Landlord. All insurance proceeds available from insurance carried by Tenant which cover loss to property that is Landlord’s property shall be paid to and become the property of Landlord to the extent of the loss, and all proceeds available from such insurance which cover loss to property which would only become the property of Landlord upon the termination of this Lease shall be paid to and remain the property of Tenant. The determination of Landlord’s property and Tenant’s property shall be made pursuant to Paragraph 6.2.

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10.3 Tenant’s Waiver. Tenant hereby waives the provisions of California Civil Code, Section 1932, Subdivision 2, and California Civil Code, Section 1933, and the provisions of any successor Civil Code Sections or similar laws hereinafter enacted.

10.4 No Abatement Of Rent. In no event shall any damage to the Leased Premises result in any abatement of the Base Monthly Rent or Additional Rent, unless (a) Landlord fails to use commercially reasonable efforts to promptly and reasonably restore in the event all of the Leased Premises is rendered unusable, or (b) a portion of the Leased Premises is rendered unusable and the part of the Leased Premises that remains cannot, despite the exercise of best efforts to do so, be made reasonably suitable for the continued operation of Tenant’s business. In that event, either party my terminate by written notice to the other given within a reasonable period of time (not to exceed 60 days) after the occurrence of the damage, with such termination to be effective on the later to occur of (i) 60 days after the date such notice is given, and (ii) the date Tenant vacated the Leased Premises.

ARTICLE 11

CONDEMNATION

11.1 Tenant’s Right To Terminate. Except as otherwise provided in Paragraph 11.4 below regarding temporary takings, Tenant shall have the option to terminate this Lease if, as a result of any taking, (i) all of the Leased Premises is taken, or (ii) a portion of the Leased Premises is taken and the part of the Leased Premises that remains cannot, despite the exercise of best efforts to do so, be made reasonably suitable for the continued operation of Tenant’s business. Tenant must exercise such option within a reasonable period of time, to be effective on the later to occur of (i) the date that possession of that portion of the Leased Premises that is condemned is taken by the condemnor or (ii) the date Tenant vacated the Leased Premises.

11.2 Landlord’s Right To Terminate. Except as otherwise provided in Paragraph 11.4 below regarding temporary takings, Landlord shall have the option to terminate this Lease if, as a result of any taking, (i) all of the Leased Premises is taken, (ii) fifty percent (50%) or more of the Leased Premises is taken and the part of the Leased Premises that remains cannot, within a reasonable period of time, be made reasonably suitable for the continued operation of Tenant’s business, or (iii) because of the laws then in force, the Leased Premises may not be used for the same use being made before such taking, whether or not restored as required by Paragraph 11.3 below. Any such option to terminate by Landlord must be exercised within a reasonable period of time, to be effective as of the date possession is taken by the condemnor.

11.3 Restoration. If any part of the Leased Premises or the Building is taken and this Lease is not terminated, then upon receipt of the condemnation award and any sums payable by Tenant as provided below, and to the extent not prohibited by laws then in force, Landlord shall repair any damage occasioned thereby to the remainder thereof to a condition reasonably suitable for Tenant’s continued operations and otherwise, to the extent practicable, in the manner and to the extent provided in Paragraph 10.1. In the event Landlord is so obligated to repair and the condemnation award received by Landlord is less than the cost to repair, then promptly upon demand by Landlord, Tenant shall pay such shortfall to Landlord.

11.4 Temporary Taking. If greater than fifty percent (50%) of the Leased Premises is temporarily taken for a period of one year or less and such period does not extend beyond the Lease Expiration Date, this Lease shall remain in effect.

11.5 Division Of Condemnation Award. Any award made for any taking of the Property, the Building, or the Leased Premises, or any portion thereof, shall belong to and be paid to Landlord, and

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Tenant hereby assigns to Landlord all of its right, title and interest in any such award; provided, however, that so long as the same does not diminish the award to Landlord as described above, Tenant shall be entitled bring a separate action and if successful shall be entitled to receive an award that is made specifically (i) for the taking of personal property, inventory or trade fixtures belonging to Tenant, (ii) for the interruption of Tenant’s business or its moving costs, or (iii) for the value of any leasehold improvements installed and paid for by Tenant. The rights of Landlord and Tenant regarding any condemnation shall be determined as provided in this Article, and each party hereby waives the provisions of Section 1265.130 of the California Code of Civil Procedure, and the provisions of any similar law hereinafter enacted, allowing either party to petition the Supreme Court to terminate this Lease and/or otherwise allocate condemnation awards between Landlord and Tenant in the event of a taking of the Leased Premises.

11.6 No Abatement Of Rent. In no event shall any taking or condemnation result in any abatement of the Base Monthly Rent or Additional Rent unless this Lease is terminated in accordance with and pursuant to Paragraph 11.1 or Paragraph 11.2 above.

11.7 Taking Defined. The term “taking” or “taken” as used in this Article 11 shall mean any transfer or conveyance of all or any portion of the Property to a public or quasi-public agency or other entity having the power of eminent domain pursuant to or as a result of the exercise of such power by such an agency, including any inverse condemnation and/or any sale or transfer by Landlord of all or any portion of the Property to such an agency under threat of condemnation or the exercise of such power.

ARTICLE 12

DEFAULT AND REMEDIES

12.1 Events Of Tenant’s Default. Tenant shall be in default of its obligations under this Lease if any of the following events occur:

(a) Tenant shall have failed to pay Base Monthly Rent or any Additional Rent when due; or

(b) Tenant shall have done or permitted to be done any act, use or thing in its use, occupancy or possession of the Leased Premises or the Building or the Outside Areas which is prohibited by the terms of this Lease; or

(c) Tenant shall have failed to perform any term, covenant or condition of this Lease (except those requiring the payment of Base Monthly Rent or Additional Rent, which failures shall be governed by subparagraph (a) above) within the shorter of (i) any specific time period expressly provided under this Lease for the performance of such term, covenant or condition, or (ii) thirty (30) days after written notice from Landlord to Tenant specifying the nature of such failure and requesting Tenant to perform same; or

(d) Tenant shall have sublet the Leased Premises or assigned or encumbered its interest in this Lease in violation of the provisions contained in Article 7, whether voluntarily or by operation of law; or

(e) Tenant shall have abandoned the Leased Premises and failed to pay rent; or

(f) Tenant or any Guarantor of this Lease shall have permitted or suffered the sequestration or attachment of, or execution on, or the appointment of a custodian or receiver with respect to, all or any substantial part of the property or assets of Tenant (or such Guarantor) or any property or asset essential to the conduct of Tenant’s (or such Guarantor’s) business, and Tenant (or such Guarantor) shall have failed to obtain a return or release of the same within thirty days thereafter, or prior to sale pursuant to such sequestration, attachment or levy, whichever is earlier; or

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(g) Tenant or any Guarantor of this Lease shall have made a general assignment of all or a substantial part of its assets for the benefit of its creditors; or

(h) Tenant or any Guarantor of this Lease shall have allowed (or sought) to have entered against it a decree or order which: (i) grants or constitutes an order for relief, appointment of a trustee, or condemnation or a reorganization plan under the bankruptcy laws of the United States; (ii) approves as properly filed a petition seeking liquidation or reorganization under said bankruptcy laws or any other debtor’s relief law or similar statute of the United States or any state thereof; or (iii) otherwise directs the winding up or liquidation of Tenant; provided, however, if any decree or order was entered without Tenant’s consent or over Tenant’s objection, Landlord may not terminate this Lease pursuant to this Subparagraph if such decree or order is rescinded or reversed within thirty days after its original entry; or

(i) Tenant or any Guarantor of this Lease shall have availed itself of the protection of any debtor’s relief law, moratorium law or other similar law which does not require the prior entry of a decree or order.

(j) Tenant shall be in default of its obligations under any lease between Landlord and Tenant.

12.2 Landlord’s Remedies. In the event of any default by Tenant, and without limiting Landlord’s right to indemnification as provided in Article 8.2, Landlord shall have the following remedies, in addition to all other rights and remedies provided by law or otherwise provided in this Lease, to which Landlord may resort cumulatively, or in the alternative:

(a) Landlord may, at Landlord’s election, keep this Lease in effect and enforce, by an action at law or in equity, all of its rights and remedies under this Lease including, without limitation, (i) the right to recover the rent and other sums as they become due by appropriate legal action, (ii) the right to make payments required by Tenant, or perform Tenant’s obligations and be reimbursed by Tenant for the cost thereof with interest at the then maximum rate of interest not prohibited by law from the date the sum is paid by Landlord until Landlord is reimbursed by Tenant, and (iii) the remedies of injunctive relief and specific performance to prevent Tenant from violating the terms of this Lease and/or to compel Tenant to perform its obligations under this Lease, as the case may be.

(b) Landlord may, at Landlord’s election, terminate this Lease by giving Tenant written notice of termination, in which event this Lease shall terminate on the date set forth for termination in such notice, in which event Tenant shall immediately surrender the Leased Premises to Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any other remedy which it may have for possession or arrearages in rent, enter upon and take possession of the Leased Premises and expel or remove Tenant and any other person who may be occupying the Leased Premises or any part thereof, without being liable for prosecution or any claim or damages therefor. Any termination under this subparagraph shall not relieve Tenant from its obligation to pay to Landlord all Base Monthly Rent and Additional Rent then or thereafter due, or any other sums due or thereafter accruing to Landlord, or from any claim against Tenant for damages previously accrued or then or thereafter accruing. In no event shall any one or more of the following actions by Landlord, in the absence of a written election by Landlord to terminate this Lease constitute a termination of this Lease:

(i) Appointment of a receiver or keeper in order to protect Landlord’s interest hereunder;

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(ii) Consent to any subletting of the Leased Premises or assignment of this Lease by Tenant, whether pursuant to the provisions hereof or otherwise; or

(iii) Any action taken by Landlord or its partners, principals, members, officers, agents, employees, or servants, which is intended to mitigate the adverse effects of any breach of this Lease by Tenant, including, without limitation, any action taken to maintain and preserve the Leased Premises on any action taken to relet the Leased Premises or any portion thereof for the account at Tenant and in the name of Tenant.

(c) In the event Tenant breaches this Lease and abandons the Leased Premises, Landlord may terminate this Lease, but this Lease shall not terminate unless Landlord gives Tenant written notice of termination. If Landlord does not terminate this Lease by giving written notice of termination, Landlord may enforce all its rights and remedies under this Lease, including the right and remedies provided by California Civil Code Section 1951.4 (“lessor may continue lease in effect after lessee’s breach and abandonment and recover rent as it becomes due, if lessee has right to sublet or assign, subject only to reasonable limitations”), as in effect on the Effective Date of this Lease.

(d) In the event Landlord terminates this Lease, Landlord shall be entitled, at Landlord’s election, to the rights and remedies provided in California Civil Code Section 1951.2, as in effect on the Effective Date of this Lease. For purposes of computing damages pursuant to Section 1951.2, an interest rate equal to the maximum rate of interest then not prohibited by law shall be used where permitted. Such damages shall include, without limitation:

(i) The worth at the time of the award of the unpaid rent which had been earned at the time of termination;

(ii) The worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided;

(iii) The worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided, computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco, at the time of award plus one percent; and

(iv) Any other amount necessary to compensate Landlord for all detriment proximately caused by Tenant’s failure to perform Tenant’s obligations under this Lease, or which in the ordinary course of things would be likely to result therefrom, including without limitation, the following: (i) expenses for cleaning, repairing or restoring the Leased Premises, (ii) expenses for altering, remodeling or otherwise improving the Leased Premises for the purpose of reletting, including removal of existing leasehold improvements and/or installation of additional leasehold improvements (regardless of how the same is funded, including reduction of rent, a direct payment or allowance to a new tenant, or otherwise), (iii) broker’s fees allocable to the remainder of the term of this Lease, advertising costs and other expenses of reletting the Leased Premises; (iv) costs of carrying and maintaining the Leased Premises, such as taxes, insurance premiums, utility charges and security precautions, (v) expenses incurred in removing, disposing of and/or storing any of Tenant’s personal property, inventory or trade fixtures remaining therein; (vi) reasonable attorney’s fees, expert witness fees, court costs and other reasonable expenses incurred by Landlord (but not limited to taxable costs) in retaking possession of the Leased Premises, establishing damages hereunder, and releasing the Leased Premises; and (vii) any other expenses, costs or damages otherwise incurred or suffered as a result of Tenant’s default.

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(e) Pursuant to California Code of Civil Procedure Section 1161.1, Landlord may accept a partial payment of Rent after serving a notice pursuant to California Code of Civil Procedure Section 1161, and may without further notice to the Tenant, commence and pursue an action to recover the difference between the amount demanded in that notice and the payment actually received. This acceptance of such a partial payment of Rent does not constitute a waiver of any rights, including any right the Landlord may have to recover possession of the Leased Premises.

12.3 Landlord’s Default And Tenant’s Remedies. In the event Landlord fails to perform its obligations under this Lease, Landlord shall nevertheless not be in default under the terms of this Lease until such time as Tenant shall have first given Landlord written notice specifying the nature of such failure to perform its obligations, and then only after Landlord shall have had thirty (30) days following its receipt of such notice within which to perform such obligations; provided that, if longer than thirty (30) days is reasonably required in order to perform such obligations, Landlord shall have such longer period. In the event of Landlord’s default as above set forth, then, and only then, Tenant may then proceed in equity or at law to compel Landlord to perform its obligations and/or to recover damages proximately caused by such failure to perform (except as and to the extent Tenant has waived its right to damages as provided in this Lease).

12.4 Limitation Of Tenant’s Recourse. Tenant’s sole recourse against Landlord shall be to Landlord’s interest in the Building and the Outside Areas. If Landlord is a corporation, trust, partnership, joint venture, limited liability company, unincorporated association, or other form of business entity, Tenant agrees that (i) the obligations of Landlord under this Lease shall not constitute personal obligations of the officers, directors, trustees, partners, joint venturers, members, managers, owners, stockholders, or other principals of such business entity, and (ii) Tenant shall have recourse only to the interest of such corporation, trust, partnership, joint venture, limited liability company, unincorporated association, or other form of business entity in the Building and the Outside Areas for the satisfaction of such obligations and not against the assets of such officers, directors, trustees, partners, joint venturers, members, managers, owners, stockholders or principals. Additionally, if Landlord is a partnership or limited liability company, then Tenant covenants and agrees:

(a) No partner, manager, or member of Landlord shall be sued or named as a party in any suit or action brought by Tenant with respect to any alleged breach of this Lease (except to the extent necessary to secure jurisdiction over the partnership or limited liability company and then only for that sole purpose);

(b) No service of process shall be made against any partner, manager, or member of Landlord except for the sole purpose of securing jurisdiction over the partnership; and

(c) No writ of execution will ever be levied against the assets of any partner, manager, or member of Landlord other than to the extent of his or her interest in the assets of the partnership or limited liability company constituting Landlord.

Tenant further agrees that each of the foregoing covenants and agreements shall be enforceable by Landlord and by any partner or member of Landlord and shall be applicable to any actual or alleged misrepresentation or nondisclosure made regarding this Lease or the Leased Premises or any actual or alleged failure, default or breach of any covenant or agreement either expressly or implicitly contained in this Lease or imposed by statute or at common law.

12.5 Tenant’s Waiver. Landlord and Tenant agree that the provisions of Paragraph 12.3 above are intended to supersede and replace the provisions of California Civil Code Sections 1932(1), 1941 and 1942, and accordingly, Tenant hereby waives the provisions of California Civil Code Sections 1932(1), 1941 and 1942 and/or any similar or successor law regarding Tenant’s right to terminate this Lease or to make repairs and deduct the expenses of such repairs from the rent due under this Lease.

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ARTICLE 13

GENERAL PROVISIONS

13.1 Taxes On Tenant’s Property. Tenant shall pay before delinquency any and all taxes, assessments, license fees, use fees, permit fees and public charges of whatever nature or description levied, assessed or imposed against Tenant or Landlord by a governmental agency arising out of, caused by reason of or based upon Tenant’s estate in this Lease, Tenant’s ownership of property, improvements made by Tenant to the Leased Premises or the Outside Areas, improvements made by Landlord for Tenant’s use within the Leased Premises or the Outside Areas, Tenant’s use (or estimated use) of public facilities or services or Tenant’s consumption (or estimated consumption) of public utilities, energy, water or other resources (collectively, “Tenant’s Interest”). Upon demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these payments. If any such taxes, assessments, fees or public charges are levied against Landlord, Landlord’s property, the Building or the Property, or if the assessed value of the Building or the Property is increased by the inclusion therein of a value placed upon Tenant’s Interest, regardless of the validity thereof, Landlord shall have the right to require Tenant to pay such taxes, and if not paid and satisfactory evidence of payment delivered to Landlord at least ten days prior to delinquency, then Landlord shall have the right to pay such taxes on Tenant’s behalf and to invoice Tenant for the same, in either case whether before or after the expiration or earlier termination of the Lease Term. Tenant shall, within the earlier to occur of (a) thirty (30) days of the date it receives an invoice from Landlord setting forth the amount of such taxes, assessments, fees, or public charge so levied, or (b) the due date of such invoice, pay to Landlord, as Additional Rent, the amount set forth in such invoice. Failure by Tenant to pay the amount so invoiced within such time period shall be conclusively deemed a default by Tenant under this Lease. Tenant shall have the right to bring suit in any court of competent jurisdiction to recover from the taxing authority the amount of any such taxes, assessments, fees or public charges so paid.

13.2 Holding Over. This Lease shall terminate without further notice on the Lease Expiration Date (as set forth in Article 1). Any holding over by Tenant after expiration of the Lease Term shall neither constitute a renewal nor extension of this Lease nor give Tenant any rights in or to the Leased Premises except as expressly provided in this Paragraph. Any such holding over to which Landlord has consented shall be construed to be a tenancy from month to month, on the same terms and conditions herein specified insofar as applicable, except that the Base Monthly Rent shall be increased to an amount equal to one hundred fifty percent (150%) of the Base Monthly Rent payable during the last full month immediately preceding such holding over. Without limiting the foregoing, in the event of a holding over to which Landlord has consented, any rights of Landlord or obligations of Tenant set forth in this Lease and purporting to apply during the term of this Lease, shall nonetheless also be deemed to apply during any such hold over period. Tenant acknowledges that if Tenant holds over without Landlord’s consent, such holding over may compromise or otherwise affect Landlord’s ability to enter into new leases with prospective tenants regarding the Leased Premises. Therefore, if Tenant fails to surrender the Leased Premises upon the expiration or termination of this Lease, in addition to any other liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless from and against all claims resulting from such failure, including, without limiting the foregoing, any claims made by any succeeding tenant founded upon such failure to surrender, and any losses suffered by Landlord, including lost profits, resulting from such failure to surrender.

13.3 Subordination To Mortgages. This Lease is subject to and subordinate to all ground leases, mortgages and deeds of trust which affect the Building or the Property and which are of public record as of the Effective Date of this Lease, and to all renewals, modifications, consolidations, replacements and

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extensions thereof. However, if the lessor under any such ground lease or any lender holding any such mortgage or deed of trust shall advise Landlord that it desires or requires this Lease to be made prior and superior thereto, then, upon written request of Landlord to Tenant, Tenant shall promptly execute, acknowledge and deliver any and all customary or reasonable documents or instruments which Landlord and such lessor or lender deems necessary or desirable to make this Lease prior thereto. Tenant hereby consents to Landlord’s ground leasing the land underlying the Building or the Property and/or encumbering the Building or the Property as security for future loans on such terms as Landlord shall desire, all of which future ground leases, mortgages or deeds of trust shall be subject to and subordinate to this Lease. However, if any lessor under any such future ground lease or any lender holding such future mortgage or deed of trust shall desire or require that this Lease be made subject to and subordinate to such future ground lease, mortgage or deed of trust, then Tenant agrees, within ten days after Landlord’s written request therefor, to execute, acknowledge and deliver to Landlord any and all documents or instruments requested by Landlord or by such lessor or lender as may be necessary or proper to assure the subordination of this Lease to such future ground lease, mortgage or deed of trust, but only if such lessor or lender agrees not to disturb Tenant’s quiet possession of the Leased Premises so long as Tenant is not in default under this Lease. Tenant’s failure to execute and deliver such documents or instruments within ten business days after Landlord’s request therefor shall be a material default by Tenant under this Lease, and no further notice shall be required under Paragraph 12.1(c) or any other provision of this Lease, and Landlord shall have all of the rights and remedies available to Landlord as Landlord would otherwise have in the case of any other material default by Tenant, it being agreed and understood by Tenant that Tenant’s failure to so deliver such documents or instruments in a timely manner could result in Landlord being unable to perform committed obligations to other third parties which were made by Landlord in reliance upon this covenant of Tenant. If Landlord assigns the Lease as security for a loan, Tenant agrees to execute such documents as are reasonably requested by the lender and to provide reasonable provisions in the Lease protecting such lender’s security interest which are customarily required by institutional lenders making loans secured by a deed of trust, which may include, but shall not be limited to, those provisions listed on Exhibit C attached hereto.

13.4 Tenant’s Attornment Upon Foreclosure. Tenant shall, upon request, attorn (i) to any purchaser of the Building or the Property at any foreclosure sale or private sale conducted pursuant to any security instruments encumbering the Building or the Property, (ii) to any grantee or transferee designated in any deed given in lieu of foreclosure of any security interest encumbering the Building or the Property, or (iii) to the lessor under an underlying ground lease of the land underlying the Building or the Property, should such ground lease be terminated; provided that such purchaser, grantee or lessor recognizes Tenant’s rights under this Lease.

13.5 Mortgagee Protection. In the event of any default on the part of Landlord, Tenant will give notice by registered mail to any Lender or lessor under any underlying ground lease who shall have requested, in writing, to Tenant that it be provided with such notice, and Tenant shall offer such Lender or lessor a reasonable opportunity to cure the default, including time to obtain possession of the Leased Premises by power of sale or judicial foreclosure or other appropriate legal proceedings if reasonably necessary to effect a cure.

13.6 Estoppel Certificate. Tenant will, following any request by Landlord, promptly execute and deliver to Landlord an estoppel certificate substantially in form attached as Exhibit D, (i) certifying that this Lease is unmodified and in full force and effect, or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect, (ii) stating the date to which the rent and other charges are paid in advance, if any, (iii) acknowledging that there are not, to Tenant’s knowledge, any uncured defaults on the part of Landlord hereunder, or specifying such defaults if any are claimed, and (iv) certifying such other information about this Lease as may be reasonably requested by Landlord, its Lender or prospective lenders, investors or purchasers of the Building or the Property. Additionally, upon Landlord’s request, Tenant shall also cause any Guarantor of this Lease to

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execute such estoppel certificate and ratify its guaranty in connection with such estoppel certificate. Tenant’s failure to execute and deliver (and to have caused such Guarantor to execute and deliver) such estoppel certificate within ten business days after Landlord’s request therefor shall be a material default by Tenant under this Lease, and no further notice shall be required under Paragraph 12.1(c) or any other provision of this Lease, and Landlord shall have all of the rights and remedies available to Landlord as Landlord would otherwise have in the case of any other material default by Tenant, it being agreed and understood by Tenant that Tenant’s failure to so deliver such estoppel certificate in a timely manner could result in Landlord being unable to perform committed obligations to other third parties which were made by Landlord in reliance upon this covenant of Tenant. Landlord and Tenant intend that any statement delivered pursuant to this paragraph may be relied upon by any Lender or purchaser or prospective Lender or purchaser of the Building, the Property, or any interest in them.

13.7 Tenant’s Financial Information. Tenant shall, within ten business days after Landlord’s request therefor, deliver to Landlord a copy of Tenant’s (and any guarantor’s) current financial statements (including a balance sheet, income statement and statement of cash flow, all prepared in accordance with generally accepted accounting principles), a list of all of Tenant’s creditors with current contact information, and any such other information reasonably requested by Landlord regarding Tenant’s financial condition. Landlord shall be entitled to disclose such financial statements or other information to its Lender, to any present or prospective principal of or investor in Landlord, or to any prospective Lender or purchaser of the Building, the Property, or any portion thereof or interest therein. Any such financial statement or other information which is marked “confidential” or “company secrets” (or is otherwise similarly marked by Tenant) shall be confidential and shall not be disclosed by Landlord to any third party except as specifically provided in this paragraph, unless the same becomes a part of the public domain without the fault of Landlord.

13.8 Transfer By Landlord. Landlord and its successors in interest shall have the right to transfer their interest in the Building, the Property, or any portion thereof at any time and to any person or entity. In the event of any such transfer, the Landlord originally named herein (and in the case of any subsequent transfer, the transferor), from the date of such transfer, shall be automatically relieved, without any further act by any person or entity, of all liability for (i) the performance of the obligations of the Landlord hereunder which may accrue after the date of such transfer, and (ii) repayment of any unapplied portion of the Security Deposit (upon transferring or crediting the same to the transferee), and (iii) the performance of the obligations of the Landlord hereunder which have accrued before the date of transfer if its transferee agrees to assume and perform all such prior obligations of the Landlord hereunder. Tenant shall attorn to any such transferee. After the date of any such transfer, the term “Landlord” as used herein shall mean the transferee of such interest in the Building or the Property.

13.9 Force Majeure. Any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, acts of war, terrorist acts, inability to obtain services, labor, or materials or reasonable substitutes therefor, governmental actions, civil commotions, fire or other casualty, and other causes beyond the reasonable control of the party obligated to perform, except with respect to the obligations imposed with regard to Rent and other charges to be paid by Tenant pursuant to this Lease (collectively, a “Force Majeure”), notwithstanding anything to the contrary contained in this Lease, shall excuse the performance of such party for a period equal to any such prevention, delay or stoppage and, therefore, if this Lease specifies a time period for performance of an obligation of either party, that time period shall be extended by the period of any delay in such party’s performance caused by a Force Majeure.

13.10 Notices. Any notice required or permitted to be given under this Lease other than statutory notices shall be in writing and (i) personally delivered, (ii) sent by United States mail, registered or certified mail, postage prepaid, return receipt requested, (iii) sent by Federal Express or similar nationally recognized overnight courier service, or (iv) transmitted by facsimile with a hard copy sent within one (1) business day by any of the foregoing means, and in all cases addressed as follows, and such notice shall

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be deemed to have been given upon the date of actual receipt or delivery (or refusal to accept delivery) at the address specified below (or such other addresses as may be specified by notice in the foregoing manner) as indicated on the return receipt or air bill:

If to Landlord:	529 Bryant Street Partners LLC
	490 California Avenue
	4th Floor
	Palo Alto, California 94306
	Attention: Henry Bullock/Richard Holmstrom
	Facsimile: (650) 326-9333
with a copy to:	Cooley Godward LLP
	One Maritime Plaza
	20th Floor
	San Francisco, California 94111
	Attention: Paul Churchill
	Facsimile: (415) 951-3699
If to Tenant:	Switch & Data CA Nine, LLC
	1715 Westshore Boulevard
	Suite 650
	Tampa, Florida 33607
	Attention: Legal Department
	Facsimile: (813) 207-7701
with a copy to:	Switch & Data Facilities Company, Inc.
	1715 N. Westshore Boulevard
	Suite 650
	Tampa, Florida 33607
	Attention: Glenn Todd
	Facsimile: (813) 281-4511

Any notice given in accordance with the foregoing shall be deemed received upon actual receipt or refusal to accept delivery. Any statutory notice shall be given and deemed received in accordance with the applicable statute or as otherwise provided by law.

13.11 Attorneys’ Fees and Costs. In the event any party shall bring any action, arbitration, or other proceeding alleging a breach of any provision of this Lease, or a right to recover rent, to terminate this Lease, or to enforce, protect, interpret, determine, or establish any provision of this Lease or the rights or duties hereunder of either party, the prevailing party shall be entitled to recover from the non-prevailing party as a part of such action or proceeding, or in a separate action for that purpose brought within one year from the determination of such proceeding, reasonable attorneys’ fees, expert witness fees, court costs and reasonable disbursements, made or incurred by the prevailing party.

13.12 Definitions. Any term that is given a special meaning by any provision in this Lease shall, unless otherwise specifically stated, have such meaning wherever used in this Lease or in any Addenda or amendment hereto. In addition to the terms defined in Article 1, the following terms shall have the following meanings:

(a) Real Property Taxes. The term “Real Property Tax” or “Real Property Taxes” shall each mean Tenant’s Expense Share of the following (to the extent applicable to any portion of the Lease Term, regardless of when the same are imposed, assessed, levied, or otherwise charged): (i) all taxes,

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assessments, levies and other charges of any kind or nature whatsoever, general and special, foreseen and unforeseen (including all installments of principal and interest required to pay any general or special assessments for public improvements and any increases resulting from reassessments caused by any change in ownership or new construction), now or hereafter imposed by any governmental or quasi-governmental authority or special district having the direct or indirect power to tax or levy assessments, which are levied or assessed for whatever reason against the Property or any portion thereof, or Landlord’s interest herein, or the fixtures, equipment and other property of Landlord that is an integral part of the Property and located thereon, or Landlord’s business of owning, leasing or managing the Property or the gross receipts, income or rentals from the Property, (ii) all charges, levies or fees imposed by any governmental authority against Landlord by reason of or based upon the use of or number of parking spaces within the Property, the amount of public services or public utilities used or consumed (e.g. water, gas, electricity, sewage or waste water disposal) at the Property, the number of persons employed by tenants of the Property, the size (whether measured in area, volume, number of tenants or whatever) or the value of the Property, or the type of use or uses conducted within the Property, and all costs and fees (including attorneys’ fees) reasonably incurred by Landlord in contesting any Real Property Tax and in negotiating with public authorities as to any Real Property Tax. If, at any time during the Lease Term, the taxation or assessment of the Property prevailing as of the Effective Date of this Lease shall be altered so that in lieu of or in addition to any the Real Property Tax described above there shall be levied, awarded or imposed (whether by reason of a change in the method of taxation or assessment, creation of a new tax or charge, or any other cause) an alternate, substitute, or additional use or charge (i) on the value, size, use or occupancy of the Property or Landlord’s interest therein or (ii) on or measured by the gross receipts, income or rentals from the Property, or on Landlord’s business of owning, leasing or managing the Property or (iii) computed in any manner with respect to the operation of the Property, then any such tax or charge, however designated, shall be included within the meaning of the terms “Real Property Tax” or “Real Property Taxes” for purposes of this Lease. If any Real Property Tax is partly based upon property or rents unrelated to the Property, then only that part of such Real Property Tax that is fairly allocable to the Property shall be included within the meaning of the terms “Real Property Tax” or “Real Property Taxes.” Notwithstanding the foregoing, the terms “Real Property Tax” or “Real Property Taxes” shall not include estate, inheritance, transfer, gift or franchise taxes of Landlord or the federal or state income tax imposed on Landlord’s income from all sources.

(b) Landlord’s Insurance Costs. The term “Landlord’s Insurance Costs” shall mean Tenant’s Expense Share of the following (to the extent applicable to any portion of the Lease Term, regardless of when the same are incurred): the costs to Landlord to carry and maintain the policies of fire and property damage insurance for the Building and the Property and general liability and any other insurance required or permitted to be carried by Landlord pursuant to Article 9, together with any deductible amounts paid by Landlord upon the occurrence of any insured casualty or loss. In the event any Landlord’s Insurance Cost relates solely to the Building and not to any other portion of the Property, then Tenant’s Expense Share with respect to such Landlord’s Insurance Cost shall be deemed to be the percentage obtained by dividing the rentable square footage of the Leased Premises at the time of calculation by the rentable square footage of the Building at the time of calculation. Such percentage is currently 100%. In the event the rentable square footage of the Leased Premises or the Building is changed, the foregoing deemed Tenant’s Expense Share shall be recalculated so that the aggregate deemed Tenant’s Expense Share of all tenants in the Building shall equal 100%.

(c) Property Maintenance Costs. The term “Property Maintenance Costs” shall mean Tenant’s Expense Share of all costs and expenses (except Landlord’s Insurance Costs and Real Property Taxes) paid or incurred by Landlord in protecting, operating, maintaining, repairing and preserving the Property and all parts thereof (without in any way implying that Landlord has any such obligations). Such percentage is currently 100%. In the event the rentable square footage of the Leased Premises or the Building is changed, the foregoing deemed Tenant’s Expense Share shall be recalculated so that the aggregate deemed Tenant’s Expense Share of all tenants in the Building shall equal 100%. Landlord agrees that Tenant’s responsibility for property management fees incurred by Landlord shall not exceed two percent (2%) of the Rent.

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(d) Property Operating Expenses. The term “Property Operating Expenses” shall mean and include all Real Property Taxes, plus all Landlord’s Insurance Costs, plus all Property Maintenance Costs.

(e) Law. The term “Law” shall mean any judicial decisions and any statute, constitution, ordinance, resolution, regulation, rule, administrative order, or other requirements of any municipal, county, state, federal, or other governmental agency or authority having jurisdiction over the parties to this Lease, the Leased Premises, the Building or the Property, or any of them, in effect either at the Effective Date of this Lease or at any time during the Lease Term, including, without limitation, any regulation, order, or policy of any quasi-official entity or body (e.g. a board of fire examiners or a public utility or special district).

(f) Lender. The term “Lender” shall mean the holder of any promissory note or other evidence of indebtedness secured by the Property or any portion thereof.

(g) Restrictions. The term “Restrictions” shall mean (as they may exist from time to time) any and all covenants, conditions and restrictions, private agreements, easements, and any other recorded documents or instruments affecting the use of the Property, the Building, the Leased Premises, or the Outside Areas.

(h) Rent. The term “Rent” shall mean collectively Base Monthly Rent and all Additional Rent.

13.13 General Waivers. One party’s consent to or approval of any act by the other party requiring the first party’s consent or approval shall not be deemed to waive or render unnecessary the first party’s consent to or approval of any subsequent similar act by the other party. No waiver of any provision hereof, or any waiver of any breach of any provision hereof, shall be effective unless in writing and signed by the waiving party. The receipt by Landlord of any rent or payment with or without knowledge of the breach of any other provision hereof shall not be deemed a waiver of any such breach. No waiver of any provision of this Lease shall be deemed a continuing waiver unless such waiver specifically states so in writing and is signed by both Landlord and Tenant. No delay or omission in the exercise of any right or remedy accruing to either party upon any breach by the other party under this Lease shall impair such right or remedy or be construed as a waiver of any such breach theretofore or thereafter occurring. The waiver by either party of any breach of any provision of this Lease shall not be deemed to be a waiver of any subsequent breach of the same or any other provisions herein contained.

13.14 Miscellaneous. Should any provisions of this Lease prove to be invalid or illegal, such invalidity or illegality shall in no way affect, impair or invalidate any other provisions hereof, and such remaining provisions shall remain in full force and effect. Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor. Any copy of this Lease which is executed by the parties shall be deemed an original for all purposes. This Lease shall, subject to the provisions regarding assignment, apply to and bind the respective heirs, successors, executors, administrators and assigns of Landlord and Tenant. The benefit of each indemnity obligation of Tenant under this Lease is assignable in whole or in part by Landlord. The term “party” shall mean Landlord or Tenant as the context implies. If Tenant consists of more than one person or entity, then all members of Tenant shall be jointly and severally liable hereunder. Submission of this Lease for review, examination or signature by Tenant does not constitute an offer to lease, a reservation of or an option for lease, and notwithstanding any inconsistent language contained in any other document, this Lease is not effective as a lease or otherwise until execution and delivery by both Landlord and Tenant. This Lease shall be

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construed and enforced in accordance with the Laws of the State in which the Leased Premises are located. The captions in this Lease are for convenience only and shall not be construed in the construction or interpretation of any provision hereof. When the context of this Lease requires, the neuter gender includes the masculine, the feminine, a partnership, corporation, limited liability company, joint venture, or other form of business entity, and the singular includes the plural. The terms “must,” “shall,” “will,” and “agree” are mandatory. The term “may” is permissive. The term “governmental agency” or “governmental authority” or similar terms shall include, without limitation, all federal, state, city, local and other governmental and quasi-governmental agencies, authorities, bodies, boards, etc., and any party or parties having enforcement rights under any Restrictions. When a party is required to do something by this Lease, it shall do so at its sole cost and expense without right of reimbursement from the other party unless specific provision is made therefor. Where Landlord’s consent is required hereunder, the consent of any Lender shall also be required. Landlord and Tenant shall both be deemed to have drafted this Lease, and the rule of construction that a document is to be construed against the drafting party shall not be employed in the construction or interpretation of this Lease. Where Tenant is obligated not to perform any act or is not permitted to perform any act, Tenant is also obligated to restrain any others reasonably within its control, including agents, invitees, contractors, subcontractors and employees, from performing such act. Landlord shall not become or be deemed a partner or a joint venturer with Tenant by reason of any of the provisions of this Lease.

ARTICLE 14

CORPORATE AUTHORITY BROKERS AND ENTIRE AGREEMENT

14.1 Corporate Authority. If Tenant is a corporation, each individual executing this Lease on behalf of such corporation represents and warrants that Tenant is validly formed and duly authorized and existing, that Tenant is qualified to do business in the State in which the Leased Premises are located, that Tenant has the full right and legal authority to enter into this Lease, and that he or she is duly authorized to execute and deliver this Lease on behalf of Tenant in accordance with its terms. Tenant shall, within three (3) business days after execution of this Lease, deliver to Landlord a certified copy of the resolution of its board of directors authorizing or ratifying the execution of this Lease, as well as a certified copy of binding resolutions of any guarantor in form reasonably acceptable to Landlord, authorizing or ratifying the execution of the applicable guaranty, and if Tenant fails to do so, the same shall be a material default on the part of Tenant permitting Landlord at its sole election to terminate this Lease.

14.2 Brokerage Commissions. Tenant represents, warrants and agrees that it has not had any dealings with any real estate broker(s), leasing agent(s), finder(s) or salesmen, other than the Brokers (as named in Article 1) with respect to the lease by it of the Leased Premises pursuant to this Lease, and that it will indemnify, defend with competent counsel, and hold Landlord harmless from any liability for the payment of any real estate brokerage commissions, leasing commissions or finder’s fees claimed by any other real estate broker(s), leasing agent(s), finder(s), or salesmen to be earned or due and payable by reason of Tenant’s agreement or promise (implied or otherwise) to pay (or to have Landlord pay) such a commission or finder’s fee by reason of its leasing the Leased Premises pursuant to this Lease. Notwithstanding any provision of this Lease to the contrary, Landlord shall not pay any leasing commission or compensation of any kind or type in connection with an extension of the term of this Lease, an expansion of the Leased Premises, a lease or sublease of any other premises leased by Tenant pursuant to any right of first offer or right of first refusal or other similar right granted to Tenant.

14.3 Entire Agreement. This Lease and the Exhibits (as described in Article 1), which Exhibits are by this reference incorporated herein, constitute the entire agreement between the parties, and there are no other agreements, understandings or representations between the parties relating to the lease by Landlord of the Leased Premises to Tenant, except as expressed herein. No subsequent changes, modifications or additions to this Lease shall be binding upon the parties unless in writing and signed by both Landlord and Tenant.

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14.4 Landlord’s Representations. Tenant acknowledges that neither Landlord nor any of its agents made any representations or warranties respecting the Property, the Building or the Leased Premises, upon which Tenant relied in entering into the Lease, which are not expressly set forth in this Lease. Tenant further acknowledges that neither Landlord nor any of its agents made any representations as to (i) whether the Leased Premises may be used for Tenant’s intended use under existing Law, or (ii) the suitability of the Leased Premises for the conduct of Tenant’s business, or (iii) the exact square footage of the Leased Premises, and that Tenant relies solely upon its own investigations with respect to such matters. Tenant expressly waives any and all claims for damage by reason of any statement, representation, warranty, promise or other agreement of Landlord or Landlord’s agent(s), if any, not contained in this Lease or in any Exhibit attached hereto.

ARTICLE 15

OPTION TO EXTEND

15.1 So long as Switch and Data CA Nine LLC, a Delaware limited liability company, is the Tenant hereunder and occupies the entirety of the Leased Premises, and subject to the condition set forth in clause (b) below, Tenant shall have one option to extend the term of this Lease with respect to the entirety of the Leased Premises, for a period of ten (10) years from the expiration of the 240th month of the initial Lease Term (the “Extension Period”), subject to the following conditions:

(a) Such option to extend shall be exercised, if at all, by notice of exercise given to Landlord by Tenant not more than 360 days nor less than 270 days prior to the expiration of the 240th month of the Lease Term;

(b) Anything herein to the contrary notwithstanding, if Tenant is in default under any of the terms, covenants or conditions of this Lease, either at the time Tenant exercises the extension option or on the commencement date of the Extension Period, Landlord shall have, in addition to all of Landlord’s other rights and remedies provided in this Lease, the right to terminate such option to extend upon notice to Tenant.

15.2 In the event the option is exercised in a timely fashion, the Lease shall be extended for the term of the Extension Period upon all of the terms and conditions of this Lease, provided that the Base Monthly Rent for the Extension Period shall be the “Fair Market Rent” for the Leased Premises, increased as set forth below. For purposes hereof, “Fair Market Rent” shall mean 95% of the Base Monthly Rent determined pursuant to the process described below. In no event, however, shall any adjustment of Base Monthly Rent pursuant to this paragraph result in a decrease of the Base Monthly Rent for the Leased Premises below the amount due from Tenant for the preceding portion of the initial Lease Term for which Base Monthly Rent had been fixed. At the end of the first 12 month period of the Extension Period, Base Monthly Rent shall be increased to reflect the change in the Consumer Price Index for the San Francisco Metropolitan Area, All Items (the “CPI”), for the 12-month period ending 11 months after the commencement of the Extension Period, but in no event shall Base Monthly Rent be increased less than 3% per annum compounded annually nor more than 6% per annum compounded annually for such 12 month period. Base Monthly Rent shall be so adjusted at the end of each subsequent 12-month period during the Extension Period. No leasing commissions shall be due or payable to any broker retained by Tenant with regard to this Lease for the Extension Period.

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15.3 Within thirty (30) days after receipt of Tenant’s notice of exercise, Landlord shall notify Tenant in writing of Landlord’s estimate of the Base Monthly Rent for the Extension Period, based on the provisions of Paragraph 15.2 above. Within thirty (30) days after receipt of such notice from Landlord, Tenant shall have the right either to (i) accept Landlord’s statement of Base Monthly Rent as the Base Monthly Rent for the Extension Period; or (ii) elect to arbitrate Landlord’s estimate of Fair Market Rent, such arbitration to be conducted pursuant to the provisions hereof. Failure on the part of Tenant to require arbitration of Fair Market Rent within such 30-day period shall constitute acceptance of the Base Monthly Rent for the Extension Period as calculated by Landlord. If Tenant elects arbitration, the arbitration shall be concluded within 90 days after the date of Tenant’s election, subject to extension for an additional 30-day period if a third arbitrator is required and does not act in a timely manner. To the extent that arbitration has not been completed prior to the expiration of any preceding period for which Base Monthly Rent has been determined, Tenant shall pay Base Monthly Rent at the rate calculated by Landlord, with the potential for an adjustment to be made once Fair Market Rent is ultimately determined by arbitration.

15.4 In the event of arbitration, the judgment or the award rendered in any such arbitration may be entered in any court having jurisdiction and shall be final and binding between the parties. The arbitration shall be conducted and determined in the City and County of San Francisco in accordance with the then prevailing rules of the American Arbitration Association or its successor for arbitration of commercial disputes except to the extent that the procedures mandated by such rules shall be modified as follows:

(a) Tenant shall make demand for arbitration in writing within thirty (30) days after service of Landlord’s determination of Fair Market Rent given under Paragraph 15.3 above, specifying therein the name and address of the person to act as the arbitrator on its behalf. The arbitrator shall be qualified as a real estate appraiser familiar with the Fair Market Rent of similar industrial, research and development, or office space in the Silicon Valley area who would qualify as an expert witness over objection to give opinion testimony addressed to the issue in a court of competent jurisdiction. Failure on the part of Tenant to make a proper demand in a timely manner for such arbitration shall constitute a waiver of the right thereto. Within fifteen (15) days after the service of the demand for arbitration, Landlord shall give notice to Tenant, specifying the name and address of the person designated by Landlord to act as arbitrator on its behalf who shall be similarly qualified. If Landlord fails to notify Tenant of the appointment of its arbitrator, within or by the time above specified, then the arbitrator appointed by Tenant shall be the arbitrator to determine the issue.

(b) In the event that two arbitrators are chosen pursuant to Paragraph 15.4(a) above, the arbitrators so chosen shall, within fifteen (15) days after the second arbitrator is appointed determine the Fair Market Rent. If the two arbitrators shall be unable to agree upon a determination of Fair Market Rent within such 15-day period, they, themselves, shall appoint a third arbitrator, who shall be a competent and impartial person with qualifications similar to those required of the first two arbitrators pursuant to Paragraph 15.4(a). In the event they are unable to agree upon such appointment within seven days after expiration of such 15-day period, the third arbitrator shall be selected by the parties themselves, if they can agree thereon, within a further period of fifteen (15) days. If the parties do not so agree, then either party, on behalf of both, may request appointment of such a qualified person by the then Presiding Judge of the California Superior Court having jurisdiction over the County of Santa Clara, acting in his or her private and not in his or her official capacity, and the other party shall not raise any question as to such Judge’s full power and jurisdiction to entertain the application for and make the appointment. The three arbitrators shall decide the dispute if it has not previously been resolved by following the procedure set forth below.

(c) Where an issue cannot be resolved by agreement between the two arbitrators selected by Landlord and Tenant or settlement between the parties during the course of arbitration, the issue shall be

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resolved by the three arbitrators within 15 days of the appointment of the third arbitrator in accordance with the following procedure. The arbitrator selected by each of the parties shall state in writing his determination of the Fair Market Rent supported by the reasons therefor with counterpart copies to each party. The arbitrators shall arrange for a simultaneous exchange of such proposed resolutions. The role of the third arbitrator shall be to select which of the two proposed resolutions most closely approximates his determination of Fair Market Rent. The third arbitrator shall have no right to propose a middle ground or any modification of either of the two proposed resolutions. The resolution he chooses as most closely approximating his determination shall constitute the decision of the arbitrators and be final and binding upon the parties.

(d) In the event of a failure, refusal or inability of any arbitrator to act, his successor shall be appointed by him, but in the case of the third arbitrator, his successor shall be appointed in the same manner as provided for appointment of the third arbitrator. The arbitrators shall decide the issue within fifteen (15) days after the appointment of the third arbitrator. Any decision in which the arbitrator appointed by Landlord and the arbitrator appointed by Tenant concur shall be binding and conclusive upon the parties. Each party shall pay the fee and expenses of its respective arbitrator and both shall share the fee and expenses of the third arbitrator, if any, and the attorneys’ fees and expenses of counsel for the respective parties and of witnesses shall be paid by the respective party engaging such counsel or calling such witnesses.

(e) The arbitrators shall have the right to consult experts and competent authorities to obtain factual information or evidence pertaining to a determination of Fair Market Rent, but any such consultation shall be made in the presence of both parties with full right on their part to cross-examine. The arbitrators shall render their decision and award in writing with counterpart copies to each party. The arbitrators shall have no power to modify the provisions of this Lease.

ARTICLE 16

TELEPHONE SERVICE

Notwithstanding any other provision of this Lease to the contrary:

(a) So long as the entirety of the Leased Premises is leased to Tenant:

(i) Landlord shall have no responsibility for providing to Tenant any telephone equipment, including wiring, within the Leased Premises or for providing telephone service or connections from the utility to the Leased Premises; and

(ii) Landlord makes no warranty as to the quality, continuity or availability of the telecommunications services in the Building, and Tenant hereby waives any claim against Landlord for any actual or consequential damages (including damages for loss of business) in the event Tenant’s telecommunications services in any way are interrupted, damaged or rendered less effective, except to the extent caused by the active gross negligence or willful misconduct of Landlord, its agents or employees. Tenant accepts the telephone equipment (including, without limitation, the INC, as defined below) in its “AS-IS” condition, and Tenant shall be solely responsible for contracting with a reliable third party vendor to assume responsibility for the maintenance and repair thereof (which contract shall contain provisions requiring such vendor to inspect the INC periodically (the frequency of such inspections to be determined by such vendor based on its experience and professional judgment), and requiring such vendor to meet local and federal requirements for telecommunications material and workmanship). Landlord shall not be liable to Tenant and Tenant waives all claims against Landlord whatsoever, whether for personal injury, property damage, loss of use of the Leased Premises, or otherwise, due to the interruption or failure of telephone services to the Leased Premises. Tenant hereby holds Landlord

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harmless and agrees to indemnify, protect and defend Landlord from and against any liability for any damage, loss or expense due to any failure or interruption of telephone service to the Leased Premises for any reason. Tenant agrees to obtain loss of rental insurance adequate to cover any damage, loss or expense occasioned by the interruption of telephone service.

(b) At such time as the entirety of the Leased Premise is no longer leased to Tenant, Landlord shall in its sole discretion have the right, by written notice to Tenant, to elect to assume limited responsibility for INC, as provided below, and upon such assumption of responsibility by Landlord, this subparagraph (b) shall apply prospectively.

(i) Landlord shall provide Tenant access to such quantity of pairs in the Building intra-building network cable (“INC”) as is determined to be available by Landlord in its reasonable discretion. Tenant’s access to the INC shall be solely by arrangements made by Tenant, as Tenant may elect, directly with Pacific Bell or Landlord (or such vendor as Landlord may designate), and Tenant shall pay all reasonable charges as may be imposed in connection therewith. Pacific Bell’s charges shall be deemed to be reasonable. Subject to the foregoing, Landlord shall have no responsibility for providing to Tenant any telephone equipment, including wiring, within the Leased Premises or for providing telephone service or connections from the utility to the Leased Premises, except as required by law.

(ii) Tenant shall not alter, modify, add to or disturb any telephone wiring in the Leased Premises or elsewhere in the Building without the Landlord’s prior written consent. Tenant shall be liable to Landlord for any damage to the telephone wiring in the Building due to the act, negligent or otherwise, of Tenant or any employee, contractor or other agent of Tenant. Tenant shall have no access to the telephone closets within the Building, except in the manner and under procedures established by Landlord. Tenant shall promptly notify Landlord of any actual or suspected failure of telephone service to the Leased Premises.

(iii) All costs incurred by Landlord for the installation, maintenance, repair and replacement of telephone wiring in the Building shall be a Property Maintenance Cost.

(iv) Landlord makes no warranty as to the quality, continuity or availability of the telecommunications services in the Building, and Tenant hereby waives any claim against Landlord for any actual or consequential damages (including damages for loss of business) in the event Tenant’s telecommunications services in any way are interrupted, damaged or rendered less effective, except to the extent caused by the active gross negligence or willful misconduct of Landlord, its agents or employees. Tenant acknowledges that Landlord meets its duty of care to Tenant with respect to the Building INC by contracting with a reliable third party vendor to assume responsibility for the maintenance and repair thereof (which contract shall contain provisions requiring such vendor to inspect the INC periodically (the frequency of such inspections to be determined by such vendor based on its experience and professional judgment), and requiring such vendor to meet local and federal requirements for telecommunications material and workmanship). Subject to the foregoing, Landlord shall not be liable to Tenant and Tenant waives all claims against Landlord whatsoever, whether for personal injury, property damage, loss of use of the Leased Premises, or otherwise, due to the interruption or failure of telephone services to the Leased Premises. Tenant hereby holds Landlord harmless and agrees to indemnify, protect and defend Landlord from and against any liability for any damage, loss or expense due to any failure or interruption of telephone service to the Leased Premises for any reason. Tenant agrees to obtain loss of rental insurance adequate to cover any damage, loss or expense occasioned by the interruption of telephone service.

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ARTICLE 17

RIGHT OF FIRST OFFER

17.1 So long as Switch and Data CA Nine LLC, a Delaware limited liability company, is the Tenant hereunder and occupies the entirety of the Leased Premises, and subject to the conditions set forth below, Tenant shall have a one-time right of first offer as described below (“ROFO”) to purchase the Property, subject to the following conditions:

(a) The ROFO shall in no event be applicable or effective if Landlord is marketing the Property for sale; and

(b) The ROFO shall apply and be effective only if (a) Landlord is not marketing the Property for sale, and (b) Landlord receives an unsolicited purchase offer from a third party in the same co-location business as Tenant, who is a competitor of Tenant’s, which offer Landlord is otherwise willing to accept (the “Acceptable Unsolicited Offer”); and

(c) Anything herein to the contrary notwithstanding, if Tenant is in default under any of the terms, covenants or conditions of this Lease, either at the time Landlord delivers the ROFO Notice (as defined below) to Tenant or during any ensuing negotiations, Landlord shall have, in addition to all of Landlord’s other rights and remedies provided in this Lease, the right to terminate the ROFO upon notice to Tenant.

17.2 Tenant’s sole rights pursuant to the ROFO shall be as follows:

(a) Prior to accepting the Acceptable Unsolicited Offer, Landlord shall deliver a written notice (the “ROFO Notice”) to Tenant notifying Tenant that Landlord has received the Acceptable Unsolicited Offer. Landlord shall not be required to disclose to Tenant any of the terms of the Acceptable Unsolicited Offer.

(b) Upon receipt of the ROFO Notice, Tenant shall have seventy-two (72) hours to deliver Tenant’s written offer to Landlord to purchase the Property (the “ROFO Offer”).

(c) Failure by Tenant to deliver the ROFO Offer to Landlord on or prior to the end of such 72-hour period, or delivery of a notice stating that Tenant does not desire to make an offer to purchase the Property, shall constitute a waiver (“Waiver”). Upon rejection of Tenant’s offer or Waiver, Landlord shall be free to convey the Property or any portion thereof, free of all restrictions contained herein, and the ROFO shall terminate and be of no further force and effect and shall not bind the Property in any way. In such event, if Landlord so requests at any time, Tenant shall execute and deliver to Landlord a document in recordable form quitclaiming Tenant’s rights under this Article 17.

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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the respective dates below set forth with the intent to be legally bound thereby as of the Effective Date of this Lease first above set forth.

		LANDLORD:
		529 BRYANT STREET PARTNERS LLC, a Delaware limited liability company
		By:	529 Bryant Street Corporation, a
			Delaware corporation
Dated:	[Blank]		By:	/s/ Richard Holmstrom
				Richard J. Holmstrom, Vice President
		TENANT:
		SWITCH AND DATA CA NINE LLC, a Delaware limited liability company
Dated:	Feb. 7, 2005	By:	/s/ Keith Olsen
		Title:	Authorized Representative
Dated:	Feb. 7, 2005	By:	/s/ George Pollock, Jr.
		Title:	Authorized Representative

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EXHIBIT A

SITE PLAN

[DEPICTION OF SITE PLAN]

EXHIBIT B

WORK LETTER

THIS TENANT WORK LETTER (“Work Letter”) sets forth the agreement of Landlord and Tenant with respect to the improvements to be constructed in the Leased Premises, as defined in the Lease to which this Work Letter is attached as an exhibit. In the event of any inconsistency between the terms of this Work Letter and the terms of the Lease, the terms of the Lease shall control. All defined terms used herein shall have the meanings set forth in the Lease, unless otherwise defined in this Work Letter.

1. Improvement Work. Tenant shall construct, furnish or install all improvements, equipment or fixtures, that are necessary for Tenant’s use and occupancy of the entirety of the Leased Premises (the “Improvement Work”). Tenant shall complete construction of the Improvement Work for the entirety of the Leased Premises no later than                     , 200  , subject to delays caused by Force Majeure. Tenant shall also be responsible for the cost of any alterations to the Building required as a result of the Improvement Work. The Improvement Work shall be in conformity with drawings and specifications submitted to and approved by Landlord and shall be performed in accordance with the following provisions:

(a) Tenant shall prepare and submit to Landlord for its approval two sets of fully dimensioned scale drawings (suitable for submission with a building permit application) for the Improvement Work (including plans, elevations, critical sections and details) and a specification of Tenant’s utility requirements. Tenant shall cause all drawings and specifications for the Improvement Work to be prepared by licensed architects and where appropriate, mechanical, electrical and structural engineers.

(b) Within 10 days after receipt of Tenant’s drawings Landlord shall return one set of prints thereof with Landlord’s approval and/or suggested modifications noted thereon. If Landlord has approved Tenant’s drawings subject to modifications, such modifications shall be deemed to be acceptable to and approved by Tenant unless Tenant shall prepare and resubmit revised drawings for further consideration by Landlord. If Landlord has suggested modifications without approving Tenant’s drawings Tenant shall prepare and resubmit revised drawings within seven days for consideration by Landlord. All revised drawings shall be submitted, with changes highlighted, to Landlord within seven days following Landlord’s return to Tenant of the drawings originally submitted, and Landlord shall approve or disapprove such revised drawings within seven days following receipt of the same.

(c) Tenant shall obtain all building and other permits necessary in connection with the Improvement Work prior to the commencement of such work, and in any event no later than                     , 200  . The Improvement Work shall (i) be constructed in compliance with all of the terms and conditions of the Lease and with all applicable laws and regulations, (ii) not involve changes to structural components of the Building nor involve any floor, roof, or wall penetrations unless approved by Landlord, and (iii) not require any material modifications of the Building’s mechanical or electrical systems unless approved by Landlord.

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(d) Tenant may in its sole discretion competitively bid the Improvement Work with qualified general contractors reasonably approved by Landlord, and then select the successful bidder to be the general contractor for the Improvement Work. Landlord will not charge a construction management fee, supervision fee, or plan review fee, except as it relates to supervision and/or monitoring of any specialized aspects of the Improvement Work. Landlord will not specify subcontractors except, if Landlord so chooses, it may specify engineers for the mechanical, electrical, and plumbing aspects of the Improvement Work, which engineers may, at Tenant’s option, be subject to a competitive bidding process. If Landlord in its sole discretion requires any payment or performance bonds in connection with the Improvement Work, Landlord shall pay the cost of such bonds. Prior to commencing construction, Tenant shall deliver to Landlord the following:

(i) The address of Tenant’s general contractor (who shall be subject to Landlord’s reasonable approval in writing), and the names of the primary subcontractors Tenant’s contractor intends to engage for the construction of the Premises.

(ii) The actual commencement date of construction and the estimated date of completion of the work, including fixturization.

(iii) Evidence of insurance as called for hereinbelow.

(iv) An executed copy of the applicable building permit for such work.

(e) After final approval of Tenant’s drawings by Landlord, Tenant shall proceed promptly to commence performance of the Improvement Work. Tenant’s contractors and subcontractors shall be acceptable to and approved in writing by Landlord, which approval shall not be unreasonably withheld or delayed, and shall, at Landlord’s option, be subject to administrative supervision by Landlord in their use of the Building. Tenant shall furnish to Landlord a copy of the executed contract between Tenant and Tenant’s general contractor covering all of Tenant’s obligations under this Work Letter. Tenant shall use commercially reasonable efforts to cause such work to be performed in as efficient a manner as is commercially reasonable. Tenant shall reimburse Landlord on demand for the cost of repairing any damage to the Building caused by Tenant or its contractors during performance of the Improvement Work. Tenant’s contractors shall conduct their work and employ labor in such manner as to maintain harmonious labor relations. Tenant’s general contractor (“Contractor”) shall obtain a builder’s risk policy of insurance in an amount and form and issued by a carrier reasonably satisfactory to Landlord, and Tenant’s general contractor and subcontractors shall carry worker’s compensation insurance for their employees as required by law. The builder’s risk policy of insurance shall name Landlord as an additional insured and shall not be cancellable without at least 30 days’ prior written notice to Landlord.

(f) Any changes in the Improvement Work from the final drawings approved by Landlord shall be subject to Landlord’s prior written approval, which shall not be unreasonably withheld. Any deviation in construction from the design specifications and criteria set forth herein or from Tenant’s plans and specifications as approved by Landlord shall constitute a default for which Landlord may, within ten (10) days after giving written notice to Tenant, elect to exercise the remedies available in the event of default under the provisions of this Lease, unless such default is cured within such ten (10) day period, or, if the cure reasonably requires more than ten (10) days, unless such default is cured as soon as reasonably practicable but in no event later than thirty (30) days after Landlord’s notice to Tenant. Only new materials shall be used in the construction of the Improvement Work, except with the written consent of Landlord.

(g) During the construction of the Improvement Work, Tenant shall provide and pay for temporary connections for all utilities brought to the Building. Trash removal will be done continually at

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Tenant’s sole cost and expense. No trash, or other debris, or other waste may be deposited at any time outside the Building. If so, Landlord may remove it at Tenant’s expense, which expense shall equal the cost of removal plus twenty-five percent (25%) of such costs as a management fee.

(h) Storage of Tenant’s contractors’ construction materials, tools and equipment shall be confined within the Building, and in no event shall any materials or debris be stored outside of the Building.

(i) Tenant acknowledges that it has engaged its architect(s) and shall be solely responsible for the actions and omissions of its architect(s) and for any loss, liability, claim, cost, damage or expense suffered by Landlord or any other entity or person as a result of the acts or omissions of its architects or for delays caused by its architects. Tenant’s architect(s) shall be subject to Landlord’s reasonable approval in writing. Landlord’s approval of any of Tenant’s architects or engineers and of any documents prepared by any of them shall not be for the benefit of Tenant or any third party, and Landlord shall have no duty to Tenant or to any third parties for the actions or omissions of Tenant’s architects or engineers. Tenant shall indemnify and hold harmless Landlord against any and all losses, costs, damages, claims and liabilities arising from the actions or omissions of Tenant’s architects and engineers.

(j) Landlord shall have the right to post in a conspicuous location on the Building or the Premises, as well as record with the County of Santa Clara, a Notice of Nonresponsibility.

(k) Without limiting the generality of the foregoing, any work to be performed outside of the Building shall be coordinated with Landlord, and shall be subject to reasonable scheduling requirements of Landlord.

(l) Tenant shall, upon completion of its work, submit to Landlord two (2) complete sets of plans (one (1) reproducible) and specifications covering all of the Improvement Work, including architectural, electrical, and plumbing, as built.

2. Payment of Costs of the Improvement Work.

(a) Unless specified otherwise herein, Tenant shall bear and pay the cost of the Improvement Work (which cost shall include, without limitation, the costs of construction, the cost of permits and permit expediting, and all architectural and engineering services obtained by Landlord in connection with the Tenant Improvements, and the Contractor’s fees), provided that so long as Tenant in not in default under the Lease, Landlord shall contribute a maximum of $453,190 (the “Improvement Allowance”). The Improvement Allowance may be utilized for (i) construction and demolition of interior improvements, (ii) telecommunications equipment and installation, (iii) Building signage, manufacture and installation, and (iv) other specialty trade fixtures. Tenant shall bear and pay the cost of the Improvement Work (including but not limited to all of the foregoing fees and costs) in excess of the Improvement Allowance, if any. The cost of the Improvement Work shall exclude the cost of furniture, fixtures and inventory. Based upon applications for payment prepared, certified and submitted by Tenant, Landlord shall make progress payments from the Improvement Allowance to Tenant in accordance with the provisions of this paragraph 2.

(b) Not later than the 25th day of each month Tenant shall submit applications for payment to Landlord in a form reasonably acceptable to Landlord, certified as correct by an officer of Tenant and by Tenant’s architect, for payment of that portion of the cost of the Improvement Work allocable to labor, materials and equipment incorporated in the Building during the period from the first day of the same month projected through the last day of the month; provided, however, in no event shall any such application for payment be for an amount less than $10,000, unless such application for payment is the final such application. Each application for payment shall set forth such information and shall be

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accompanied by such supporting documentation as shall be reasonably requested by Landlord, including the following:

(i) Invoices and canceled checks.

(ii) Fully executed conditional lien releases in the form prescribed by law from the Contractor and all subcontractors and suppliers furnishing labor or materials during such period and fully executed unconditional lien releases from all such entities covering the prior payment period.

(iii) Contractor’s worksheets showing percentages of completion.

(iv) Contractor’s certification as follows:

“There are no known mechanics’ or materialmen’s liens outstanding at the date of this application for payment, all due and payable bills with respect to the Building have been paid to date or shall be paid from the proceeds of this application for payment, and there is no known basis for the filing of any mechanics’ or materialmen’s liens against the Building or the Property, and, to the best of our knowledge, waivers from all subcontractors are valid and constitute an effective waiver of lien under applicable law to the extent of payments that have been made or shall be made concurrently herewith.”

(c) Tenant shall submit with each application for payment all documents necessary to effect and perfect the transfer of title to the materials or equipment for which application for payment is made.

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(d) On or before the 15th day of the month following submission of the application for payment, Landlord shall pay a share of such payment determined by multiplying the amount of such payment by a fraction, the numerator of which is the the amount of the Improvement Allowance, and the denominator of which is the sum of (i) estimated construction cost of all Improvement Work for the entire Leased Premises, and (ii) the estimated cost of all professional services, fees and permits in connection therewith. Tenant shall pay the balance of such payment, provided that at such time as Landlord has paid the entire Improvement Allowance on account of such Improvement Work, all billings shall be paid entirely by Tenant. If upon completion of the Improvement Work and payment in full to the Contractor, the architect and engineer, and payment in full of all fees and permits, the portion of the cost of the Improvement Work, architects’ and engineers’ fees, permits and fees theretofore paid by Landlord is less than the Improvement Allowance, Landlord shall reimburse Tenant for costs expended by Tenant for Improvement Work up to the amount by which the Improvement Allowance exceeds the portion of such cost theretofore paid by Landlord. Landlord shall have no obligation to advance the Improvement Allowance to the extent it exceeds the total cost of the Improvement Work. In no event shall Landlord have any responsibility for the cost of the Improvement Work in excess of the Improvement Allowance. Landlord shall have no obligation to make any payments to Contractor’s material suppliers or subcontractors or to determine whether amounts due them from Contractor in connection with the Improvement Work have, in fact, been paid.

3. Evidence of Completion of Improvement Work. Upon the completion of the Improvement Work, Tenant shall:

(a) Submit to Landlord a detailed breakdown of Tenant’s final and total construction costs, together with receipted evidence showing payment thereof, including without limitation unconditional lien releases, satisfactory to Landlord.

(b) Submit to Landlord all evidence reasonably available from governmental authorities showing compliance with any and all other laws, orders and regulations of any and all governmental authorities having jurisdiction over the Building, including, without limitation, authorization for physical occupancy of the Building.

(c) Submit to Landlord the as-built plans and specifications referred to above.

4. Assignment of Rights Against Architect and Contractor. Tenant hereby assigns to Landlord on a non-exclusive basis any and all rights Tenant may have against Tenant’s architects and contractors relating to the Improvement Work, without in any way obligating Landlord to pursue or prosecute such rights.

5.

ARCHITECT’S CONSENT

The undersigned,                     , is the architect retained by                              in connection with the Improvement Work. The undersigned hereby consents to the assignment effected by paragraph 4 above.

CONTRACTOR’S CONSENT

The undersigned,                             , is the general contractor retained by                              in connection with the Improvement Work. The undersigned hereby consents to the assignment effected by paragraph 4 above.

6.

EXHIBIT C

SUBORDINATION, NONDISTURBANCE AND ATTORNMENT PROVISIONS

RECORDING REQUESTED BY AND

WHEN RECORDED RETURN TO:

Kilpatrick Stockton LLP

1100 Peachtree Street

Suite 2800

Atlanta, GA 30309

Attn: Tia Cottey, Esq.

(Space above this line for Recorder’s use)

SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this “Agreement”) made as of the          day of January, 2005, by and among 529 BRYANT STREET PARTNERS LLC, a Delaware limited liability company (“Landlord”), and LA SALLE NATIONAL BANK, AS TRUSTEE FOR THE REGISTERED HOLDERS OF LB-UBS COMMERCIAL MORTGAGE TRUST PASS-THROUGH CERTIFICATES, SERIES 2001-C2 (“Lender”), and SWITCH AND DATA CA NINE LLC, a Delaware limited liability company (“Tenant”).

WITNESSETH:

WHEREAS, Lender has made a loan (the “Loan”) to Landlord;

WHEREAS, the Loan is evidenced by a deed of trust note (the “Note”) made by Landlord to order of Lender and is secured by, among other things, a deed of trust, assignment of leases and rents and security agreement (the “Deed of Trust”) made by Landlord to Lender covering the land (the “Land”) described on Exhibit A attached hereto and all improvements (the “Improvements”) now or hereafter located on the land (the Land and the Improvements hereinafter collectively referred to as the “Property”); and

WHEREAS, by a lease dated as of January         , 2005 (which lease, as the same may have been amended and supplemented, is hereinafter called the “Lease”), Landlord leased to Tenant approximately 45,319square feet of space located in the Improvements (the “Premises”); and

WHEREAS, the parties hereto desire to make the Lease subject and subordinate to the Deed of Trust.

NOW, THEREFORE, the parties hereto, in consideration of the covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, hereby agree as follows:

5. The Lease, as the same may hereafter be modified, amended or extended, and all of Tenant’s right, title and interest in and to the Premises and all rights, remedies and options of Tenant under the Lease, are and shall be unconditionally subject and subordinate to the Deed of Trust and the lien thereof,

to all the terms, conditions and provisions of the Deed of Trust, to each and every advance made or hereafter made under the Deed of Trust, and to all renewals, modifications, consolidations, replacements, substitutions and extensions of the Deed of Trust; provided, however, and Lender agrees, that so long as (A) no event has occurred and no condition exists, which would entitle Landlord to terminate the Lease or would cause, without further action of Landlord, the termination of the Lease or would entitle Landlord to dispossess Tenant from the Premises, (B) the term of the Lease has commenced and Tenant is in possession of the Premises, (C) the Lease shall be in full force and effect and shall not have been otherwise modified or supplemented in any way without Lender’s prior written consent, (D) Tenant attorns to Lender, which attornment is hereby acknowledged by Tenant as effective and self-operative, without the execution of any other instruments, and (E) neither Lender nor its successors or assigns shall be liable under any warranty of construction contained in the Lease or any implied warranty of construction; then, and in such event Tenant’s leasehold estate under the Lease shall not be terminated, Tenant’s possession of the Premises shall not be disturbed by Lender and Lender will accept the attornment of Tenant and will hereby recognize the Lease and Tenant’s rights under this Lease.

6. Notwithstanding anything to the contrary contained in the Lease, Tenant hereby agrees that in the event of any act, omission or default by Landlord or Landlord’s agents, employees, contractors, licensees or invitees which would give Tenant the right, either immediately or after the lapse of a period of time, to terminate the Lease, or to claim a partial or total eviction, or to reduce the rent payable thereunder or credit or offset any amounts against future rents payable thereunder, Tenant will not exercise any such right (i) until it has given written notice of such act, omission or default to Lender by delivering notice of such act, omission or default, in accordance with this Agreement, and (ii) until a period of not less than forty-five (45) days for remedying such act, omission or default shall have elapsed following the giving of such notice. Notwithstanding the foregoing, in the case of any default of Landlord which cannot be cured within such forty-five (45) day period, if Lender shall within such period proceed promptly to cure the same (including such time as may be necessary to acquire possession of the Premises if possession is necessary to effect such cure) and thereafter shall prosecute the curing of such default with diligence, then the time within which such default may be cured by Lender shall be extended for such period as may be necessary to complete the curing of the same with diligence. Lender’s cure of Landlord’s default shall not be considered an assumption by Lender of Landlord’s other obligations under the Lease. Unless Lender otherwise agrees in writing, Landlord, while it remains the landlord under the Lease, shall remain solely liable to perform Landlord’s obligations under the Lease (but only to the extent required by and subject to the limitation included with the Lease), both before and after Lender’s exercise of any right or remedy under this Agreement. If Lender or any successor or assign becomes obligated to perform as Landlord under the Lease, such person or entity will be released from those obligations when such person or entity assigns, sells or otherwise transfers its interest in the Premises or the Property.

7. If Lender succeeds to the interest of Landlord or any successor to Landlord (such event, whether a foreclosure, deed-in-lieu of foreclosure or other acquisition, being referred to herein as a “Foreclosure”), in no event shall Lender (i) have any liability for any act or omission of any prior landlord under the Lease which occurs prior to the date Lender succeeds to the rights of Landlord under the Lease, nor any liability for claims, offsets or defenses which Tenant might have had against Landlord, (ii) be obligated to complete or permit the construction of any improvements under the Lease, except for any obligation arising after Foreclosure and only for any construction or expenditure that a real estate mortgage investment conduit is allowed to make under Section 856(e)(4)(B) of the Internal Revenue Code of 1986, as amended and/or supplemented from time to time, and regulations and rulings thereunder, (iii) bound by any rents paid more than one month in advance to any prior owner, (iv) liable for any security deposit not paid over to Lender by Landlord, or (v) bound by any modification, amendment, extension or cancellation of the Lease not consented to in writing by Lender; and further provided, that nothing herein shall negate the right of Lender after a Foreclosure to exercise the rights and remedies, including termination of the Lease, of Landlord under the Lease upon the occurrence of an event of default by Tenant under the Lease in accordance therewith. As to any event of default by Tenant

2.

under the Lease existing at the time of Foreclosure, such Foreclosure shall not operate to waive or abate any action initiated by Landlord under the Lease to terminate the same on account of such event of default. In no event shall Lender have any personal liability as successor to Landlord and Tenant shall look only to the estate and property of Lender in the Land and the Improvements for the satisfaction of Tenant’s remedies for the collection of a judgment (or other judicial process) requiring the payment of money in the event of any default by Lender as Landlord under the Lease, and no other property or assets of Lender shall be subject to levy, execution or other enforcement procedure for the satisfaction of Tenant’s remedies under or with respect to the Lease. Tenant agrees that Lender, as holder of the Deed of Trust, and as Landlord under the Lease if it succeeds to that position, shall in no event have any liability for the performance or completion of any initial work or installations or for any loan or contribution or rent concession towards initial work, which are required to be made by Landlord (A) under the Lease or under any related Lease documents or (B) for any space which may hereafter become part of said Premises, and any such requirement shall be inoperative in the event Lender succeeds to the position of Landlord prior to the completion or performance thereof. Tenant further agrees with Lender that Tenant will not voluntarily subordinate the Lease to any lien or encumbrance without Lender’s prior written consent. Landlord recognizes and acknowledges the prohibition on Tenant’s subordination of the Lease as set forth in the immediately preceding sentence and shall not enforce against the Tenant the subordination obligations under the Lease in any manner that is inconsistent with such prohibition.

8. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute and be construed as one and the same instrument. This Agreement shall be interpreted and construed in accordance with and governed by the laws of the State of California.

9. All notices to be given under this Agreement shall be in writing and shall be deemed served upon receipt by the addressee if served personally or, if mailed, upon the first to occur of receipt or the refusal of delivery as shown on a return receipt, after deposit in the United States Postal Service certified mail, postage prepaid, addressed to the address of Landlord, Tenant or Lender appearing below, or, if sent by overnight courier, when delivered by or refused upon attempted delivery by the courier service, or, if sent by facsimile transmission, on the date delivered as indicated on a facsimile transmittal confirmation sheet, provided that notice is simultaneously served personally or sent via overnight courier. Such addresses may be changed by notice given in the same manner. If any party consists of multiple individuals or entities, then notice to any one of same shall be deemed notice to such party.

Lender’s Address:

c/o Wachovia Securities

Structured Products Servicing, NC 1075

8739 Research Drive - URP4

Charlotte, NC 28288-1075

(Loan number 13-0000234)

With a Copy To:

Kilpatrick Stockton LLP

1100 Peachtree Street

Suite 2800

Atlanta, GA 30309

Attn: Tia Cottey, Esq.

3.

Tenant’s Address:

Switch & Data CA Nine, LLC

1715 Westshore Boulevard

Suite 650

Tampa, Florida 33607

Attention: Legal Department

Landlord’s Address:

529 Bryant Street Partners LLC

c/o Menlo Equities

490 California Avenue

Fourth Floor

Palo Alto, CA 94306

Attn: Richard J. Holmstrom/Henry D. Bullock

With a Copy To:

Cooley Godward LLP

One Maritime Plaza

20^th Floor

San Francisco, CA 94111

Attn: Paul Churchill

10. This Agreement shall apply to, bind and inure to the benefit of the parties hereto and their respective successors and assigns. As used herein “Lender” shall include any subsequent holder of the Deed of Trust.

11. Tenant acknowledges that Landlord has assigned to Lender its right, title and interest in the Lease and to the rents, issues and profits of the Property and the Property pursuant to the Deed of Trust, and that Landlord has been granted the license to collect such rents provided no Event of Default has occurred under, and as defined in, the Deed of Trust. Tenant agrees to pay all rents and other amounts due under the Lease directly to Lender upon receipt of written demand by Lender, and Landlord hereby consents thereto. The assignment of the Lease to Lender, or the collection of rents by Lender pursuant to such assignment, shall not obligate Lender to perform Landlord’s obligations under the Lease.

[No Further Text On This Page]

4.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

SWITCH AND DATA CA NINE LLC,
a Delaware limited liability company,
By:
Name:
Title:
By:
Name:
Title:
529 BRYANT STREET PARTNERS LLC,     a Delaware limited liability company
By:	529 Bryant Street Corporation,
	a Delaware corporation
	its Manager
By:
	Henry D. Bullock, President
LA SALLE NATIONAL BANK, AS TRUSTEE FOR THE REGISTERED HOLDERS OF LB-UBS COMMERCIAL MORTGAGE TRUST PASS-THROUGH CERTIFICATES, SERIES 2001-C2
By:	Allied Capital Corporation, Special Servicer
	By:
	Name:
	Title:

5.

EXHIBIT D

FORM OF ESTOPPEL CERTIFICATE

January     , 2005

529 Bryant Street Partners LLC

490 California Avenue, 4^th Floor

Palo Alto, California 94306

La Salle National Bank, as Trustee

c/o Wachovia Securities

        Structured Products Servicing, NC 1075

        8739 Research Drive - URP4

        Charlotte, NC 28288-1075

(Loan number 13-0000234)

Re 529 Bryant Street

Palo Alto, California

Ladies and Gentlemen:

Reference is made to that certain Lease, dated as of January         , 2005, by and between 529 BRYANT STREET PARTNERS LLC, a California limited liability company (“Landlord”), and the undersigned (the “Lease”). A copy of the Lease is attached hereto as Exhibit A. Capitalized terms used but not defined herein shall have the meanings assigned to them in the Lease.

At the request of Landlord in connection with entering into the Lease, the undersigned hereby certifies to Landlord and to LA SALLE NATIONAL BANK, AS TRUSTEE FOR THE REGISTERED HOLDERS OF LB-UBS COMMERCIAL MORTGAGE TRUST PASS-THROUGH CERTIFICATES, SERIES 2001-C2 (“Lender”) and each of your respective successors and assigns as follows:

1. The undersigned is the tenant under the Lease.

2. The Lease is in full force and effect and has not been amended, modified, supplemented or superseded except as indicated in Exhibit A.

3. Landlord has delivered the Leased Premises to Tenant as required by and pursuant to Section 2.4 of the Lease, and the termination right of Tenant described in Section 2.4 of the Lease has expired and is void and of no force or effect. There is no defense, offset, claim or counterclaim by or in favor of the undersigned against Landlord under the Lease or against the obligations of the undersigned under the Lease. The undersigned has no renewal, extension or expansion option, no right of first offer or right of first refusal and no other similar right to renew or extend the term of the Lease or expand the property demised thereunder except as may be expressly set forth in the Lease.

4. The undersigned is not aware of any default now existing of the undersigned or of Landlord under the Lease, nor of any event which with notice or the passage of time or both would constitute a default of the undersigned or of Landlord under the Lease.

5. The undersigned has not received notice of a prior transfer, assignment, hypothecation or pledge by Landlord of any of Landlord’s interest in the Lease, except in connection with the financing provided by Lender.

6. The Base Monthly Rent due under the Lease is currently $                    , which has been paid through                     , 2005, and all additional rent due and payable under the Lease has been paid through                     , 2005.

7. The term of the Lease commenced on                     , and expires on                 , unless sooner terminated pursuant to the provisions of the Lease. There was and is no work to be performed by for the undersigned’s initial occupancy of the demised property.

8. The undersigned has deposited the sum of $0 with Landlord as security for the performance of its obligations as tenant under the Lease, and no portion of such deposit has been applied by Landlord to any obligation under the Lease.

9. There is no free rent period pending, nor is Tenant entitled to any Landlord’s contribution.

The above certifications are made to Landlord and Lender knowing that Landlord and Lender will rely thereon in accepting an assignment of the Lease.

,

Very truly yours

TENANT:

SWITCH AND DATA CA NINE LLC,

a Delaware limited liability company

By:

Title:

By:

Title:

GUARANTOR RATIFICATION:

The undersigned (“Guarantor”) has guaranteed the foregoing Lease pursant to that certain Guaranty of Lease dated January     , 2005 (“Guaranty”). In connection with the foregoing estoppel certificate, Guarantor hereby certifies to Landlord and Lender that all of the terms, covenants, conditions and warranties contained in the Guaranty are hereby ratified, confirmed and held to be in full force and effect.

SWITCH & DATA FACILITIES COMPANY, INC., a Delaware corporation
By:
Its:	President
By:
Its:	Chief Financial Officer

2.

SCHEDULE 1

LANDLORD REPAIRS

3.

EX-10.18

Exhibit 10.18

WAIVER AND SECOND AMENDMENT TO THIRD AMENDED

AND RESTATED CREDIT AGREEMENT

This WAIVER AND SECOND AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November 27, 2006 (this “Amendment”), is by and among SWITCH & DATA HOLDINGS, INC., a Delaware corporation (the “Borrower”), the financial institutions from time to time party to the Credit Agreement referred to below as Lenders, DEUTSCHE BANK AG NEW YORK BRANCH, as administrative agent (hereinafter, in such capacity, the “Administrative Agent”) for itself and the Lenders, CANADIAN IMPERIAL BANK OF COMMERCE and ROYAL BANK OF CANADA, as co-documentation agents (the “Co-Documentation Agents”), and CIT LENDING SERVICES CORPORATION and BNP PARIBAS, as co-syndication agents (the “Co-Syndication Agents”), amending certain provisions of the Third Amended and Restated Credit Agreement, dated as of October 13, 2005 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Credit Agreement”), among the Borrower, the financial institutions party thereto from time to time as lenders (each individually a “Lender” and, collectively, the “Lenders”), the Administrative Agent, the Co-Syndication Agents and the Co-Documentation Agents. Terms used but not defined herein shall have the meanings ascribed to such terms in the Credit Agreement.

RECITALS

WHEREAS, pursuant to Section 5.1 of the Credit Agreement, the Borrower has delivered to the Administrative Agent and the Lenders the Compliance Certificate for the fiscal quarter ending September 30, 2006, which Compliance Certificate states that the Borrower is not in compliance with the Consolidated Leverage Ratio, Consolidated Interest Coverage Ratio and the Consolidated Fixed Charge Coverage Ratio covenants set forth in Section 6.6 of the Credit Agreement and that such non-compliance has given rise to an Event of Default under the Credit Agreement (the “Specified Event of Default”).

WHEREAS, the Borrower has requested that the Administrative Agent and the Lenders amend the Credit Agreement to provide, among other things, revisions to the Consolidated Leverage Ratio, First Lien Consolidated Leverage Ratio, Consolidated Interest Coverage Ratio and Consolidated Fixed Charge Coverage Ratio covenants set forth on Schedule 6.6 to the Credit Agreement;

WHEREAS, the Administrative Agent and the Lenders are willing to amend the Credit Agreement as provided herein.

NOW THEREFORE, in consideration of the mutual agreements contained in the Credit Agreement and herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

§1. Limited Waiver. Effective as of the date hereof, upon satisfaction of the conditions precedent set forth in §3 hereof, and in reliance upon the representations and warranties of the Borrower Group set forth in the Credit Agreement and in this Amendment, the Administrative Agent and the Lenders hereby waive the requirement under Section 6.6 of the Credit Agreement that (i) the Consolidated Leverage Ratio for the Fiscal Quarter ending September 30, 2006 shall not exceed 4.50 to 1.00 for such Fiscal Quarter, (ii) the Consolidated Interest Coverage Ratio for the Fiscal Quarter ending September 30, 2006 shall not be less than 2.40:1.00 for such Fiscal Quarter and (iii) the Consolidated Fixed Charge Coverage Ratio for the fiscal quarter ending September 30, 2006 shall not be less than 0.90:1.00 for such Fiscal Quarter. The foregoing is a limited waiver and the execution and delivery of this Amendment does not (a) constitute a waiver by the Administrative Agent or any Lender of any other term or condition under Credit Agreement or any other Loan Document, including, without limitation, any other financial covenant set forth in Section 6.6 of the Credit Agreement and of any right, power or remedy of the Administrative Agent or any Lender under any of the Loan Documents (all such rights, powers and remedies being expressly reserved), (b) establish a custom or a course of dealing or conduct among the Administrative Agent, any Lender, any member of the Borrower Group and the Borrower, or (c) prejudice any rights which any Lender or the Administrative Agent now has or may have in the future under or in connection with the Loan Documents.

§2. Amendment to the Credit Agreement.

Schedule 6.6 of the Credit Agreement is hereby amended by deleting such Schedule 6.6 in its entirety and substituting in lieu thereof Schedule 6.6 attached hereto as Exhibit A.

§3. Conditions Precedent. This Amendment shall become effective upon the satisfaction of each of the following conditions precedent:

(a) Each of the Borrower, the Lenders and the Administrative Agent shall have duly executed and delivered a counterpart signature page to this Amendment to the Administrative Agent;

(b) Each of the Guarantors shall have duly executed and delivered a counterpart signature page to the Ratification of Guaranty attached to this Amendment to the Administrative Agent;

(c) The Borrower shall pay in cash to the Administrative Agent, for the pro rata accounts of the Lenders executing and delivering a signature page to this Amendment, an amendment fee in an amount equal to two-tenths of one percent (0.20%) of the Commitments of such Lenders; and

(d) The Borrower shall have paid all unpaid fees and expenses of the Administrative Agent’s counsel, Bingham McCutchen LLP, to the extent that copies of invoices for such fees and expenses have been delivered to the Borrower.

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§4. Representations and Warranties. The Borrower hereby represents and warrants to the Administrative Agent and the Lenders as follows:

(a) Representations and Warranties. The representations and warranties of the Borrower contained in the Credit Agreement and the other Loan Documents were true and correct in all material respects as of the date when made and continue to be true and correct in all material respects on the date hereof, except to the extent of changes resulting from transactions or events contemplated by the Credit Agreement and the other Loan Documents or to the extent that such representations and warranties relate expressly to an earlier date.

(b) Ratification, Etc. Except as expressly amended hereby, the Credit Agreement and the other Loan Documents, and all documents, instruments and agreements related thereto, are hereby ratified and confirmed in all respects and shall continue in full force and effect. The Credit Agreement shall, together with this Amendment, be read and construed as a single agreement. All references to the Credit Agreement in the Credit Agreement, the Loan Documents or any related agreement or instrument shall hereafter refer to the Credit Agreement as amended hereby.

(c) Authority, Etc. The execution and delivery by the Borrower of this Amendment and the performance by the Borrower of all of its agreements and obligations under the Credit Agreement as amended hereby and the other Loan Documents are within the corporate authority of the Borrower and have been duly authorized by all necessary corporate action on the part of the Borrower.

(d) Enforceability of Obligations. This Amendment, the Credit Agreement as amended hereby and the other Loan Documents constitute the legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their terms, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of, creditors’ rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought.

(e) No Default. Except for the Specified Event of Default, no Potential Event of Default or Event of Default has occurred and is continuing, and no Potential Event of Default or Event of Default will exist after execution and delivery of this Amendment.

§5. Ratification of Existing Agreements. The Borrower agrees that the Obligations are, except as otherwise expressly modified in this Amendment upon the terms set forth herein, ratified and confirmed in all respects. In addition, by the execution of this Amendment, the Borrower represents and warrants that no counterclaim, right of set-off or defense of any kind exists or is outstanding with respect to such Obligations.

§6. No Other Amendments. Except as expressly provided in this Amendment, all of the terms and conditions of the Credit Agreement and the other Loan Documents remain in full force and effect. Nothing contained in this Amendment shall (a) be construed to imply a willingness on the part of the Administrative Agent or the Lenders to grant any similar or other

-3-

future amendment of any of the terms and conditions of the Credit Agreement or the other Loan Documents or (b) in any way prejudice, impair or effect any rights or remedies of the Administrative Agent or the Lenders under the Credit Agreement or the other Loan Documents.

§7. Release. In order to induce the Administrative Agent and the Lenders to enter into this Amendment, the Borrower acknowledges and agrees that: (i) the Borrower does not have any claim or cause of action against the Administrative Agent or any Lender (or any of their respective directors, officers, employees or agent); (ii) the Borrower does not have any offset right, counterclaim, right of recoupment or any defense of any kind against the Borrower’s obligations, indebtedness or liabilities to the Administrative Agent or any Lender; and (iii) each of the Administrative Agent and the Lenders has heretofore properly performed and satisfied in a timely manner all of its obligations to the Borrower. The Borrower wishes to eliminate any possibility that any past conditions, acts, omissions, events, circumstances or matters would impair or otherwise adversely affect any of the Administrative Agent’s and the Lenders’ rights, interests, contracts, collateral security or remedies. Therefore, the Borrower unconditionally releases, waives and forever discharges (A) any and all liabilities, obligations, duties, promises or indebtedness of any kind of the Administrative Agent or any Lender to the Borrower, except the obligations to be performed by the Administrative Agent or any Lender on or after the date hereof as expressly stated in this Amendment, the Credit Agreement and the other Loan Documents, and (B) all claims, offsets, causes of action, right of recoupment, suits or defenses of any kind whatsoever (if any), whether arising at law or in equity, whether known or unknown, which the Borrower might otherwise have against the Administrative Agent, any Lender or any of their respective directors, officers, employees or agents, in either case (A) or (B), on account of any past or presently existing condition, act, omission, event, contract, liability, obligation, indebtedness, claim, cause of action, defense, circumstance or matter of any kind.

§8. Execution in Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but which together shall constitute one instrument. In proving this Amendment, it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought.

§9. Expenses. Pursuant to §9.2 of the Credit Agreement, all costs and expenses incurred or sustained by the Administrative Agent in connection with this Amendment, including the fees and disbursements of legal counsel for the Administrative Agent in producing, reproducing and negotiating the Amendment, will be for the account of the Borrower whether or not the transactions contemplated by this Amendment are consummated.

§10. Governing Law; Entire Agreement. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CHOICE OF LAWS AND CONFLICTS OF LAWS PRINCIPLES (OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). The captions in this Amendment are for convenience of reference only and shall not define or limit the provisions hereof. This Amendment shall be a “Loan Document” under and as defined in the Credit Agreement.

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§11. Consent to Jurisdiction and Service of Process. All judicial proceedings brought against any party hereto arising out of or relating to this Amendment or any other Loan Document, or any obligations thereunder, may be brought in any state or federal court of competent jurisdiction in the State, County and City of New York. By executing and delivering this Amendment, each party irrevocably:

(i) accepts generally and unconditionally the nonexclusive jurisdiction and venue of such courts;

(ii) waives any defense of forum non conveniens;

(iii) agrees that service of all process in any such proceeding in any such court may be made by registered or certified mail, return receipt requested, to its address provided in accordance with Section 9.8 of the Credit Agreement or an Assignment Agreement;

(iv) with respect to the Borrower, agrees that service as provided in clause (iii) above is sufficient to confer personal jurisdiction over the Borrower in any such proceeding in any such court, and otherwise constitutes effective and binding service in every respect;

(v) with respect to the Borrower, agrees that Lenders retain the right to serve process in any other manner permitted by law or to bring proceedings against the Borrower in the courts of any other jurisdiction; and

(vi) agrees that the provisions of this Section 10 relating to jurisdiction and venue shall be binding and enforceable to the fullest extent permissible under New York General Obligations Law Section 5-1402 or otherwise.

§12. Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AMENDMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AMENDMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including contract claims, tort claims, breach of duty claims and all other common law and statutory claims. Each party hereto acknowledges that this waiver is a material inducement to enter into a business relationship, that each has already relied on this waiver in entering into this Amendment, and that each will continue to rely on this waiver in their related future dealings. Each party hereto further warrants and represents that it has reviewed this waiver with its legal counsel and that it knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 11 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AMENDMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE UNDER THE CREDIT AGREEMENT. In the event of litigation, this Amendment may be filed as a written consent to a trial by the court.

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[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

-6-

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as a document under seal as of the date first above written.

Borrower:
SWITCH & DATA HOLDINGS, INC.
By:	/s/ George A. Pollock, Jr.
Name:
Title:

***Signature Page to First Amendment to Third Amended and Restated Credit Agreement***

Administrative Agent and Lender:
DEUTSCHE BANK AG NEW YORK BRANCH
By:	/s/ Anca Trifan
Name:	Anca Trifan
Title:	Director
By:	/s/ Enrique Landaeta
Name:	Enrique Landaeta
Title:	Vice President

***Signature Page to First Amendment to Third Amended and Restated Credit Agreement***

Co-Syndication Agent and Lender:
CIT LENDING SERVICES CORPORATION
By:	/s/ Joe Junda
Name:	Joe Junda
Title:	Vice President

***Signature Page to First Amendment to Third Amended and Restated Credit Agreement***

Co-Syndication Agent and Lender:
BNP PARIBAS
By:	/s/ Ola Anderssen
Name:	Ola Anderssen
Title:	Director
By:	/s/ PJ de Filippis
Name:	PJ de Filippis
Title:	Managing Director

***Signature Page to First Amendment to Third Amended and Restated Credit Agreement***

Co-Documentation Agent and Lender:
CANADIAN IMPERIAL BANK OF COMMERCE
By:	/s/ Gerald Girardi
Name:	Gerald Girardi
Title:	Authorized Signatory

***Signature Page to First Amendment to Third Amended and Restated Credit Agreement***

Co-Documentation Agent and Lender
ROYAL BANK OF CANADA
By:	/s/ Mark Narbey
Name:	Mark Narbey
Title:	Authorized Signatory

***Signature Page to First Amendment to Third Amended and Restated Credit Agreement***

Lenders:
	A3 FUNDING LP
By:	A3 Fund Management LLC, its General Partner
By:	/s/ Daniel Wolf
Name:	Daniel Wolf
Title:	Vice President
	A4 FUNDING LP
By:	A4 Fund Management Inc., its General Partner
By:	/s/ Daniel Wolf
Name:	Daniel Wolf
Title:	Vice President
	ABLECO FINANCE LLC
By:	/s/ Daniel Wolf
Name:	Daniel Wolf
Title :	Senior Vice President

***Signature Page to Waiver and Second Amendment to Third Amended and Restated Credit Agreement***

Lenders:
AMEGY BANK NATIONAL ASSOCIATION
By:	/s/ David C. Moriniere
	David C. Moriniere
	Vice President

***Signature Page to Waiver and Second Amendment to Third Amended and Restated Credit Agreement***

Lenders:
BABSON CLO LTD. 2003-I BABSON CLO LTD. 2004-I BABSON CLO LTD. 2004-II BABSON CLO LTD. 2005-I BABSON CLO LTD. 2005-II BABSON CLO LTD. 2005-III BABSON CLO LTD. 2006-I
By:	Babson Capital Management LLC as Collateral Manager
By:	/s/ David P. Wells, CFA
Name:	David P. Wells, CFA
Title:	Managing Director
JEFFERIES FINANCE CP FUNDING LLC
By:	/s/ DAVID P. WELLS, CFA
Name:	DAVID P. WELLS, CFA
Title:	Executive Vice President

***Signature Page to Waiver and Second Amendment to Third Amended and Restated Credit Agreement***

Lenders:
FM Leveraged Capital Fund I
By:	/s/ Eric Green
Name:	Eric Green
Title:	Senior Partner

***Signature Page to Waiver and Second Amendment to Third Amended and Restated Credit Agreement***

Lenders:
FriedbergMilstein Private Capital Fund I
By:	/s/ Eric Green
Name:	Eric Green
Title:	Senior Partner

***Signature Page to Waiver and Second Amendment to Third Amended and Restated Credit Agreement***

Lenders:
OSP FUNDING LLC
By:	/s/ Anna M. Tallent
Name:	Anna M. Tallent
Title:	Assistant Vice President

***Signature Page to Waiver and Second Amendment to Third Amended and Restated Credit Agreement***

Lenders:
TRS Thebe LLC
By:	Deutsche Bank Trust Company Americas,
	Its Sole Member
By:	DB Services New Jersey, Inc.
By:	/s/ Alice L.Wagner
Name:	Alice L.Wagner
Title:	Vice President
By:	/s/ Deidre Whorton
Name:	Deidre Whorton
Title:	Assistant Vice President

***Signature Page to Waiver and Second Amendment to Third Amended and Restated Credit Agreement***

RATIFICATION OF GUARANTY

Each of the undersigned Guarantors hereby (a) acknowledges and consents to the foregoing Amendment and the Borrower’s execution thereof; (b) ratifies and confirms all of their respective obligations and liabilities under the Loan Documents to which any of them is a party and ratifies and confirms that such obligations and liabilities extend to and continue in effect with respect to, and continue to guarantee and secure, as applicable, the Obligations of the Borrower under the Credit Agreement; (c) acknowledge and confirm that the liens and security interests granted pursuant to the Loan Documents are and continue to be valid and perfected first priority liens and security interests (subject only to Permitted Liens) that secure all of the Obligations on and after the date hereof; (d) acknowledges and agrees that such Guarantor does not have any claim or cause of action against the Administrative Agent or any Lender (or any of its respective directors, officers, employees or agents); and (e) acknowledges, affirms and agrees that such Guarantor does not have any defense, claim, cause of action, counterclaim, offset or right of recoupment of any kind or nature against any of their respective obligations, indebtedness or liabilities to the Administrative Agent or any Lender.

Guarantors:
SWITCH & DATA FACILITIES COMPANY, INC.
By:	/s/ George A. Pollock, Jr.
	George A. Pollock, Jr.
	Treasurer
SWITCH AND DATA ENTERPRISES, INC.
SWITCH AND DATA MANAGEMENT COMPANY LLC
SWITCH AND DATA OPERATING COMPANY LLC
SWITCH & DATA FACILITIES COMPANY LLC
SWITCH AND DATA COMMUNICATIONS LLC
SWITCH AND DATA FL SEVEN LLC
SWITCH AND DATA IL FIVE LLC
SDOC ACQUISITION, INC. (formerly known as Telx Acquisition, Inc.)
SWITCH AND DATA, INC.
By:	/s/ George A. Pollock, Jr.
	George A. Pollock, Jr.
	Treasurer

***Signature Page to First Amendment to Third Amended and Restated Credit Agreement***

Guarantors:
SWITCH AND DATA CA NINE LLC
SWITCH AND DATA GA THREE LLC
SWITCH AND DATA IL FOUR LLC
SWITCH AND DATA NY FOUR LLC
SWITCH AND DATA NY FIVE LLC
SWITCH & DATA/NY FACILITIES COMPANY LLC
SWITCH AND DATA PA THREE LLC
SWITCH AND DATA PA FOUR LLC
SWITCH AND DATA DALLAS HOLDINGS I LLC
SWITCH AND DATA DALLAS HOLDINGS II LLC
SWITCH AND DATA VA FOUR LLC
SWITCH AND DATA WA THREE LLC
By:	Switch and Data Operating Company LLC, as Manager
By:	/s/ George A. Pollock, Jr.
	George A. Pollock, Jr.
	Treasurer

***Signature Page to First Amendment to Third Amended and Restated Credit Agreement***

Guarantors:
SWITCH & DATA AZ ONE LLC
SWITCH & DATA CA ONE LLC
SWITCH & DATA CA TWO LLC
SWITCH & DATA CO ONE LLC
SWITCH & DATA FL ONE LLC
SWITCH & DATA FL TWO LLC
SWITCH & DATA FL FOUR LLC
SWITCH & DATA GA ONE LLC
SWITCH & DATA IL ONE LLC
SWITCH & DATA IN ONE LLC
SWITCH & DATA LA ONE LLC
SWITCH & DATA MA ONE LLC
SWITCH & DATA MI ONE LLC
SWITCH & DATA MO ONE LLC
SWITCH & DATA MO TWO LLC
SWITCH & DATA NY ONE LLC
SWITCH & DATA OH ONE LLC
SWITCH & DATA PA TWO LLC
SWITCH & DATA TN TWO LLC
SWITCH & DATA TX ONE LLC
SWITCH & DATA VA ONE LLC
SWITCH & DATA VA TWO LLC
SWITCH & DATA WA ONE LLC
By:	Switch & Data Facilities Company LLC, as Manager
By:	/s/ George A. Pollock, Jr.
	George A. Pollock, Jr.
	Treasurer
SWITCH AND DATA TX FIVE LP
By:	Switch and Data Dallas Holdings I LLC, as General Partner
By:	Switch and Data Operating Company LLC, as Manager
By:	/s/ George A. Pollock, Jr.
	George A. Pollock, Jr.
	Treasurer

***Signature Page to First Amendment to Third Amended and Restated Credit Agreement***

EXHIBIT A

SCHEDULE 6.6

FINANCIAL COVENANTS

A. Consolidated Leverage Ratio. As of the last day of each Fiscal Quarter set forth below, the Consolidated Leverage Ratio shall not exceed the ratios set forth below:

Fiscal Quarter Ending	Ratio
December 31, 2006	4.75 to 1.00
March 31, 2007	4.70 to 1.00
June 30, 2007	4.50 to 1.00
September 30, 2007	4.25 to 1.00
December 31, 2007	3.85 to 1.00
March 31, 2008	3.50 to 1.00
June 30, 2008	3.25 to 1.00
September 30, 2008, and December 31, 2008	3.00 to 1.00
March 31, 2009	2.75 to 1.00
June 30, 2009 and thereafter	2.50 to 1.00

B. First Lien Consolidated Leverage Ratio. As of the last day of each Fiscal Quarter set forth below, the First Lien Consolidated Leverage Ratio shall not exceed the ratios set forth below for such Fiscal Quarter:

Fiscal Quarter Ending	Ratio
December 31, 2006, and March 31, 2007	3.25 to 1.00
June 30, 2007	3.10 to 1.00
September 30, 2007	2.85 to 1.00
December 31, 2007 and March 31, 2008	2.50 to 1.00
June 30, 2008 and September 30, 2008	2.25 to 1.00
December 31, 2008 and thereafter	2.00 to 1.00

C. Consolidated Interest Coverage Ratio. As of the last day of each Fiscal Quarter, Consolidated Interest Coverage Ratio shall not be less than the ratios set forth below for such Fiscal Quarter:

Fiscal Quarter Ending	Ratio
December 31, 2006, March 31, 2007 and June 30, 2007	2.05 to 1.00
September 30, 2007	2.20 to 1.00
December 31, 2007	2.45 to 1.00
March 31, 2008	2.75 to 1.00
June 30, 2008 and thereafter	3.00 to 1.00

D. Consolidated Fixed Charge Coverage Ratio. As of the last day of each Fiscal Quarter set forth below, the Consolidated Fixed Charge Coverage Ratio shall not be less than the ratio set forth below for such Fiscal Quarter:

Fiscal Quarter Ending	Ratio
December 31, 2006	0.85 to 1.00
March 31, 2007, June 30, 2007,and September 30, 2007	0.90 to 1.00
December 31, 2007	0.95 to 1.00
March 31, 2008 June 30, 2008 and September 30, 2008	1.00 to 1.00
December 31, 2008 and March 31, 2009	1.25 to 1.00
June 30, 2009 and thereafter	1.50 to 1.00

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC

ACCOUNTING FIRM

We hereby consent to the use in this Registration Statement on Form S-1/A of our report dated December 19, 2006, relating to the financial statements and financial statement schedule of Switch & Data Facilities Company, Inc., which appears in such Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

Tampa, Florida

December 20, 2006

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC

ACCOUNTING FIRM

We hereby consent to the use in this Registration Statement on Form S-1/A of our report dated September 25, 2006 relating to the financial statement of Switch and Data, Inc. which appears in such Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

/s/    PricewaterhouseCoopers LLP

Tampa, Florida

December 20, 2006

CORRESP

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