10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2008

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period From                      to                     .

Commission file number 001-32336

DIGITAL REALTY TRUST, INC.

(Exact name of registrant as specified in its charter)

Maryland	26-0081711
(State or other jurisdiction of incorporation or organization)	(IRS employer identification number)
560 Mission Street, Suite 2900 San Francisco, CA	94105
(Address of principal executive offices)	(Zip Code)

(415) 738-6500

(Registrant’s telephone number, including area code)

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

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

Large accelerated filer  x	Accelerated filer  ¨
Non-accelerated filer  ¨	Smaller reporting company  ¨

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

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

Class	Outstanding at July 31, 2008
Common Stock, $.01 par value per share	71,925,302

DIGITAL REALTY TRUST, INC.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2008

TABLE OF CONTENTS

		Page number
PART I.	FINANCIAL INFORMATION
ITEM 1.	Condensed Consolidated Financial Statements:
	Condensed Consolidated Balance Sheets as of June 30, 2008 (unaudited) and December 31, 2007	3
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2008 and 2007 (unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2008 and 2007 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2008 and 2007 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements	8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	39
ITEM 4.	Controls and Procedures	43
PART II.	OTHER INFORMATION
ITEM 1.	Legal Proceedings	43
ITEM 1A.	Risk Factors	43
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
ITEM 3.	Defaults Upon Senior Securities	43
ITEM 4.	Submission of Matters to a Vote of Security Holders	43
ITEM 5.	Other Information	43
ITEM 6.	Exhibits	44
	Signatures	45

2

DIGITAL REALTY TRUST, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	June 30, 2008			December 31, 2007
	(unaudited)
ASSETS
Investments in real estate:
Properties:
Land	$	329,557		$	316,196
Acquired ground leases		2,895			2,790
Buildings and improvements		2,274,652			1,968,850
Tenant improvements		200,982			193,436
Total investments in properties		2,808,086			2,481,272
Accumulated depreciation and amortization		(241,964	)		(188,099	)
Net investments in properties		2,566,122			2,293,173
Investment in unconsolidated joint venture		8,172			8,521
Net investments in real estate		2,574,294			2,301,694
Cash and cash equivalents		19,764			31,352
Accounts and other receivables, net of allowance for doubtful accounts of $2,945 and $3,167 as of June 30, 2008 and December 31, 2007, respectively		47,469			43,440
Deferred rent		81,545			64,639
Acquired above market leases, net		36,410			38,762
Acquired in place lease value and deferred leasing costs, net		240,462			253,642
Deferred financing costs, net		15,820			17,610
Restricted cash		36,949			41,302
Other assets		18,137			17,023
Total Assets	$	3,070,850		$	2,809,464
LIABILITIES AND STOCKHOLDERS’ EQUITY
Revolving credit facility	$	287,843		$	299,731
Mortgage loans		900,829			895,507
Exchangeable senior debentures		172,500			172,500
Accounts payable and other accrued liabilities		147,132			176,143
Accrued dividends and distributions		—			22,345
Acquired below market leases, net		88,995			93,572
Security deposits and prepaid rents		26,502			27,839
Total liabilities		1,623,801			1,687,637
Commitments and contingencies
Minority interests in consolidated joint ventures		12,423			4,928
Minority interests in operating partnership, redemption value of $254,919 as of June 30, 2008		66,453			72,983
Stockholders’ equity:
Preferred Stock: $0.01 par value, 30,000,000 authorized:
Series A Cumulative Redeemable Preferred Stock, 8.50%, $103,500,000 liquidation preference ($25.00 per share), 4,140,000 issued and outstanding		99,297			99,297
Series B Cumulative Redeemable Preferred Stock, 7.875%, $63,250,000 liquidation preference ($25.00 per share), 2,530,000 issued and outstanding		60,502			60,502
Series C Cumulative Convertible Preferred Stock, 4.375%, $175,000,000 liquidation preference ($25.00 per share), 7,000,000 issued and outstanding		169,068			169,068
Series D Cumulative Convertible Preferred Stock, 5.500%, $345,000,000 liquidation preference ($25.00 per share), 13,800,000 issued and outstanding		333,586			—
Common Stock; $0.01 par value: 125,000,000 authorized, 66,174,618 and 65,406,240 shares issued and outstanding as of June 30, 2008 and December 31, 2007, respectively		661			654
Additional paid-in capital		824,249			814,106
Dividends in excess of earnings		(137,319	)		(103,090	)
Accumulated other comprehensive income, net		18,129			3,379
Total stockholders’ equity		1,368,173			1,043,916
Total liabilities and stockholders' equity	$	3,070,850		$	2,809,464

See accompanying notes to the condensed consolidated financial statements.

3

DIGITAL REALTY TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited in thousands, except share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
Operating Revenues:
Rental	$	97,966		$	78,705		$	190,712		$	151,993
Tenant reimbursements		25,698			16,631			47,485			32,310
Other		112			247			126			247
Total operating revenues		123,776			95,583			238,323			184,550
Operating Expenses:
Rental property operating and maintenance		36,396			23,865			67,960			45,104
Property taxes		8,522			7,342			16,646			14,882
Insurance		1,198			1,419			2,403			2,845
Depreciation and amortization		39,570			31,832			78,707			61,231
General and administrative		9,823			8,456			18,668			15,666
Other		138			128			589			316
Total operating expenses		95,647			73,042			184,973			140,044
Operating income		28,129			22,541			53,350			44,506
Other Income (Expenses):
Equity in earnings of unconsolidated joint venture		173			216			331			761
Interest and other income		407			532			1,062			1,045
Interest expense		(14,281	)		(15,264	)		(28,913	)		(31,858	)
Loss from early extinguishment of debt		(182	)		—			(182	)		—
Income from continuing operations before minority interests		14,246			8,025			25,648			14,454
Minority interests in consolidated joint ventures		(50	)		—			(50	)		—
Minority interests in continuing operations of operating partnership		(366	)		(305	)		(660	)		(806	)
Income from continuing operations		13,830			7,720			24,938			13,648
Income from discontinued operations before gain on sale of assets and minority interests		—			43			—			1,413
Gain on sale of assets		—			—			—			18,049
Minority interests attributable to discontinued operations		—			(5	)		—			(3,266	)
Income from discontinued operations		—			38			—			16,196
Net income		13,830			7,758			24,938			29,844
Preferred stock dividends		(10,102	)		(5,167	)		(18,360	)		(8,612	)
Net income available to common stockholders	$	3,728		$	2,591		$	6,578		$	21,232
Income per share from continuing operations available to common stockholders:
Basic	$	0.06		$	0.04		$	0.10		$	0.08
Diluted	$	0.05		$	0.04		$	0.10		$	0.08
Income per share from discontinued operations:
Basic	$	—		$	—		$	—		$	0.28
Diluted	$	—		$	—		$	—		$	0.27
Net income per share available to common stockholders:
Basic	$	0.06		$	0.04		$	0.10		$	0.36
Diluted	$	0.05		$	0.04		$	0.10		$	0.35
Weighted average common shares outstanding:
Basic		65,889,122			60,697,740			65,660,354			58,616,035
Diluted		68,068,600			62,970,291			67,563,963			60,732,425

See accompanying notes to the condensed consolidated financial statements.

4

DIGITAL REALTY TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited in thousands)

	Three months ended June 30,						Six months ended June 30,
	2008			2007			2008			2007
Net income	$	13,830		$	7,758		$	24,938		$	29,844
Other comprehensive income:
Foreign currency translation adjustments		2,821			287			12,910			1,293
Minority interests in foreign currency translation adjustments		(252	)		(31	)		(1,195	)		(200	)
Increase in fair value of interest rate swaps		5,635			3,519			3,501			4,161
Minority interests in increase in fair value of interest rate swaps		(503	)		(375	)		(304	)		(483	)
Reclassification to interest expense from interest rate swaps		174			(313	)		(179	)		(1,695	)
Minority interests in reclassification to interest expense from interest rate swaps		(16	)		33			17			265
Comprehensive income	$	21,689		$	10,878		$	39,688		$	33,185

See accompanying notes to the condensed consolidated financial statements.

5

DIGITAL REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited in thousands)

	Six Months Ended
	June 30, 2008			June 30, 2007
Cash flows from operating activities (including discontinued operations):
Net income	$	24,938		$	29,844
Adjustments to reconcile net income to net cash provided by operating activities
Gain on sale of assets		—			(18,049	)
Minority interests in operating partnership and discontinued operations		660			4,072
Minority interests in consolidated joint ventures		50			—
Equity in earnings of unconsolidated joint venture		(331	)		(761	)
Distributions from unconsolidated joint venture		1,290			389
Write-off of net assets due to early lease terminations		309			(34	)
Depreciation and amortization of buildings and improvements, tenant improvements and acquired ground leases, including amounts for discontinued operations		53,662			35,277
Amortization over the vesting period of the fair value of share-based compensation		3,918			1,343
Allowance for doubtful accounts		(220	)		36
Amortization of deferred financing costs		2,809			2,699
Write-off of deferred financing costs, included in net loss on early extinguishment of debt		182			—
Amortization of debt premium		(114	)		(114	)
Amortization of acquired in place lease value and deferred leasing costs		25,046			26,333
Amortization of acquired above market leases and acquired below market leases, net		(5,416	)		(4,916	)
Changes in assets and liabilities:
Restricted cash		4,649			(3,150	)
Accounts and other receivables		(625	)		186
Deferred rent		(16,671	)		(10,497	)
Deferred leasing costs		(3,352	)		(5,867	)
Other assets		1,181			2,558
Accounts payable and other accrued liabilities		(17,099	)		(2,582	)
Security deposits and prepaid rents		(1,512	)		(302	)
Net cash provided by operating activities (including discontinued operations)		73,354			56,465
Cash flows from investing activities:
Acquisitions of properties		(68,595	)		(192,753	)
Proceeds from sale of assets, net of sales costs		—			78,191
Deposits paid for acquisitions of properties		(100	)		(1,089	)
Receipt of value added tax refund		9,149			412
Refundable value added tax paid		(11,544	)		(5,226	)
Change in restricted cash		(723	)		(986	)
Improvements to investments in real estate		(249,402	)		(83,910	)
Tenant improvement advances to tenants		(16,692	)		(17,878	)
Collection of advances to tenants for tenant improvements		16,433			22,185
Purchase of joint venture partners’ interests		(610	)		—
Net cash used in investing activities		(322,084	)		(201,054	)

6

DIGITAL REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(in thousands)

	Six Months Ended
	June 30, 2008			June 30, 2007
Cash flows from financing activities:
Borrowings on revolving credit facility	$	297,066		$	261,590
Repayments on revolving credit facility		(308,372	)		(294,000	)
Proceeds from mortgage loans		—			121,288
Principal payments on mortgage loans		(7,594	)		(44,090	)
Change in restricted cash		427			(325	)
Payment of loan fees and costs		(867	)		(1,807	)
Contributions from joint venture partners		6,525			—
Gross proceeds from the sale of preferred stock		334,650			175,000
Common stock offering costs paid		(76	)		—
Preferred stock offering costs paid		(556	)		(5,444	)
Proceeds from exercise of stock options		1,506			402
Payment of dividends to preferred stockholders		(18,360	)		(3,445	)
Payment of dividends to common stockholders and distributions to limited partners of operating partnership		(67,207	)		(38,827	)
Net cash provided by financing activities		237,142			170,342
Net (decrease) increase in cash and cash equivalents		(11,588	)		25,753
Cash and cash equivalents at beginning of period		31,352			22,261
Cash and cash equivalents at end of period	$	19,764		$	48,014
Supplemental disclosure of cash flow information:
Cash paid for interest, including amounts capitalized	$	34,784		$	32,241
Cash paid for taxes		601			376
Supplementary disclosure of noncash investing and financing activities:
Change in net assets related to foreign currency translation adjustments	$	12,910		$	1,293
Accrual of dividends and distributions		—			24,626
Increase in other assets related to increase in fair value of interest rate swaps		3,501			4,161
Increase to accounts and other receivables related to sale of interest rate swap agreement		—			—
Reclassification of owner’s equity to minority interest in the Operating Partnership		(1,526	)		739
Operating Partnership units redeemed for or converted to shares of common stock		6,679			65,201
Assumption of mortgage loans		(2,836	)		—
Accrual for additions to investments in real estate and tenant improvement advances included in accounts payable and accrued expenses		69,452			6,653
Allocation of purchase price of properties to:
Investments in real estate		67,868			175,624
Accounts and other receivables		—			1,686
Other assets					952
Acquired above market leases		440			(91	)
Acquired below market leases		(3,104	)		(17,984	)
Acquired in place lease value and deferred leasing costs		3,493			34,738
Accounts payable and other accrued liabilities		(38	)		(1,925	)
Security deposits and prepaid rents		(64	)		(247	)
Cash paid for acquisition of properties	$	68,595		$	192,753

See accompanying notes to the consolidated financial statements.

7

DIGITAL REALTY TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008 and 2007

(unaudited)

1. Organization and Description of Business

Digital Realty Trust, Inc. through its controlling interest in Digital Realty Trust, L.P. (the Operating Partnership) and the subsidiaries of the Operating Partnership (collectively, we or the Company) is engaged in the business of owning, acquiring, developing, redeveloping and managing technology-related real estate. The Company is focused on providing Turn-Key Datacenter^™ and Powered Base Building^™ datacenter solutions for domestic and international tenants across a variety of industry verticals ranging from information technology and Internet enterprises, to manufacturing and financial services. As of June 30, 2008, our portfolio consisted of 74 properties, excluding one property held as an investment in an unconsolidated joint venture, of which 61 are located throughout North America and 13 are located in Europe. Our properties are diversified in major markets where corporate datacenter and technology tenants are concentrated, including the Chicago, Dallas, Los Angeles, New York, Northern Virginia, Phoenix, San Francisco and Silicon Valley metropolitan areas in the U.S. and the London, Dublin, Paris and Amsterdam markets in Europe. The portfolio consists of Internet gateway and corporate datacenter properties, technology manufacturing properties and regional or national headquarters of technology companies.

The Operating Partnership was formed on July 21, 2004 in anticipation of our initial public offering (IPO) on November 3, 2004 and commenced operations on that date. As of June 30, 2008, we own a 91.4% common interest and a 100% preferred interest in the Operating Partnership. As general partner, we have control over the Operating Partnership. The limited partners of the Operating Partnership do not have rights to replace us as the general partner nor do they have participating rights, although they do have certain protective rights.

2. Summary of Significant Accounting Policies

(a) Principles of Consolidation and Basis of Presentation

The accompanying interim condensed consolidated financial statements include all of the accounts of Digital Realty Trust, Inc., the Operating Partnership and the subsidiaries of the Operating Partnership. Intercompany balances and transactions have been eliminated.

Property interests contributed to the Operating Partnership by our predecessor, Global Innovation Partners, LLC (GI Partners) in exchange for units have been accounted for as a reorganization of entities under common control in a manner similar to a pooling of interests. Accordingly, the contributed assets and assumed liabilities were recorded at the predecessor’s historical cost basis. Property interests acquired from third parties for cash or Units are accounted for using purchase accounting.

The accompanying interim condensed consolidated financial statements are unaudited, but have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and in compliance with the rules and regulations of the United States Securities and Exchange Commission. Accordingly, they do not include all of the disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments necessary for a fair presentation have been included. All such adjustments are considered to be of a normal recurring nature, except as otherwise indicated. The results of operations for the interim periods are not necessarily indicative of the results to be obtained for the full fiscal year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our annual report on Form 10-K for the year ended December 31, 2007.

(b) Cash Equivalents

For purpose of the condensed consolidated statements of cash flows, we consider short-term investments with original maturities of 90 days or less to be cash equivalents. As of June 30, 2008 and December 31, 2007, cash equivalents consist of investments in money market instruments.

(c) Share Based Compensation

We account for share based compensation using the fair value method of accounting. The estimated fair value of the stock options granted by us is being amortized on a straight-line basis over the vesting period of the stock options. The estimated fair value of the long-term incentive units and Class C Units (discussed in note 10) granted by us is being amortized on a straight-line basis over the expected service period.

For share based compensation awards with performance conditions, we estimate the fair value of the award for each of the possible performance condition outcomes and amortize the compensation cost based on management’s projected performance outcome. In the instance management’s projected performance outcome changes prior to the final measurement date, compensation cost is adjusted accordingly.

8

(d) Income Taxes

We have elected to be treated and believe that we have operated in a manner that has enabled us to qualify as a Real Estate Investment Trust (REIT) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the Code). As a REIT, we generally are not required to pay federal corporate income and excise taxes on our taxable income to the extent it is currently distributed to our stockholders.

However, qualification and taxation as a REIT depends upon our ability to meet the various qualification tests imposed under the Code, including tests related to annual operating results, asset composition, distribution levels and diversity of stock ownership. Accordingly, no assurance can be given that we will be organized or be able to operate in a manner so as to qualify or remain qualified as a REIT. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate tax rates.

Even if we qualify for taxation as a REIT, we are taxed in certain states in which we operate. Our consolidated taxable REIT subsidiaries are subject to both federal and state income taxes to the extent there is taxable income. We are also taxed in foreign countries where we operate that do not recognize U.S. REITs under their respective tax laws. Accordingly, we recognize and accrue income taxes for taxable REIT subsidiaries, certain states and foreign jurisdictions, as appropriate.

(e) Presentation of Transactional-based Taxes

In accordance with the provisions of Emerging Issues Task Force Issue No. 06-3 (EITF 06-3), How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation), we account for such taxes on a net basis.

(f) Asset Retirement Obligations

We record accruals for estimated retirement obligations as required by SFAS No. 143, “Accounting for Asset Retirement Obligations” and FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations”. The amount of asset retirement obligations relates primarily to estimated asbestos removal costs at the end of the economic life of properties that were built before 1984. As of June 30, 2008 and December 31, 2007, the amount included in accounts payable and other accrued liabilities on our condensed consolidated balance sheets was approximately $1.6 million, and the equivalent asset is recorded at $1.5 million, net of accumulated depreciation.

(g) Assets and Liabilities Measured at Fair Value

On January 1, 2008, we adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances. However, the FASB issued FASB Staff Positions (“FSP”) 157-1 and 157-2, which impact our adoption of SFAS 157. FSP 157-1 amends SFAS 157 to exclude FASB No. 13, “Accounting for Leases,” and its related interpretive accounting pronouncements that address leasing transactions, while FSP 157-2 delays the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis, until fiscal years beginning after November 15, 2008.

SFAS No. 157 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, SFAS No. 157 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which is typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The reporting entity’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

9

(h) Management’s Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(i) Reclassifications

Certain reclassifications to prior year amounts have been made to conform to the current year presentation.

This consists of a reclassification of the increase in restricted cash to cash flows from investing activities and cash flows from financing activities in the consolidated statements of cash flows for the six months ended June 30, 2007 by $986,000 and $325,000, respectively, with a corresponding reclassification from cash flows from operating activities.

3. Minority Interests in the Operating Partnership

Minority interests in the Operating Partnership relate to the interests that are not owned by us. The following table shows the ownership interest in the Operating Partnership as of June 30, 2008 and December 31, 2007:

	June 30, 2008			December 31, 2007
	Common units and long term incentive units	Percentage of total		Common units and long term incentive units	Percentage of total
The Company	66,174,618	91.4	%	65,406,240	90.7	%
Minority interest consisting of:
Third Parties	4,950,070	6.8		5,290,070	7.4
Employees ( includes long term incentive units, see note 10)	1,281,151	1.8		1,385,724	1.9
	72,405,839	100.0	%	72,082,034	100.0	%

The following table shows activity for the Operating Partnership and long-term incentive units that are not owned by us for the six months ended June 30, 2008:

	Third Parties		Employees / Directors		Total
As of January 1, 2008	5,290,070		1,385,724		6,675,794
Redemption of third party common Operating Partnership units for shares of our common stock (1)	(340,000	)	—		(340,000	)
Redemption of common Operating Partnership units for shares of our common stock by an employee of the Company (1)	—		(200,000	)	(200,000	)
Conversion of long-term incentive units for shares of our common stock by employees of the Company (1)	—		(80,745	)	(80,745	)
Grant of long-term incentive units to employees/directors	—		176,172		176,172
As of June 30, 2008	4,950,070		1,281,151		6,231,221

(1) This redemption was recorded as a reduction to minority interest and an increase to common stock and additional paid in capital based on the book value per unit in the accompanying condensed consolidated balance sheet.

Limited partners have the right to require the Operating Partnership to redeem part or all of their common units for cash based on the fair market value of an equivalent number of shares of our common stock at the time of the redemption. The redemption value of the outstanding Operating Partnership common units held by third parties and employees was approximately $254.9 million based on the closing market price of the Company’s common stock on June 30, 2008. Alternatively, we may elect to acquire those common units in exchange for shares of our common stock on a one-for-one basis, subject to adjustment in the event of stock splits, stock dividends, issuance of stock rights, specified extraordinary distributions and similar events. We have filed a shelf registration statement covering the issuance of the shares of our common stock issuable upon redemption of certain common units, and the resale of those shares of common stock by the holders.

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Under the terms of certain third parties’ (the eXchange parties) contribution agreements signed in the third quarter of 2004, we have agreed to indemnify each exchange party against adverse tax consequences in the event the Operating Partnership directly or indirectly sells, exchanges or otherwise disposes of (whether by way of merger, sale of assets or otherwise) in a taxable transaction any interest in 200 Paul Avenue 1-4 or 1100 Space Park Drive until the earlier of November 3, 2013 and the date on which these contributors hold less than 25% of the Operating Partnership common units issued to them in the formation transactions consummated concurrently with the IPO. Under the eXchange parties’ amended contribution agreement, the Operating Partnership has agreed to make approximately $17.8 million of indebtedness available for guaranty by the eXchange parties until the earlier of November 3, 2013 and the date on which these contributors or certain transferees hold less than 25% of the Operating Partnership common units issued to them in the formation transactions consummated concurrently with the IPO, and we have agreed to indemnify each eXchange party against adverse tax consequences if the Operating Partnership does not provide such indebtedness to guarantee.

4. Properties Acquired During the Six Months Ended June 30, 2008

We acquired the following real estate properties during the six months ended June 30, 2008:

Location	Metropolitan Area	Date Acquired	Purchase Price (in millions) (1)
365 South Randolphville Road	New York	February 14, 2008	$	20.4
701 & 717 Leonard Street (2)	Dallas	May 13, 2008		12.1
650 Randolph Road	New York	June 13, 2008		10.9
Manchester Technopark Plot C1, Birley Fields	Manchester	June 20, 2008		24.7
1201 Comstock Street (3)	Silicon Valley	June 30, 2008		1.9
			$	70.0

(1) Includes closing costs.

(2) Acquisition of a parking garage adjacent to one of our properties in Dallas, Texas.

(3) Represents the amount to acquire a 50% interest in a joint venture that owns this above building. Since we control the joint venture, we have consolidated the joint venture in the accompanying consolidated financial statements. Upon consolidation, we included total assets of $3.8 million and minority interest of $1.9 million.

The purchase prices of these acquisitions have been allocated on a preliminary basis to the individual assets acquired. We expect to finalize our purchase price allocations no later than twelve months from the date of each acquisition.

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5. Discontinued Operations

In the six months ended June 30, 2007, we sold the following properties:

Property	Date of Sale	Proceeds (in millions)		Gain on Sale (in millions)
4055 Valley View Lane	March 30, 2007	$	33.0	$	6.2
100 Technology Center Drive	March 20, 2007		45.5		11.8

The results of operations of the properties above are reported as discontinued operations for all periods presented in the accompanying consolidated condensed financial statements. The following table summarizes the income and expense components that comprise income (loss) from discontinued operations for the three and six months ended June 30, 2008 and 2007 (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2008		2007			2008		2007
Operating revenues	$	—	$	(52	)	$	—	$	2,339
Operating expenses		—		(31	)		—		(1,264	)
Interest and other income		—		4			—		5
Interest expense		—		122			—		(607	)
Gain on derivative instruments		—		—			—		940
		—		43			—		1,413
Gain on sale of assets		—		—			—		18,049
Minority interests attributable to discontinued operations		—		(5	)		—		(3,266	)
Income (loss) from discontinued operations	$	—	$	38		$	—	$	16,196

We sold no properties during the six months ended June 30, 2008.

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6. Debt

A summary of outstanding indebtedness as of June 30, 2008 and December 31, 2007, respectively, is as follows (in thousands):

Properties	Interest Rate at June 30, 2008			Maturity Date	Principal Outstanding June 30, 2008			Principal Outstanding December 31, 2007
Mortgage loans:
Secured Term Debt (1)(2)	5.65%			Nov. 11, 2014	$	147,628		$	148,738
350 East Cermak Road (2)	1-month LIBOR + 2.20%	(3	)	Jun. 9, 2009(4)		97,292			97,993
200 Paul Avenue 1-4 (2)	5.74%			Oct. 8, 2015		80,063			80,768
2045 & 2055 LaFayette Street (2)	5.93%			Feb. 6, 2017		68,000			68,000
600 West Seventh Street	5.80%			Mar. 15, 2016		57,432			58,032
2323 Bryan Street (2)	6.04%			Nov. 6, 2009		55,447			55,832
34551 Ardenwood Boulevard 1-4 (2)	5.95%			Nov. 11, 2016		55,000			55,000
1100 Space Park Drive (2)	5.89%			Dec. 11, 2016		55,000			55,000
150 South First Street (2)	6.30%			Feb. 6, 2017		53,288			53,288
2334 Lundy Place (2)	5.96%			Nov. 11, 2016		40,000			40,000
114 Rue Ambroise Croizat (5)	3-month EURIBOR + 1.35%	(6	)	Jan. 18, 2012		50,708	(7)		47,294	(7)
Unit 9, Blanchardstown Corporate Park (5)	3-month EURIBOR + 1.35%	(6	)	Jan. 18, 2012		43,596	(7)		40,661	(7)
6 Braham Street	3-month GBP LIBOR + 0.90%	(6	)	Apr. 10, 2011		26,298	(8)		26,172	(8)
Paul van Vlissingenstraat 16	3-month EURIBOR + 1.60%	(6	)	Jul. 18, 2013		17,116	(7)		15,965	(7)
Chemin de l’Epinglier 2	3-month EURIBOR + 1.50%	(6	)	Jul. 18, 2013		12,430	(7)		11,594	(7)
Gyroscoopweg 2E-2F (9)	3-month EURIBOR + 1.50%	(6	)	Oct. 18, 2013		10,895	(7)		10,163	(7)
1125 Energy Park Drive	7.62%	(10	)	Mar. 1, 2032		9,397			9,456
375 Riverside Parkway	3-month LIBOR + 1.85%	(6	)	Dec. 1, 2008		8,459			8,564
731 East Trade Street	8.22%			Jul. 1, 2020		5,616			5,708
1500 Space Park Drive	1-month LIBOR + 2.75%			Aug. 3, 2008(11)		5,541			5,541
						899,206			893,769
Revolving credit facility	Various	(12)		Aug. 31, 2010(13)		287,843	(14)		299,731	(14)
Exchangeable senior debentures	4.13%			Aug. 15, 2026(15)		172,500			172,500
3 Corporate Place construction loan	1-month LIBOR + 2.25%			Dec. 1, 2008		—	(16)		—
Total principal outstanding						1,359,549			1,366,000
Loan premium — 1125 Energy Park Drive and 731 East Trade Street mortgages						1,623			1,738
Total indebtedness					$	1,361,172		$	1,367,738

(1) This amount represents six mortgage loans secured by our interests in 36 NE 2nd Street, 3300 East Birch Street, 100 & 200 Quannapowitt Parkway, 300 Boulevard East, 4849 Alpha Road, and 11830 Webb Chapel Road. Each of these loans is cross-collateralized by the six properties.

(2) The respective borrower’s assets and credit are not available to satisfy the debts and other obligations of affiliates or any other person.

(3) This is the weighted average interest rate as of June 30, 2008. The first note, in a principal amount of $77.8 million, bears interest at a rate of 1-month LIBOR + 1.375% per annum and the second note, in a principal amount of $19.5 million, bears interest at a rate of 1-month LIBOR + 5.5% per annum. This loan is subject to an interest rate cap agreement. See note 11 for further information.

(4) The first one-year extension has been exercised, an additional one-year extension is available which we may exercise if certain conditions are met.

(5) These loans are also secured by a €4.0 million letter of credit. These loans are cross-collateralized by the two properties.

(6) We have entered into interest rate swap agreements as a cash flow hedge for interest generated by these LIBOR, EURIBOR and GBP LIBOR based loans. See note 11 for further information.

(7) Based on exchange rate of $1.58 to €1.00 as of June 30, 2008 and $1.46 to €1.00 as of December 31, 2007.

(8) Based on exchange rate of $1.99 to £1.00 as of June 30, 2008 and $1.99 to £1.00 as of December 31, 2007.

(9) This loan is also secured by a €1.3 million letter of credit.

(10) If the loan is not repaid by March 1, 2012, the interest rate increases to the greater of 9.62% or the then treasury rate plus 2%.

(11) This loan was paid in full on August 4, 2008.

(12) The interest rate under our revolving credit facility equals either (i) LIBOR, EURIBOR and GBP LIBOR (ranging from 1- to 6-month maturities) plus a margin of between 1.10% and 2.00% or (ii) the greater of (x) the base rate announced by the lender and (y) 1/2 of 1% per annum above the federal funds rate, plus a margin of between 0.10% and 1.00%. In each case, the margin is based on our total leverage ratio. We incur a fee ranging from 0.125% to 0.20% for the unused portion of our unsecured revolving credit facility.

(13) Two one-year extensions are available, which we may exercise if certain conditions are met.

(14) Balances as of June 30, 2008 and December 31, 2007 are as follows (US$, in thousands):

Denomination of Draw	Balance as of June 30, 2008			Weighted-average interest rate		Balance as of December 31, 2007			Weighted-average interest rate
US ($)	$	155,000		3.59	%	$	111,000		6.12	%
Euro (€)		86,198	(a)	5.59	%		84,577	(a)	5.86	%
British Sterling (£)		46,645	(b)	6.61	%		104,154	(b)	7.55	%
Total	$	287,843		4.68	%	$	299,731		6.54	%

(a) Based on exchange rate of $1.58 to €1.00 as of June 30, 2008 and $1.46 to €1.00 as of December 31, 2007.

(b) Based on exchange rate of $1.99 to £1.00 as of June 30, 2008 and $1.99 to £1.00 as of December 31, 2007.

(15) The holders of the debentures have the right to require the Operating Partnership to repurchase the debentures in cash in whole or in part for a price of 100% of the principal amount plus accrued and unpaid interest on each of August 15, 2011, August 15, 2016 and August 15, 2021. We have the right to redeem the debentures in cash for a price of 100% of the principal amount plus accrued and unpaid interest commencing on August 18, 2011.

(16) The facility was terminated on June 12, 2008.

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As of June 30, 2008, our revolving credit facility had a total capacity of $650.0 million and matures in August 2010, subject to two one-year extension options exercisable by us. As of June 30, 2008, borrowings under the revolving credit facility bore interest at a blended rate of 3.59% (US dollar), 5.59% (Euro) and 6.61% (British Pound Sterling), which is based on 1-month LIBOR, 1-month EURIBOR and 1-month GBP LIBOR, respectively, plus a margin of 1.10%. The margin can range from 1.10% to 2.00%, depending on our Operating Partnership’s total overall leverage. The revolving credit facility has a $450.0 million sub-facility for multicurrency advances in British Pounds Sterling, Canadian Dollars, Euros, and Swiss Francs. We intend to use available borrowings under the revolving credit facility to, among other things, finance the acquisition of additional properties, fund tenant improvements and capital expenditures, fund development and redevelopment activities and to provide for working capital and other corporate purposes. As of June 30, 2008, approximately $287.8 million was drawn under this facility, and $10.1 million of letters of credit were issued.

The credit facility contains various restrictive covenants, including limitations on our ability to incur additional indebtedness, make certain investments or merge with another company, and requirements to maintain financial coverage ratios as well as a pool of unencumbered assets. In addition, except to enable us to maintain our status as a REIT for federal income tax purposes, we are not permitted during any four consecutive fiscal quarters to make distributions with respect to common stock or other equity interests in an aggregate amount in excess of 95% of Funds From Operations, as defined, for such period, subject to certain other adjustments. As of June 30, 2008, we were in compliance with all of the covenants.

Some of the loans impose penalties upon prepayment. The terms of the following mortgage loans do not permit prepayment of the loan without penalty prior to the dates listed below:

Loan	Date
2323 Bryan Street	August 2009
1125 Energy Park Drive	December 2011
Secured Term Debt	September 2014
200 Paul Avenue 1-4	September 2015
2334 Lundy Place	August 2016
34551 Ardenwood Boulevard 1-4	August 2016
1100 Space Park Drive	September 2016
2045 & 2055 LaFayette Street	November 2016
150 South First Street	November 2016

During the three months ended June 30, 2008 and 2007, we capitalized interest of approximately $4.5 million and $2.8 million, respectively, and for the six months ended June 30, 2008 and 2007, we capitalized interest of approximately $8.9 million and $4.3 million, respectively.

Exchangeable Senior Debentures due 2026

On August 15, 2006, the Operating Partnership issued $172.5 million of its 4.125% exchangeable senior debentures due August 15, 2026 (the Debentures). Costs incurred to issue the Debentures were approximately $6.2 million. These costs are being amortized over a period of five years, which represents the estimated term of the Debentures, and are included in deferred financing costs, net in the consolidated balance sheet. The Debentures are general unsecured senior obligations of the Operating Partnership and rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership.

Interest is payable on August 15 and February 15 of each year beginning February 15, 2007 until the maturity date of August 15, 2026. The Debentures bear interest at 4.125% per annum and contain an exchange settlement feature, which provides that the Debentures may, under certain circumstances, be exchangeable for cash (up to the principal amount of the Debentures) and, with respect to any excess exchange value, into cash, shares of our common stock or a combination of cash and shares of our common stock at an initial exchange rate of 30.6828 shares per $1,000 principal amount of Debentures. The exchange rate on the Debentures is subject to adjustment for certain events, including, but not limited to, certain dividends on our common stock in excess of $0.265 per share per quarter.

Prior to August 18, 2011, the Operating Partnership may not redeem the Debentures except to preserve its status as a REIT for U.S. federal income tax purposes. On or after August 18, 2011, at the Operating Partnership’s option, the Debentures are redeemable in cash in whole or in part at 100% of the principal amount plus unpaid interest, if any, accrued to, but excluding, the redemption date, upon at least 30 days but not more than 60 days prior written notice to holders of the Debentures.

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The holders of the Debentures have the right to require the Operating Partnership to repurchase the Debentures in cash in whole or in part on each of August 15, 2011, August 15, 2016 and August 15, 2021, and in the event of a designated event, for a repurchase price equal to 100% of the principal amount of the Debentures plus unpaid interest, if any, accrued to, but excluding, the repurchase date. Designated events include certain merger or combination transactions, non-affiliates becoming the beneficial owner of more than 50% of the total voting power of our capital stock, a substantial turnover of our company’s directors within a 12-month period, or our ceasing to be the general partner of the Operating Partnership. Certain events are considered “Events of Default,” which may result in the accelerated maturity of the Debentures, including a default for 30 days in payment of any installment of interest under the Debentures, a default in the payment of the principal amount or any repurchase price or redemption price due with respect to the Debentures and the Operating Partnership’s failure to deliver cash or any shares of our common stock within 15 days after the due date upon an exchange of the Debentures, together with any cash due in lieu of fractional shares of our common stock.

In addition, the Debentures are exchangeable (i) prior to July 15, 2026, during any fiscal quarter after the fiscal quarter ended September 30, 2006, if the closing sale price of the Company’s common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter exceeds 130% of the exchange price in effect on the last trading day of the immediately preceding fiscal quarter, (ii) prior to July 15, 2026, during the five business day period after any five consecutive trading day period in which the average trading price per $1,000 principal amount of Debentures was equal to or less than 98% of the product of the closing sale price of the common stock during such period, multiplied by the applicable exchange rate, (iii) if we call the Debentures for redemption, or (iv) any time on or after July 15, 2026.

We have entered into a registration rights agreement whereby we agreed to register the shares of common stock which could be issued in the future upon exchange of the Debentures. We filed the shelf registration statement with the U.S. Securities and Exchange Commission in April 2007.

7. Income per Share

The following is a summary of basic and diluted income per share (in thousands, except share and per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
Income from continuing operations	$	13,830		$	7,720		$	24,938		$	13,648
Preferred stock dividends		(10,102	)		(5,167	)		(18,360	)		(8,612	)
Income from continuing operations available to common stockholders		3,728			2,553			6,578			5,036
Income from discontinued operations		—			38			—			16,196
Net income available to common stockholders	$	3,728		$	2,591		$	6,578		$	21,232
Weighted average shares outstanding—basic		65,889,122			60,697,740			65,660,354			58,616,035
Potentially dilutive common shares:
Stock options		289,866			361,443			277,924			352,386
Class C Units (2005 Grant)		899,170			937,964			893,622			933,122
Excess exchange value of exchangeable senior debentures		990,442			973,144			732,063			830,882
Weighted average shares outstanding - diluted		68,068,600			62,970,291			67,563,963			60,732,425
Income per share - basic:
Income per share from continuing operations available to common stockholders	$	0.06		$	0.04		$	0.10		$	0.08
Income per share from discontinued operations		—			—			—			0.28
Net income per share available to common stockholders	$	0.06		$	0.04		$	0.10		$	0.36
Income per share - diluted:
Income per share from continuing operations available to common stockholders	$	0.05		$	0.04		$	0.10		$	0.08
Income per share from discontinued operations		—			—			—			0.27
Net income per share available to common stockholders	$	0.05		$	0.04		$	0.10		$	0.35

On or after July 15, 2026, the Debentures may be exchanged at the then applicable exchange rate for cash (up to the principal amount of the Debentures) and, with respect to any excess exchange value, into cash, shares of our common stock or a combination of cash and shares of our common stock at an initial exchange rate of 30.6828 shares per $1,000 principal amount of Debentures. The Debentures will also be exchangeable prior to July 15, 2026, but only upon the occurrence of certain specified events. During the three and six months ended June 30, 2008 and 2007, the weighted average common stock price exceeded the current strike price of $32.59

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per share. Therefore, using the treasury method, 990,442 and 973,144 shares of common stock contingently issuable upon settlement of the excess exchange value were included as potentially dilutive common shares in determining diluted earnings per share for the three months ended June 30, 2008 and 2007, respectively, and 732,063 and 830,882 shares of common stock contingently issuable upon settlement of the excess exchange value were included, as potentially dilutive common shares in determining diluted earnings per share for the six months ended June 30, 2008 and 2007, respectively.

We have excluded the following potentially dilutive securities in the calculations above as they would be antidilutive or not dilutive:

	Three Months Ended June 30,		Six Months Ended June 30,
	2008	2007	2008	2007
Weighted average of common Operating Partnership units not owned by us	6,464,455	7,258,603	6,604,180	9,320,938
Potentially dilutive outstanding stock options	584,753	619,000	588,004	619,000
Potentially dilutive outstanding Class C Units (2007 Grant)	750,724	750,724	750,724	750,724
Potentially dilutive Series C Cumulative Convertible Preferred Stock	3,614,800	3,614,800	3,614,800	3,614,800
Potentially dilutive Series D Cumulative Convertible Preferred Stock	8,217,900	—	6,628,803	—
	19,632,632	12,243,127	18,186,511	14,305,462

8. Income Taxes

We have elected to be taxed as a REIT and believe that we have complied with the REIT requirements of the Code as of June 30, 2008. As a REIT, we are generally not subject to corporate level federal income and excise taxes on taxable income to the extent it is currently distributed to our stockholders. Since inception, we have distributed 100% of our taxable income and we intend to do so for the tax year ending December 31, 2008. As such, no provision for federal income taxes has been included in the accompanying interim condensed consolidated financial statements for the three and six months ended June 30, 2008 and 2007.

As a REIT, we are subject to local and state taxes in certain states where we operate. We are also subject to foreign income taxes in countries that do not recognize U.S. REITs under their respective tax laws. Income taxes for these jurisdictions are accrued, as necessary, for the three and six months ended June 30, 2008 and 2007.

We have elected taxable REIT subsidiary (TRS) status for some of our consolidated subsidiaries. In general, a TRS may provide services that would otherwise be considered impermissible for REITs and hold assets that we cannot hold directly. We recognize federal, state and foreign income tax expenses for TRS entities, as necessary. There is no current tax provision for our TRS entities for the three and six months ended June 30, 2008 and 2007 due to taxable losses incurred.

9. Stockholders’ Equity

(a) Redeemable Preferred Stock

8.50% Series A Cumulative Redeemable Preferred Stock

We currently have outstanding 4,140,000 shares of our 8.50% series A cumulative redeemable preferred stock, or series A preferred stock. Dividends are cumulative on our series A preferred stock from the date of original issuance in the amount of $2.125 per share each year, which is equivalent to 8.50% of the $25.00 liquidation preference per share. Dividends on our series A preferred stock are payable quarterly in arrears. Our series A preferred stock does not have a stated maturity date and is not subject to any sinking fund or mandatory redemption provisions. Upon liquidation, dissolution or winding up, our series A preferred stock will rank senior to our common stock with respect to the payment of distributions and other amounts and rank on parity with our series B preferred stock, series C preferred stock and series D preferred stock. We are not allowed to redeem our series A preferred stock before February 9, 2010, except in limited circumstances to preserve our status as a REIT. On or after February 9, 2010, we may, at our option, redeem our series A preferred stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus all accrued and unpaid dividends on such series A preferred stock up to but excluding the redemption date. Holders of our series A preferred stock generally have no voting rights except for limited voting rights if we fail to pay dividends for six or more quarterly periods (whether or not consecutive) and in certain other circumstances. Our series A preferred stock is not convertible into or exchangeable for any other property or securities of our company.

7.875% Series B Cumulative Redeemable Preferred Stock

We currently have outstanding 2,530,000 shares of our 7.875% series B cumulative redeemable preferred stock, or series B preferred stock. Dividends are cumulative on our series B preferred stock from the date of original issuance in the amount of $1.96875 per share each year, which is equivalent to 7.875% of the $25.00 liquidation preference per share. Dividends on our series B preferred stock are

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payable quarterly in arrears. Our series B preferred stock does not have a stated maturity date and is not subject to any sinking fund or mandatory redemption provisions. Upon liquidation, dissolution or winding up, our series B preferred stock will rank senior to our common stock with respect to the payment of distributions and other amounts and rank on parity with our series A preferred stock, series C preferred stock and series D preferred stock. We are not allowed to redeem our series B preferred stock before July 26, 2010, except in limited circumstances to preserve our status as a REIT. On or after July 26, 2010, we may, at our option, redeem our series B preferred stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus all accrued and unpaid dividends on such series B preferred stock up to but excluding the redemption date. Holders of our series B preferred stock generally have no voting rights except for limited voting rights if we fail to pay dividends for six or more quarterly periods (whether or not consecutive) and in certain other circumstances. Our series B preferred stock is not convertible into or exchangeable for any other property or securities of our company.

(b) Convertible Preferred Stock

4.375% Series C Cumulative Convertible Preferred Stock

On April 10, 2007, we issued 7,000,000 shares of our 4.375% series C cumulative convertible preferred stock, or series C preferred stock. Dividends are cumulative on our series C preferred stock from the date of original issuance in the amount of $1.09375 per share each year, which is equivalent to 4.375% of the $25.00 liquidation preference per share. Dividends on our series C preferred stock are payable quarterly in arrears. Our series C preferred stock does not have a stated maturity date and is not subject to any sinking fund or mandatory redemption provisions. Upon liquidation, dissolution or winding up, our series C preferred stock will rank senior to our common stock with respect to the payment of distributions and other amounts and rank on parity with our series A preferred stock, series B preferred stock and series D preferred stock. We are not allowed to redeem our series C preferred stock, except in limited circumstances to preserve our status as a REIT. Holders of our series C preferred stock generally have no voting rights except for limited voting rights if we fail to pay dividends for six or more quarterly periods (whether or not consecutive) and in certain other circumstances.

Holders of shares of series C preferred stock may convert some or all of their outstanding shares of series C preferred stock initially at a conversion rate of 0.5164 shares of common stock per $25.00 liquidation preference. Except as otherwise provided, shares of our series C preferred stock will be convertible only into shares of our common stock. On or after April 10, 2012, we may, at our option, convert some or all of our series C preferred stock into that number of shares of common stock that are issuable at the then-applicable conversion rate. We may exercise this conversion option only if (1) the closing sale price per share of our common stock equals or exceeds 130% of the then-applicable conversion price of our series C preferred stock for at least 20 trading days in a period of 30 consecutive trading days (including the last trading day of such period) ending on the trading day immediately prior to our issuance of a press release announcing the exercise of our conversion option; and (2) on or prior to the effective date of our conversion option, we have either declared and paid, or declared and set apart for payment, any unpaid dividends that are in arrears on our series C preferred stock. The conversion rate on the series C preferred stock is subject to adjustment, including, but not limited to, for certain dividends on our common stock in excess of $0.28625 per share per quarter, subject to adjustment. If holders of shares of the series C preferred stock elect to convert their shares of the series C preferred stock in connection with a fundamental change that occurs on or prior to April 10, 2014, we will increase the conversion rate for shares of the series C preferred stock surrendered for conversion by a number of additional shares determined based on the stock price at the time of such fundamental change and the effective date of such fundamental change. The aggregate number of shares of our common stock issuable in connection with the exercise of the fundamental change conversion right may not exceed 7.3 million shares.

5.500% Series D Cumulative Convertible Preferred Stock

On February 6, 2008, we issued 13,800,000 shares of our 5.500% series D cumulative convertible preferred stock, or series D preferred stock. Dividends are cumulative on our series D preferred stock from the date of original issuance in the amount of $1.375 per share each year, which is equivalent to 5.500% of the $25.00 liquidation preference per share. Dividends on our series D preferred stock are payable quarterly in arrears. Our series D preferred stock does not have a stated maturity date and is not subject to any sinking fund or mandatory redemption provisions. Upon liquidation, dissolution or winding up, our series D preferred stock will rank senior to our common stock with respect to the payment of distributions and other amounts and rank on parity with our series A preferred stock, series B preferred stock and series C preferred stock. We are not allowed to redeem our series D preferred stock, except in limited circumstances to preserve our status as a REIT. Holders of our series D preferred stock generally have no voting rights except for limited voting rights if we fail to pay dividends for six or more quarterly periods (whether or not consecutive) and in certain other circumstances.

Holders of shares of series D preferred stock may convert some or all of their outstanding shares of series D preferred stock initially at a conversion rate of 0.5955 shares of common stock per $25.00 liquidation preference. Except as otherwise provided, shares of our series D preferred stock will be convertible only into shares of our common stock. On or after February 6, 2013, we may, at our option, convert some or all of our series D preferred stock into that number of shares of common stock that are issuable at the then-applicable conversion rate. We may exercise this conversion option only if (1) the closing sale price per share of our common stock equals or exceeds 130% of the then-applicable conversion price of our series D preferred stock for at least 20 trading days in a period of 30 consecutive trading days (including the last trading day of such period) ending on the trading day immediately prior to our

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issuance of a press release announcing the exercise of our conversion option; and (2) on or prior to the effective date of our conversion option, we have either declared and paid, or declared and set apart for payment, any unpaid dividends that are in arrears on our series D preferred stock. The conversion rate on the series D preferred stock is subject to adjustment, including, but not limited to, for certain dividends on our common stock in excess of $0.31 per share per quarter, subject to adjustment. If holders of shares of the series D preferred stock elect to convert their shares of the series D preferred stock in connection with a fundamental change that occurs on or prior to February 6, 2015, we will increase the conversion rate for shares of the series D preferred stock surrendered for conversion by a number of additional shares determined based on the stock price at the time of such fundamental change and the effective date of such fundamental change. The aggregate number of shares of our common stock issuable in connection with the exercise of the fundamental change conversion right may not exceed 16.4 million shares.

(b) Shares and Units

A common unit and a share of our common stock are structured to have essentially the same economic characteristics as they share equally in the total net income or loss and distributions of the Operating Partnership. The common units are further discussed in note 3 and the long term incentive units are discussed in note 10.

(c) Dividends and Distributions

In 2008, we have declared the following dividends and equivalent distributions on common units in our Operating Partnership (in thousands):

Date dividend and distribution declared	Dividend and distribution payable date	Series A Preferred Stock (1)		Series B Preferred Stock (2)		Series C Preferred Stock (3)		Series D Preferred Stock (4)		Common Stock and Operating Partnership Common Units (5)
February 25, 2008	March 31, 2008	$	2,199	$	1,246	$	1,914	$	2,899	$	22,418
May 5, 2008	June 30, 2008		2,199		1,246		1,914		4,744		22,444
Total		$	4,398	$	2,492	$	3,828	$	7,643	$	44,862

(1) $2.125 annual rate of dividend per share.

(2) $1.969 annual rate of dividend per share.

(3) $1.094 annual rate of dividend per share.

(4) $1.375 annual rate of dividend per share.

(5) $1.240 annual rate of dividend and distribution per share and unit.

10. Incentive Plan

Our 2004 Incentive Award Plan provides for the grant of incentive awards to employees, directors and consultants. Awards issuable under the 2004 Incentive Award Plan include stock options, restricted stock, dividend equivalents, stock appreciation rights, long-term incentive units, cash performance bonuses and other incentive awards. Only employees are eligible to receive incentive stock options under the 2004 Incentive Award Plan. Initially, we had reserved a total of 4,474,102 shares of common stock for issuance pursuant to the 2004 Incentive Award Plan, subject to certain adjustments set forth in the 2004 Incentive Award Plan. On May 2, 2007, our stockholders approved the First Amended and Restated Digital Realty Trust, Inc., Digital Realty Services, Inc. and Digital Realty Trust, L.P. 2004 Incentive Award Plan (the Amended and Restated 2004 Incentive Award Plan). The Amended and Restated 2004 Incentive Award Plan increases the aggregate number of shares of stock which may be issued or transferred under the plan by 5,000,000 shares to a total of 9,474,102 shares, and provides that the maximum number of shares of stock with respect to awards granted to any one participant during a calendar year will be 1,500,000 and the maximum amount that may be paid in cash during any calendar year with respect to any performance-based award not denominated in stock or otherwise for which the foregoing limitation would not be an effective limitation for purposes of Section 162(m) of the Code will be $10.0 million.

As of June 30, 2008, 3,928,252 shares of common stock or awards convertible into or exchangeable for common stock remained available for future issuance under the Amended and Restated 2004 Incentive Award Plan. Each long-term incentive and Class C Unit issued under the Amended and Restated 2004 Incentive Award Plan will count as one share of common stock for purposes of calculating the limit on shares that may be issued under the Amended and Restated 2004 Incentive Award Plan and the individual award limit discussed above.

(a) Long Term Incentive Units

Long-term incentive units, which are also referred to as profits interest units, may be issued to eligible participants for the performance of services to or for the benefit of the Operating Partnership. Long-term incentive units, whether vested or not, will receive the same

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quarterly per unit distributions as Operating Partnership common units, which equal per share distributions on our common stock. Initially, long-term incentive units do not have full parity with common units with respect to liquidating distributions. Upon the occurrence of specified events, long-term incentive units may over time achieve full parity with Operating Partnership common units for all purposes, and therefore accrete to an economic value for participants equivalent to our common stock on a one-for-one basis. If such parity is reached, vested long-term incentive units may be converted into an equal number of common units of the Operating Partnership at any time, and thereafter enjoy all the rights of common units of the Operating Partnership.

In connection with the IPO, an aggregate of 1,490,561 fully vested long-term incentive units were issued and compensation expense totaling $17.9 million was recorded at the completion of the IPO. Subsequent to the IPO, we have issued 282,485 long-term incentive units. The grant date fair values are being expensed on a straight-line basis over the vesting period of the long-term incentive units, which ranges from four to five years. During the three months ended March 31, 2008, certain employees were granted an aggregate of 95,652 long-term incentive units which, in addition to a service condition, are subject to a performance condition that impacts the number of units ultimately granted to the employee. The performance condition is based upon our achievement of fiscal year 2008 Funds From Operations per share targets. Upon evaluating the results of the performance condition, the final number of units is determined and such units vest based on achievement of the service conditions. The service conditions of the awards provide for 20% vesting on each of the first and second anniversaries of the original grant date and 30% vesting on each of the third and fourth anniversaries of the original grant date provided the grantee continues employment on each anniversary date.

The expense recorded for the three months ended June 30, 2008 and 2007 related to long-term incentive units was approximately $0.8 million and $0.2 million, respectively and was $1.2 million and $0.3 million for the six months ended June 30, 2008 and 2007, respectively. We capitalized amounts relating to compensation expense of employees directly engaged in construction and leasing activities of approximately $0.1 million and $0.2 million for the three and six months ended June 30, 2008, respectively, as compared to $7,000 for the three and six months ended June 30, 2007. Unearned compensation representing the unvested portion of the long-term incentive units totaled $9.1 million and $3.9 million as of June 30, 2008 and December 31, 2007, respectively. We expect to recognize this unearned compensation over the next 3.5 years on a weighted average basis.

(b) Class C Profits Interests Units

2005 Grant

During the fourth quarter of 2005, we granted to each of our named executive officers and certain other employees an award of Class C Units under our 2004 Incentive Award Plan (2005 Grant).

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The award agreements provide that the Class C Units subject to this award will vest based on the achievement of a 10% or greater compound annual total shareholder return, as defined, for the period from the grant date through the earlier of September 30, 2008 and the date of a change of control of our Company (the market condition) combined with the employee’s continued service with our company or the Operating Partnership through September 30, 2010. Upon achievement of the market condition, the Class C units will receive the same quarterly per unit distribution as common units in the Operating Partnership.

The aggregate amount of the 2005 Grant award pool will be equal to 7% of the excess shareholder value, as defined, created during the applicable performance period, but in no event will the amount of the pool exceed the lesser of $40.0 million or the value of 2.5% of the total number of shares of our common stock and limited partnership units of the Operating Partnership at the end of the performance period.

2007 Grant

On May 2, 2007, we granted to each of our named executive officers and certain other officers and employees an award of Class C Units of the Operating Partnership under the First Amended and Restated 2004 Incentive Award Plan (2007 Grant).

The Class C Units subject to this award will vest based on the achievement of a total shareholder return (which we refer to as the market condition) as measured on November 1, 2008 (which we refer to as the first measurement date) and May 1, 2010 (which we refer to as the second measurement date). If:

• with respect to the first measurement date, we achieve a total shareholder return equal to at least 18% over a period commencing on May 2, 2007 and ending on November 1, 2008; and

• with respect to the second measurement date, we achieve a total shareholder return equal to at least 36% over a period commencing on May 2, 2007 and ending on the earlier of May 1, 2010 and the date of a change in control of our company,

the aggregate amount of the 2007 Grant award pool will be equal to 8% of the excess shareholder value, as defined, created during the applicable performance period, but in no event will the amount of the pool exceed:

• $17 million for the first measurement date; or

• $40 million (less the amount of the award pool as of the first measurement date) for the second measurement date.

The first and second measurement dates may be accelerated as follows:

• in the event that during any 60 consecutive days ending prior to November 1, 2008, the 2007 Grant award pool, if calculated on each day during such period, equals or exceeds $17.0 million on each such day, the first measurement date will be accelerated to the last day of the 60-day period; and

• in the event that during any 60 consecutive days ending prior to May 1, 2010, the 2007 Grant award pool, if calculated on each day during such period, equals or exceeds $40.0 million on each such day, the second measurement date will be accelerated to the last day of the 60-day period; and

• upon a change in control of the Company.

Common Provisions for the 2005 and 2007 Grant

Except in the event of a change in control of our company, 60% of the Class C Units that satisfy the applicable market condition will vest at the end of the three year period subsequent to grant and an additional 1/60th of such Class C Units will vest on the date of each monthly anniversary thereafter, provided that the employee’s service has not terminated prior to the applicable vesting date. On August 4, 2008, our board of directors approved an amendment to the award agreements that eliminates the employees’ continued service with our company or the Operating Partnership between October 1, 2008 and September 30, 2010 as a condition of the vesting of the Class C Units subject to the 2005 awards. See Note 15 for more information.

If the market condition and the other service conditions, as described above, are satisfied with respect to a Class C Unit, the Class C Unit will be treated in the same manner as the existing long-term incentive units issued by the Operating Partnership.

To the extent that any Class C Units fail to satisfy the market condition on the measurement dates discussed above, such Class C Units will automatically be cancelled and forfeited by the employee. In addition, any Class C Units which are not eligible for pro rata vesting in the event of a termination of the employee’s employment due to death or disability or without cause (or for good reason, if applicable) will automatically be cancelled and forfeited upon a termination of the employee’s employment.

In the event that the value of the employee’s allocated portion of the award pool that satisfies the market condition equates to a number of Class C Units that is greater than the number of Class C Units awarded to the executive, we will make an additional payment to the executive in the form of a number of shares of our restricted stock equal to the difference subject to the same vesting requirements as the Class C Units.

As of June 30, 2008 and December 31, 2007, approximately 1,203,000 Class C Units related to the 2005 Grant had been awarded to our executive officers and other employees. The grant date fair value of these awards of approximately $4.0 million will be recognized as compensation expense on a straight line basis over the expected service period of five years. The unearned compensation as of June

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30, 2008 and December 31, 2007 was $1.8 million and $2.2 million, respectively. As of June 30, 2008 and December 31, 2007, none of the above awards had vested. We recognized compensation expense related to these Class C Units of $0.2 million and $0.2 million for the three months ended June 30, 2008 and 2007, respectively and $0.4 million and $0.4 million for the six months ended June 30, 2008 and 2007, respectively.

As of June 30, 2008 and December 31, 2007, approximately 751,000 Class C Units related to the 2007 Grant had been awarded to our executive officers and other employees. The grant date fair value of these awards of approximately $11.8 million will be recognized as compensation expense on a straight line basis over the expected service period of five years. The unearned compensation as of June 30, 2008 and December 31, 2007 was $9.0 million and $10.2 million, respectively. As of June 30, 2008 and December 31, 2007, none of the above awards had vested. We recognized compensation expense related to these Class C Units of $0.5 million and $0.3 million for the three months ended June 30, 2008 and 2007, respectively and $1.0 million and $0.3 million for the six months ended June 30, 2008 and 2007, respectively. We capitalized amounts relating to compensation expense of employees directly engaged in construction and leasing activities of $0.1 million and $0.1 million for the three months ended June 30, 2008 and 2007, respectively and $0.2 million and $0.1 million for the six months ended June 30, 2008 and 2007, respectively.

(c) Stock Options

The fair value of each option granted under the 2004 Incentive Award Plan is estimated on the date of the grant using the Black-Scholes option-pricing model with the weighted-average assumptions listed below for grants in 2008 and 2007. The fair values are being expensed on a straight-line basis over the vesting period of the options, which ranges from four to five years. The expense recorded for the three months ended June 30, 2008 and 2007 was approximately $0.3 million and $0.2 million, respectively and approximately $0.6 million and $0.4 million for the six months ended June 30, 2008 and 2007, respectively. We capitalized amounts relating to compensation expense of employees directly engaged in construction and leasing activities of approximately $68,000 and $112,000 for the three and six months ended June 30, 2008. Unearned compensation representing the unvested portion of the stock options totaled $4.4 million and $5.1 million as of June 30, 2008 and December 31, 2007, respectively. We expect to recognize this unearned compensation over the next 3.4 years on a weighted average basis.

The following table sets forth the weighted-average assumptions used to calculate the fair value of the stock options granted during the three and six months ended June 30, 2008 and 2007:

	Three months ended June 30,				Six months ended June 30,
	2008	2007			2008	2007
Dividend yield	—		2.74	%	—		2.76	%
Expected life of option	—		78 months		—		80 months
Risk-free interest rate	—		4.65	%	—		4.65	%
Expected stock price volatility	—		22.26	%	—		22.82	%
Weighted-average fair value of options granted during the period	—	$	9.55		—	$	9.70

The following table summarizes the 2004 Incentive Award Plan’s stock option activity for the six months ended June 30, 2008:

	Six months ended June 30, 2008
	Shares		Weighted average exercise price
Options outstanding, beginning of period	1,158,600		$	27.86
Granted	—			—
Exercised	(86,403	)		19.15
Cancelled	(12,968	)		36.65
Options outstanding, end of period	1,059,229		$	28.46
Exercisable, end of period	354,774		$	24.00

We issued new common shares for the common stock options exercised during the six months ended June 30, 2008. The intrinsic value of options exercised in the six months ended June 30, 2008 was approximately $1.8 million.

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The following table summarizes information about stock options outstanding and exercisable as of June 30, 2008:

Options outstanding							Options exercisable
Exercise price	Number outstanding	Weighted average remaining contractual life (years)	Weighted average exercise price		Aggregate Intrinsic Value		Number exercisable	Weighted average remaining contractual life (years)	Weighted average exercise price		Aggregate Intrinsic Value
$12.00-13.02	355,323	6.34	$	12.07	$	10,247,143	177,650	6.34	$	12.07	$	5,122,857
$13.47-14.50	20,000	6.58		14.11		535,925	7,500	6.57	$	13.99		201,938
$20.37-28.09	99,153	7.46		22.72		1,803,635	21,562	7.45	$	22.62		394,368
$33.18-41.73	584,753	8.73		39.89		595,691	148,062	8.68		39.02		279,294
	1,059,229	7.77	$	28.46	$	13,182,394	354,774	7.39	$	24.00	$	5,998,457

(d) Restricted Stock

During the six months ended June 30, 2008, certain employees were granted an aggregate of 27,859 shares of restricted stock. The grant date fair values are being expensed on a straight-line basis over the vesting period of the restricted stock, which is four years. During the six months ended June 30, 2008, certain employees were granted an aggregate of 34,822 shares of restricted stock which, in addition to a service condition, are subject to a performance condition that impacts the number of shares ultimately granted to the employee. The performance condition is based upon our achievement of fiscal year 2008 Funds From Operations per share targets. Upon evaluating the results of the performance condition, the final number of shares is determined and such shares vest based on achievement of the service conditions. The service conditions of the awards provide for 20% vesting on each of the first and second anniversaries of the original grant date and 30% vesting on each of the third and fourth anniversaries of the original grant date provided the grantee continues employment on each anniversary date.

The expense recorded for the three and six months ended June 30, 2008 related to grants of restricted stock was approximately $0.1 million and $0.2 million, respectively. We capitalized amounts relating to compensation expense of employees directly engaged in construction and leasing activities of approximately $96,000 and $117,000 for the three and six months ended June 30, 2008. Unearned compensation representing the unvested portion of the restricted stock totaled $2.1 million as of June 30, 2008. We expect to recognize this unearned compensation over the next 3.6 years on a weighted average basis.

11. Derivative Instruments

Currently, we use interest rate caps and swaps to manage our interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

To comply with the provisions of SFAS No. 157, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of June 30, 2008, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

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As of June 30, 2008, we were a party to interest rate cap and swap agreements which hedge variability in cash flows related to LIBOR, GBP LIBOR and EURIBOR based mortgage loans. The fair value of these derivatives was $5.9 million at June 30, 2008. At December 31, 2007, the fair value of these derivatives was $2.6 million, which was based on a methodology used prior to the adoption of SFAS No. 157. The table below summarizes the terms of these interest rate swaps measured at fair value on a recurring basis as of June 30, 2008 (in thousands):

Current Notional Amount			Strike Rate	Effective Date	Expiration Date	Fair Value at Significant Other Observable Inputs (Level 2)
$	8,459		5.020	Dec. 1, 2006	Dec. 1, 2008	$	(76	)
	26,292	(1)	4.944	Jul. 10, 2006	Apr. 10, 2011		756
	17,104	(2)	3.981	May 17, 2006	Jul. 18, 2013		723
	12,374	(2)	4.070	Jun. 23, 2006	Jul. 18, 2013		476
	10,888	(2)	3.989	Jul. 27, 2006	Oct. 18, 2013		469
	50,672	(2)	3.776	Dec. 5, 2006	Jan. 18, 2012		2,078
	43,566	(2)	4.000	Dec. 20, 2006	Jan. 18, 2012		1,479
$	169,355					$	5,905

(1) Translation to U.S. dollars is based on exchange rate of $1.99 to £1.00 as of June 30, 2008.

(2) Translation to U.S. dollars is based on exchange rate of $1.58 to €1.00 as of June 30, 2008.

We do not have any fair value measurements using significant unobservable inputs (Level 3) as of June 30, 2008.

We purchased an interest rate cap from a financial institution with a notional amount of $97.2 million on a 1-month LIBOR based loan. Under the interest rate cap agreement, we would receive payments from the counterparty in the event 1-month LIBOR exceeds 6.00% over the term of the agreement. The interest rate cap agreement expires on June 15, 2009. The fair value of the cap was immaterial as of June 30, 2008.

As of June 30, 2008, we estimate that $1.9 million of accumulated other comprehensive income will be reclassified to earnings through a reduction to interest expense during the twelve months ending June 30, 2009, when the hedged forecasted transactions impact earnings.

12. Related Party Transactions

In April 2005, we entered into two agreements with Linc Facility Services, LLC, LFS, primarily for personnel providing operations and maintenance repairs of the mechanical, electrical, plumbing and general building service systems of five of our properties. LFS belongs to The Linc Group, which GI Partners has owned since late 2003. Richard Magnuson, our Chairman, is also the chief executive officer of the advisor to GI Partners Fund II, LLP. Our consolidated statement of operations includes amounts related to these fees of $0.2 million and $0.5 million for the three and six months ended June 30, 2007. As of December 31, 2007, all of the contracts had expired and had not been renewed.

In December 2006, we entered into ten leases with tel(x), pursuant to which tel(x) provides enhanced meet-me-room services to our customers. tel(x) was acquired by GI Partners Fund II, LLP in November 2006. Richard Magnuson, our Chairman, is also the chief executive officer of the advisor to GI Partners Fund II, LLP. Our consolidated statements of operations include rental revenues of approximately $3.7 million and $3.5 million from tel(x) for the three months ended June 30, 2008 and 2007, respectively and $7.3 million and $6.6 million for the six months ended June 30, 2008 and 2007, respectively. In connection with the lease agreements, we entered into an operating agreement with tel(x), effective as of December 1, 2006, with respect to joint sales and marketing efforts, designation of representatives to manage the national relationship between us and tel(x) and future meet-me-room facilities. Under the operating agreement, tel(x) has a sixty-day option to enter into a meet-me-room lease for certain future meet-me-room buildings acquired by us or any buildings currently owned by us that are converted into a meet-me-room building.

We also entered into a referral agreement with tel(x), effective as of December 1, 2006, with respect to referral fees arising out of potential future lease agreements for rentable space in buildings covered by the meet-me-room lease agreements. Additionally, we have the right to purchase approximately 10% of tel(x) preferred stock. The purchase price would be calculated as GI Partners Fund II, LLP’s initial cost plus a 12% per annum return. We have the right to purchase, at market, a pro-rata share of any follow on tel(x) equity transactions to prevent dilution to our option to acquire approximately 10%. The option to purchase the preferred stock will expire in November 2008.

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13. Commitments and Contingencies

We have agreed with the seller of 350 East Cermak Road to share a portion, not to exceed $135,000 per month, of rental revenue, adjusted for our costs to lease the premises, from the lease of the 260,000 square feet of space held for redevelopment. This revenue sharing agreement will terminate in May 2013. We made a payment of approximately $17,000 to the seller during the six months ended June 30, 2008. No payments were made in 2007. We have recorded no liability for this contingent liability on our balance sheet at June 30, 2008.

As part of the acquisition of Clonshaugh Industrial Estate, we entered into an agreement with the seller whereby the seller is entitled to receive 40% of the net rental income generated by the existing building, after we have received a 9% return on all capital invested in the property. As of February 6, 2006, the date we acquired this property, we have estimated the present value of these expected payments over the 10 year lease term to be approximately $1.1 million and this value has been recorded as a component of the purchase price. Accounts payable and other liabilities include $1.5 million for this liability as of June 30, 2008 and December 31, 2007, respectively. During the six months ended June 30, 2008 and 2007, we paid approximately $0.2 million and $0.1 million, respectively, to the seller.

As part of the acquisition of Naritaweg 52 in December 2007, we entered into an agreement with the seller whereby the seller is entitled to receive up to 50% of the gain on sale of the property if the property is sold within 12 months (50% of gain) or 24 months (25% of gain) from the date of purchase to an unaffiliated buyer.

Our properties require periodic investments of capital for tenant-related capital expenditures and for general capital improvements and from time to time in the normal course of our business, we enter into various construction contracts with third parties that may obligate us to make payments. At June 30, 2008, we had construction contracts related open commitments of $70.9 million, excluding approximately $65.9 million of the obligations for which third parties are obligated to reimburse us.

14. Tenant leases

Revenues recognized from Savvis Communications comprised approximately 11.5% and 12.3% of total operating revenues, for the three months ended June 30, 2008 and 2007, respectively and 11.5% and 12.3% of total operating revenues, for the six months ended June 30, 2007 and 2006, respectively. Other than noted here, for the three and six months ended June 30, 2008 and 2007 no single tenant comprised more than 10% of total operating revenues.

15. Subsequent Events

On July 18, 2008, we completed the refinancing of 3 Corporate Place in Piscataway, New Jersey. The new interest-only loan for $80.0 million bears interest at 6.72% per year, matures on August 1, 2011 and is subject to two one-year extensions upon the satisfaction of certain conditions. The $70.0 million construction loan was terminated on June 12, 2008. We used the net proceeds to temporarily repay borrowings under our revolving credit facility.

On July 21, 2008, we completed an offering of 5,750,000 shares of common stock for total net proceeds, after underwriting discounts and estimated expenses, of $211.6 million, including the proceeds from the exercise of the underwriters’ over-allotment option. We used the net proceeds from the offering to temporarily repay borrowings under our revolving credit facility.

On July 24, 2008, we closed on the $200.0 million Prudential Shelf Facility (the Shelf Facility). The three-year uncommitted, multi-currency facility provides for draws, from time to time, subject to agreement with Prudential on the applicable interest rate and satisfaction of other conditions, with an average life and final maturity of up to seven years and ten years, respectively. Concurrent with the close of the Shelf Facility, we made an initial draw of $25.0 million with an interest-only rate of 7.00% per annum and a three-year maturity. We intend to use the proceeds of the initial notes and any additional notes to acquire properties, to fund development and redevelopment activities and for general corporate purposes.

On July 25, 2008, an additional $25.0 million commitment was closed on the Revolving Credit Facility, increasing total commitments from $650.0 million to $675.0 million.

On August 4, 2008, our board of directors approved amendments to the outperformance award agreements that we entered into with our executive officers in 2005. Effective September 30, 2008, all of the Class C Units granted pursuant to the outperformance award agreements that satisfy the market condition (as set forth in the award agreements) shall be fully vested as of that date. Prior to the amendment, 60 percent of the Class C Units that satisfy the market condition would have vested on September 30, 2008, with the remaining 40 percent of such Class C Units vesting ratably each month for 24 months.

On August 4, 2008, we declared the following dividends per share and the Operating Partnership declared an equivalent distribution per unit.

Share Class	Series A Preferred Stock		Series B Preferred Stock		Series C Preferred Stock		Series D Preferred Stock		Common stock and common unit
Dividend and distribution amount	$	0.531250	$	0.492188	$	0.273438	$	0.343750	$	0.310000
Dividend and distribution payable date		September 30, 2008		September 30, 2008		September 30, 2008		September 30, 2008		September 30, 2008
Dividend payable to shareholders of record on		September 15, 2008		September 15, 2008		September 15, 2008		September 15, 2008		September 15, 2008
Annual equivalent rate of dividend and distribution	$	2.125	$	1.969	$	1.094	$	1.375	$	1.240

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

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere in this report. This report contains forward-looking statements within the meaning of the federal securities laws. In particular, statements pertaining to our capital resources, portfolio performance, acquisition and capital expenditure plans and results of operations contain forward-looking statements. Likewise, all of our statements regarding anticipated market conditions, demographics and results of operations are forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all).

The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: adverse economic or real estate developments in our markets or the technology industry; our dependence upon significant tenants; bankruptcy or insolvency of a major tenant; downturn of local economic conditions in our geographic markets; our inability to comply with the rules and regulations applicable to public companies or to manage our growth effectively; difficulty acquiring or operating properties in foreign jurisdictions; defaults on or non-renewal of leases by tenants; increased interest rates and operating costs; our failure to obtain necessary outside financing; restrictions on our ability to engage in certain business activities; risks related to joint venture investments; decreased rental rates or increased vacancy rates; inability to successfully develop and lease new properties and space held for redevelopment; difficulties in identifying properties to acquire and completing acquisitions; increased competition or available supply of data center space; our failure to successfully operate acquired properties; our inability to acquire off-market property; delays or unexpected costs in development or redevelopment of properties; our failure to maintain our status as a REIT; possible adverse changes to tax laws; environmental uncertainties and risks related to natural disasters; financial market fluctuations; changes in foreign currency exchange rates; changes in foreign laws and regulations, including those related to taxation and real estate ownership and operation; and changes in real estate and zoning laws and increases in real property tax rates.

While forward-looking statements reflect our good faith beliefs, they are not guaranties of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes.

The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks included in other sections of this report. In addition, we discussed a number of material risks in our annual report on Form 10-K for the year ended December 31, 2007 and our quarterly report on Form 10-Q for the quarter ended March 31, 2008. Those risks continue to be relevant to our performance and financial condition. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can we assess the impact of all such risk factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

Overview

Our Company. We completed our initial public offering of common stock (IPO) on November 3, 2004. We believe that we have operated in a manner that has enabled us to qualify, and have elected to be treated, as a Real Estate Investment Trust (REIT) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the Code). Our company was formed on March 9, 2004. During the period from our formation until we commenced operations in connection with the completion of our IPO we did not have any corporate activity other than the issuance of shares of common stock in connection with the initial capitalization of the company. Any reference to “our”, “we” and “us” in this filing includes our company and our predecessor. Our predecessor is comprised of the real estate activities and holdings of Global Innovation Partners LLC, or GI Partners, which GI Partners contributed to us in connection with our IPO.

Business and strategy. Our primary business objectives are to maximize: (i) sustainable long-term growth in earnings and funds from operations per share and (ii) cash flow and returns to our stockholders. We expect to achieve our objectives by focusing on our core business of investing in and redeveloping technology-related real estate. A significant component of our current and future internal growth is anticipated through the development of our existing space held for redevelopment and new properties. We target high quality, strategically located properties containing applications and operations critical to the day-to-day operations of corporate enterprise datacenter and technology industry tenants and properties that may be redeveloped for such use. Most of our properties contain fully redundant electrical supply systems, multiple power feeds, above-standard precision cooling systems, raised floor areas,

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extensive in-building communications cabling and high-level security systems. We focus solely on technology-related real estate because we believe that the growth in corporate datacenter adoption and the technology-related real estate industry generally will be superior to that of the overall economy.

As of June 30, 2008, we owned an aggregate of 74 technology-related real estate properties, excluding one property held as an investment in an unconsolidated joint venture, with 12.9 million rentable square feet including approximately 1.9 million square feet of space held for redevelopment. At June 30, 2008, approximately 456,000 square feet of our space held for redevelopment was under construction for Turn-Key Datacenter™, build-to-suit datacenter and Powered Base Building™ space in eight U.S. and European markets.

We have developed detailed, standardized procedures for evaluating acquisitions to ensure that they meet our financial, technical and other criteria. We expect to continue to acquire additional assets as a key part of our growth strategy. We intend to aggressively manage and lease our assets to increase their cash flow. We will continue to build out our redevelopment portfolio when justified by anticipated returns.

We may acquire properties subject to existing mortgage financing and other indebtedness or new indebtedness may be incurred in connection with acquiring or refinancing these properties. Debt service on such indebtedness will have a priority over any dividends with respect to our common stock and our preferred stock. We currently intend to limit our indebtedness to 60% of our total market capitalization and, based on the closing price of our common stock on June 30, 2008 of $40.91, our ratio of debt to total market capitalization was approximately 27% as of June 30, 2008. Our total market capitalization is defined as the sum of the market value of our outstanding common stock (which may decrease, thereby increasing our debt to total market capitalization ratio), excluding options issued under our incentive award plan, plus the liquidation value of our preferred stock, plus the aggregate value of the units not held by us (with the per unit value equal to the market value of one share of our common stock and excluding long-term incentive units and Class C units), plus the book value of our total consolidated indebtedness.

Revenue Base. As of June 30, 2008, we owned 74 properties through our Operating Partnership, excluding one property held as an investment in an unconsolidated joint venture. These properties are mainly located throughout the U.S., with 13 properties located in Europe and one property in Canada. We acquired our first portfolio property in January 2002 and have added properties as follows:

Year Ended December 31:	Properties Acquired (1)	Net Rentable Square Feet Acquired (2)	Square Feet of Space Held for Redevelopment as of June 30, 2008 (3)
2002	5	1,125,292	19,890
2003	6	878,861	179,499
2004	10	2,638,119	48,350
2005	20	3,254,893	255,404
2006	16	1,914,538	307,060
2007	13	1,128,226	646,334
Six months ended June 30, 2008	4	38,016	416,582
Properties owned as of June 30, 2008	74	10,977,945	1,873,119

(1) Excludes properties sold in 2007 and 2006: 100 Technology Center Drive (March 2007), 4055 Valley View Lane (March 2007) and 7979 East Tufts Avenue (July 2006). Also excludes a leasehold interest acquired in March 2007 related to an acquisition made in 2006.

(2) Excludes space held for redevelopment.

(3) Redevelopment space is unoccupied space that requires significant capital investment in order to develop datacenter facilities that are ready for use. Most often this is shell space. However, in certain circumstances this may include partially built datacenter space that was not completed by previous ownership and requires a large capital investment in order to build out the space. The amounts included in this table represent redevelopment space as of June 30, 2008 in the properties acquired during the relevant period.

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As of June 30, 2008, the properties in our portfolio were approximately 95.2% leased excluding 1.9 million square feet held for redevelopment. Due to the capital intensive and long term nature of the operations being supported, our lease terms are generally longer than standard commercial leases. As of June 30, 2008, our original average lease term was in excess of 13 years, with an average of seven years remaining. The majority of our leasing since the completion of our initial public offering in November 2004 has been at lease terms shorter than 12 years. Our lease expirations through December 31, 2009 are 6.5% of net rentable square feet excluding space held for redevelopment as of June 30, 2008. Operating revenues from properties outside the United States were $11.5 million and $7.8 million for the three months ended June 30, 2008 and 2007, respectively and $22.3 million and $15.2 million for the six months ended June 30, 2008 and 2007, respectively.

Factors Which May Influence Future Results of Operations

Rental income. The amount of rental income generated by the properties in our portfolio depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space and space available from lease terminations. Excluding 1.9 million square feet held for redevelopment, as of June 30, 2008, the occupancy rate in the properties in our portfolio was approximately 95.2% of our net rentable square feet.

The amount of rental income generated by us also depends on our ability to maintain or increase rental rates at our properties. Included in our approximately 11.0 million net rentable square feet, excluding redevelopment space, at June 30, 2008 is approximately 240,000 net rentable square feet of space with extensive datacenter improvements that is currently, or will shortly be, available for lease. Since our IPO, we have leased approximately 1,391,000 square feet of similar space. These Turn-Key Datacenters™ are effective solutions for tenants who lack the expertise or capital budget to provide their own extensive datacenter infrastructure and security. As experts in datacenter construction and operations we are able to lease space to these tenants at a significant premium over other uses. Negative trends in one or more of these factors could adversely affect our rental income in future periods.

In addition, as of June 30, 2008, we had approximately 1.9 million square feet of redevelopment space, or approximately 15% of the total space in our portfolio, including nine vacant properties comprising approximately 1,012,000 square feet. Redevelopment space requires significant capital investment in order to develop datacenter facilities that are ready for use, and in addition, we may require additional time or encounter delays in securing tenants for redevelopment space. We will require additional capital to finance our redevelopment activities, which may not be available or may not be available on terms acceptable to us. Our ability to grow earnings depends in part on our ability to redevelop space and lease redevelopment space at favorable rates, which we may not be able to obtain. We intend to purchase additional vacant properties and properties with vacant redevelopment space in the future.

Economic downturns or regional downturns affecting our submarkets or downturns in the technology-related real estate industry that impair our ability to lease or renew or re-lease space, otherwise reduce returns on our investments or the ability of our tenants to fulfill their lease commitments, as in the case of tenant bankruptcies, could adversely affect our ability to maintain or increase rental rates at our properties. As of June 30, 2008, we had no material tenants in bankruptcy.

Scheduled lease expirations. Our ability to re-lease expiring space at rental rates equal to or in excess of current rental rates will impact our results of operations. In addition to approximately 0.5 million square feet of available space in our portfolio, which excludes approximately 1.9 million square feet available for redevelopment as of June 30, 2008, leases representing approximately 2.1% and 4.4% of the net rentable square footage of our portfolio are scheduled to expire during the periods ending December 31, 2008 and 2009, respectively.

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Market concentration. We depend on the market for technology based real estate in specific geographic regions and significant changes in these regional markets can impact our future results. As of June 30, 2008 our portfolio was geographically concentrated in the following metropolitan markets:

Metropolitan Market	Percentage of 6/30/08 total annualized rent (1)
Silicon Valley	15.2	%
Chicago	13.6	%
New York	10.9	%
Dallas	10.0	%
San Francisco	6.7	%
Phoenix	6.4	%
Los Angeles	6.0	%
Northern Virginia	4.8	%
Other	26.4	%
	100.0	%

(1) Annualized rent is monthly contractual rent under existing leases as of June 30, 2008 multiplied by 12.

Operating expenses. Our operating expenses generally consist of utilities, property and ad valorem taxes, property management fees, insurance and site maintenance costs, as well as rental expenses on our ground and building leases. Many of our leases contain provisions under which the tenants reimburse us for a portion of property operating expenses and real estate taxes incurred by us. However, we generally are not entitled to reimbursement of property operating expenses and real estate taxes under our leases for Turn-Key Datacenters™. We also incur general and administrative expenses, including expenses relating to our asset management function, as well as significant legal, accounting and other expenses related to corporate governance, U.S. Securities and Exchange Commission reporting and compliance with the various provisions of the Sarbanes-Oxley Act. Increases or decreases in such operating expenses will impact our overall performance. We expect to incur additional operating expenses as we expand.

Interest Rates. As of June 30, 2008, we had approximately $560.2 million of variable rate debt, of which approximately $266.7 million was mortgage debt subject to interest rate cap or swap agreements, and $287.8 million was outstanding on our revolving credit facility. Liquidity traditionally provided by collateralized debt obligations has significantly decreased as a result of the continuing impact of the sub-prime mortgage crisis. The affects on commercial real estate mortgages include: higher loan spreads, tightened loan covenants, reduced loan to value ratios resulting in lower borrower proceeds and higher principal payments. Potential future increases in interest rates and credit spreads may increase our interest expense as well as fixed charges and negatively affect our financial condition and results of operations, and reduce our access to capital markets. Increased interest rates may also increase the risk that the counterparties to our swap agreements will default on their obligations, which could further increase our interest expense. If we cannot obtain capital from third party sources, we may not be able to acquire or develop properties when strategic opportunities exist, satisfy our debt service obligations or make the cash dividends to our stockholders necessary to maintain our qualification as a REIT.

Demand for Datacenter Space. Our portfolio of properties consists primarily of technology-related real estate, and datacenter real estate in particular. A decrease in the demand for datacenter space, Internet gateway facilities or other technology-related real estate would have a greater adverse effect on our business and financial condition than if we owned a portfolio with a more diversified tenant base or less specialized use. Our substantial redevelopment activities make us particularly susceptible to general economic slowdowns, including recessions, as well as adverse developments in the corporate datacenter, Internet and data communications and broader technology industries. Any such slowdown or adverse development could lead to reduced corporate IT spending or reduced demand for datacenter space. Reduced demand could also result from business relocations, including to markets that we do not currently serve such as Asia. Changes in industry practice or in technology, such as virtualization technology, more efficient computing or networking devices, or devices that require higher power densities than today’s devices, could also reduce demand for the physical datacenter space we provide or make the tenant improvements in our facilities obsolete or in need of significant upgrades to remain viable. In addition, the development of new technologies, the adoption of new industry standards or other factors could render many of our tenants’ current products and services obsolete or unmarketable and contribute to a downturn in their businesses, thereby increasing the likelihood that they default under their leases, become insolvent or file for bankruptcy.

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Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses in the reporting period. Our actual results may differ from these estimates. We have provided a summary of our significant accounting policies in note 2 to our consolidated financial statements included elsewhere in this report. We describe below those accounting policies that require material subjective or complex judgments and that have the most significant impact on our financial condition and consolidated results of operations. Our management evaluates these estimates on an ongoing basis, based upon information currently available and on various assumptions management believes are reasonable as of the date on the front cover of this report.

Investments in Real Estate

Acquisition of real estate. The price that we pay to acquire a property is impacted by many factors including the condition of the property and improvements, the occupancy of the building, the existence of above and below market tenant leases, the creditworthiness of the tenants, favorable or unfavorable financing, above or below market ground leases and numerous other factors. Accordingly, we are required to make subjective assessments to allocate the purchase price paid to acquire investments in real estate among the assets acquired and liabilities assumed based on our estimate of the fair values of such assets and liabilities. This includes determining the value of the property and improvements, land, any ground leases, tenant improvements, in-place tenant leases, tenant relationships, the value (or negative value) of above (or below) market leases, any debt assumed from the seller or loans made by the seller to us and any building leases assumed from the seller. Each of these estimates requires a great deal of judgment and some of the estimates involve complex calculations. Our allocation methodology is summarized in note 2 to our condensed consolidated financial statements. These allocation assessments have a direct impact on our results of operations. For example, if we were to allocate more value to land, there would be no depreciation with respect to such amount. If we were to allocate more value to the property as opposed to allocating to the value of tenant leases, this amount would be recognized as an expense over a much longer period of time. This potential effect occurs because the amounts allocated to property are depreciated over the estimated lives of the property whereas amounts allocated to tenant leases are amortized over the terms of the leases. Additionally, the amortization of the value (or negative value) assigned to above (or below) market rate leases is recorded as an adjustment to rental revenue as compared to amortization of the value of in-place leases and tenant relationships, which is included in depreciation and amortization in our condensed consolidated statements of operations.

Useful lives of assets. We are required to make subjective assessments as to the useful lives of our properties for purposes of determining the amount of depreciation to record on an annual basis with respect to our investments in real estate. These assessments have a direct impact on our net income because if we were to shorten the expected useful lives of our investments in real estate we would depreciate such investments over fewer years, resulting in more depreciation expense and lower net income on an annual basis.

Asset impairment evaluation. We review the carrying value of our properties when circumstances, such as adverse market conditions, indicate potential impairment may exist. We base our review on an estimate of the future cash flows (excluding interest charges) expected to result from the real estate investment’s use and eventual disposition. We consider factors such as future operating income, trends and prospects, as well as the effects of leasing demand, competition and other factors. If our evaluation indicates that we may be unable to recover the carrying value of a real estate investment, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property. These losses have a direct impact on our net income because recording an impairment loss results in an immediate negative adjustment to net income. The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results in future periods. Since cash flows on properties considered to be long-lived assets to be held and used are considered on an undiscounted basis to determine whether an asset has been impaired, our strategy of holding properties over the long-term directly decreases the likelihood of recording an impairment loss. If our strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized and such loss could be material. If we determine that impairment has occurred, the affected assets must be reduced to their fair value. No such impairment losses have been recognized to date.

We estimate the fair value of rental properties utilizing a discounted cash flow analysis that includes projections of future revenues, expenses and capital improvement costs, similar to the income approach that is commonly utilized by appraisers.

Capitalization of costs

We capitalize pre-acquisition costs related to probable property acquisitions. We also capitalize direct and indirect costs related to construction, development and redevelopment, including property taxes, insurance, financing and employee costs relating to space under development. Costs previously capitalized related to any property acquisitions no longer considered probable are written off, which may have a material effect on our net income. The selection of costs to capitalize and which acquisitions are probable is subjective and depends on many assumptions including the timing of potential acquisitions and the probability that future acquisitions occur. If we made different assumptions in this respect we would have a different amount of capitalized costs in the periods presented leading to different net income.

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Revenue Recognition

Rental income is recognized using the straight-line method over the terms of the tenant leases. Deferred rents included in our balance sheets represent the aggregate excess of rental revenue recognized on a straight-line basis over the contractual rental payments that would be received under the remaining terms of the leases. Many of our leases contain provisions under which the tenants reimburse us for a portion of property operating expenses and real estate taxes incurred by us. However, we generally are not entitled to reimbursement of property operating expenses and real estate taxes under our leases for Turn-Key Datacenters™. Such reimbursements are recognized in the period that the expenses are incurred. Lease termination fees are recognized over the remaining term of the lease, effective as of the date the lease modification is finalized, assuming collection is not considered doubtful. As discussed above, we recognize amortization of the value of acquired above or below market tenant leases as a reduction of rental income in the case of above market leases or an increase to rental revenue in the case of below market leases.

We must make subjective estimates as to when our revenue is earned and the collectability of our accounts receivable related to minimum rent, deferred rent, expense reimbursements, lease termination fees and other income. We specifically analyze accounts receivable and historical bad debts, tenant concentrations, tenant creditworthiness and current economic trends when evaluating the adequacy of the allowance for bad debts. These estimates have a direct impact on our net income because a higher bad debt allowance would result in lower net income, and recognizing rental revenue as earned in one period versus another would result in higher or lower net income for a particular period.

Share-based awards

We recognize compensation expense related to share-based awards. We generally amortize this compensation expense over the vesting period of the award. The calculation of the fair value of share-based awards is subjective and requires several assumptions over such items as expected stock volatility, dividend payments and future company results. These assumptions have a direct impact on our net income because a higher share-based awards amount would result in lower net income for a particular period.

Results of Operations

The discussion below relates to our financial condition and results of operations for the three and six months ended June 30, 2008 and 2007. A summary of our operating results from continuing operations for the three and six months ended June 30, 2008 and 2007 is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
Statement of Operations Data:
Total operating revenues	$	123,776		$	95,583		$	238,323		$	184,550
Total operating expenses		(95,647	)		(73,042	)		(184,973	)		(140,044	)
Operating income		28,129			22,541			53,350			44,506
Other expenses, net		(13,883	)		(14,516	)		(27,702	)		(30,052	)
Income from continuing operations before minority interests	$	14,246		$	8,025		$	25,648		$	14,454

Our property portfolio has experienced consistent and significant growth since the first property acquisition in January 2002. As a result of such growth, a period-to-period comparison of our financial performance focuses on the impact on our revenues and expenses resulting both from the new property additions to our portfolio, as well as on a “same store” property basis (same store properties are properties that were owned and operated for the entire current year and the entire immediate preceding year). The following table identifies each of the properties in our portfolio acquired from January 1, 2007 through June 30, 2008.

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Acquired Properties			Acquisition Date	Redevelopment Space as of June 30, 2008 (1)	Net Rentable Square Feet Excluding Redevelopment Space	Square Feet including Redevelopment Space	Occupancy Rate as of June 30, 2008 (2)
As of December 31, 2006 (57 properties)				810,203	9,811,703	10,621,906	95.1	%
Year Ended December 31, 2007
21110 Ridgetop Circle			Jan-07	—	135,513	135,513	100.0
3011 LaFayette Street			Jan-07	—	90,780	90,780	100.0
44470 Chillum Place			Feb-07	—	95,440	95,440	100.0
43791 Devon Shafron Drive	(3	)	Mar-07	135,000	—	135,000	—
43831 Devon Shafron Drive	(3	)	Mar-07	—	117,071	117,071	100.0
43881 Devon Shafron Drive	(3	)	Mar-07	64,138	115,862	180,000	73.4
Mundells Roundabout	(4	)	Apr-07	113,464	—	113,464	—
210 N Tucker Boulevard			Aug-07	62,000	139,588	201,588	95.0
900 Walnut Street			Aug-07	—	112,266	112,266	93.5
1 Savvis Parkway			Aug-07	—	156,000	156,000	100.0
Clonshaugh Industrial Estate (Land)	(5	)	Sep-07	124,500	—	124,500	—
1500 Space Park Drive	(6	)	Sep-07	—	51,615	51,615	100.0
Cressex 1			Dec-07	50,848	—	50,848	—
Naritaweg 52			Dec-07	—	63,260	63,260	100.0
1 St. Anne’s Boulevard	(7	)	Dec-07	—	20,219	20,219	100.0
2 St. Anne’s Boulevard	(7	)	Dec-07	—	30,612	30,612	100.0
3 St. Anne’s Boulevard	(7	)	Dec-07	96,384	—	96,384	—
Subtotal				646,334	1,128,226	1,774,560	96.0	%
Six Months Ended June 30, 2008
365 South Randolphville Road			Feb-08	264,792	—	264,792	—
650 Randolph Road			Jun-08	127,790	—	127,790	—
1201 Comstock Street	(6	)	Jun-08	24,000	—	24,000	—
Manchester Technopark Plot C1, Birley Fields			Jun-08	—	38,016	38,016	100.0
Subtotal				416,582	38,016	454,598	100.0	%
Total				1,873,119	10,977,945	12,851,064	95.2	%

(1) Redevelopment space requires significant capital investment in order to develop datacenter facilities that are ready for use. Most often this is shell space. However, in certain circumstances this may include partially built datacenter space that was not completed by previous ownership and requires a large capital investment in order to build out the space.

(2) Occupancy rates exclude redevelopment space.

(3) The three buildings at Devin Shafron Drive are considered one property for our property count.

(4) Land parcel held for development.

(5) Building completed and placed into service in September 2007 on a land parcel acquired in 2006.

(6) We acquired a 50 % controlling interest in a joint venture that owns the building.

(7) The three buildings at St. Anne’s Boulevard are considered one property for our property count.

Comparison of the Three Months Ended June 30, 2008 to the Three Months Ended June 30, 2007 and the Six Months Ended June 30, 2008 to the Six Months Ended June 30, 2007

Portfolio

As of June 30, 2008, our portfolio consisted of 74 properties, excluding one property held as an investment in an unconsolidated joint venture with an aggregate of 12.9 million net rentable square feet including 1.9 million square feet held for redevelopment compared to a portfolio consisting of 62 properties (excluding three properties which we sold in 2006 and 2007 and which are presented as discontinued operations in the accompanying consolidated statements of operations), with an aggregate of 11.4 million net rentable square feet including 1.7 million square feet held for redevelopment as of June 30, 2007. The increase in our portfolio reflects the acquisition of 12 properties in the twelve months ended June 30, 2008.

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Operating revenues

Operating revenues during the three and six months ended June 30, 2008 and 2007 were as follows (in thousands):

	Three Months Ended June 30,							Six Months Ended June 30,
	2008		2007		Change			2008		2007		Change
Rental	$	97,966	$	78,705	$	19,261		$	190,712	$	151,993	$	38,719
Tenant reimbursements		25,698		16,631		9,067			47,485		32,310		15,175
Other		112		247		(135	)		126		247		(121	)
Total operating revenues	$	123,776	$	95,583	$	28,193		$	238,323	$	184,550	$	53,773

As shown by the same store and new properties table shown below, the increases in rental revenues and tenant reimbursement revenues in the periods ended June 30, 2008 compared to the same periods in 2007 were primarily due to new leasing at our same store properties and our acquisition of properties. We acquired 12 properties during the twelve months ended June 30, 2008.

The following table shows operating revenues for new properties (properties that were not owned for each of the full six months ended June 30, 2008 and 2007) and same store properties (all other properties) (in thousands):

	Same Store Three Months Ended June 30,							New Properties Three Months Ended June 30,
	2008		2007		Change			2008			2007		Change
Rental	$	85,800	$	74,416	$	11,384		$	12,166		$	4,289	$	7,877
Tenant reimbursements		23,512		16,490		7,022			2,186			141		2,045
Other		113		247		(134	)		(1	)		—		(1	)
Total operating revenues	$	109,425	$	91,153	$	18,272		$	14,351		$	4,430	$	9,921
	Same Store Six Months Ended June 30,							New Properties Six Months Ended June 30,
	2008		2007		Change			2008			2007		Change
Rental	$	169,454	$	146,871	$	22,583		$	21,258		$	5,122	$	16,136
Tenant reimbursements		44,364		32,113		12,251			3,121			197		2,924
Other		126		247		(121	)		—			—		—
Total operating revenues	$	213,944	$	179,231	$	34,713		$	24,379		$	5,319	$	19,060

Same store rental revenues increased in the three and six months ended June 30, 2008 compared to the same period in 2007 primarily as a result of new leases at our properties during the twelve months ended June 30, 2008 due to strong demand for datacenter space, the largest of which was for space in 3 Corporate Place, 350 East Cermak Road, 4025 Midway Road, 115 Second Avenue, 200 Paul Avenue 1-4, 115 Second Avenue and 600 West Seventh Street. Rental revenue included amounts earned from leases with tel(x), a related party, of approximately $3.7 million and $3.5 million for the three months ended June 30, 2008 and 2007, respectively and $7.3 million and $6.6 million for the six months ended June 30, 2008 and 2007, respectively. Same store tenant reimbursement revenues increased in both the three and six months ended June 30, 2008 as compared to the same periods in 2007 primarily as a result of new leasing and higher utility and operating expenses being billed to our tenants, the largest occurrences of which were at 350 East Cermak Road, 3 Corporate Place, 200 Paul Avenue 1-4, Unit 9, Blanchardstown Corporate Park and 600 West Seventh Street.

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New property increases were caused by properties acquired during the period from January 1, 2007 to June 30, 2008. For the three and six months ended June 30, 2008, 3011 Lafayette Street, 900 Walnut Street, Devin Shafron properties (3 buildings) and 210 N. Tucker Boulevard contributed $6.9 million, or approximately 69% and $11.2, or approximately 59% of the total new properties increase in revenues compared to the same periods in 2007.

Operating Expenses and Interest Expense

Operating expenses and interest expense during the three and six months ended June 30, 2008 and 2007 were as follows (in thousands):

	Three Months Ended June 30,							Six Months Ended June 30,
	2008		2007		Change			2008		2007		Change
Rental property operating and maintenance	$	36,396	$	23,865	$	12,531		$	67,960	$	45,104	$	22,856
Property taxes		8,522		7,342		1,180			16,646		14,882		1,764
Insurance		1,198		1,419		(221	)		2,403		2,845		(442	)
Depreciation and amortization		39,570		31,832		7,738			78,707		61,231		17,476
General and administrative		9,823		8,456		1,367			18,668		15,666		3,002
Other		138		128		10			589		316		273
Total operating expenses	$	95,647	$	73,042	$	22,605		$	184,973	$	140,044	$	44,929
Interest expense	$	14,281	$	15,264	$	(983	)	$	28,913	$	31,858	$	(2,945	)

As shown in the same store expense and new properties table below, total expenses in the three and six months ended June 30, 2008 increased compared to the same period in 2007 primarily as a result of higher same store utility and maintenance costs, increased depreciation as additional development projects were placed into service and acquisition of properties.

The following table shows expenses for new properties (properties that were not owned for each of the full six months ended June 30, 2008 and 2007) and same store properties (all other properties) (in thousands):

	Same Store Three Months Ended June 30,							New Properties Three Months Ended June 30,
	2008		2007		Change			2008		2007		Change
Rental property operating and maintenance	$	31,318	$	22,895	$	8,423		$	5,078	$	970	$	4,108
Property taxes		7,734		7,200		534			788		142		646
Insurance		1,134		1,406		(272	)		64		13		51
Depreciation and amortization		34,819		30,023		4,796			4,751		1,809		2,942
General and administrative (1)		9,823		8,456		1,367			—		—		—
Other		131		128		3			7		—		7
Total operating expenses	$	84,959	$	70,108	$	14,851		$	10,688	$	2,934	$	7,754
Interest expense	$	13,779	$	13,725	$	54		$	502	$	1,539	$	(1,037	)
	Same Store Six Months Ended June 30,							New Properties Six Months Ended June 30,
	2008		2007		Change			2008		2007		Change
Rental property operating and maintenance	$	58,333	$	43,404	$	14,929		$	9,627	$	1,700	$	7,927
Property taxes		15,369		14,644		725			1,277		238		1,039
Insurance		2,274		2,820		(546	)		129		25		104
Depreciation and amortization		69,774		59,026		10,748			8,933		2,205		6,728
General and administrative (1)		18,668		15,666		3,002			—		—		—
Other		512		316		196			77		—		77
Total operating expenses	$	164,930	$	135,876	$	29,054		$	20,043	$	4,168	$	15,875
Interest expense	$	27,502	$	26,503	$	999		$	1,411	$	5,355	$	(3,944	)

(1) General and administrative expenses are included in same store as they are not allocable to specific properties.

Same store rental property operating and maintenance expenses increased in the three and six months ended June 30, 2008 compared to the same period in 2007 primarily as a result of higher utility rates in several of our properties leading to higher utility expense in 2008. We capitalized amounts relating to compensation expense of employees directly engaged in construction and leasing activities of $2.9 million and $1.3 million in the three months ended June 30, 2008 and 2007, respectively and $5.5 million and $1.9 million in the six months ended June 30, 2008 and 2007, respectively.

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Same store depreciation and amortization expense increased in the three and six months ended June 30, 2008 compared to the same periods in 2007, principally because of depreciation of redevelopment projects that were placed into service in the final six months of 2007 and during 2008.

General and administrative expenses for the three and six months ended June 30, 2008 increased compared to the same periods in 2007 primarily due to the growth of our company, which resulted in more employees, additional incentive compensation, and higher insurance, professional fees and marketing expenses.

Same store interest expense increased for the three and six months ended June 30, 2008 as compared to the same period in 2007 primarily as a result of higher average outstanding debt balances during 2008 compared to 2007 due to financings on 2045 & 2055 LaFayette Street and 150 South First Street. Interest incurred on our revolving credit facility and senior exchangeable debentures is allocated entirely to new properties in the table above. During the three months ended June 30, 2008 and 2007, we capitalized interest of approximately $4.5 million and $2.8 million, respectively, and for the six months ended June 30, 2007 and 2006, we capitalized interest of approximately $8.9 million and $4.3 million, respectively.

New property increases were caused by properties acquired during the period from January 1, 2007 to June 30, 2008. For the three and six months ended June 30, 2008, 3011 Lafayette Street, 900 Walnut Street and 210 N. Tucker Boulevard contributed $4.2 million, or approximately 54%, and $6.8 million, or approximately 43% of the total new properties increase in total operating expenses compared to the same period in 2007.

Minority Interests

Minority interests has decreased for the three and six months ended June 30, 2008 as compared to the same periods in 2007 primarily as a result of the weighted average minority ownership percentage decreasing from approximately 11% for the three months ended June 30, 2007 to approximately 9% for the three months ended June 30, 2008 and decreasing from approximately 14% for the six months ended June 30, 2007 to approximately 9% for the six months ended June 30, 2008.

Discontinued Operations

In 2007, we completed the sales of 100 Technology Center Drive (March 2007) and 4055 Valley View Lane (March 2007) and recognized gains upon closing. The results of operations and gain on sales of 100 Technology Center Drive ($11.8 million) and 4055 Valley View Lane ($6.2 million) are reported as discontinued operations for all periods presented.

Liquidity and Capital Resources

Analysis of Liquidity and Capital Resources

As of June 30, 2008, we had $19.8 million of cash and cash equivalents, excluding $36.9 million of restricted cash. Restricted cash primarily consists of interest bearing cash deposits required by the terms of several of our mortgage loans for a variety of purposes, including real estate taxes, insurance, anticipated or contractually obligated tenant improvements and leasing deposits.

Our short term liquidity requirements primarily consist of operating expenses, redevelopment costs and other expenditures associated with our properties, dividend payments on our preferred stock, dividend payments to our stockholders and distributions to our unitholders in the Operating Partnership required to maintain our REIT status, capital expenditures, debt service on our loans and, potentially, acquisitions. We expect to meet our short-term liquidity requirements through net cash provided by operations, restricted cash accounts established for certain future payments and by drawing upon our revolving credit facility.

As of June 30, 2008 our revolving credit facility had a total capacity of $650.0 million and matures in August 2010, subject to two one-year extension options exercisable by us. As of June 30, 2008, borrowings under the revolving credit facility bore interest at a blended rate of 3.59% (US dollar), 5.59% (Euro) and 6.61% (British Pound Sterling), which is based on 1-month LIBOR, 1-month EURIBOR and 1-month GBP LIBOR, respectively, plus a margin of 1.10%. The margin can range from 1.10% to 2.00%, depending on our Operating Partnership’s total leverage ratio. The revolving credit facility has a $450.0 million sub-facility for multicurrency advances in British Pounds Sterling, Canadian Dollars, Euros, and Swiss Francs. We intend to use available borrowings under the revolving credit facility to, among other things, finance the acquisition of additional properties, to fund tenant improvements and capital expenditures, fund development and redevelopment activities, finance the acquisition of additional properties and provide for working capital and other corporate purposes. As of June 30, 2008, approximately $287.8 million was drawn under this facility, and $10.1 million of letters of credit were issued, leaving $352.0 million available for use. On July 25, 2008, an additional $25.0 million commitment was closed on the Revolving Credit Facility, increasing total commitments from $650.0 million to $675.0 million.

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On February 6, 2008, we issued 13.8 million shares of 5.500% series D cumulative convertible preferred stock for total net proceeds, after underwriting discounts and estimated offering expenses, of $333.6 million, including the proceeds from the exercise of the underwriters’ over-allotment option. We used the net proceeds from the offering to temporarily repay borrowings under our revolving credit facility, to acquire properties, to fund development and redevelopment activities and for general corporate purposes.

On July 18, 2008, we completed the refinancing of 3 Corporate Place in Piscataway, New Jersey. The new interest-only loan for $80.0 million bears interest at 6.72% per year, matures on August 1, 2011 and is subject to two one-year extensions upon the satisfaction of certain conditions. The $70.0 million construction loan was terminated on June 12, 2008.

On July 21, 2008, we completed an offering of 5,750,000 shares of common stock for total net proceeds, after underwriting discounts and estimated expenses, of $211.6 million, including the proceeds from the exercise of the underwriters’ over-allotment option. We used the net proceeds from the offering to temporarily repay borrowings under our credit facility.

On July 24, 2008, we closed on the $200.0 million Prudential Shelf Facility (the Shelf Facility). The three-year uncommitted, multi-currency facility provides for draws, from time to time, subject to agreement with Prudential on the applicable interest rate and satisfaction of other conditions, with an average life and final maturity of up to seven years and ten years, respectively. Concurrent with the close of the Shelf Facility, we made an initial draw of $25.0 million with an interest-only rate of 7.00% per annum and a three-year maturity. We intend to use the proceeds of the initial notes and any additional notes to acquire properties, to fund development and redevelopment activities and for general corporate purposes.

Properties acquired in 2008

During the six months ended June 30, 2008 we acquired the following properties:

Location	Metropolitan Area	Date Acquired	Purchase Price (in millions) (1)
365 South Randolphville Road	New York	February 14, 2008	$	20.4
701 & 717 Leonard Street (2)	Dallas	May 13, 2008		12.1
650 Randolph Road	New York	June 13, 2008		10.9
Manchester Technopark Plot C1, Birley Fields	Manchester	June 20, 2008		24.7
1201 Comstock Street (3)	Silicon Valley	June 30, 2008		1.9
			$	70.0

(1) Includes closing costs.

(2) Acquisition of a parking garage adjacent to one of our properties in Dallas, Texas. The parking garage is not included in our property count.

(3) Represents the amount to acquire a 50% interest in a joint venture that owns this above building. Since we control the joint venture, we have consolidated the joint venture in the accompanying consolidated financial statements. Upon consolidation, we included total assets of $3.8 million and minority interest of $1.9 million.

We financed the purchase of these properties with borrowings under our revolving credit facility.

Construction

As of June 30, 2008 and December 31, 2007, work in progress, including the proportionate land and property costs related to current construction projects amounted to $364.2 million and $494.5 million, respectively. In addition, our redevelopment program includes the proportionate land and building costs related to other targeted projects in the amount of $85.8 million and $100.0 million as of June 30, 2008 and December 31, 2007, respectively. Work in progress related to non-redevelopment projects, primarily tenant and building improvements, amounted to $11.3 million and $7.1 million as of June 30, 2008 and December 31, 2007, respectively.

Future uses of cash

Our properties require periodic investments of capital for tenant-related capital expenditures and for general capital improvements. As of June 30, 2008, we had approximately 1.9 million square feet of redevelopment space and we also owned approximately 240,000 net rentable square feet of datacenter space with extensive installed tenant improvements that we may subdivide for Turn-Key Datacenter™ use during the next two years rather than lease such space to large single tenants. Turn-Key Datacenter™ space is move-in-ready space for the placement of computer and network equipment required to provide a datacenter environment. Depending on demand for additional Turn-Key Datacenter™ space, we expect to incur significant tenant improvement costs to build out and redevelop these spaces. At June 30, 2008, approximately 456,000 square feet of our space held for redevelopment was under construction for Turn-Key Datacenter™, build-to-suit datacenter and Powered Base Building™ space in eight U.S. and European markets. At June 30, 2008, we had commitments under construction contracts for approximately $70.9 million, excluding approximately $65.9 million of the obligations for which third parties are obligated to reimburse us. We currently expect to incur $600.0 million of capital expenditures for our redevelopment program during the year ended December 31, 2008 although this amount may increase or decrease, potentially materially, based on numerous factors, including changes in demand, leasing results and availability of debt or equity capital.

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We are also subject to the commitments discussed below under “Commitments and Contingencies” and Off-Balance Sheet Arrangements, and Distributions as described below.

Consistent with our growth strategy, we actively pursue opportunities for potential acquisitions, with due diligence and negotiations often at different stages at different times. Year-to-date, we have acquired five properties for $70.0 million. We currently expect total acquisitions for the full year in the range of $115 million to $180 million, though this amount may increase or decrease, potentially materially, based on numerous factors, including changes in demand, leasing results, availability of debt or equity capital or based on acquisition opportunities.

We expect to meet our long-term liquidity requirements to pay for scheduled debt maturities and to fund property acquisitions and non-recurring capital improvements with net cash from operations, future long-term secured and unsecured indebtedness and the issuance of equity and debt securities. We also may fund future property acquisitions and non-recurring capital improvements using our revolving credit facility pending permanent financing.

Distributions

We are required to distribute 90% of our REIT taxable income (excluding capital gains) on an annual basis in order to continue to qualify as a REIT for federal income tax purposes. Accordingly, we intend to make, but are not contractually bound to make, regular quarterly distributions to preferred stockholders, common stockholders and unit holders from cash flow from operating activities. All such distributions are at the discretion of our board of directors. We may be required to use borrowings under the revolving credit facility, if necessary, to meet REIT distribution requirements and maintain our REIT status. We consider market factors and our performance in addition to REIT requirements in determining distribution levels. Amounts accumulated for distribution to stockholders are invested primarily in interest-bearing accounts and short-term interest-bearing securities, which are consistent with our intention to maintain our status as a REIT. The exchange rate on our $172.5 million principal amount of exchangeable debentures and the conversion rate on our series C cumulative convertible preferred stock and our series D cumulative convertible preferred stock are each subject to adjustment for certain events, including, but not limited to, certain dividends on our common stock in excess of $0.265 per share per quarter, $0.28625 per share per quarter and $0.31 per share per quarter, respectively. Therefore, increases to our quarterly dividend may increase the dilutive impact of the exchangeable debentures, series C cumulative convertible preferred stock and series D cumulative convertible preferred stock on our common stockholders.

Commitments and Contingencies

We have agreed with the seller of 350 East Cermak Road to share a portion, not to exceed $135,000 per month, of rental revenue, adjusted for our costs to lease the premises, from the lease of the 260,000 square feet of space held for redevelopment. This revenue sharing agreement will terminate in May 2013. We made a payment of approximately $17,000 to the seller during the six months ended June 30, 2008. No payments were made in 2007. We have recorded no liability for this contingent liability on our balance sheet at June 30, 2008.

As part of the acquisition of Clonshaugh Industrial Estate, we entered into an agreement with the seller whereby the seller is entitled to receive 40% of the net rental income generated by the existing building, after we have received a 9% return on all capital invested in the property. As of February 6, 2006, the date we acquired this property, we have estimated the present value of these expected payments over the 10 year lease term to be approximately $1.1 million and this value has been recorded as a component of the purchase price. Accounts payable and other liabilities include $1.5 million for this liability as of June 30, 2008 and December 31, 2007, respectively. During the six months ended June 30, 2008 and 2007, we paid approximately $0.2 million and $0.1 million, respectively, to the seller.

As of June 30, 2008, we were a party to interest rate cap and swap agreements which hedge variability in cash flows related to LIBOR, GBP LIBOR and EURIBOR based mortgage loans. Under these swaps, we pay variable-rate amounts in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying principal amounts. See Item 3 “Quantitative and Qualitative Disclosures about Market Risk.”

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Outstanding Consolidated Indebtedness

The table below summarizes our debt, as of June 30, 2008 (in millions):

Debt Summary:
Fixed rate	$	801.0
Variable rate—hedged by interest rate swaps		169.4
Total fixed rate		970.4
Variable rate(1)		390.8
Total	$	1,361.2
Percent of Total Debt:
Fixed rate (including swapped debt)		71.3	%
Variable rate		28.7	%
Total		100.0	%
Effective Interest Rate as of June 30, 2008(2) :
Fixed rate (including swapped debt)		5.52	%
Variable rate		4.68	%
Effective interest rate		5.28	%

(1) We have a LIBOR interest rate cap with a notional amount of $97.2 million, that is not designated as a hedge. The interest rate cap agreement effectively caps interest payments from exceeding 6.00% plus the spread.

(2) Excludes impact of deferred financing cost amortization.

As of June 30, 2008, we had approximately $1.4 billion of outstanding consolidated long-term debt as set forth in the table above. Our ratio of debt to total market capitalization was approximately 27% (based on the closing price of our common stock on June 30, 2008 of $40.91). For this purpose, our total market capitalization is defined as the sum of the market value of our outstanding common stock (which may decrease, thereby increasing our debt to total market capitalization ratio), excluding options issued under our incentive award plan, plus the liquidation value of our preferred stock, plus the aggregate value of the units not held by us (with the per unit value equal to the market value of one share of our common stock and excluding long-term incentive units and Class C units), plus the book value of our total consolidated indebtedness.

The variable rate debt shown above bears interest at interest rates based on various LIBOR, GBP LIBOR and EURIBOR rates ranging from one to twelve months, depending on the respective agreement governing the debt. Assuming maturity of our exchangeable senior debentures at their first redemption date in August 2011, as of June 30, 2008, our debt had a weighted average term to initial maturity of approximately 4.8 years (approximately 5.3 years assuming exercise of extension options).

Off-Balance Sheet Arrangements

As of June 30, 2008, we were a party to interest rate cap agreements in connection with debt and interest rate swap agreements related to $169.4 million of outstanding principal on our variable rate debt. See Item 3 “Quantitative and Qualitative Disclosures about Market Risk.”

The exchangeable senior debentures provide for excess exchange value to be paid in cash or shares of our common stock if our stock price exceeds a certain amount. See note 6 to our consolidated financial statements for a further description of our exchangeable senior debentures.

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Cash Flows

The following summary discussion of our cash flows is based on the consolidated statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.

Comparison of Six Months Ended June 30, 2008 to Six Months Ended June 30, 2007

The following table shows cash flows and ending cash and cash equivalent balances for the six months ended June 30, 2008 and 2007, respectively (in thousands):

	Six Months Ended June 30,
	2008			2007			Change
Net cash provided by operating activities (including discontinued operations)	$	73,354		$	56,465		$	16,889
Net cash used in investing activities		(322,084	)		(201,054	)		(121,030	)
Net cash provided by financing activities		237,142			170,342			66,800
Net increase in cash and cash equivalents	$	(11,588	)	$	25,753		$	(37,341	)

The increase in net cash provided by operating activities was primarily due to increased cash flows from new leasing at our same store properties and our acquisition of new operating properties during the twelve months ended June 30, 2008. Net cash used in investing activities increased for the six months ended June 30, 2008, as we had an increase in cash payments for our redevelopment program offset by cash paid for acquisitions for the six months ended June 30, 2008 ($68.6 million) as compared to the same period in 2007 ($192.8 million). The higher use of cash for acquisitions in 2007 more than offset the receipt of proceeds from the sales of 100 Technology Center Drive and 4055 Valley View Lane in March 2007.

Net cash flows from financing activities consisted of the following amounts (in thousands):

	Six Months Ended June 30,
	2008			2007			Change
Net proceeds from borrowings	$	(18,900	)	$	44,788		$	(63,688	)
Net proceeds from issuance of common/preferred stock, including exercise of stock options		335,524			169,958			165,566
Dividend and distribution payments		(85,567	)		(42,272	)		(43,295	)
Other		6,085			(2,132	)		8,217
Net cash provided by financing activities	$	237,142		$	170,342		$	66,800

The change in net borrowings for the six months ended June 30, 2008 as compared to the same period in 2007 was a result of repayments on the revolving credit facility from proceeds from issuance of our preferred stock (net proceeds of $334.1 million in February 2008 as compared to $169.6 million in April 2007) offset by proceeds from mortgage loans in 2007 for 2045 & 2055 Lafayette Street ($68.0 million) and 150 South First Street ($53.3 million). The increase in dividend and distribution payments for the six months ended June 30, 2008 as compared to the same period in 2007 was a result of the second quarter 2008 common dividend being paid as of June 30, 2008 but the second quarter 2007 common dividend and distribution declared was accrued and unpaid as of June 30, 2007, an increase in shares outstanding in 2008 as compared to 2007 and dividends on our series D preferred stock paid as of June 30, 2008, whereas this series of preferred stock was not outstanding as of June 30, 2007.

Minority interest

Minority interests relate to the interests in the Operating Partnership that are not owned by us, which, as of June 30, 2008, amounted to 8.6% of the Operating Partnership common units. In conjunction with our formation, GI Partners received common units, in exchange for contributing ownership interests in properties to the Operating Partnership. Also in connection with acquiring real estate interests owned by third parties, the Operating Partnership issued common units to those sellers.

Limited partners who acquired common units in the formation transactions have the right to require the Operating Partnership to redeem part or all of their common units for cash based upon the fair market value of an equivalent number of shares of our common stock at the time of the redemption. Alternatively, we may elect to acquire those common units in exchange for shares of our common stock on a one-for-one basis, subject to adjustment in the event of stock splits, stock dividends, issuance of stock rights, specified extraordinary distributions and similar events. Pursuant to registration rights agreements we entered into with GI Partners and the other third party contributors, we filed a shelf registration statement covering the issuance of the shares of our common stock issuable upon redemption of the common units, and the resale of those shares of common stock by the holders. As of March 31, 2007, GI Partners no longer had an ownership interest in the Operating Partnership.

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Inflation

Substantially all of our leases provide for separate real estate tax and operating expense escalations. In addition, many of the leases provide for fixed base rent increases. We believe that inflationary increases may be at least partially offset by the contractual rent increases and expense escalations described above.

New Accounting Pronouncements Issued But Not Yet Adopted

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”), which replaces SFAS No. 141, “Business Combinations.” SFAS 141(R) retains the fundamental requirements in SFAS 141 that the acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination. However, SFAS 141(R) changes the method of applying the acquisition method in a number of significant areas, including that acquisition costs will generally be expensed as incurred; noncontrolling interests will be valued at fair value at the acquisition date; in-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date; restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. SFAS 141(R) is effective on a prospective basis for all business combinations for which the acquisition date is on or after the beginning of the first annual period subsequent to December 15, 2008, with the exception of the accounting for valuation allowances on deferred taxes and acquired tax contingencies. SFAS 141(R) amends SFAS No. 109, “Accounting for Income Taxes,” such that adjustments made to valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to the effective date of SFAS 141(R) would also apply the provisions of SFAS 141(R). Early adoption of SFAS 141(R) is not permitted. We are evaluating the potential impact of this statement.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51.” This statement requires the recognition of a noncontrolling interest (minority interest) as a separate component within equity within the consolidated balance sheet. It also requires the amount of consolidated net income attributable to the parent and the noncontrolling interest be clearly identified and presented within the consolidated statement of income. This statement also amends certain of ARB No. 51’s consolidation procedures to make them consistent with the requirements of SFAS 141(R). SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. We are evaluating the potential impact of this statement.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133”. This statement amends SFAS No. 133 by requiring enhanced disclosures about an entity’s derivative instruments and hedging activities, but does not change SFAS No. 133’s scope or accounting. SFAS No. 161 requires increased qualitative, quantitative and credit-risk disclosures about the entity’s derivative instruments and hedging activities. SFAS 161 is effective for fiscal years, and interim periods within those fiscal years, beginning after November 15, 2008, with earlier adoption permitted. We are evaluating the potential impact of this statement.

In May 2008, the FASB issued Staff Position Accounting Principles Board (“APB”) 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP APB 14-1”). FSP APB 14-1 applies to convertible debt instruments that have a “net settlement feature” permitting settlement partially or fully in cash upon conversion. The guidance requires issuers of such convertible debt securities to separately account for the liability and equity components in a manner that reflects the issuer’s nonconvertible, unsecured debt borrowing rate. The FSP requires bifurcation of a component of the debt into equity, representative of the approximate fair value of the conversion feature at inception, and the amortization of the resulting debt discount to interest expense in the condensed consolidated statement of operations. We are in the process of assessing the impact of FSP APB 14-1. The non-cash interest recognized will gradually increase over time using the effective interest method. FSP APB 14-1 will become effective beginning in the first quarter of 2009 and is required to be applied retrospectively with early adoption prohibited.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our future income, cash flows and fair values relevant to financial instruments depend upon prevalent market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. We do not use derivatives for trading or speculative purposes and only enter into contracts with major financial institutions based on their credit rating and other factors.

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Analysis of debt between fixed and variable rate.

We use interest rate swap agreements and fixed rate debt to reduce our exposure to interest rate movements. As of June 30, 2008, our consolidated debt was as follows (in millions):

	Carrying Value		Estimated Fair Value
Fixed rate debt	$	801.0	$	809.8
Variable rate debt subject to interest rate swaps		169.4		172.0
Total fixed rate debt (including interest rate swaps)		970.4		981.8
Variable rate debt		390.8		390.8
Total outstanding debt	$	1,361.2	$	1,372.6

40

Interest rate swaps included in this table and their fair values as of June 30, 2008 were as follows (in thousands):

Current Notional Amount			Strike Rate	Effective Date	Expiration Date	Fair Value at Significant Other Observable Inputs (Level 2)
$	8,459		5.020	Dec. 1, 2006	Dec. 1, 2008	$	(76	)
	26,292	(1)	4.944	Jul. 10, 2006	Apr. 10, 2011		756
	17,104	(2)	3.981	May 17, 2006	Jul. 18, 2013		723
	12,374	(2)	4.070	Jun. 23, 2006	Jul. 18, 2013		476
	10,888	(2)	3.989	Jul. 27, 2006	Oct. 18, 2013		469
	50,672	(2)	3.776	Dec. 5, 2006	Jan. 18, 2012		2,078
	43,566	(2)	4.000	Dec. 20, 2006	Jan. 18, 2012		1,479
$	169,355					$	5,905

(1) Translation to U.S. dollars is based on exchange rate of $1.99 to £1.00 as of June 30, 2008.

(2) Translation to U.S. dollars is based on exchange rate of $1.58 to €1.00 as of June 30, 2008.

We purchased an interest rate cap from a financial institution with a notional amount of $97.2 million on a LIBOR based loan. Under the interest rate cap agreement, we would receive payments from the counterparty in the event LIBOR exceeds 6.00% over the term of the agreement. The interest rate cap agreement expires on June 15, 2009. The fair value of the cap was immaterial as of June 30, 2008.

Sensitivity to changes in interest rates.

The following table shows the effect if assumed changes in interest rates occurred:

Assumed event	Interest rate change (basis points)		Change ($ millions)
Increase in fair value of interest rate swaps following an assumed 10% increase in interest rates	43		$	2.1
Decrease in fair value of interest rate swaps following an assumed 10% decrease in interest rates	(43	)		(2.2	)
Increase in annual interest expense on our debt that is variable rate and not subject to swapped interest following a 10% increase in interest rates	43			1.7
Decrease in annual interest expense on our debt that is variable rate and not subject to swapped interest following a 10% increase in interest rates	(43	)		(1.7	)
Increase in fair value of fixed rate debt following a 10% decrease in interest rates	(43	)		13.4
Decrease in fair value of fixed rate debt following a 10% increase in interest rates	43			(12.6	)

Interest risk amounts were determined by considering the impact of hypothetical interest rates on our financial instruments. These analyses do not consider the effect of any change in overall economic activity that could occur in that environment. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure.

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Foreign currency forward exchange risk

As of June 30, 2008, we had foreign operations in the United Kingdom, Ireland, France, The Netherlands, Switzerland and Canada and, as such, are subject to risk from the effects of exchange rate movements of foreign currencies, which may affect future costs and cash flows. Our foreign operations are conducted in the British Pound, Euro and the Swiss Franc, except for our Canadian property for which the functional currency is the U.S. dollar. For these currencies we are a net receiver of the foreign currency (we receive more cash then we pay out) and therefore our foreign investments benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar relative to the foreign currency. For the three and six months ended June 30, 2008, operating revenues from properties outside the United States contributed $11.5 million and $22.3 million, respectively, which represented 9.3% and 9.4% of our operating revenues, respectively. Due to the decline in value of the U.S. dollar relative to the British Pound Sterling and Euro, should we substantially liquidate these foreign subsidiaries, a significant positive impact on our earnings in the periods in which the liquidation occurs would result.

42

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We have adopted and maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities and Exchange Act of 1934, as amended (the Exchange Act) is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rule 13a-15(b) of the Exchange Act, we have carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the quarter covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting that has occurred during the fiscal quarter ended June 30, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1 – Legal Proceedings.

None.

ITEM 1A – Risk factors.

See our risk factors set forth in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2007 and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2008.

ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds.

None.

ITEM 3 – Defaults Upon Senior Securities.

None.

ITEM 4 – Submission of Matters to a Vote of Security Holders.

On May 5, 2008, the Company held its Annual Meeting of Stockholders. The following resolutions were passed:

• Election of the following six individuals as directors of the Company for a one-year term, which will expire at the 2009 Annual Meeting of Stockholders:

Nominee	Votes For	Votes Withheld
Richard A. Magnuson	57,669,040	458,527
Michael F. Foust	58,109,663	17,904
Laurence A. Chapman	58,109,968	17,599
Kathleen Earley	56,645,252	1,482,315
Ruann F. Ernst, Ph.D.	58,105,787	21,780
Dennis E. Singleton	58,107,838	19,729

• Ratification of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2008. This resolution was passed with 58,101,194 votes for, 15,527 votes against and 10,843 abstentions.

ITEM 5 – Other Information.

(a)

Employment Agreements

On August 7, 2008, we entered into new employment agreements with each of Richard A. Magnuson, Chairman of our Board of Directors, Michael F. Foust, our Chief Executive Officer, A. William Stein, our Chief Financial Officer and Chief Investment Officer and Christopher J. Crosby, Jr., our Senior Vice President, Sales and Technical Services. Copies of the employment agreements with Messrs. Magnuson, Foust, Stein and Crosby will be filed as exhibits to our quarterly report on Form 10-Q for the quarter ending September 30, 2008.

The employment agreements have terms ending on the third anniversary of the effective date. If the respective employment agreement is not terminated by us or by the executive with 60 days written notice prior to the end of the initial term, the term automatically extends for one additional year at the end of the initial term, and on each subsequent anniversary. Under his employment agreement, Mr. Magnuson has agreed to waive his right to receive all cash compensation payable to him for serving as a member of our Board of Directors.

The employment agreements provide for (i) an annual base salary of $208,000 for Mr. Magnuson, $546,000 for Mr. Foust, $374,400 for Mr. Stein and $260,000 for Mr. Crosby, subject to increase in accordance with our policies in effect from time to time, (ii) eligibility for an annual cash performance bonus under our incentive bonus plan based on the satisfaction of performance criteria established in accordance with the terms of such plan, and with respect to Messrs. Foust, Stein and Crosby, (iii) eligibility to participate in all incentive, savings and retirement plans, practices, policies and programs maintained by us which are applicable to other similarly-situated executives, and (iv) medical and other group welfare plan coverage and fringe benefits provided to similarly-situated executives.

Target and maximum annual bonuses for Mr. Magnuson are initially 150% and 200%, respectively, of his base salary. Target and maximum annual bonuses for Mr. Foust are initially 100% and 150%, respectively, of his base salary. Target and maximum annual bonuses for Mr. Stein are initially 75% and 100%, respectively, of his base salary. Target annual bonus for Mr. Crosby is initially 50% of his base salary plus 0.25% of leases signed, based on their contract value, up to a cap of $300,000.

Mr. Magnuson’s employment agreement provides that if he is terminated (i) by us without “cause,” (ii) by Mr. Magnuson for “good reason” (each as defined in Mr. Magnuson’s employment agreement) or, (iii) by Mr. Magnuson for any reason on or within 30 days after the six month anniversary of a “change in control” (as defined in the First Amended and Restated Digital Realty Trust, Inc., Digital Services, Inc. and Digital Realty Trust, L.P. 2004 Incentive Award Plan, the “2004 Incentive Award Plan”), then, subject to Mr. Magnuson’s execution and non-revocation of a general release of claims, he will be entitled to a lump-sum termination payment within 30 days after the date of such termination in an amount equal to the sum of (a) three times the sum of his then-current annual base salary plus his target annual bonus for the fiscal year in which the termination date occurs, (b) the prorated portion of the target annual bonus for the partial fiscal year in which the termination date occurs (the “stub year bonus”), and (c) if the termination occurs after a fiscal year-end but before annual bonuses are paid or determined for such preceding fiscal year, an amount equal to such unpaid bonus, if determined, or the target bonus (the “prior year bonus”), if any. In addition, all outstanding unvested stock options and other equity-based awards held by Mr. Magnuson, other than any equity award that is subject to performance-based vesting (including unvested Class C Units of the Operating Partnership), shall become fully vested and exercisable. With respect to any outstanding unvested stock options and other equity-based awards subject to performance-based vesting (including unvested Class C Units of the Operating Partnership), Mr. Magnuson will continue to be deemed a “service provider” under the applicable award agreements until all such awards that ultimately satisfy the performance conditions, if any, vest.

Mr. Foust’s employment agreement provides that if his employment is terminated (i) by us without “cause,” (ii) by Mr. Foust for “good reason” (each as defined in Mr. Foust’s employment agreement) or, (iii) by Mr. Foust for any reason on or within 30 days after the six month anniversary of a “change in control” (as defined in the 2004 Incentive Award Plan), then, subject to Mr. Foust’s execution and non-revocation of a general release of claims, he will be entitled to a lump-sum termination payment within 30 days after the date of such termination in an amount equal to the sum of (a) three times the sum of his then-current annual base salary plus his maximum annual bonus for the fiscal year in which the termination date occurs, (b) the prorated portion of 150% of his then-current annual base salary for the partial fiscal year in which the termination date occurs (the “stub year bonus”), and (c) if the termination occurs after a fiscal year-end but before annual bonuses are paid or determined for such preceding fiscal year, an amount equal to such unpaid bonus, if determined, or 150% of his base salary actually paid for such preceding year (the “prior year bonus”), if any. In addition, all outstanding unvested stock options and other equity-based awards held by Mr. Foust, other than any equity award that is subject to performance-based vesting (including unvested Class C Units of the Operating Partnership and certain profits interest units awarded in 2008 subject to performance conditions), shall become fully vested and exercisable. With respect to any outstanding unvested stock options and other equity-based awards subject to performance-based vesting (including unvested Class C Units of the Operating Partnership and certain profits interest units awarded in 2008 subject to performance conditions), Mr. Foust will continue to be deemed a “service provider” under the applicable award agreements until all such awards that ultimately satisfy the performance conditions, if any, vest.

The employment agreements of Messrs. Stein and Crosby provide that if the executive’s employment is terminated by us without “cause” or by the executive for “good reason” (each as defined in the employment agreements), then, subject to the executive’s execution and non-revocation of a general release of claims, the executive will be entitled to receive a lump-sum severance payment within 60 days after the date of such termination in an amount equal to the sum of (i) the executive’s then-current annual base salary, (ii) the prorated portion of the maximum annual bonus for the partial fiscal year in which the termination date occurs (the “stub year bonus”) and (iii) if the termination occurs after a fiscal year-end but before annual bonuses are paid or determined for such preceding fiscal year, an amount equal to such unpaid bonus, if determined, or the maximum bonus) (the “prior year bonus”), if any. In the event of a termination of the executive’s employment by us without “cause” or by the executive for “good reason” on or within one year after a “change in control” (as defined in the 2004 Incentive Award Plan), in lieu of the severance payment set forth in the preceding paragraph, the executive will be entitled to receive a lump-sum severance payment within 60 days after the date of such termination in an amount equal to the sum of (i) two times the amount of the executive’s then-current base salary plus (ii) two times the greater of (a) the executive’s target annual bonus for the fiscal year in which the termination date occurs or (b) the annual bonus paid for the immediately preceding fiscal year, plus (iii) the stub year bonus, plus (iv) the prior year bonus, if any. In addition, all outstanding unvested stock options and other equity-based awards held by Messrs. Stein and Crosby, other than any equity award that is subject to performance-based vesting (including unvested Class C Units of the Operating Partnership and other outperformance awards), shall become fully vested and exercisable; provided with respect to any stock options and other equity-based awards that were subject to a performance condition (including unvested Class C Units of the Operating Partnership and other outperformance awards), such stock options or other equity-based awards shall only vest to the extent provided in the applicable award agreement.

In the event of any termination described above for Mr. Foust, and a termination of the executive’s employment by us without “cause” or by the executive for “good reason” on or within one year after a “change in control” for Messrs. Stein and Crosby, the executive will also be entitled to continued health insurance coverage at least equal to the coverage that would have been provided to such executive if such executive’s employment had not been terminated, for a period ending on the earlier of the first anniversary of such termination or the date on which such executive becomes eligible to receive comparable health insurance under a subsequent employer’s plan.

Mr. Magnuson’s employment agreement provides that upon death or disability, he will be entitled to a lump-sum severance payment in an amount equal to the sum of (i) his then-current annual base salary plus (ii) his target annual bonus for the fiscal year in which the termination date occurs plus (iii) the stub year bonus plus (iv) the prior year bonus, if any. The employment agreements of Messrs. Foust, Stein and Crosby provide that upon death or disability, the executive will be entitled to a lump-sum severance payment in an amount equal to the sum of (i) the executive’s then-current annual base salary plus (ii) the executive’s maximum annual bonus for the fiscal year in which the termination date occurs plus (iii) the stub year bonus plus (iv) the prior year bonus, if any. In addition, all outstanding stock options and other equity-based awards held by the executive, other than any equity award that is subject to performance-based vesting (including Class C Units of the Operating Partnership), will become fully vested and exercisable. The executive will continue to be deemed a “service provider” under the Class C Profits Interest Units Agreements, or the Class C Agreements, until all Class C Units issued pursuant to the Class C Agreements that ultimately satisfy the Performance Condition (as defined in the Class C Agreements), if any, vest.

The executives are entitled to an additional tax gross-up payment under their employment agreements if any amounts paid or payable to the executive would be subject to the excise tax on certain so-called “excess parachute payments” under Section 4999 of the Code. However, if a reduction in the payments of 10% or less would render the excise tax inapplicable, then the payments will be reduced by such amount and we will not be required to make the gross-up payment.

Mr. Magnuson’s agreement contains confidentiality provisions which apply indefinitely and fiduciary duty provisions that will apply during the term of his employment. The employment agreements of Messrs. Foust, Stein and Crosby contain confidentiality provisions which apply indefinitely and non-solicitation provisions which will apply during the term of the executive’s employment and for a one-year period thereafter. In addition, the employment agreements of Messrs. Foust, Stein and Crosby provide that, except in limited circumstances, the executives generally may not compete with us through the acquisition or ownership of technology-related real estate properties in the United States or Europe during the term of their employment with us.

Termination of Mr. Magnuson as an employee of the company or the Operating Partnership will not automatically affect his status as a director or as Chairman of the Board of Directors.

Amendment to 2005 Outperformance Awards

On August 4, 2008, our board of directors approved amendments to the outperformance award agreements that we entered into with our executive officers in 2005. Effective September 30, 2008, all of the class C units granted pursuant to the outperformance award agreements that satisfy the market condition (as set forth in the award agreements) shall be fully vested as of that date. Prior to the amendment, 60 percent of the class C units that satisfy the market condition would have vested on September 30, 2008, with the remaining 40 percent of such class C units vesting ratably each month for 24 months. For more information about the 2005 Outperformance awards, see “Executive Compensation – Compensation Discussion and Analysis – Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table – 2005 Outperformance Awards” in our proxy statement for the 2008 annual meeting of stockholders.

(b) None.

43

ITEM 6 – Exhibits

Exhibit

10.1	Amendment No. 2 to the Revolving Credit Agreement, dated as of June 13, 2008, among Digital Realty Trust, L.P., Citicorp North America, Inc., as administrative agent, the financial institutions named therein, KeyBank National Association, as syndication agent, and Citigroup Global Markets Inc. and KeyBanc Capital Markets, as arrangers.
10.2	Note Purchase and Private Shelf Agreement, dated as of July 24, 2008, among Digital Realty Trust, L.P., Prudential Investment Management, Inc. and the financial institutions named therein.
12.1	Statement of Computation of Ratios.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

44

SIGNATURES

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

	DIGITAL REALTY TRUST, INC.
August 8, 2008	/s/ MICHAEL F. FOUST
	Michael F. Foust Chief Executive Officer (principal executive officer)
August 8, 2008	/s/ A. WILLIAM STEIN
	A. William Stein Chief Financial Officer and Chief Investment Officer (principal financial officer)
August 8, 2008	/s/ EDWARD F. SHAM
	Edward F. Sham Vice President and Controller (principal accounting officer)

45

EX-10.1

Exhibit 10.1

AMENDMENT NO. 2 TO THE

REVOLVING CREDIT AGREEMENT

Dated as of June 13, 2008

AMENDMENT NO. 2 TO THE REVOLVING CREDIT AGREEMENT (this “Amendment”) among Digital Realty Trust, L.P. (the “Borrower”); Citicorp North America, Inc. (“CNAI”), as administrative agent (the “Administrative Agent”), and the financial institutions party to the Credit Agreement referred to below (collectively, the “Lender Parties”).

PRELIMINARY STATEMENTS:

(1) The Borrower, Digital Realty Trust, Inc. (the “Parent Guarantor”), the subsidiaries of the Borrower party thereto, the Lenders from time to time party thereto, the other Lender Parties, the Administrative Agent and the Syndication Agent have entered into a Revolving Credit Agreement dated as of August 31, 2007 (as amended prior to the date hereof, the “Credit Agreement”). Capitalized terms not otherwise defined in this Amendment have the same meanings as specified in the Credit Agreement.

(2) The Borrower, the Administrative Agent and the Required Lenders have agreed to amend the Credit Agreement on the terms and subject to the conditions hereinafter set forth.

SECTION 1. Amendments to Credit Agreement. The Credit Agreement is, upon the occurrence of the Amendment Effective Date (as defined in Section 3 below), hereby amended as follows:

(a) Section 1.01 of the Credit Agreement is hereby amended by adding thereto the following new definitions in their appropriate alphabetical order:

“Note Agreement” means that certain Note Purchase and Private Shelf Agreement dated as of July 24, 2008, by and among Borrower, Parent Guarantor, each of the entities party thereto from time to time as Subsidiary Guarantors (as defined therein), PIM, and the note purchasers party thereto or bound thereby from time to time.

“Note Documents” means the Note Agreement, together with all notes, instruments and other agreements entered into and delivered in connection therewith from time to time.

“PIM” means Prudential Investment Management, Inc., and its successors and assigns under the Note Documents.

(b) The definition of “Negative Pledge” set forth in Section 1.01 of the Credit Agreement is hereby amended by adding at the end thereof immediately before the period the following: “; provided, however, that (a) an agreement that conditions a Person’s ability to encumber its assets upon the maintenance of one or more specified ratios that limit such Person’s ability to encumber its assets but that do not generally prohibit the encumbrance of its assets, or the encumbrance of specific assets, shall not constitute a Negative Pledge, and (b) any provision of the Note Documents restricting the ability of any Loan Party to encumber its assets shall be deemed to not constitute a Negative Pledge so long as such provision is generally consistent with a comparable provision of the Loan Documents.”

Digital Realty – Amend No. 2

(c) The definition of “Unencumbered Asset Conditions” set forth in Section 1.01 of the Credit Agreement is hereby amended by deleting the first clause (i) and clause (j) in their entirety and substituting the following therefor: “(i) is an Asset with respect to which the Borrower directly, or indirectly through such Subsidiary owner, has the right to take the following actions without the need to obtain the consent of any Person: (i) to create Liens on such Asset as security for the Obligations of the Loan Parties under or in respect of the Loan Documents, and (ii) to sell, transfer or otherwise dispose of such Asset (provided, however, that in the case of the foregoing clauses (i)(i) and (i)(ii), (x) an agreement that conditions a Person’s ability to create Liens on its assets or to sell, transfer or otherwise dispose of its assets upon the maintenance of one or more specified ratios but that does not otherwise generally prohibit the creation of Liens on assets or the sale, transfer or disposition of assets, or the taking of such actions with respect to specific assets, shall not be deemed a violation of or prohibition under this clause (i), and (y) any restriction under the Note Documents on sales, transfers or other dispositions of assets during the existence of a default or event of default (or any such restriction under the Note Documents that would apply if a default or event of default would result from any such sales, transfers or other dispositions) shall not be deemed a violation of or prohibition under this clause (i) so long as such provision is generally consistent with a comparable provision of the Loan Documents), (j) is owned directly by the Borrower or a Guarantor, and (k) in the case of ownership by a Guarantor, one-hundred percent (100%) of all of the equity interests (other than directors’ qualifying shares) and voting interests (such ownership being defined as “Wholly-Owned”) of such Guarantor are owned by one or more of the Borrower and/or any other Wholly-Owned Subsidiary of the Borrower at such time.”

(d) The following new Section 5.01(s) is hereby added to the Credit Agreement immediately following Section 5.01(r) thereof:

“(s) Certain Amendments to Note Documents. If any of the Note Documents is modified (i) to add covenants or events of default that are not provided for in this Agreement, or (ii) to make covenants or events of default that are contained in the Note Documents immediately prior to such modification (and that are contained in this Agreement immediately prior to such modification) more restrictive than such covenants or events of default were immediately prior to such modification, then (x) such additional or more restrictive covenants or events of default shall immediately and automatically be incorporated by reference in this Agreement as if set forth fully herein, mutatis mutandis, effective as of the time when such additional or more restrictive covenants or events of default become effective under the Note Documents, and no such provision may thereafter be waived, amended or modified under this Agreement except in accordance with the provisions of Section 9.01, and (y) the Borrower shall promptly, and in any event within five (5) Business Days of entering into any such modification, so advise the Administrative Agent thereof in writing. Thereafter, upon the request of the Administrative Agent or the Required Lenders, the Loan Parties shall enter into an amendment to this Agreement evidencing the incorporation of such incremental or more restrictive covenant or event of default.”

(e) Section 5.02(a)(viii) is hereby renumbered “(ix)”, and a new Section 5.02 (a)(viii) is hereby inserted in the Credit Agreement immediately following Section 5.02(a)(vii) but before “and”:

“(viii) Liens on property of the Borrower or its Subsidiaries (other than Unencumbered Assets) securing Debt under the Note Documents so long as no Default or Event of Default arises therefrom;”

Digital Realty – Amend No. 2 2

(f) Section 5.02(k) of the Credit Agreement is hereby amended (i) by renumbering clauses (v) and (vi) thereof to read “(viii)” and “(ix)”, and (ii) by adding thereto immediately after the words “Administrative Agent; (iv)” on lines 11 and 12 thereof the following:

“(iv) customary provisions under Debt permitted under Section 5.02(b) which, following a default or event of default in respect of such Debt, limit the ability of any Person to make payments on Debt described in Section 5.02(b)(i); (v) customary provisions under any secured Debt permitted under Section 5.02(b) which limit the ability of any Person to transfer the assets encumbered by Liens securing such Debt; (vi) provisions under the Note Documents (including affirmative and negative covenants) that are generally consistent with comparable provisions under the Loan Documents; (vii)”

(g) Section 5.02(m) of the Credit Agreement hereby amended by (i) inserting the words “or the Note Documents” into clause (i) thereof immediately following the words “the Loan Documents”, (ii) by changing subclause “(E)” in clause (iv) thereof to be read “(F)”, and (iii) by inserting the following new clause (E) into clause (iv) thereof immediately prior to “, or”: “(E) any Non-Recourse Debt permitted under Section 5.02(b)(ii)(G)”.

(h) Section 5.02(n) of the Credit Agreement is hereby amended by (i) deleting the word “not” in the first line thereof, (ii) renumbering clause (vii) thereof to read “(viii)”, and (iii) adding thereto immediately after the words “Loan Documents; (vi)” in line 13 thereof the following:

“activities permitted under the Loan Documents, including without limitation the incurrence of Debt (and guarantees thereof) permitted under Sections 5.02(b)(iii) and (iv); (vii)”

SECTION 2. Representations and Warranties. The Borrower hereby represents and warrants that the representations and warranties contained in each of the Loan Documents (as amended or supplemented to date, including pursuant to this Amendment) are true and correct on and as of the Amendment Effective Date (defined below), before and after giving effect to this Amendment (including, without limitation, the representation and warranty set forth in Section 4.01(g) of the Credit Agreement, as amended by this Amendment), as though made on and as of such date (except for any such representation and warranty that, by its terms, refers to an earlier date, in which case as of such earlier date).

SECTION 3. Conditions of Effectiveness. This Amendment shall become effective as of the first date (the “Amendment Effective Date”) on which, and only if, each of the following conditions precedent shall have been satisfied:

(a) The Administrative Agent shall have received (i) counterparts of this Amendment executed by the Borrower, the Administrative Agent and all consenting Lenders (including, at a minimum, those Lenders comprising Required Lenders) or, as to any of such Lenders, advice satisfactory to the Administrative Agent that such Lender has executed this Amendment, and (ii) the consent attached hereto (the “Consent”) executed by each of the Guarantors.

(b) The representations and warranties set forth in each of the Loan Documents shall be correct in all material respects on and as of the Amendment Effective Date, before and after giving effect to this Amendment, as though made on and as of such date (except for any such representation and warranty that, by its terms, refers to a specific date other than the Amendment Effective Date, in which case as of such specific date).

Digital Realty – Amend No. 2 3

(c) No event shall have occurred and be continuing, or shall result from the effectiveness of this Amendment, that constitutes a Default.

(d) All of the fees and expenses of the Administrative Agent (including the reasonable fees and expenses of counsel for the Administrative Agent) due and payable on the Amendment Effective Date shall have been paid in full.

(e) The Administrative Agent shall have received payment in full of an amendment fee equal to 0.10% of the sum of the Commitments of those Lenders that have executed and delivered to the Administrative Agent a signature page to this Amendment, which fee shall be for the ratable benefit of such Lenders.

(f) The Administrative Agent shall have received copies, certified by the Borrower as correct and complete, of the Note Agreement and the other Note Documents, which shall be in form and substance satisfactory to the Administrative Agent.

The effectiveness of this Amendment is conditioned upon the accuracy of the factual matters described herein. This Amendment is subject to the provisions of Section 9.01 of the Credit Agreement.

SECTION 4. Reference to and Effect on the Loan Documents. (a) On and after the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in each of the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Amendment.

(b) The Credit Agreement, as specifically amended by this Amendment, is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed.

(c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.

SECTION 5. Costs and Expenses. The Borrower agrees to pay on demand all reasonable out-of-pocket costs and expenses of the Administrative Agent in connection with the preparation, execution, delivery and administration, modification and amendment of this Amendment and the other instruments and documents to be delivered hereunder (including, without limitation, the reasonable fees and expenses of counsel for the Administrative Agent) in accordance with the terms of Section 9.04 of the Credit Agreement.

SECTION 6. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by facsimile shall be effective as delivery of a manually executed counterpart of this Amendment.

Digital Realty – Amend No. 2 4

SECTION 7. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

[Balance of page intentionally left blank.]

Digital Realty – Amend No. 2 5

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

BORROWER:
DIGITAL REALTY TRUST, L.P.
By:	DIGITAL REALTY TRUST, INC., its sole general partner
	By	/s/ Michael F. Foust
		Name: Michael F. Foust Title: Chief Executive Officer

Digital Realty – Amend No. 2 Signature Page

ADMINISTRATIVE AGENT, SWING LINE BANK, ISSUING BANK AND INITIAL LENDER:
CITICORP NORTH AMERICA, INC.
By	/s/ Ricardo James
	Name: Ricardo James Title: Vice President

Digital Realty – Amend No. 2 Signature Page

INITIAL ISSUING BANK:
CITIBANK, N.A.
By	/s/ Ricardo James
	Name: Ricardo James Title: Vice President

Digital Realty – Amend No. 2 Signature Page

INITIAL LENDERS:
MERRILL LYNCH CAPITAL CORPORATION, as a Lender
By	/s/ John C. Rowland
	Name: John C. Rowland Title: Vice President

Digital Realty – Amend No. 2 Signature Page

BANK OF AMERICA, N.A., as a Lender
By	/s/ Allison M. Gauthier
	Name: Allison M. Gauthier Title: Senior Vice President

Digital Realty – Amend No. 2 Signature Page

KEYBANK NATIONAL ASSOCIATION, as a Lender
By	/s/ Jane E. McGrath
	Name: Jane E. McGrath Title: Vice President

Digital Realty – Amend No. 2 Signature Page

ROYAL BANK OF CANADA, NEW YORK BRANCH, as a Lender
By	/s/ Jake Sigmund
	Name: Jake Sigmund Title: Authorized Signatory

Digital Realty – Amend No. 2 Signature Page

CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as a Lender
By	/s/ Mikhail Faybusovich
	Name: Mikhail Faybusovich Title: Vice President
By	/s/ Christopher Reo Day
	Name: Christopher Reo Day Title: Associate

Digital Realty – Amend No. 2 Signature Page

UBS LOAN FINANCE LLC, as a Lender
By	/s/ Richard L. Tavrow
	Name: Richard L. Tavrow Title: Director
By	/s/ Irja R. Otsa
	Name: Irja R. Otsa Title: Associate Director

Digital Realty – Amend No. 2 Signature Page

THE ROYAL BANK OF SCOTLAND PLC, as a Lender
By	/s/ Brett E. Thompson
	Name: Brett E. Thompson Title: Vice President

Digital Realty – Amend No. 2 Signature Page

SOVEREIGN BANK, as a Lender
By	/s/ T. Gregory Donohue
	Name: T. Gregory Donohue Title: Sovereign Bank

Digital Realty – Amend No. 2 Signature Page

ALLIED IRISH BANKS, plc, as a Lender
By
	Name: Title:
By
	Name: Title:

Digital Realty – Amend No. 2 Signature Page

RAYMOND JAMES BANK, FSB, as a Lender
By
	Name: Title:

Digital Realty – Amend No. 2 Signature Page

SOCIÉTÉ GÉNÉRALE, as a Lender
By
	Name: Title:

Digital Realty – Amend No. 2 Signature Page

CHANG HWA COMMERCIAL BANK, LTD., NEW YORK BRANCH, as a Lender
By
	Name: Title:

Digital Realty – Amend No. 2 Signature Page

COMERICA BANK, as a Lender
By	/s/ James Graycheck
	Name: James Graycheck Title: Vice President

Digital Realty – Amend No. 2 Signature Page

CONSENT

Dated as of June 13, 2008

Each of the undersigned, as a Guarantor under the Credit Agreement referred to in the foregoing Amendment, hereby consents to such Amendment and hereby confirms and agrees that notwithstanding the effectiveness of such Amendment, the Guaranty contained in the Credit Agreement is and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that, on and after the effectiveness of such Amendment, each reference in the Loan Documents to “Credit Agreement”, “thereunder”, “thereof” or words of like import shall mean and be a reference to the Credit Agreement, as amended or otherwise affected by such Amendment.

GUARANTORS:
DIGITAL REALTY TRUST, INC.
By	/s/ Michael F. Foust
	Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL SERVICES, INC.
By	/s/ Michael F. Foust
	Name: Michael F. Foust Title: Chief Executive Officer

GLOBAL ASML, LLC
By:	DIGITAL REALTY TRUST, L.P., its member
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

Digital Realty – Consent to Amend No. 2 Signature Page

GLOBAL INNOVATION SUNSHINE HOLDINGS LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

GLOBAL GOLD CAMP, LLC
By:	GLOBAL GOLD CAMP HOLDING COMPANY, LLC, its member and manager
	By:	DIGITAL REALTY TRUST, L.P., its member and manager
		By:	DIGITAL REALTY TRUST, INC., its sole general partner
			By	/s/ Michael F. Foust
				Name: Michael F. Foust Title: Chief Executive Officer

GLOBAL GOLD CAMP HOLDING COMPANY, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

Digital Realty – Consent to Amend No. 2 Signature Page

DIGITAL 833 CHESTNUT, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL CONCORD CENTER, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL PRINTER SQUARE, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

Digital Realty – Consent to Amend No. 2 Signature Page

GLOBAL KATO HG, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL GREENSPOINT, L.P.
By:	DRT GREENSPOINT, LLC, its general partner and manager
	By:	DIGITAL REALTY TRUST, L.P., its member and manager
		By:	DIGITAL REALTY TRUST, INC., its sole general partner
			By	/s/ Michael F. Foust
				Name: Michael F. Foust Title: Chief Executive Officer

DRT GREENSPOINT, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

Digital Realty – Consent to Amend No. 2 Signature Page

DIGITAL GREENSPOINT, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL 113 N. MYERS, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL 125 N. MYERS, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL TORONTO BUSINESS TRUST
By	/s/ Michael F. Foust
	Name: Michael F. Foust Title: Chief Executive Officer

Digital Realty – Consent to Amend No. 2 Signature Page

DIGITAL AQUILA, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL CENTREPORT, L.P.
By:	DRT CENTREPORT, LLC, its general partner and manager
	By:	GLOBAL STANFORD PLACE II, LLC, its member and manager
		By:	DIGITAL REALTY TRUST, L.P., its member and manager
			By:	DIGITAL REALTY TRUST, INC., its sole general partner
				By	/s/ Michael F. Foust
					Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL PHOENIX VAN BUREN, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

Digital Realty – Consent to Amend No. 2 Signature Page

DIGITAL WINTER, LLC
By:	GLOBAL STANFORD PLACE II, LLC, its member and manager
	By:	DIGITAL REALTY TRUST, L.P., its member and manager
		By:	DIGITAL REALTY TRUST, INC., its sole general partner
			By	/s/ Michael F. Foust
				Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL 89TH PLACE, LLC
By:	GLOBAL STANFORD PLACE II, LLC, its member and manager
	By:	DIGITAL REALTY TRUST, L.P., its member and manager
		By:	DIGITAL REALTY TRUST, INC., its sole general partner
			By	/s/ Michael F. Foust
				Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL RESTON, LLC
By:	DIGITAL ABOVE, LLC, its sole member and manager
	By:	DIGITAL SERVICES, INC., its sole member and manager
		By	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

Digital Realty – Consent to Amend No. 2 Signature Page

DIGITAL ABOVE, LLC
By:	DIGITAL SERVICES, INC., its sole member and manager
	By	/s/ Michael F. Foust
		Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL CHELSEA, LLC
By:	DIGITAL ABOVE, LLC, its sole member and manager
	By:	DIGITAL SERVICES, INC., its sole member and manager
		By	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL VIENNA, LLC
By:	DIGITAL ABOVE, LLC, its sole member and manager
	By:	DIGITAL SERVICES, INC., its sole member and manager
		By	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL WALTHAM, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By:	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

Digital Realty – Consent to Amend No. 2 Signature Page

DIGITAL MIDWAY, L.P.
By:	DIGITAL MIDWAY GP, LLC, its general partner and manager
	By:	DIGITAL REALTY TRUST, L.P., its member and manager
		By:	DIGITAL REALTY TRUST, INC., its sole general partner
			By:	/s/ Michael F. Foust
				Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL 21110 RIDGETOP, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By:	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL 3011 LAFAYETTE, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By:	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

Digital Realty – Annex A to Amend No. 2 Signature Page

DIGITAL ASHBURN CS, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By:	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

GIP STOUGHTON, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By:	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL ARIZONA RESEARCH PARK II, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By:	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

Digital Realty – Annex A to Amend No. 2 Signature Page

DIGITAL 1 SAVVIS PARKWAY, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By:	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL 900 WALNUT, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By:	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL 210 TUCKER, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By:	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

Digital Realty – Annex A to Amend No. 2 Signature Page

GLOBAL MARSH MEMBER, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By:	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

GLOBAL MARSH LIMITED PARTNER, LLC
By:	GLOBAL MARSH MEMBER, LLC, its member and manager
	By:	DIGITAL REALTY TRUST, L.P., its member and manager
		By:	DIGITAL REALTY TRUST, INC., its sole general partner
			By:	/s/ Michael F. Foust
				Name: Michael F. Foust Title: Chief Executive Officer

GLOBAL MARSH GENERAL PARTNER, LLC
By:	GLOBAL MARSH MEMBER, LLC, its member and manager
	By:	DIGITAL REALTY TRUST, L.P., its member and manager
		By:	DIGITAL REALTY TRUST, INC., its sole general partner
			By:	/s/ Michael F. Foust
				Name: Michael F. Foust Title: Chief Executive Officer

Digital Realty – Annex A to Amend No. 2 Signature Page

DIGITAL NETWORK SERVICES, LLC
By:	DIGITAL PHOENIX VAN BUREN, LLC, its member and manager
	By:	DIGITAL REALTY TRUST, L.P., its member and manager
		By:	DIGITAL REALTY TRUST, INC., its sole general partner
			By:	/s/ Michael F. Foust
				Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL SERVICES PHOENIX, LLC
By:	DIGITAL SERVICES, INC., its sole member and manager
	By:	/s/ Michael F. Foust
		Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL CONNECT, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By:	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

Digital Realty – Annex A to Amend No. 2 Signature Page

DIGITAL 650 RANDOLPH, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By:	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL BUSINESS TRUST
By:	/s/ Michael F. Foust
	Name: Michael F. Foust Title: Chief Executive Officer

DIGITAL 365 RANDOLPHVILLE, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By:	/s/ Michael F. Foust
			Name: Michael F. Foust Title: Chief Executive Officer

Digital Realty – Annex A to Amend No. 2 Signature Page

GLOBAL STANFORD PLACE II, LLC
By:	DIGITAL REALTY TRUST, L.P., its member and manager
	By:	DIGITAL REALTY TRUST, INC., its sole general partner
		By:	/s/ A. William Stein
			Name: A. William Stein Title:  Chief Financial Officer and Chief Investment Officer

Digital Realty – Annex A to Amend No. 2 Signature Page

EX-10.2

Exhibit 10.2

DIGITAL REALTY TRUST, L.P.

NOTE PURCHASE AND PRIVATE SHELF AGREEMENT

7.00% Series A Senior Notes Due July 24, 2011

($25,000,000 Aggregate Original Principal Amount)

$175,000,000 Private Shelf Facility

July 24, 2008

TABLE OF CONTENTS

	Page
1 Authorization of Notes	1
1A Authorization of Series A Notes	1
1B Authorization of Issue of Shelf Notes	1
2 Sale And Purchase of Notes	2
2A Sale and Purchase of Series A Notes	2
2B Sale and Purchase of Shelf Notes	2
2B(1) Facility	2
2B(2) Issuance Period	3
2B(3) Request For Purchase	3
2B(4) Rate Quotes	3
2B(5) Acceptance	3
2B(6) Market Disruption	4
2B(7) Facility Closings	4
2B(8) Fees	5
2B(8)(i)   Structuring Fee	5
2B(8)(ii)  Issuance Fee	5
2B(8)(iii) Delayed Delivery Fee	6
2B(8)(iv) Cancellation Fee	6
3 Series A Closing	7
4 Conditions to Closing	7
4A Conditions to Series A Closing	7
4A(1) Delivery of Revolving Credit Agreement and Modifications Thereto	7
4A(2) Payment of Special Counsel Fees	8
4A(3) Consents	8
4A(4) Structuring Fee	8
4B Conditions to Each Closing	8
4B(1) Certain Documents	8
4B(2) Payment of Fees	9
4B(3) Representations and Warranties	9
4B(4) Performance; No Default	10
4B(5) Changes in Structure	10

i

TABLE OF CONTENTS

(continued)

	Page
4B(6) Purchase Permitted By Applicable Law, etc.	10
4B(7) Private Placement Number	10
4B(8) Proceedings and Documents	10
5 Representation and Warranties of the Company	10
5.1 Organization; Power and Authority	10
5.2 Authorization, etc.	11
5.3 Disclosure	11
5.4 Organization; Power and Authority	11
5.5 Financial Statements	12
5.6 Compliance with Laws; Other Instruments, etc.	12
5.7 Governmental Authorizations, etc.	13
5.8 Litigation; Observance of Agreements, Statutes and Orders	13
5.9 Taxes	13
5.10 Title to Property; Leases	14
5.11 Licenses, Permits, etc.	14
5.12 Compliance with ERISA	15
5.13 Private Offering	16
5.14 Use of Proceeds; Margin Regulations	16
5.15 Existing Debt; Liens	16
5.16 Foreign Assets Control Regulations, etc.	17
5.17 Status under Certain Statutes	17
5.18 Solvency	17
5.19 Hostile Tender Offers	18
5.20 Excluded Subsidiaries	18
5.21 Environmental Matters	18
6 Representations of the Purchasers	18
6.1 Purchase for Investment	18
6.2 Source of Funds	19
7 Information as to the Company	20
7.1 Default Notice	20
7.2 Annual Financials	21
7.3 Quarterly Financials	21

ii

TABLE OF CONTENTS

(continued)

	Page
7.4 Unencumbered Assets Certificate	22
7.5 Unencumbered Assets Financials	22
7.6 Annual Budgets	22
7.7 Material Litigation	22
7.8 Real Property	22
7.9 Assets Report	23
7.10 Environmental Conditions	23
7.11 Unencumbered Asset Conditions	23
7.12 Other Information	23
8 Prepayment of the Notes	23
8.1 Required Prepayments	24
8.2 Optional Prepayments with Make-Whole Amount	24
8.3 Allocation of Partial Prepayments	24
8.4 Maturity; Surrender, etc.	24
8.5 Purchase of Notes	25
8.6 Make-Whole Amount	25
9 Affirmative Covenants	28
9.1 Compliance with Laws, Etc.	28
9.2 Payment of Taxes, Etc.	28
9.3 Compliance with Environmental Laws	28
9.4 Maintenance of Insurance	29
9.5 Preservation of Partnership or Corporate Existence, Etc.	29
9.6 Visitation Rights	29
9.7 Keeping of Books	29
9.8 Maintenance of Properties, Etc.	29
9.9 Transactions with Affiliates and Excluded Subsidiaries	29
9.10 Covenant to Guarantee Obligations	30
9.11 Additional Unencumbered Assets	30
9.12 Performance of Material Contracts	31
9.13 Maintenance of REIT Status	31
9.14 NYSE Listing	31
9.15 Sarbanes-Oxley	31

iii

TABLE OF CONTENTS

(continued)

	Page
9.16 Certain Excluded Subsidiaries	31
9.17 Most Favored Lender	31
9.18 Information Required by Rule 144A	32
10 Negative Covenants	32
10.1 Liens, Etc.	32
10.2 Debt	33
10.3 Change in Nature of Business	35
10.4 Mergers, Etc.	35
10.5 Sales, Etc. of Assets	35
10.6 Investments in Other Persons	37
10.7 Restricted Payments	38
10.8 Accounting Changes	38
10.9 Speculative Transactions	38
10.10 Payment Restrictions Affecting Subsidiaries	38
10.11 Amendment, Etc. of Material Contracts	39
10.12 Negative Pledge	39
10.13 Parent Guarantor as Holding Company	39
10.14 Excluded Subsidiaries	40
10.15 Terrorism Sanctions Regulations	40
11 Financial Covenants	40
11.1 Parent Guarantor Financial Covenants	40
11.2 Unencumbered Assets Financial Covenants	41
12 Events Of Default	41
13 Remedies On Default, Etc.	44
13.1 Acceleration	44
13.2 Other Remedies	44
13.3 Rescission	45
13.4 No Waivers or Election of Remedies, Expenses, etc.	45
14 Registration; Exchange; Substitution Of Notes	45
14.1 Registration of Notes	45
14.2 Transfer and Exchange of Notes	46
14.3 Replacement of Notes	46

iv

TABLE OF CONTENTS

(continued)

	Page
15 Payments On Notes	47
15.1 Place of Payment	47
15.2 Home Office Payment	47
16 Expenses, Etc.	47
16.1 Transaction Expenses	47
16.2 Survival	48
17 Survival Of Representations And Warranties; Entire Agreement	48
18 Amendment And Waiver	48
18.1 Requirements	48
18.2 Solicitation of Holders of Notes	49
18.3 Binding Effect. etc.	49
18.4 Notes Held by Company, etc.	49
19 Notices	50
20 Reproduction Of Documents	50
21 Multiparty Guaranty	51
21.1 Unconditional Guaranty	51
21.2 Subrogation	53
21.3 Amendments, Etc. with Respect to Guaranteed Obligations	54
21.4 Guaranty Absolute and Unconditional; Termination	54
21.5 Reinstatement	55
21.6 Payments	55
21.7 Additional Guarantors	56
22 Miscellaneous	56
22.1 Successors and Assigns	56
22.2 Payments Due on Non-Business Days; Payment Currency	56
22.3 Severability	56
22.4 Construction	57
22.5 Counterparts	57
22.6 Governing Law	57
22.7 Several Obligations	57
22.8 Accounting Terms	57
22.9 Jurisdiction and Process; Waiver of Jury Trial	57

v

TABLE OF CONTENTS

(continued)

	Page
22.10 Waiver of Jury Trial	58
22.11 Confidentiality	59

vi

Information Schedule

Schedule A	—	Purchaser Schedule Related to Series A Notes
Schedule B	—	Defined Terms
Schedule II	—	Unencumbered Assets
Schedule 5.4	—	Credit Parties and Subsidiaries; Ownership
Schedule 5.8	—	Disclosed Litigation
Schedule 5.10(b)	—	Owned Real Property
Schedule 5.10(c)	—	Leased Real Property
Schedule 5.15	—	Existing Debt; Existing Liens
Schedule 5.20	—	Excluded Subsidiaries and Excluded Subsidiary Agreements
Schedule 10.1	—	Existing Liens
Schedule 10.2(c)	—	Surviving Debt
Exhibit A-1	—	Form of 7.00% Series A Senior Notes due 2011
Exhibit A-2	—	Form of Shelf Note
Exhibit B	—	Form of Request for Purchase
Exhibit C	—	Form of Confirmation of Acceptance
Exhibit D	—	Form of Funding Instruction Letter
Exhibit E	—	Form of Joinder to Multiparty Guaranty
Exhibit F	—	Form of Unencumbered Assets Certificate

i

DIGITAL REALTY TRUST, L.P.

560 Mission Street, Suite 2900

San Francisco, CA 94105

July 24, 2008

Prudential Investment Management, Inc.

Each Prudential Affiliate (as hereinafter defined) which is

    a signatory of this Agreement or becomes bound by certain

    provisions of this Agreement as hereinafter provided)

c/o Prudential Capital Group

Four Embarcadero Center, Suite 2700

San Francisco, California 94111

Ladies and Gentlemen:

Each of the undersigned, Digital Realty Trust, L.P., a Maryland limited partnership (the “Company”), Digital Realty Trust, Inc., a Maryland corporation (the “Parent Guarantor”), and the other entities listed on the signature pages hereof as the “Guarantors” (together with any Additional Guarantors (as hereinafter defined) acceding hereto pursuant to Section 21.7, the “Subsidiary Guarantors” and, together with the Parent Guarantor, the “Guarantors”) agrees with each of the Purchasers as follows:

1 AUTHORIZATION OF NOTES

1A AUTHORIZATION OF SERIES A NOTES.

The Company has authorized the issue and sale of ($25,000,000 aggregate principal amount of its 7.00% Series A Senior Notes due July 24, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Series A Notes”, such term to include any such notes issued in substitution therefor pursuant to Section 14). The Series A Notes shall be substantially in the form set out in Exhibit A-1. Certain capitalized and other terms used in this Agreement are defined in Schedule B; and references to a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement.

1B AUTHORIZATION OF ISSUE OF SHELF NOTES.

The Company will authorize the issue and sale from time to time of its additional senior notes (as amended, restated, supplemented or otherwise modified from time to time, the “Shelf Notes”) in the aggregate principal amount of up to $175,000,000 (including the equivalent in the Available Currencies), to be dated the date of issue thereof, to mature, in the case of each Shelf Note so issued, no more than 10 years after the date of original issuance thereof, to have an average life, in the case of each Shelf Note so issued, of no more than 7 years after the date of original issuance thereof, to bear interest on the unpaid balance thereof from the date thereof at the rate per annum, and to have such other particular terms, as shall be set forth, in the case of each Shelf Note so issued, in the Confirmation of Acceptance with respect to such Shelf Note delivered

pursuant to Section 2B(5), and to be substantially in the form of Exhibit A-2. The terms “Shelf Note” and “Shelf Notes” as used herein shall include each Shelf Note delivered pursuant to any provision of this Agreement and each Shelf Note delivered in substitution or exchange for any such Shelf Note pursuant to any such provision. The terms “Note” and “Notes” as used herein shall include each Series A Note and each Shelf Note delivered pursuant to any provision of this Agreement and each Note delivered in substitution or exchange for any such Note pursuant to any such provision. Notes that have (i) the same final maturity, (ii) the same principal prepayment dates, (iii) the same principal prepayment amounts (as a percentage of the original principal amount of each Note), (iv) the same interest rate, (v) the same interest payment periods, (vi) the same currency specification, and (vii) the same date of issuance (which, in the case of a Note issued in exchange for another Note, shall be deemed for these purposes the date on which such Note’s ultimate predecessor Note was issued), are herein called a “Series” of Notes.

2 SALE AND PURCHASE OF NOTES

2A SALE AND PURCHASE OF SERIES A NOTES.

Subject to the terms and conditions of this Agreement, the Company agrees to issue and sell to each Series A Purchaser and each Series A Purchaser agrees to purchase from the Company, on the Series A Closing Day provided for in Section 3, Series A Notes in the principal amount specified opposite such Series A Purchaser’s name in the Purchaser Schedule Relating to Series A Notes set forth as Schedule A at the purchase price of 100% of the principal amount thereof.

2B SALE AND PURCHASE OF SHELF NOTES.

2B(1) Facility. PIM is willing to consider, in its sole discretion and within limits that may be authorized for purchase by PIM and Prudential Affiliates from time to time, the purchase of Shelf Notes pursuant to this Agreement. The willingness of PIM to consider such purchase of Shelf Notes is herein called the “Facility.” At any time, (i) the aggregate principal amount of Shelf Notes stated in Section 1B, minus (ii) the aggregate principal amount of Shelf Notes purchased and sold pursuant to this Agreement prior to such time, minus (iii) the aggregate principal amount of Accepted Notes (as hereinafter defined) which have not yet been purchased and sold hereunder prior to such time, plus (iv) the aggregate principal amount of Accepted Notes the issuance of which is cancelled in accordance herewith, is herein called the “Available Facility Amount” at such time. For purposes of the preceding sentence, all aggregate principal amounts of Shelf Notes and Accepted Notes shall be calculated in Dollars with the aggregate amount of any Shelf Notes denominated or Accepted Notes to be denominated in any Available Currency other than Dollars being converted to Dollars at the rate of exchange used by PIM to calculate the Dollar equivalent at the time of the applicable Acceptance under Section 2B(5). NOTWITHSTANDING THE WILLINGNESS OF PIM TO CONSIDER PURCHASES OF SHELF NOTES, THIS AGREEMENT IS ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER PIM NOR ANY PRUDENTIAL AFFILIATE SHALL BE OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE SHELF NOTES, OR TO QUOTE RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC PURCHASES OF SHELF NOTES, AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A COMMITMENT BY PIM OR ANY PRUDENTIAL AFFILIATE.

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2B(2) Issuance Period. Shelf Notes may be issued and sold pursuant to this Agreement until the earlier of (i) the third anniversary of the date of this Agreement (or if such anniversary is not a New York Business Day, the New York Business Day next preceding such anniversary), and (ii) the thirtieth day after PIM shall have given to the Company, or the Company shall have given to PIM, written notice stating that it elects to terminate the issuance and sale of Shelf Notes pursuant to this Agreement (or if such thirtieth day is not a New York Business Day, the New York Business Day next preceding such thirtieth day). The period during which Shelf Notes may be issued and sold pursuant to this Agreement is herein called the “Issuance Period.”

2B(3) Request For Purchase. The Company may from time to time during the Issuance Period make requests for purchases of Shelf Notes (each such request being herein called a “Request for Purchase”). Each Request for Purchase shall be made to PIM by telefacsimile or overnight delivery service, and shall (i) specify the currency (which shall be an Available Currency) of the Shelf Notes covered thereby, (ii) specify the aggregate principal amount of Shelf Notes covered thereby, which shall not be less than $5,000,000 (or its equivalent in another Available Currency) and not be greater than the Available Facility Amount (or its equivalent in another Available Currency) at the time such Request for Purchase is made, (iii) specify the principal amounts, final maturities (which shall be no more than 10 years from the date of original issuance), and principal prepayment dates and amounts (which shall result in an average life of no more than 7 years from the date of original issuance) of the Shelf Notes covered thereby, (iv) specify the use of proceeds of such Shelf Notes), (v) specify the proposed day for the closing of the purchase and sale of such Shelf Notes, which shall be a Business Day during the Issuance Period not less than 10 Business Days (or such earlier date as PIM may agree) and not more than 42 days after the making of such Request for Purchase, (vi) specify the number of the account and the name and address of the depository institution to which the purchase prices of such Shelf Notes are to be transferred on the Closing Day for such purchase and sale, (vii) certify that, except as may be described in a writing attached to such Request for Purchase, the representations and warranties contained in Section 5 are true on and as of the date of such Request for Purchase (except such representations and warranties that relate solely to an earlier date, in which case such representations and warranties shall have been true as of such earlier date) and that there exists on the date of such Request for Purchase no Event of Default or Default, and (viii) be substantially in the form of Exhibit B attached hereto. Each Request for Purchase shall be in writing and shall be deemed made when received by PIM.

2B(4) Rate Quotes. Not later than 3 Business Days after the Company shall have given PIM a Request for Purchase pursuant to Section 2B(3), PIM may, but shall be under no obligation to, provide to the Company by telephone interest rate quotes for the several currencies, principal amounts, maturities and principal prepayment schedules of Shelf Notes specified in such Request for Purchase. Each quote shall represent the interest rate per annum payable on the outstanding principal balance of such Shelf Notes at which PIM or a Prudential Affiliate would be willing to purchase such Shelf Notes at 100% of the principal amount thereof.

2B(5) Acceptance. Within 2 minutes after PIM shall have provided any interest rate quotes pursuant to Section 2B(4) or such shorter period as PIM may specify to the Company (such period herein called the “Acceptance Window”), the Company may, subject to Section 2B(6), elect to accept such interest rate quotes as to not less than $5,000,000 (or its equivalent in another Available Currency) aggregate principal amount of the Shelf Notes specified in the

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related Request for Purchase. Such election shall be made by an Authorized Officer of the Company notifying PIM by telephone or telefacsimile within the Acceptance Window (but not earlier than 9:30 a.m. or later than 1:30 p.m. (or such later time as PIM may agree), New York City local time) that the Company elects to accept such interest rate quotes, specifying the Shelf Notes (each such Shelf Note being herein called an “Accepted Note”) as to which such acceptance (herein called an “Acceptance”) relates. The day the Company notifies PIM of an Acceptance with respect to any Accepted Notes is herein called the “Acceptance Day” for such Accepted Notes. Any interest rate quotes as to which PIM does not receive an Acceptance within the Acceptance Window shall expire, and no purchase or sale of Shelf Notes hereunder shall be made based on such expired interest rate quotes. Subject to Section 2B(6) and the other terms and conditions hereof, the Company agrees to sell to PIM or a Prudential Affiliate, and PIM agrees to purchase, or to cause the purchase by a Prudential Affiliate of, the Accepted Notes at 100% of the principal amount of such Accepted Notes which purchase price shall be paid in the currency in which such Notes are to be denominated. As soon as practicable following the Acceptance Day, the Company, PIM and each Prudential Affiliate which is to purchase any such Accepted Notes will execute a confirmation of such Acceptance substantially in the form of Exhibit C (herein called a “Confirmation of Acceptance”). If the Company should fail to execute and return to PIM within 2 Business Days following receipt thereof a Confirmation of Acceptance with respect to any Accepted Notes, PIM may at its election at any time prior to its receipt thereof cancel the closing with respect to such Accepted Notes by so notifying the Company in writing.

2B(6) Market Disruption. Notwithstanding the provisions of Section 2B(5), if PIM shall have provided interest rate quotes pursuant to Section 2B(4) and thereafter, prior to the time an Acceptance with respect to such quotes shall have been notified to PIM in accordance with Section 2B(5), (i) the domestic market for U.S. Treasury securities or derivatives shall have closed during normal business hours of any Business Day or there shall have occurred a general suspension, material limitation, or significant disruption of trading in securities generally on the New York Stock Exchange or in the domestic market for U.S. Treasury securities or derivatives, or (ii) in the case of Shelf Notes to be denominated in a currency other than Dollars, the markets for the relevant government securities (which, in the case of the Euro, shall be the German Bund) or the spot and forward currency market, the financial futures market or the interest rate swap market shall have closed during normal business hours of any Business Day or there shall have occurred a general suspension, material limitation, or significant disruption of trading in securities generally in any of such markets, then the interest rate quotes with respect to such Shelf Notes shall expire, and no purchase or sale of such Shelf Notes hereunder shall be made based on such expired interest rate quotes. If the Company thereafter notifies PIM of the Acceptance of any such expired interest rate quotes, such Acceptance shall be ineffective for all purposes of this Agreement, and PIM shall promptly notify the Company that the provisions of this Section 2B(6) are applicable with respect to such Acceptance.

2B(7) Facility Closings. Not later than 1:30 p.m. (New York City local time) on the Document Delivery Date for any Accepted Notes, the Company will deliver to each Purchaser listed in the Confirmation of Acceptance relating thereto (or such Purchaser’s agent, including PIM and its agents) at the offices of the Bingham McCutchen LLP, Three Embarcadero Center, San Francisco, California 94111 (or such other address as PIM may specify in writing), the Accepted Notes to be purchased by such Purchaser in the form of one or more Notes in

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authorized denominations as such Purchaser may request for each Series of Accepted Notes to be purchased on such Closing Day, dated the applicable Closing Day and registered in such Purchaser’s name (or in the name of its nominee), against payment of the purchase price thereof by transfer of immediately available funds for credit to the account(s) specified in the Request for Purchase of such Notes. If the Company fails to tender to any Purchaser the Accepted Notes to be purchased by such Purchaser on the applicable Document Delivery Date, or any of the conditions specified in Section 4 shall not have been fulfilled by the time required on the applicable Document Delivery Date (and the applicable Purchaser(s) shall not have waived such conditions), the Company shall, prior to 2:00 p.m., New York City local time, on the applicable Document Delivery Date notify PIM (which notification shall be deemed received by each Purchaser) in writing whether (i) such closing is to be rescheduled (such rescheduled date to be a Business Day during the Issuance Period not less than one Business Day and not more than 10 Business Days after such originally scheduled Closing Day (the “Rescheduled Closing Day”)) and certify to PIM (which certification shall be for the benefit of each Purchaser) that the Company reasonably believes that it will be able to comply with the conditions set forth in Section 4 on the Document Delivery Date applicable to such Rescheduled Closing Day and that the Company will pay the Delayed Delivery Fee in accordance with Section 2B(8)(iii), or (ii) such closing is to be canceled and the Company will pay the Cancellation Fee as provided in Section 2B(8)(iv). If a Rescheduled Closing Day is established in respect of Notes denominated in a currency other than Dollars, such Notes shall have the same maturity date, principal prepayment dates and amounts and interest payment dates as originally scheduled. In the event that the Company shall fail to give such notice referred to in the second preceding sentence, PIM (on behalf of each Purchaser) may at its election, at any time after 2:00 p.m., New York City local time, on the applicable Document Delivery Date, notify the Company in writing that such closing is to be canceled and the Company is obligated to pay the Cancellation Fee as provided in Section 2B(8)(iv). Notwithstanding anything to the contrary appearing in this Agreement, the Company may elect to reschedule a closing with respect to any given Accepted Notes on not more than two occasions, unless PIM shall have otherwise consented in writing.

2B(8) Fees.

2B(8)(i) Structuring Fee. In consideration for the time, effort and expense involved in the preparation, negotiation and execution of this Agreement, the Company will pay to or as directed by PIM, on or before the date hereof, a non-refundable fee in the aggregate amount of $25,000 (herein called the “Structuring Fee”).

2B(8)(ii) Issuance Fee. The Company will pay to or as directed by PIM in immediately available funds a fee (herein called the “Issuance Fee”) on each Closing Day (including the Series A Closing Day) in an amount equal to 0.10% of the Dollar equivalent of the aggregate principal amount of Notes sold on such Closing Day. Such fee shall be payable in Dollars.

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2B(8)(iii) Delayed Delivery Fee. If the closing of the purchase and sale of any Accepted Note is delayed for any reason beyond the original Closing Day for such Accepted Note (other than at PIM’s or any Purchaser’s request), the Company shall pay to or as directed by PIM, on the Cancellation Date or Document Delivery Date applicable to the actual Closing Day of such purchase and sale, an amount (the “Delayed Delivery Fee”) equal to:

(a) in the case of an Accepted Note denominated in Dollars, the product of (1) the amount determined by PIM to be the amount by which the bond equivalent yield per annum of such Accepted Note exceeds the investment rate per annum on an alternative Dollar investment of the highest quality selected by PIM and having a maturity date or dates the same as, or closest to, the Rescheduled Closing Day from time to time fixed for the delayed delivery of such Accepted Note, (2) the principal amount of such Accepted Note, and (3) a fraction the numerator of which is equal to the number of actual days elapsed from and including the original Closing Day for such Accepted Note to but excluding the date of such payment, and the denominator of which is 360; and

(b) in the case of an Accepted Note denominated in a currency other than Dollars, the sum of (1) the product of (x) the amount by which the bond equivalent yield per annum of such Accepted Note exceeds the Overnight Interest Rate on each day from and including the original Closing Day for such Accepted Note, (y) the principal amount of such Accepted Note, and (z) a fraction the numerator of which is equal to the number of actual days elapsed from and including the original Closing Day for such Accepted Note to but excluding the date of such payment, and the denominator of which is 360, and (2) the costs and expenses (if any) incurred by such Purchaser or its Affiliates with respect to any interest rate, currency exchange or similar agreement entered into by the Purchaser or any such Affiliate in connection with the delayed closing of such Accepted Notes.

In no case shall the Delayed Delivery Fee be less than zero. The delayed Delivery Fee described in clause (b) above shall be paid in the currency in which the Accepted Notes are denominated. Nothing contained herein shall obligate any Purchaser to purchase any Accepted Note on any day other than the Closing Day for such Accepted Note, as the same may be rescheduled from time to time in compliance with Section 2B(7). Notwithstanding the foregoing, no Delayed Delivery Fee shall be payable in connection with the closing of the purchase and sale of any Accepted Shelf Note if the Company shall have timely satisfied all conditions precedent set forth in Section 4B (other than (i) the condition precedent in Section 4B(2) to the extent it pertains to the payment of the Delayed Delivery Fee provided for in this Section 2B(8)(iii), and (ii) the condition precedent in Section 4B(8)).

2B(8)(iv) Cancellation Fee. If the Company at any time notifies PIM in writing that the Company is canceling the closing of the purchase and sale of any Accepted Note, or if PIM notifies the Company in writing under the circumstances set forth in the penultimate sentence of Section 2B(7) that the closing of the purchase and sale of such Accepted Note is to be canceled, or if, due to the action or inaction of the Company, the closing of the purchase and sale of such Accepted Note is not consummated on or prior to the last day of the Issuance Period (the date of any such notification, or the last day of the Issuance Period, as the case may be, being herein called the “Cancellation Date”), the Company shall pay to or as directed by PIM in immediately available funds on the Cancellation Date an amount (the “Cancellation Fee”) equal to:

(a) in the case of an Accepted Note denominated in Dollars, the product of (1) the principal amount of such Accepted Note, and (2) the quotient (expressed in decimals) obtained by dividing (y) the excess of the ask price (as determined by PIM) of the Hedge Treasury Note(s) on the Cancellation Date over the bid price (as determined by PIM) of the Hedge Treasury Note(s) on the Acceptance Day for such Accepted Note by (z) such bid price, with the foregoing bid and ask prices as reported by such publicly available source of such market data as is then customarily used by PIM, and rounded to the second decimal place; and

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(b) in the case of an Accepted Note denominated in a currency other than Dollars, the aggregate of all unwinding costs incurred by such Purchaser or its Affiliates on positions executed by or on behalf of such Purchaser or such Affiliates in connection with such Accepted Note, including the proposed lending in such currency and fixing the coupon in such currency; provided, however, that any gain realized upon the unwinding of any such positions shall be offset against any such unwinding costs. Such positions include (without limitation) currency and interest rate swaps, futures and forwards, government bond (including U.S. Treasury bond) hedges and currency exchange contracts, all of which may be subject to substantial price volatility. Such costs may also include (without limitation) losses incurred by such Purchaser or its Affiliates as a result of fluctuations in exchange rates. All unwinding costs incurred by such Purchaser shall be determined by such Purchaser or its Affiliate in accordance with generally accepted financial practice.

In no case shall the Cancellation Fee be less than zero.

3 SERIES A CLOSING.

The sale and purchase of the Series A Notes to be purchased by the Series A Purchasers shall occur at the offices of Bingham McCutchen LLP, Three Embarcadero Center, San Francisco, California 94111, at 9:00 a.m., Pacific time, at a closing on July 24, 2008 (the “Series A Closing Day”). On the Document Delivery Date, the Company will deliver to each Series A Purchaser the Series A Notes to be purchased by such Series A Purchaser in the form of a single Series A Note (or such greater number of Series A Notes in denominations of at least $1,000,000 as it may request), dated the date of the Series A Closing Day, and registered in such Series A Purchaser’s name (or in the name of its nominee), against delivery by such Series A Purchaser to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds as set forth in the Funding Instruction Letter set forth as Exhibit D. If on the Series A Closing Day the Company shall fail to tender such Notes as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to the satisfaction of any Series A Purchaser (and not waived thereby), such Series A Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights it may have by reason of such failure or such nonfulfillment.

4 CONDITIONS TO CLOSING.

The obligation of any Purchaser to purchase and pay for any Notes is subject to the fulfillment to its satisfaction, on or before the applicable Document Delivery Date, of the following conditions:

4A CONDITIONS TO SERIES A CLOSING

4A(1) Delivery of Revolving Credit Agreement and Modifications Thereto. (i) The Company and Guarantors shall have entered into amendments or other modifications of the Revolving Credit Agreement as necessary to permit the Company and the Guarantors to enter

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into this Agreement, (ii) such amendments or other modifications shall be in form and substance reasonably satisfactory to PIM, and (iii) PIM shall have received copies of the Revolving Credit Agreement and all such amendments or other modifications, accompanied by an Officer’s Certificate certifying such copies as being true, correct and complete copies of the Revolving Credit Agreement and such amendments or other modifications.

4A(2) Payment of Special Counsel Fees. Without limiting the provisions of Section 16.1, the Company shall have paid on or before the Series A Closing Day the reasonable fees, charges and disbursements of the special counsel of the Series A Purchasers referred to in Section 4B(1)(g), to the extent reflected in a statement of such counsel rendered to the Company at least one Business Day prior to the Series A Closing Day.

4A(3) Consents. The Series A Purchasers shall have received evidence satisfactory to it that all government, contractual and other third-party approvals and consents, if any, necessary to the consummation of the transactions contemplated by this Agreement and the other Transaction Documents as of the Series A Closing Day have been obtained.

4A(4) Structuring Fee. The Company shall have paid to or as directed by PIM in immediately available funds the Structuring Fee.

4B CONDITIONS TO EACH CLOSING.

4B(1) Certain Documents. Except as PIM may otherwise agree in writing, each Purchaser that is purchasing Notes on such Closing Day shall have received (or PIM shall have received on such Purchaser’s behalf) the following, each dated the applicable Closing Day and in form and substance reasonably satisfactory to PIM:

(a) The Note(s) to be purchased by such Purchaser;

(b) an Officer’s Certificate from the general partner of the Company, certifying that the conditions specified in Sections 4B(3), 4B(4) and 4B(5) have been fulfilled;

(c) certified copies of the resolutions of each Credit Party, authorizing the execution and delivery of the Transaction Documents relating to such Note purchase and to which such Credit Party is a party (and, in the case of such resolutions of the Board of Directors of the general partner of the Company, authorizing the issuance of the applicable Series of Notes by the Company), and of all documents evidencing other necessary corporate or similar action and governmental approvals, if any, with respect to the Transaction Documents and the applicable Series of Notes;

(d) a certificate of the Secretary or an Assistant Secretary of each of the Credit Parties (or, if such Person is a partnership, of its general partner), certifying the names and true signatures of the officers of such Person authorized to sign the Transaction Documents relating to such Note purchase and to which such Credit Party is a party;

(e) certified copies of the articles or certificate of incorporation (or similar charter document) and by-laws, operating agreement or partnership agreement, as applicable, of each Credit Party;

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(f) favorable opinions addressed to each Purchaser purchasing Notes on such Closing Day of (i) Latham & Watkins LLP, special counsel for the Credit Parties (or other counsel reasonably acceptable to PIM), satisfactory to such Purchaser in its sole discretion (in the case of the Series A Closing Day) and, in the case of any Closing Day other than the Series A Closing Day, substantially similar in form to the opinion rendered by Latham & Watkins LLP on the Series A Closing Day and satisfactory to such Purchaser in its reasonable discretion, (ii) Venable LLP, special Maryland counsel for the Credit Parties (or other counsel reasonably acceptable to PIM), satisfactory to such Purchaser in its sole discretion (in the case of the Series A Closing Day) and, in the case of any Closing Day other than the Series A Closing Day, substantially similar in form to the opinion rendered by Venable LLP on the Series A Closing Day and satisfactory to such Purchaser in its reasonable discretion, and (iii) Haynes and Boone, LLP, special Texas counsel for the Credit Parties (or other counsel reasonably acceptable to PIM), satisfactory to such Purchaser in its sole discretion (in the case of the Series A Closing Day) and, in the case of any Closing Day other than the Series A Closing Day, substantially similar in form to the opinion rendered by Haynes and Boone, LLP on the Series A Closing Day and satisfactory to such Purchaser in its reasonable discretion. The Company hereby directs each such counsel to deliver such opinions, agrees that the issuance and sale of any Notes will constitute a reconfirmation of such direction, and understands and agrees that each Purchaser receiving such an opinion will and is hereby authorized to rely on such opinion;

(g) a favorable opinion of Bingham McCutchen LLP, special counsel for PIM and the Purchasers, as to such matters incident to the matters herein contemplated related to the Series A Notes as such Purchaser reasonably requests;

(h) a good standing or similar certificate for (i) with respect to the Series A Closing Day, each Credit Party, the Company and the Parent Guarantor, and (ii) with respect to each Closing Day thereafter, the Company and the Parent Guarantor, in each case from the appropriate Governmental Authority of its jurisdiction of organization, dated as of a recent date, and such other evidence of the status of such Persons as such Purchaser may reasonably request; and

(i) additional documents or certificates with respect to legal matters or corporate or other proceedings related to the transactions contemplated hereby as may be reasonably requested by such Purchaser in a timely manner.

4B(2) Payment of Fees. The Company shall have paid to or as directed by PIM any fees due pursuant to or in connection with this Agreement, including the Issuance Fee due pursuant to Section 2B(8)(ii) and any Delayed Delivery Fee due pursuant to Section 2B(8)(iii).

4B(3) Representations and Warranties. Except as disclosed to PIM in writing and approved by PIM in writing, the representations and warranties of the Credit Parties in Section 5 hereof shall, in each case, be correct when made and on and as of such Closing Day (except where limited to an earlier date, in which case the same shall have been correct as of such earlier date).

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4B(4) Performance; No Default. Each of the Credit Parties shall have performed and complied with all unwaived agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at such Closing Day, and after giving effect to the issue and sale of the applicable Series of Notes (and the application of the proceeds thereof pursuant to the requirements of Section 5.14) no Default or Event of Default shall have occurred and be continuing.

4B(5) Changes in Structure. The Company shall not have changed its jurisdiction of organization or, except as otherwise permitted under this Agreement, been the subject of any merger or consolidation or succeeded to all or any substantial part of the liabilities of any other Person (except as permitted by Section 10.4), at any time following the date of the most recent financial statements referred to in Section 5.5.

4B(6) Purchase Permitted By Applicable Law, etc. Each Purchaser’s purchase of Notes on such Closing Day shall (i) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (ii) not violate any applicable law or regulation (including Regulation T, U or X of the Board of Governors of the Federal Reserve System), and (iii) not subject such Purchaser to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof. If requested by any Purchaser of Notes on such Closing Day, such Purchaser shall have received an Officer’s Certificate certifying as to such matters of fact as it may reasonably specify (and to which the Parent Guarantor can properly certify) to enable such Purchaser to determine whether such purchase is so permitted.

4B(7) Private Placement Number. A Private Placement number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National Association of Insurance Commissioners) or any then-applicable equivalent shall have been obtained for each Series of Notes to be issued on the applicable Closing Day.

4B(8) Proceedings and Documents. All corporate, organizational and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to each Purchaser purchasing Notes on the applicable Closing Day and its U.S. special counsel, and each such Purchaser and its U.S. special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such counsel may reasonably request.

5 REPRESENTATION AND WARRANTIES OF THE COMPANY.

Each Credit Party represents and warrants to each Purchaser that:

5.1 Organization; Power and Authority.

Each Credit Party is a corporation or other legal entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected

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to have a Material Adverse Effect. Each Credit Party has the requisite organizational power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver the Transaction Documents to which it is a party and to perform the provisions of such Transaction Documents. The Parent Guarantor is organized in conformity with the requirements for qualification as a REIT under the Code, and its method of operation enables it to meet the requirements for qualification and taxation as a REIT under the Code.

5.2 Authorization, etc.

This Agreement, the Notes and the other Transaction Documents to which any Credit Party is a party have been duly authorized by all necessary organizational action on the part of such Credit Party, and each of this Agreement and such other Transaction Documents (other than the Notes) constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of each Credit Party that is party to such Transaction Document enforceable against such Credit Party in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

5.3 Disclosure.

Neither this Agreement nor any other document, certificate or written statement furnished to PIM by or on behalf of the Company or the other Credit Parties in connection herewith, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading in light of the circumstances under which they were made. There is no fact known to the Company or any other Credit Party that would reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the other documents, certificates and other writings delivered to PIM by or on behalf of the Company or the other Credit Parties specifically for use in connection with the transactions contemplated hereby or filed with the SEC at least one Business Day prior to the date this representation is made or repeated. Since the date of the most recent audited balance sheet delivered pursuant to Section 7.2, or if no such balance sheet has been delivered, the most recent audited balance sheet referred to in Section 5.5, there has been no change in the financial condition, operations, business, properties or prospects of the Company, the Parent Guarantor or any Subsidiary except changes that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the other documents, certificates and other writings delivered to PIM by or on behalf of the Company or the other Credit Parties specifically for use in connection with the transactions contemplated hereby or filed with the SEC at least one Business Day prior to the date this representation is made or repeated.

5.4 Organization; Power and Authority.

(a) Schedule 5.4 contains complete and correct lists as of the Series A Closing Day of each of the Credit Parties (including the Company and the Parent Guarantor) and its Subsidiaries, showing, as to each such Person, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by other Credit Parties or other Persons.

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(b) All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company or the Parent Guarantor and their respective Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Company, the Parent Guarantor or another Subsidiary free and clear of any Lien (other than Liens on Equity Interests in Property-Level Subsidiaries securing Non-Recourse Debt permitted under Section 10.2(b)(vii) hereof).

5.5 Financial Statements.

The Company has furnished PIM with the following financial statements: (i) Consolidated balance sheets of the Parent Guarantor and its Subsidiaries as of December 31, 2005, 2006 and 2007 and as of the last day in each of the fiscal years completed thereafter and prior to the date as of which this representation is made or repeated to such Purchaser (other than fiscal years completed within 90 days prior to such date for which audited financial statements have not been released), and Consolidated statements of income and cash flows of the Parent Guarantor and its Subsidiaries for each such year, all certified by independent certified public accountants of recognized international standing; and (ii) unaudited Consolidated balance sheets of the Parent Guarantor and its Subsidiaries as at the end of the quarterly period (if any) most recently completed prior to such date and after the end of the most recent fiscal year (other than quarterly periods completed within 45 days (in the case of the first three fiscal quarters) or 70 days (in the case of the fourth fiscal quarter) prior to such date for which financial statements have not been released) and the comparable quarterly period in the preceding fiscal year and unaudited Consolidated statements of income and, solely for the first three fiscal quarters, cash flows of the Parent Guarantor and its Subsidiaries for the periods from the beginning of the fiscal years in which such quarterly periods are included to the end of such quarterly periods. Such financial statements (including any related schedules and/or notes) have been prepared in accordance with generally accepted accounting principals as in effect from time to time in the United States of America (subject, as to interim statements, to changes resulting from year-end adjustments) consistently applied throughout the periods involved and show all liabilities, direct and contingent, of the Parent Guarantor and its Subsidiaries required to be shown in accordance with such principles. The balance sheets fairly present the consolidated financial condition of the Parent Guarantor and its Subsidiaries as at the dates thereof, and the statements of income and cash flows fairly present the consolidated financial results of the operations of the Parent Guarantor and its Subsidiaries and their cash flows for the periods indicated. The Parent Guarantor and its Subsidiaries do not have any Material liabilities that are not disclosed on such financial statements or otherwise disclosed in writing to PIM. No event has occurred since the end of the most recent fiscal year for which such audited financial statements have been furnished which has had or would reasonably be expected to have a Material Adverse Effect.

5.6 Compliance with Laws; Other Instruments, etc.

The execution, delivery and performance by each Credit Party of the Transaction Documents to which it is a party will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of any Credit Party or any of its

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Subsidiaries under, any material indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, or any corporate charter (or similar constitutive documents) or bylaws (or similar documents), or any other material agreement or instrument to which any Credit Party or any of its Subsidiaries is bound or by which any Credit Party or any of its Subsidiaries or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority by which any Credit Party or any of its Subsidiaries is bound, or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to any Credit Party or any of its Subsidiaries.

5.7 Governmental Authorizations, etc.

No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by any Credit Party of this Agreement, the Notes or the other Transaction Documents to which such Person is a party except such consents, approvals or authorizations previously obtained and are in full force and effect.

5.8 Litigation; Observance of Agreements, Statutes and Orders.

(a) There are no actions, suits, investigations or proceedings pending or, to the knowledge of any Credit Party, threatened against or affecting the Parent Guarantor, the Company or any of their respective Subsidiaries or any property of the Parent Guarantor, the Company or any of their respective Subsidiaries in any court or before any arbitrator of any kind or before or by any Governmental Authority (including, without limitation, the matters disclosed in Schedule 5.8 (the “Disclosed Litigation”) that, if adversely determined, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

(b) None of the Parent Guarantor, the Company or any of their respective Subsidiaries is in default under any term of any material agreement or instrument to which it is a party or by which it is bound, or any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority by which it is bound, or is in violation of any applicable law, ordinance, rule or regulation (including, without limitation, Environmental Laws or the USA Patriot Act) of any Governmental Authority, which default or violation, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

5.9 Taxes.

The Parent Guarantor, the Company and their respective Subsidiaries have filed all Material income tax returns that, to the knowledge of each Credit Party, are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments received by such Credit Party or Subsidiary and levied upon them or their properties, assets, income or franchises, before they have become delinquent, except for any taxes and assessments being contested in accordance with Section 9.2. None of the Credit Parties knows of any basis for any other tax or assessment that would reasonably be expected to have a Material Adverse Effect.

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5.10 Title to Property; Leases.

(a) The Parent Guarantor, the Company and their respective Subsidiaries have good and sufficient title to their respective properties that individually or in the aggregate are Material, including all such properties reflected in the most recent audited balance sheet delivered pursuant to Section 7.2, or if no such balance sheet has been delivered, the most recent audited balance sheet referred to in Section 5.5 or purported to have been acquired by the Parent Guarantor, the Company or any Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of business or as otherwise permitted hereunder), in each case free and clear of Liens prohibited by this Agreement.

(b) Set forth on Schedule 5.10(b) hereto is a complete and accurate list of all material Real Property owned by any Credit Party or any of its Subsidiaries, showing as of the date hereof, and as of each other date Schedule 5.10(b) is required to be supplemented pursuant to Section 7.8, the street address, county or other relevant jurisdiction, state, record owner and book value thereof. Each Credit Party or such Subsidiary has good, marketable and insurable fee simple title to such Real Property, free and clear of all Liens, other than Liens created or permitted by the Transaction Documents.

(c) Set forth on Schedule 5.10(c) hereto is a complete and accurate list of all leases of material Real Property under which any Credit Party or any of its Subsidiaries is the lessee, showing as of the date hereof, and as of each other date Schedule 5.10(c) is required to be supplemented pursuant to Section 7.8, the street address, county or other relevant jurisdiction, state, lessor, lessee, expiration date and annual rental cost thereof. To the best of each Credit Party’s knowledge, each such lease is the legal, valid and binding obligation of the lessor thereof, enforceable in accordance with its terms.

(d) Each of the Assets listed on Schedule II satisfies all Unencumbered Asset Conditions, except to the extent as otherwise set forth in Schedule II or, with respect to Assets added after the Series A Closing Day, waived in writing by the Required Holders. The Credit Parties are the legal and beneficial owners (either in fee or leasehold, as applicable) of the Unencumbered Assets free and clear of any Lien, except for the Liens permitted under the Transaction Documents.

5.11 Licenses, Permits, etc.

(a) The Parent Guarantor, the Company and their respective Subsidiaries own or possess all licenses, permits, franchises, authorizations, patents, copyrights, proprietary software, service marks, trademarks and trade names, or rights thereto, without known conflict with the rights of others, that failure to own or possess, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

(b) To the best knowledge of each Credit Party, no product of the Parent Guarantor, the Company or any of their respective Subsidiaries infringes in any material respect any license, permit, franchise, authorization, patent, copyright, proprietary software, service mark, trademark, trade name or other right owned by any other Person, where such infringement would reasonably be expected to have a Material Adverse Effect.

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(c) To the best knowledge of each Credit Party, there is no Material violation by any Person of any right of the Parent Guarantor, the Company or any of their respective Subsidiaries with respect to any patent, copyright, proprietary software, service mark, trademark, trade name or other right owned or used by the Parent Guarantor, the Company or any of their respective Subsidiaries that is not being contested in good faith by the Credit Parties and their Subsidiaries or would not otherwise reasonably be expected to have a Material Adverse Effect.

5.12 Compliance with ERISA.

(a) The Parent Guarantor, the Company, each Subsidiary and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances of noncompliance as have not resulted in and would not reasonably be expected to result in a Material Adverse Effect. None of the Parent Guarantor, the Company, any Subsidiary or any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in section 3 of ERISA), and no event, transaction or condition has occurred or exists that would reasonably be expected to result in the incurrence of any such liability by the Parent Guarantor, the Company, any Subsidiary or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Parent Guarantor, the Company, any Subsidiary or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to section 4068 of ERISA or the Pension Funding Rules, other than such liabilities or Liens as would not be individually or in the aggregate Material.

(b) The present value of the aggregate benefit liabilities under each of the Plans (other than Multiemployer Plans), determined as of the end of such Plan’s most recently ended plan year on the basis of the actuarial assumptions specified for funding purposes in such Plan’s most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities. The term “benefit liabilities” has the meaning specified in section 4001 of ERISA and the terms “current value” and “present value” have the meaning specified in section 3 of ERISA. Following the effective date of the Pension Act, for any Plan which is subject to the Pension Funding Rules, the funding target attainment percentage, within the meaning of Section 303 of ERISA or Section 430 of the Code, for such Plan is not less than 100%.

(c) The Parent Guarantor, the Company, the Subsidiaries and their ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material.

(d) The expected postretirement benefit obligation (determined as of the last day of the Parent Guarantor’s most recently ended fiscal year in accordance with Financial Accounting Standards Board Statement No. 106, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Code) of the Parent Guarantor, the Company and their respective Subsidiaries is not Material.

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(e) The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to the prohibitions of section 406 of ERISA or in connection with which (x) a Material tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code on the Parent Guarantor, the Company, the Subsidiaries or their ERISA Affiliates or (y) any tax could be imposed pursuant to section 4975(c)(1)(A)-(D) on any Purchaser. The representation by the Credit Parties to each Purchaser in the first sentence of this Section 5.12(e) is made in reliance upon and subject to the accuracy of such Purchaser’s representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the Notes to be purchased by such Purchaser.

5.13 Private Offering.

Neither the Company nor anyone acting on its behalf has offered the Notes or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any Person other than the Purchasers and not more than 10 other Institutional Investors, each of which has been offered the Notes at a private sale for investment. Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of Section 5 of the Securities Act or the registration requirements of any securities or blue sky laws of any applicable jurisdiction. Without limiting the foregoing, neither PIM nor any Prudential Affiliate shall be deemed to be acting on behalf of the Company for purposes of this Section 5.13.

5.14 Use of Proceeds; Margin Regulations.

None of the proceeds of the sale of the Notes hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock does not constitute more than 5% of the value of the consolidated assets of the Company and its Subsidiaries and the Company does not have any present intention that margin stock will constitute more than 5% of the value of such assets. As used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U.

5.15 Existing Debt; Liens.

(a) Except as described therein, Schedule 5.15 sets forth a complete and correct list of all outstanding Debt for Borrowed Money of the Parent Guarantor, the Company and their respective Subsidiaries having a principal amount of at least $1,000,000 as of March 31, 2008 (including a description of the obligors and obligees, principal amount outstanding and collateral therefor, if any, and full-recourse guaranties thereof, if any, and the maturity date and amortization schedule therefor) which Debt will be outstanding as of the Series A Closing Day (after giving effect to the application of proceeds of the Series A Notes), and from March 31, 2008 to the Series A Closing Day there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of the such of the Parent Guarantor, the Company or any of their respective Subsidiaries (other than payments of principal and interest in accordance with the documents governing such Debt). None of the Parent Guarantor, the

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Company nor any Subsidiary is in default, and no waiver (other than a permanent waiver) of default is currently in effect, in the payment of any principal or interest on any such Debt of the Parent Guarantor, the Company or such Subsidiary and no event or condition exists with respect to any such Debt of the Parent Guarantor, the Company or any Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause Debt in an aggregate principal amount in excess of $30,000,000 to become due and payable before its stated maturity or before its regularly scheduled dates of payment.

(b) Set forth on Schedule 5.15 hereto is a complete and accurate list as of the Series A Closing Day of all Liens on the property or assets of any Credit Party or, with respect to Debt for Borrowed Money, any of its Subsidiaries, securing, in each case, obligations in a principal amount of at least $1,000,000, showing as of the date hereof the lienholder thereof, the principal amount of the obligations secured thereby and the property or assets of such Credit Party or such Subsidiary subject thereto.

5.16 Foreign Assets Control Regulations, etc.

(a) Neither the sale of the Notes by the Company hereunder nor its use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto.

(b) None of the Parent Guarantor, the Company nor any Subsidiary (i) is a Person described or designated in the Specially Designated National and Blocked Persons List of the Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order, or (ii) engages in any dealings or transactions with any such Person. The Parent Guarantor, the Company and their respective Subsidiaries are in compliance, in all material respects, with the USA Patriot Act.

(c) No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in each case in violation of the United States Foreign Corrupt Practices Act of 1977, as amended, assuming in all cases that such act applies to the Company.

5.17 Status under Certain Statutes.

None of the Parent Guarantor or any of its Subsidiaries is required to be registered under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 2005, as amended, the ICC Termination Act of 1995, as amended, or the Federal Power Act, as amended.

5.18 Solvency. Immediately after giving effect to the incurrence of Debt evidenced by the Notes, the use of the proceeds thereof and the payment of all estimated legal, accounting and other fees and expenses related to the foregoing, each Credit Party will be “Solvent,” (taking into account any and all rights of contribution) meaning: (a) the fair market value of such Credit Party’s assets, on a going concern basis, will be in excess of the amount that will be required to

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be paid on or in respect of its existing debts and other liabilities (including contingent liabilities) as they mature; (b) such Credit Party will not have unreasonably small capital to carry on its business as conducted or as proposed to be conducted; and (c) such Credit Party does not intend to or believe that it will incur debts beyond its ability to generally pay such debts as they mature (taking into account the timing and amounts of cash to be received by it and the amounts to be payable on or in respect of its obligations).

5.19 Hostile Tender Offers. None of the proceeds of the sale of any Notes will be used to finance a Hostile Tender Offer.

5.20 Excluded Subsidiaries. Set forth on Schedule 5.20 is a complete and accurate list of all Excluded Subsidiaries and their respective Excluded Subsidiary Agreements (if any) existing on the Series A Closing Day.

5.21 Environmental Matters.

(a) None of the Parent Guarantor, the Company or any Subsidiary has knowledge of any claim or has received any notice of any claim, and no proceeding has been instituted raising any claim against the Parent Guarantor, the Company or any of their respective Subsidiaries or any of their respective real properties now or formerly owned, leased or operated by any of them or other assets, alleging any damage to the environment or violation of any Environmental Laws, except, in each case, such as would not reasonably be expected to result in a Material Adverse Effect.

(b) None of the Parent Guarantor, the Company or any Subsidiary has knowledge of any facts which would give rise to any claim, public or private, against the Parent Guarantor or its Subsidiaries of violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to properties now or formerly owned, leased or operated by any of them, except, in each case, such as would not reasonably be expected to result in a Material Adverse Effect.

(c) None of the Parent Guarantor, the Company nor any Subsidiary has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them nor has disposed of any Hazardous Materials in a manner contrary to any Environmental Laws, in each case in any manner that would reasonably be expected to result in a Material Adverse Effect; and

(d) All buildings on all real properties now owned, leased or operated by the Parent Guarantor, the Company or any Subsidiary are in compliance with applicable Environmental Laws, except where failure to comply would not reasonably be expected to result in a Material Adverse Effect.

6 REPRESENTATIONS OF THE PURCHASERS.

6.1 Purchase for Investment. Each Purchaser severally represents that it is purchasing the Notes for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of such Purchaser’s or their property shall

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at all times be within such Purchaser’s or their control. Each Purchaser severally represents and warrants that it is an “accredited investor” within the meaning of Rule 501(a) under the Securities Act. Each Purchaser understands that the Notes have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that neither the Company nor any other Credit Party is required to register the Notes.

6.2 Source of Funds.

Each Purchaser severally represents that at least one of the following statements is an accurate representation as to each source of funds (a “Source”) to be used by such Purchaser to pay the purchase price of the Notes to be purchased by such Purchaser hereunder:

(a) the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the National Association of Insurance Commissioners (the “NAIC Annual Statement”)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser’s state of domicile; or

(b) the Source is a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or

(c) the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1, or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the Company in writing pursuant to this clause (c), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or

(d) the Source constitutes assets of an “investment fund” (within the meaning of Part V of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part V of the QPAM Exemption), no employee benefit plan’s assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are

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satisfied, as of the last day of its most recent calendar quarter, neither the QPAM nor a person controlling or controlled by the QPAM (applying the definition of “control” in Section V(e) of the QPAM Exemption) owns a 10% or more interest in the Company and (i) the identity of such QPAM, and (ii) the names of all employee benefit plans whose assets managed by the QPAM in the investment fund, when combined with the assets of other plans established or maintained by the same employer (or affiliate thereof described in Section V(c)(1) of the QPAM Exemption) or by the same employee organization, represent 10% or more of the assets of the investment fund have been disclosed to the Company in writing pursuant to this clause (d); or

(e) the Source constitutes assets of a “plan(s)” (within the meaning of Section IV of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV of the INHAM exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in Section IV(h) of the INHAM Exemption) owns a 5% or more interest in the Company and (i) the identity of such INHAM, and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this clause (e); or

(f) the Source is a governmental plan; or

(g) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, or one or more plans, within the meaning of Section 4975 of the Code, each of which has been identified to the Company in writing pursuant to this clause (g); or

(h) the Source does not include “plan assets,” within the meaning of Department of Labor Regulations Section 2510.3-101, as modified by Section 3(42) of ERISA, of any employee benefit plan subject to the fiduciary responsibility provisions of Title I of ERISA or of any plan to which Section 4975 of the Code applies.

As used in this Section 6.2, the terms “employee benefit plan”, “governmental plan”, and “separate account” shall have the respective meanings assigned to such terms in Section 3 of ERISA.

7 INFORMATION AS TO THE COMPANY.

The Parent Guarantor and the Company covenant that during the Issuance Period and so long thereafter as any Notes remain outstanding or any amounts owing under the Transaction Documents remain unpaid, the Parent Guarantor and the Company will furnish to each Significant Holder:

7.1 Default Notice. As soon as possible and in any event within three days after a Responsible Officer obtains knowledge of the occurrence of each Default or any event, development or occurrence reasonably likely to have a Material Adverse Effect, in each case, if continuing on the date of such statement, a statement of the Chief Financial Officer (or other Responsible Officer) of the Parent Guarantor setting forth details of such Default or such event, development or occurrence and the action that the Parent Guarantor has taken and proposes to take with respect thereto.

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7.2 Annual Financials. As soon as available and in any event within 90 days after the end of each Fiscal Year, a copy of the annual audit report for such year for the Parent Guarantor and its Subsidiaries, including therein Consolidated balance sheets of the Parent Guarantor and its Subsidiaries as of the end of such Fiscal Year and Consolidated statements of income and a Consolidated statement of cash flows of the Parent Guarantor and its Subsidiaries for such Fiscal Year (it being acknowledged that a copy of the annual audit report filed by the Parent Guarantor with the Securities and Exchange Commission shall satisfy the foregoing requirements), in each case accompanied by an opinion reasonably acceptable to the Required Holders of KPMG LLP or other independent public accountants of recognized standing reasonably acceptable to the Required Holders, together with (i) a certificate of such accounting firm to the Significant Holders stating that in the course of the regular audit of the business of the Parent Guarantor and its Subsidiaries, which audit was conducted by such accounting firm in accordance with generally accepted auditing standards, such accounting firm has obtained no knowledge that a Default with respect to Section 11 has occurred and is continuing, or if, in the opinion of such accounting firm, a Default with respect to Section 11 has occurred and is continuing, a statement as to the nature thereof, (ii) to the extent available, a schedule in form reasonably satisfactory to the Required Holders of the computations used by such accountants in determining, as of the end of such Fiscal Year, compliance with the covenants contained in Section 11, provided that in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Parent Guarantor shall also provide, if necessary for the determination of compliance with Section 11, a statement of reconciliation conforming such financial statements to GAAP, and (iii) a certificate of the Chief Financial Officer (or other Responsible Officer performing similar functions) of the Parent Guarantor stating that such financial statements have been prepared in accordance with generally accepted accounting principals as in effect from time to time in the United States of America and that no Default has occurred and is continuing or, if a Default has occurred and is continuing, a statement as to the nature thereof and the action that the Parent Guarantor has taken and proposes to take with respect thereto.

7.3 Quarterly Financials. As soon as available and in any event within 45 days after the end of each of the first three quarters of each Fiscal Year (and as soon as available and in any event within 70 days after the fourth fiscal quarter of any Fiscal Year, a supplemental schedule that contains the applicable financial information for the fourth fiscal quarter of such Fiscal Year as provided to the SEC on Form 8K), Consolidated balance sheets of the Parent Guarantor and its Subsidiaries as of the end of such quarter and Consolidated statements of income and a Consolidated statement of cash flows of the Parent Guarantor and its Subsidiaries for the period commencing at the end of the previous fiscal quarter and ending with the end of such fiscal quarter and Consolidated statements of income and a Consolidated statement of cash flows of the Parent Guarantor and its Subsidiaries for the period commencing at the end of the previous Fiscal Year and ending with the end of such quarter (provided that such statements of cash flows shall be required to be provided only with respect to the first three fiscal quarter of each Fiscal Year), setting forth in each case in comparative form the corresponding figures for the corresponding date or period of the preceding Fiscal Year, all in reasonable detail and duly certified (subject to normal year-end audit adjustments) by the Chief Financial Officer (or other Responsible Officer performing similar functions) of the Parent Guarantor as having been prepared in accordance with generally accepted accounting principals as in effect from time to time in the United States of America (it being acknowledged that a copy of the quarterly

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financials filed by the Parent Guarantor with the Securities and Exchange Commission shall satisfy the foregoing requirements), together with (i) a certificate of said officer stating that no Default has occurred and is continuing or, if a Default has occurred and is continuing, a statement as to the nature thereof and the action that the Parent Guarantor has taken and proposes to take with respect thereto, and (ii) a schedule in form reasonably satisfactory to the Required Holders of the computations used by the Parent Guarantor in determining compliance with the covenants contained in Section 11, provided that in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Parent Guarantor shall also provide, if necessary for the determination of compliance with Section 11, a statement of reconciliation conforming such financial statements to GAAP.

7.4 Unencumbered Assets Certificate. As soon as available and in any event within (i) 45 days after the end of each of the first three quarters of each Fiscal Year, and (ii) 70 days after the end of the fourth quarter of each Fiscal Year, an Unencumbered Assets Certificate, as at the end of such quarter, certified by the Chief Financial Officer (or other Responsible Officer performing similar functions) of the Parent Guarantor.

7.5 Unencumbered Assets Financials. As soon as available and in any event within (i) 45 days after the end of each of the first three quarters of each Fiscal Year, and (ii) 70 days after the end of the fourth quarter of each Fiscal Year, financial information in respect of all Unencumbered Assets, in form and detail satisfactory to the Required Holders.

7.6 Annual Budgets. As soon as available and in any event no later than 90 days after the end of each Fiscal Year, forecasts prepared by management of the Parent Guarantor, in form satisfactory to the Required Holders, of balance sheets, income statements and cash flow statements on a monthly basis for the then current Fiscal Year and on an annual basis for each Fiscal Year thereafter until the Termination Date (as defined in the Revolving Credit Agreement).

7.7 Material Litigation. Promptly after the commencement thereof, notice of all actions, suits, investigations, litigation and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting any Credit Party or any of its Subsidiaries of the type described in Section 5.8, and promptly after the occurrence thereof, notice of any material adverse change in the status or the financial effect on any Credit Party or any of its Subsidiaries of the Disclosed Litigation from that described on Schedule 5.8 hereto.

7.8 Real Property. As soon as available and in any event within 90 days after the end of each Fiscal Year, a report supplementing Schedule 5.10(b) and Schedule 5.10(c) hereto, including an identification of all owned and leased real property disposed of by any Credit Party or any of its Subsidiaries during such Fiscal Year, a list and description (including the street address, county or other relevant jurisdiction, state, record owner, book value thereof and, in the case of leases of property, lessor, lessee, expiration date and annual rental cost thereof) of all Real Property acquired or leased by any Credit Party or any of its Subsidiaries during such Fiscal Year and a description of such other changes in the information included in such Schedules as may be necessary for such Schedules to be accurate and complete.

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7.9 Assets Report. As soon as available and in any event within 90 days after the end of each quarter of each Fiscal Year, a report listing all Assets of the Parent Guarantor and its Subsidiaries as of the end of such quarter in form and substance reasonably satisfactory to the Required Holders.

7.10 Environmental Conditions. Written notice thereof (i) promptly upon a Responsible Officer of a Credit Party obtaining knowledge of any material violation of any Environmental Law affecting any Asset or the operations thereof or the operations of any of its Subsidiaries, (ii) promptly upon obtaining knowledge of any known release, discharge or disposal of any Hazardous Materials at, from, or into any Asset which it reports in writing or is reportable by it in writing to any governmental authority and which is material in amount or nature or which could reasonably be expected to materially adversely affect the value of such Asset, (iii) promptly upon a Credit Party’s receipt of any notice of material violation of any Environmental Laws or of any material release, discharge or disposal of Hazardous Materials in violation of any Environmental Laws or any matter that may result in an Environmental Action, including a notice or claim of liability or potential responsibility from any third party (including, without limitation, any federal, state or local governmental officials) and including notice of any formal inquiry, proceeding, demand, investigation or other action with regard to (A) such Credit Party’s or any other Person’s operation of any Asset, (B) contamination on, from or into any Asset, or (C) investigation or remediation of off-site locations at which such Credit Party or any of its predecessors are alleged to have directly or indirectly disposed of Hazardous Materials, or (iv) upon a Responsible Officer of such Credit Party obtaining knowledge that any expense or loss has been incurred by such governmental authority in connection with the assessment, containment, removal or remediation of any Hazardous Materials with respect to which such Credit Party or any Joint Venture may be liable or for which a Lien may be imposed on any Asset, provided that any of the events described in clauses (i) through (iv) above would have a Material Adverse Effect or could reasonably be expected to result in an Environmental Action with respect to any Unencumbered Asset.

7.11 Unencumbered Asset Conditions. Promptly after discovery by a Responsible Officer of a Credit Party of any condition or event which causes any of the Assets listed as Unencumbered Assets on Schedule II hereto no longer to comply with the requirements set forth in the definition of Unencumbered Asset Conditions, provide written notice thereof.

7.12 Other Information. Promptly after any request therefor, such other information respecting the business, condition (financial or otherwise), operations, performance, properties or prospects of any Credit Party or any of its Subsidiaries as any Significant Holder may from time to time reasonably request.

8 PREPAYMENT OF THE NOTES.

The Series A Notes and any Shelf Notes shall be subject to required prepayment as and to the extent provided in Section 8.1. The Series A Notes and any Shelf Notes shall also be subject to prepayment under the circumstances set forth in Section 8.2.

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8.1 Required Prepayments.

(a) Series A Notes. As provided therein, the entire unpaid principal balance of the Series A Notes shall be due and payable on the stated maturity date thereof.

(b) Shelf Notes. Each Series of Shelf Notes shall be subject to required prepayments, if any, set forth in the Notes of such Series; provided that upon any partial prepayment of any Series of Shelf Notes pursuant to Section 8.2, the principal amount of each required prepayment thereof becoming due on and after the date of such partial prepayment shall be reduced in the same proportion as the aggregate principal amount of such Series of Shelf Notes is reduced as a result of such prepayment.

8.2 Optional Prepayments with Make-Whole Amount.

The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes of any Series (to the exclusion of all other Series), in an amount not less than $1,000,000 (or in the equivalent of the currency in which the Notes of such Series are denominated) of the aggregate principal amount of the Notes of such Series then outstanding in the case of a partial prepayment, or such lesser principal amount of the Notes of such Series as shall then be outstanding, at 100% of the principal amount so prepaid, plus interest thereon to the prepayment date and the Make-Whole Amount determined for the prepayment date with respect to such principal amount. The Company will give each holder of Notes of such Series written notice of each optional prepayment under this Section 8.2 not less than 5 Business Days and not more than 60 days prior to the date (which shall be a Business Day) fixed for such prepayment. Each such notice shall specify such date, the Series of Notes to be prepaid, the aggregate principal amount of such Notes to be prepaid on such date, the principal amount of each Note of such Series held by such holder to be prepaid (determined in accordance with Section 8.3), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid.

8.3 Allocation of Partial Prepayments.

In the case of each partial prepayment of the Notes of each Series under Section 8.2, the principal amount prepaid shall be allocated among the Notes of such Series at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof.

8.4 Maturity; Surrender, etc.

In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment (which shall be a Business Day), together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.

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8.5 Purchase of Notes.

The Company will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes. The Company will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment or prepayment of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes.

8.6 Make-Whole Amount.

The term “Make-Whole Amount” means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal; provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:

“Called Principal” means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 13.1, as the context requires.

“Discounted Value” means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.

“Implied British Pound Yield” means, with respect to the Called Principal of any Note, the yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page 0#GBBMK” on the Reuters Screen (or such other display as may replace “Page 0#GBBMK” on the Reuters Screen) for actively traded benchmark gilt-edged securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or if such yields are not reported as of such time or the yields reported shall not be ascertainable, (ii) the average of the yields for such securities as determined by Recognized British Government Bond Market Makers. Such implied yield will be determined, if necessary, by (a) converting quotations to bond-equivalent yields in accordance with accepted financial practice, and (b) interpolating linearly between (1) the actively benchmark traded gilt-edged securities with the maturity closest to and greater than the Remaining Average Life of such Called Principal, and (2) the actively traded benchmark gilt-edged securities with the maturity closest to and less than the Remaining Average Life of such Called Principal.

“Implied Canadian Dollar Yield” means, with respect to the Called Principal of any Note, the yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page 0#CABMK” on the Reuters Screen (or such other display as may

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replace “Page 0#CABMK” on the Reuters Screen) for actively traded benchmark Canadian Government bonds having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or if such yields are not reported as of such time or the yields reported shall not be ascertainable, (ii) the average of the yields for such securities as determined by Recognized Canadian Government Bond Market Makers. Such implied yield will be determined, if necessary, by (a) converting quotations to bond-equivalent yields in accordance with accepted financial practice, and (b) interpolating linearly between (1) the actively traded benchmark Canadian Government bonds with the maturity closest to and greater than the Remaining Average Life of such Called Principal, and (2) the actively traded benchmark Canadian Government bonds with the maturity closest to and less than the Remaining Average Life of such Called Principal.

“Implied Dollar Yield” means, with respect to the Called Principal of any Note, the yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York City local time) on the Business Day next preceding the Settlement Date with respect to such Called Principal, for actively traded U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date on the display designated as “Page PX1” on Bloomberg Financial Markets (“Bloomberg”) (or, if Bloomberg shall cease to report such yields on Page PX1 or shall cease to be PIM’s customary source of information for calculating make-whole amounts on privately placed notes, then such source as is then PIM’s customary source of such information), or if such yields shall not be reported as of such time or the yields reported as of such time shall not be ascertainable, (ii) the Treasury Constant Maturity Series yields reported, for the latest day for which such yields shall have been so reported as of the second Business Day next preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield shall be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice, and (b) interpolating linearly between (1) the actively traded U.S. Treasury security with the maturity closest to and greater than the Remaining Average Life of such Called Principal, and (2) the actively traded U.S. Treasury security with the maturity closest to and less than the Remaining Average Life of such Called Principal.

“Implied Euro Yield” means, with respect to the Called Principal of any Note, the yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page 0#DEBMK” on the Reuters Screen (or such other display as may replace “Page 0#DEBMK” on the Reuters Screen) for the actively traded benchmark German Bunds having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or if such yields are not reported as of such time or the yields reported shall not be ascertainable, (ii) the average of the yields for such securities as determined by Recognized German Bund Market Makers. Such implied yield will be determined, if necessary, by (a) converting quotations to bond-equivalent yields in accordance with accepted financial practice, and (b) interpolating linearly between (1) the actively traded benchmark German Bunds with the maturity closest to and greater than the Remaining Average Life of such Called Principal, and (2) the actively traded benchmark German Bunds with the maturity closest to and less than the Remaining Average Life of such Called Principal.

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“Implied Swiss Franc Yield” means, with respect to the Called Principal of any Note, the yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page 0#CHBMK” on the Reuters Screen (or such other display as may replace “Page 0#CHBMK” on the Reuters Screen) for the actively traded benchmark Swiss Government bonds having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or if such yields are not reported as of such time or the yields reported shall not be ascertainable, (ii) the average of the yields for such securities as determined by Recognized Swiss Government Bond Market Makers. Such implied yield will be determined, if necessary, by (a) converting quotations to bond-equivalent yields in accordance with accepted financial practice, and (b) interpolating linearly between (1) the actively traded benchmark Swiss Government bonds with the maturity closest to and greater than the Remaining Average Life of such Called Principal, and (2) the actively traded benchmark Swiss Government bonds with the maturity closest to and less than the Remaining Average Life of such Called Principal.

“Recognized British Government Bond Market Makers” means two internationally recognized dealers of gilt edged securities reasonably selected by PIM.

“Recognized Canadian Government Bond Market Makers” means two internationally recognized dealers of Canadian Government bonds reasonably selected by PIM.

“Recognized German Bund Market Makers” means two internationally recognized dealers of German Bunds reasonably selected by PIM.

“Recognized Swiss Government Bond Market Makers” means two internationally recognized dealers of Swiss Government bonds reasonably selected by PIM.

“Reinvestment Yield” means, with respect to the Called Principal of any Note denominated in (i) Dollars, 0.50% plus the Implied Dollar Yield, (ii) British Pounds, the Implied British Pound Yield, (iii) Canadian Dollars, the Implied Canadian Dollar Yield, (iv) Euros, the Implied Euro Yield, and (v) Swiss Francs, the Implied Swiss Franc Yield. The Reinvestment Yield will be rounded to that number of decimals as appears in the coupon for the applicable Note.

“Remaining Average Life” means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.

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“Remaining Scheduled Payments” means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date; provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.2 or Section 13.1.

“Settlement Date” means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2, or has become or is declared to be immediately due and payable pursuant to Section 13.1, as the context requires.

9 AFFIRMATIVE COVENANTS

During the Issuance Period and for so long thereafter as any of the Notes are outstanding or any amounts owing under the Transaction Documents remain unpaid, each Credit Party covenants that it will:

9.1 Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA and the Racketeer Influenced and Corrupt Organizations Chapter of the Organized Crime Control Act of 1970; provided, however, that the failure to comply with the provisions of this Section 9.1 shall not constitute a default hereunder so long as such non-compliance is the subject of a Good Faith Contest.

9.2 Payment of Taxes, Etc. Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its property, and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided, however, that neither the Credit Parties nor any of their Subsidiaries shall be required to pay or discharge any such tax, assessment, charge or claim that is the subject of a Good Faith Contest, unless and until any Lien resulting therefrom attaches to its property and becomes enforceable by the holder of such Lien.

9.3 Compliance with Environmental Laws. (i) Comply, and cause each of its Subsidiaries to comply, and to take commercially reasonably steps to ensure that all lessees and other Persons operating or occupying its properties to comply, in all material respects, with all applicable Environmental Laws and Environmental Permits, except where such non-compliance could not reasonably be expected to result in a Material Adverse Effect; (ii) obtain and renew and cause each of its Subsidiaries to obtain and renew all Environmental Permits necessary for its operations and properties, except where failure to do so could not reasonably be expected to result in a Material Adverse Effect; and (iii) conduct, and cause each of its Subsidiaries to conduct, any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Hazardous Materials from any of its properties, in accordance with the requirements of all Environmental Laws, except where failure to do the same could not reasonably be expected to result in a Material Adverse Effect; provided, however, that neither the Credit Parties nor any of their Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is the subject of a Good Faith Contest.

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9.4 Maintenance of Insurance. Maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which such Credit Party or such Subsidiaries operate.

9.5 Preservation of Partnership or Corporate Existence, Etc. Preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, its existence (corporate or otherwise), legal structure, legal name, rights (charter and statutory), permits, licenses, approvals, privileges and franchises, except, in the case of Subsidiaries of the Company only, if in the reasonable business judgment of such Subsidiary it is in its best economic interest not to preserve and maintain such rights or franchises and such failure to preserve such rights or franchises is not reasonably likely to result in a Material Adverse Effect (it being understood that the foregoing shall not prohibit, or be violated as a result of, any transactions by or involving any Credit Party or Subsidiary thereof otherwise permitted under Section 10.4 or Section 10.5 below).

9.6 Visitation Rights. At any reasonable time and from time to time, permit any Significant Holder, or any agent or representatives thereof (in each case at such Significant Holder’s expense other than during the continuance of an Event of Default) to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, any Credit Party and any of its Subsidiaries, and to discuss the affairs, finances and accounts of any Credit Party and any of its Subsidiaries with any of their general partners, managing members, officers or directors.

9.7 Keeping of Books. Keep, and cause each of its active Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of such Credit Party and each such Subsidiary in accordance with generally accepted accounting principals as in effect from time to time in the United States of America.

9.8 Maintenance of Properties, Etc. Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted and will from time to time make or cause to be made all appropriate repairs, renewals and replacement thereof except where failure to do so would not have a Material Adverse Effect.

9.9 Transactions with Affiliates and Excluded Subsidiaries. Conduct, and cause each of its Subsidiaries to conduct, all transactions with any of their Affiliates (other than transactions exclusively among or between the Credit Parties) or with any Excluded Subsidiary on terms that are fair and reasonable and no less favorable to such Credit Party or such Subsidiary than it would obtain at the time in a comparable arm’s-length transaction with a Person not an Affiliate.

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9.10 Covenant to Guarantee Obligations. Each applicable Credit Party shall, in each case at its expense:

(a) Within 15 days after any Excluded Subsidiary Agreement terminates or otherwise becomes ineffective as to the Excluded Subsidiary party to such agreement, cause such Excluded Subsidiary (other than a Foreign Subsidiary) to duly execute and deliver to the holders of Notes a Joinder to Multiparty Guaranty in substantially the form of Exhibit E, or such other guaranty supplement in form and substance satisfactory to the Required Holders, guaranteeing the obligations of the other Credit Parties under the Transaction Documents, unless such Excluded Subsidiary (or a related Excluded Subsidiary) shall incur Non-Recourse Debt permitted under Section 10.2(b)(vii) within 60 days after the termination of such Excluded Subsidiary Agreement, and in such case the agreement in respect of such Non-Recourse Debt shall be deemed to be an Excluded Subsidiary Agreement and the Company shall promptly deliver to each Significant Holder an amended Schedule 5.20 that sets forth such agreement in respect of such Non-Recourse Debt opposite the name of such Excluded Subsidiary.

(b) Within 15 days after the formation or acquisition of any new direct or indirect Subsidiary (other than a Foreign Subsidiary) by any Credit Party, cause each such Subsidiary (other than a Subsidiary (x) that is prohibited by the terms of any loan agreement or indenture or other agreement to which it or a related Excluded Subsidiary is a party (or a default under any such agreement would result therefrom) from providing guarantees of the obligations of the Credit Parties under the Transaction Documents, (y) that is being formed with the intent to incur Non-Recourse Debt permitted under Section 10.2(b)(vii) in respect of Assets that are not Unencumbered Assets, or (z) that is inactive or holds de minimis assets (any Subsidiary described in clauses (x), (y) or (z) of this parenthetical, a “Limited Subsidiary”)), and cause each direct and indirect parent of such Subsidiary that is not a Limited Subsidiary (if it has not already done so), to duly execute and deliver to the holders of Notes a Joinder to Multiparty Guaranty in substantially the form of Exhibit E hereto, or such other guaranty supplement in form and substance satisfactory to the Required Holders, guaranteeing the other Credit Parties’ obligations under the Transaction Documents, provided that upon the formation or acquisition of any Limited Subsidiary, each such Limited Subsidiary shall be deemed to be an Excluded Subsidiary and each such loan agreement or indenture or other material agreement (if any) that restricts such Limited Subsidiary from providing guarantees of the obligations of the Credit Parties under the Transaction Documents shall be deemed to be an Excluded Subsidiary Agreement, and the Company shall promptly deliver to each Significant Holder an amended Schedule 5.20 that sets forth such agreements or indentures in respect of such Non-Recourse Debt opposite the name of such Limited Subsidiary.

9.11 Additional Unencumbered Assets. Within 10 days after any request by the Company that any Asset (a “Proposed Unencumbered Asset”) be added as an Unencumbered Asset, in each case at the Company’s expense, furnish to each Significant Holder the following items:

(a) confirmation that the Credit Parties are in compliance with the covenants contained in Section 11 (both immediately before and on a pro-forma basis immediately after the addition of such Proposed Unencumbered Asset as an Unencumbered Asset), evidenced by a certificate of the Chief Financial Officer (or other Responsible Officer) of the Company delivered to each Significant Holder prior to such addition demonstrating such compliance;

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(b) a certificate of the Chief Financial Officer (or other Responsible Officer) of the Company confirming that (i) such Proposed Unencumbered Asset has become an Unencumbered Asset pursuant to the requirements of the Revolving Credit Agreement, and (ii) such Asset satisfies all Unencumbered Asset Conditions (or, in the event that all Unencumbered Asset Conditions are not satisfied, specifying the Unencumbered Asset Conditions that are not satisfied, in which case such Proposed Unencumbered Asset shall not become an Unencumbered Asset unless the Required Holders shall have expressly consented in writing to the addition of such Proposed Unencumbered Asset as an Unencumbered Asset); and

(c) a revised Schedule II hereto reflecting the addition of such Proposed Unencumbered Asset.

9.12 Performance of Material Contracts. Perform and observe in all material respects all the terms and provisions of each Material Contract to be performed or observed by it, maintain each such Material Contract in full force and effect, enforce in all material respects each such Material Contract in accordance with its terms, take all such action to such end as may be from time to time reasonably requested by the Required Holders and, upon request of the Required Holders, make to each other party to each such Material Contract such demands and requests for information and reports or for action as any Credit Party or any of its Subsidiaries is entitled to make under such Material Contract, and cause each of its Subsidiaries to do so.

9.13 Maintenance of REIT Status. In the case of the Parent Guarantor, at all times, conduct its affairs and the affairs of its Subsidiaries in a manner so as to continue to qualify as a REIT and not terminate or revoke its election to be treated as a REIT under all applicable laws, rules and regulations.

9.14 NYSE Listing. In the case of the Parent Guarantor, at all times cause its common shares to be duly listed on the New York Stock Exchange or other national stock exchange.

9.15 Sarbanes-Oxley. Comply at all times with all applicable provisions of Section 402(a) of Sarbanes-Oxley, except where the failure to so comply could not reasonably be expected to result in a Material Adverse Effect.

9.16 Certain Excluded Subsidiaries. After the Series A Closing Day, (i) use best efforts to obtain such consents of lenders as may be required to permit those Subsidiaries (other than a Foreign Subsidiary) presently designated as Excluded Subsidiaries solely on the basis of restrictive provisions in their charters to become Guarantors hereunder, and (ii) within 10 days after obtaining any such required consents, (x) cause the applicable Subsidiary to execute and deliver to each holder of Notes a Joinder to Multiparty Guaranty in substantially the form of Exhibit E hereto, or such other guaranty supplement in form and substance satisfactory to the Required Holders, guaranteeing the other Credit Parties’ obligations under the Transaction Documents, and (y) deliver or cause the applicable Subsidiary to deliver an amended Schedule 5.20 that no longer lists such Subsidiary as an Excluded Subsidiary.

9.17 Most Favored Lender. If at any time hereafter the Revolving Credit Agreement or any of the Revolving Credit Documents is modified (a) to add covenants or events of default that are not provided for in this Agreement or the other Transaction Documents, or (b) to make

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covenants or events of default that are contained in the Revolving Credit Agreement or the other Revolving Credit Documents immediately prior to such modification (and that are contained in this Agreement or the other Transaction Documents immediately prior to such modification) more restrictive than such covenants or events of default were immediately prior to such modification, then (a) such additional or more restrictive covenants or events of default shall immediately and automatically be incorporated by reference in this Agreement as if set forth fully herein, mutatis mutandis, effective as of the time when such additional or more restrictive covenants or events of default become effective under the Revolving Credit Agreement or the other Revolving Credit Documents, and no such provision may thereafter be waived, amended or modified under this Agreement except pursuant to the provisions of Section 18.1, and (b) the Company shall promptly, and in any event within 5 Business Days of entering into any such modification, so advise each Significant Holder in writing. Thereafter, upon the request of the Required Holders, the Credit Parties shall enter into an amendment to this Agreement evidencing the incorporation of such incremental or more restrictive covenant or event of default.

9.18 Information Required by Rule 144A. Upon the request of any Significant Holder, provide to such holder, and to any Qualified Institutional Buyer designated by such holder, such financial and other information as such holder may reasonably determine to be necessary in order to permit compliance with the information requirements of Rule 144A under the Securities Act in connection with the resale of Notes, except at such times as the Parent Guarantor is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act.

10 NEGATIVE COVENANTS.

During the Issuance Period and for so long thereafter as any of the Notes are outstanding or any amounts owing under the Transaction Documents remain unpaid, each Credit Party covenants that it will not, at any time:

10.1 Liens, Etc. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien on or with respect to any of its properties of any character (including, without limitation, accounts) whether now owned or hereafter acquired, or sign or file or suffer to exist, or permit any of its Subsidiaries to sign or file or suffer to exist, under the Uniform Commercial Code of any jurisdiction, a financing statement (other than such financing statements filed solely as a precaution in respect of true leases entered in the ordinary course of business) that names such Credit Party or any of its Subsidiaries as debtor, or sign or suffer to exist, or permit any of its Subsidiaries to sign or suffer to exist, any security agreement authorizing any secured party thereunder to file such financing statement, or assign, or permit any of its Subsidiaries to assign, any accounts or other right to receive income, except, in the case of the Credit Parties (other than the Parent Guarantor) and their respective Subsidiaries:

(a) Permitted Liens;

(b) Liens existing on the date hereof and described on Schedule 10.1;

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(c) purchase money Liens upon or in equipment acquired or held by such Credit Party or any of its Subsidiaries in the ordinary course of business to secure the purchase price of such equipment or to secure Debt incurred solely for the purpose of financing the acquisition of any such equipment to be subject to such Liens, or Liens existing on any such equipment at the time of acquisition (other than any such Liens created in contemplation of such acquisition that do not secure the purchase price), or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount; provided, however, that no such Lien shall extend to or cover any property other than the equipment being acquired, and no such extension, renewal or replacement shall extend to or cover any property not theretofore subject to the Lien being extended, renewed or replaced; and provided, further, that the aggregate principal amount of the Debt secured by Liens permitted by this clause (c) shall not exceed the amount permitted under Section 10.2(b)(ii) at any time outstanding;

(d) Liens arising in connection with Capitalized Leases permitted under Section 10.2(b)(iii), provided that no such Lien shall extend to or cover any assets other than the assets subject to such Capitalized Leases;

(e) Liens on property of a Person existing at the time such Person is acquired by, merged into or consolidated with any Credit Party or any Subsidiary of any Credit Party or becomes a Subsidiary of any Credit Party, provided that such Liens were not created in contemplation of such merger, consolidation or acquisition and do not extend to any assets other than those of the Person so merged into or consolidated with such Credit Party or such Subsidiary or acquired by such Credit Party or such Subsidiary;

(f) other Liens securing Non-Recourse Debt permitted under Section 10.2(b)(vii);

(g) the replacement, extension or renewal of any Lien permitted by clause (c) or (e) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal of the Debt secured thereby;

(h) Liens on property of the Company or its Subsidiaries (other than Unencumbered Assets) securing Debt under the Revolving Credit Documents so long as no Default or Event of Default arises therefrom; and

(i) other Liens incurred in the ordinary course of business with respect to obligations in an amount not to exceed $3,000,000 in the aggregate at any time.

10.2 Debt. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Debt, except:

(a) (y) in the case of any Credit Party or any Subsidiary of a Credit Party, Debt owed to any other Credit Party or any wholly-owned Subsidiary of any Credit Party (other than an Excluded Subsidiary), provided that, in each case, such Debt (1) shall be on terms acceptable to the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders), and (2) shall be evidenced by promissory notes in form and substance satisfactory to the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders), which promissory notes shall (unless payable to the Company) by their terms be subordinated to the obligations of the Credit Parties evidenced by the Notes and under the other Transaction Documents, and (z) in the case of any Excluded Subsidiary, Debt owed to any other Excluded Subsidiary;

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(b) in the case of each Credit Party (other than the Parent Guarantor) or its Subsidiaries,

(i) Debt under the Transaction Documents,

(ii) Debt secured by Liens permitted by Section 10.1(c) not to exceed in the aggregate $7,500,000 at any time outstanding,

(iii) (1) Capitalized Leases (other than with respect to Real Property) not to exceed in the aggregate $25,000,000 at any time outstanding, and (2) in the case of Capitalized Leases (other than with respect to Real Property) to which any Subsidiary of a Credit Party is a party, Debt of such Credit Party of the type described in clause (a) of the definition of “Debt” guaranteeing the obligations of such Subsidiary under such Capitalized Leases,

(iv) [intentionally omitted],

(v) Debt in respect of Hedge Agreements designed to hedge against fluctuations in interest rates or foreign exchange rates incurred in the ordinary course of business and consistent with prudent business practice,

(vi) Unsecured Debt incurred in the ordinary course of business for borrowed money, maturing within one year from the date created, and aggregating, on a Consolidated basis, not more than $25,000,000 at any one time outstanding, and

(vii) Non-Recourse Debt (including, without limitation, the JV Pro Rata Share of Non-Recourse Debt of any Joint Venture) in respect of Assets other than Unencumbered Assets, the incurrence of which would not result in a Default under Section 11 or any other provision of this Agreement;

(c) In the case of the Parent Guarantor or any of its Subsidiaries:

(i) Debt under Customary Carve-Out Agreements,

(ii) the Surviving Debt described on Schedule 10.2(c) hereto and any Refinancing Debt, extending, refunding, or refinancing such Surviving Debt, and

(iii) Recourse Debt (whether secured or unsecured) in an amount not to exceed in the aggregate (1) 20% of Total Asset Value plus (2) an amount equal to the aggregate commitments under the Revolving Credit Agreement; provided, however, that any recourse guaranties of Non-Recourse Debt (exclusive of Customary Carve-Out Agreements) otherwise permitted under this clause (iii) shall not exceed in the aggregate 5% of Total Asset Value; provided, further, that during any period in which the Parent Guarantor shall maintain a Debt Rating of BBB-/Baa3 or better, then the Parent Guarantor and its Subsidiaries shall be permitted to incur Recourse Debt in any amount that would not result in a failure by the Company or the Parent Guarantor to comply with any of the financial covenants applicable to it contained in Section 11;

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(d) in the case of the Parent Guarantor, Debt under the Transaction Documents; and

(e) endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business.

10.3 Change in Nature of Business. Engage in, or permit any of its Subsidiaries to engage in, any material new line of business different from those lines of business conducted by the Company or any of its Subsidiaries on the Series A Closing Day, including the ownership, acquisition, development, construction, rental and management of Real Property (including all Assets), and activities substantially related, necessary or incidental thereto.

10.4 Mergers, Etc. Merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, any Person, or permit any of its Subsidiaries to do so; provided, however, that (i) any Subsidiary of a Credit Party may merge or consolidate with or into, or dispose of assets to, any other Subsidiary of a Credit Party (provided that if one or more of such Subsidiaries is also a Credit Party, a Credit Party shall be the surviving entity) or any other Credit Party (provided that such Credit Party or, in the case of any Credit Party other than the Company, another Credit Party shall be the surviving entity), and (ii) any Credit Party may merge with any Person that is not a Credit Party so long as such Credit Party or another Credit Party is the surviving entity, provided, in the case of the foregoing clause (i) or clause (ii), that no Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom. Notwithstanding any other provision of this Agreement, (y) any Subsidiary of a Credit Party (other than the Company or any Subsidiary that is the direct owner of an Unencumbered Asset) may liquidate or dissolve if the Company determines in good faith that such liquidation or dissolution is in the best interests of the Company and the assets or proceeds from the liquidation or dissolution of such Subsidiary are transferred to the Company or any Subsidiary thereof, which Subsidiary shall be a Credit Party if the Subsidiary being liquidated or dissolved is a Credit Party, provided that no Default or Event of Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom, and (z) any Credit Party or Subsidiary of a Credit Party shall be permitted to effect any Transfer of Unencumbered Assets through the sale or transfer of the direct or indirect Equity Interests in the Subsidiary of such Credit Party that owns such Unencumbered Assets so long as Section 10.5 would otherwise permit the Transfer of all Unencumbered Assets owned by such Subsidiary at the time of such sale or transfer of such Equity Interests. Upon the sale or transfer of Equity Interests in any Subsidiary or Subsidiaries of a Credit Party permitted under clause (z) above, PIM and the holders of Notes shall, upon the request of the Company, release such Subsidiary or Subsidiaries from the Multiparty Guaranty; provided, that no such release shall be become effective prior to any parallel release of such Subsidiary from the Guaranty (as defined in the Revolving Credit Agreement).

10.5 Sales, Etc. of Assets. (i) In the case of the Parent Guarantor, sell, lease, transfer or otherwise dispose of, or grant any option or other right to purchase, lease or otherwise acquire any assets, and (ii) in the case of the Credit Parties (other than the Parent Guarantor), sell, lease

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(other than enter into Tenancy Leases), transfer or otherwise dispose of, or grant any option or other right to purchase, lease (other than any option or other right to enter into Tenancy Leases) or otherwise acquire, or permit any of its Subsidiaries to sell, lease (other than pursuant to a Tenancy Lease), transfer or otherwise dispose of, or grant any option or other right to purchase, lease (other than an option or other right to enter into a Tenancy Lease) or otherwise acquire (each action described in clause (ii) of this Section 10.5 being a “Transfer”), any Unencumbered Asset or Unencumbered Assets (or any direct or indirect Equity Interests in the owner thereof) other than the following Transfers, which shall be permitted hereunder only so long as no Default or Event of Default shall exist or would result therefrom:

(A) the Transfer of any Unencumbered Asset or Unencumbered Assets from any Credit Party to another Credit Party or from a Subsidiary of a Credit Party to another Subsidiary of such Credit Party or any other Credit Party, or

(B) the Transfer of any Unencumbered Asset or Unencumbered Assets to any Person, or the designation of an Unencumbered Asset or Unencumbered Assets as a non-Unencumbered Asset or non-Unencumbered Assets (it being acknowledged and agreed for purpose of this Section 10.5 that any such designation shall be deemed to constitute a Transfer), in each case with the intention that such Unencumbered Asset or Unencumbered Assets, upon consummation of such Transfer or upon such designation, shall no longer constitute an Unencumbered Asset or Unencumbered Assets for purposes of this Agreement, provided that (x) the remaining Unencumbered Assets continue to satisfy all Unencumbered Asset Conditions, and (y) the Credit Parties shall be in compliance with the covenants contained in Section 11 both immediately before and on a pro forma basis immediately after giving effect to such Transfer, provided, further, that compliance with the foregoing proviso shall be evidenced by a certificate of the Chief Financial Officer (or other Responsible Officer performing similar functions) of the Company delivered to each Significant Holder prior to the date of such Transfer demonstrating such compliance, together with supporting information in detail reasonably satisfactory to the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders).

If, at any time after the designation in accordance with the foregoing clause (B) of all Unencumbered Assets of any Property-Level Subsidiary as non-Unencumbered Assets, such Subsidiary shall incur any Debt not prohibited by Section 10.2 pursuant to an agreement that could qualify as an Excluded Subsidiary Agreement hereunder, (i) PIM and each holder of Notes shall, upon the request of the Company, release such Subsidiary (and any other Subsidiary related thereto to the extent reasonably requested by the Company) from the Multiparty Guaranty; provided, that no such release shall be become effective prior to any parallel release of the applicable Subsidiary or Subsidiaries from the Guaranty (as defined in the Revolving Credit Agreement), (ii) such Subsidiary or Subsidiaries shall constitute Excluded Subsidiaries hereunder and such agreement shall constitute an Excluded Subsidiary Agreement hereunder, and (iii) the Company shall promptly deliver to each Significant Holder an amended Schedule 5.20 that sets forth such Excluded Subsidiary Agreement opposite the name of such Excluded Subsidiaries.

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10.6 Investments in Other Persons. Make or hold, or permit any of its Subsidiaries to make or hold, any Investment in any Person other than:

(a) Investments by the Credit Parties and their Subsidiaries in their Subsidiaries outstanding on the date hereof and additional Investments in Subsidiaries (including, without limitation, Investments comprised of loans or equity contributions to Excluded Subsidiaries or loans or equity contributions by one Excluded Subsidiary to another Excluded Subsidiary) and, in the case of the Credit Parties (other than the Parent Guarantor) and their Subsidiaries, Investments in Assets (including by asset or Equity Interest acquisitions), in each case subject, where applicable, to the limitations set forth in Section 10.6(d);

(b) Investments in Cash Equivalents;

(c) Investments consisting of intercompany Debt permitted under Section 10.2(a);

(d) Investments consisting of the following items so long as (y) the aggregate amount outstanding, without duplication, of all Investments described in this subsection does not exceed, at any time, 35% of Total Asset Value at such time, and (z) the aggregate amount of each of the following items of Investments does not exceed the specified percentage of Total Asset Value set forth below:

(i) Investments in Redevelopment Assets and Development Assets (including such assets that such Person has contracted to purchase for development with or without options to terminate the purchase agreement), so long as the aggregate amount of all such Investments in Redevelopment Assets and Development Assets, calculated on the basis of actual cost, does not at any time exceed 27.50% of Total Asset Value at such time; provided, however, that the limitations set forth in this clause (i) shall not apply to any Redevelopment Asset or Development Asset that is 85% pre-leased pursuant to duly executed Tenancy Leases and all completion and performance guarantees pertaining to such Asset are reasonably satisfactory to the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders),

(ii) Investments in undeveloped land (including undeveloped land that such Person has contracted to purchase with or without options to terminate the purchase agreement), so long as the aggregate amount of all such Investments in undeveloped land, calculated on the basis of actual cost, does not at any time exceed 11.0% of Total Asset Value at such time, and

(iii) Investments in Joint Ventures of any Credit Party or its Subsidiaries so long as the aggregate amount of such Investments outstanding does not at any time exceed 27.5% of Total Asset Value of the Parent Guarantor and its Subsidiaries, as determined in accordance with GAAP, at such time;

(e) Investments by the Company in Hedge Agreements permitted under Section 10.2(b)(v);

(f) to the extent permitted by applicable law, advances to officers, directors and employees of any Credit Party or any Subsidiary of any Credit Party in the ordinary course of business, for travel, entertainment, relocation and analogous ordinary business purposes;

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(g) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit extended in the ordinary course of business in an aggregate amount not to exceed $10,000,000; and

(h) Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss.

10.7 Restricted Payments. In the case of the Parent Guarantor, declare or pay any dividends, purchase, redeem, retire, defease or otherwise acquire for value any of its Equity Interests now or hereafter outstanding, return any capital to its stockholders, partners or members (or the equivalent Persons thereof) as such, make any distribution of assets, Equity Interests, obligations or securities to its stockholders, partners or members (or the equivalent Persons thereof) as such; provided, however, that the Parent Guarantor may declare and pay dividends or make other distributions of common stock or cash or purchase, redeem, retire, defease or otherwise acquire for value any of its Equity Interests, in each case only (i) so long as no Event of Default under Sections 12(a), (b), (c) or (f) shall have occurred and be continuing or shall result therefrom, (y) in an aggregate amount not to exceed during any four consecutive fiscal quarters of the Parent Guarantor 95% of Funds From Operations for such four fiscal quarter period, or (z) as may otherwise be required to avoid the imposition of income or excise taxes on the Parent Guarantor, and (ii) as may be required to comply with Section 9.13.

10.8 Accounting Changes. Make or permit, or permit any of its Subsidiaries to make or permit, any change in (i) accounting policies or reporting practices, except as required or permitted by generally accepted accounting principles, or (ii) its Fiscal Year.

10.9 Speculative Transactions. Engage, or permit any of its Subsidiaries to engage, in any transaction involving commodity options or futures contracts or any similar speculative transactions.

10.10 Payment Restrictions Affecting Subsidiaries. Directly or indirectly, enter into or suffer to exist, or permit any of its Subsidiaries to enter into or suffer to exist, any agreement or arrangement limiting the ability of any of its Subsidiaries to declare or pay dividends or other distributions in respect of its Equity Interests or repay or prepay any Debt owed to, make loans or advances to, or otherwise transfer assets to or invest in, the Company or any Subsidiary of the Company (whether through a covenant restricting dividends, loans, asset transfers or investments, a financial covenant or otherwise), except (i) the Transaction Documents, (ii) any agreement or instrument evidencing Surviving Debt or Refinancing Debt, (iii) any agreement evidencing any Non-Recourse Debt permitted under this Agreement so long as any such limiting agreement or arrangement in such agreement may be triggered only by a default or event of default under the terms of such agreement or is on customary terms otherwise satisfactory to the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders); (iv) customary provisions under Debt permitted under Section 10.2 which, following a default or event of default in respect of such Debt, limit the ability of any Person to make payments on Debt described in Section 10.2(a); (v) customary provisions under any secured Debt permitted under Section 10.2 which limit the ability of any Person to transfer the assets encumbered by Liens securing such Debt; (vi) provisions under the Revolving Credit Documents (including

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affirmative and negative covenants) that are generally consistent with comparable provisions under the Transaction Documents; (vii) any agreement in effect at the time such Subsidiary becomes a Subsidiary of the Company, so long as such agreement was not entered into solely in contemplation of such Person becoming a Subsidiary of the Company, (viii) any Excluded Subsidiary Agreement, and (ix) any restrictions with respect to any Subsidiary of the Company imposed pursuant to an agreement which has been entered into for the sale or disposition of all or substantially all of the Equity Interests in or assets of such Subsidiary to an unaffiliated Person that is not prohibited by Section 10.5.

10.11 Amendment, Etc. of Material Contracts. Cancel or terminate any Material Contract or consent to or accept any cancellation or termination thereof, amend or otherwise modify any Material Contract or give any consent, waiver or approval thereunder, waive any default under or breach of any Material Contract, agree in any manner to any other amendment, modification or change of any term or condition of any Material Contract or take any other action in connection with any Material Contract that would materially impair the value of the interest or rights of any Credit Party thereunder or that would impair or otherwise materially adversely affect the interest or rights of any holder of Notes, or permit any of its Subsidiaries to do any of the foregoing.

10.12 Negative Pledge. Enter into or suffer to exist, or permit any of its Subsidiaries to enter into or suffer to exist, any agreement prohibiting or conditioning the creation or assumption of any Lien upon any of its property or assets (including, without limitation, any Unencumbered Assets), except (i) pursuant to the Transaction Documents or the Revolving Credit Documents, (ii) pursuant to any Excluded Subsidiary Agreement, (iii) as set forth in Article 11 of the Seventh Amended and Restated Agreement of Limited Partnership of the Company, as in effect on the date hereof (or any substantially similar provisions in any subsequent amendment thereof), or (iv) in connection with (A) any Surviving Debt and any Refinancing Debt extending, refunding or refinancing such Surviving Debt, (B) any purchase money Debt permitted by Section 10.2(b)(ii) solely to the extent that the agreement or instrument governing such Debt prohibits a Lien on the property acquired with the proceeds of such Debt, (C) any Capitalized Lease permitted by Section 10.2(b)(iii) solely to the extent that such Capitalized Lease prohibits a Lien on the property subject thereto, (D) any Debt outstanding on the date any Subsidiary of the Company becomes such a Subsidiary (so long as such agreement was not entered into solely in contemplation of such Subsidiary becoming a Subsidiary of the Company), (E) any Non-Recourse Debt permitted under Section 10.2(b)(vii), or (G) any Debt permitted under Section 10.2(c)(iii).

10.13 Parent Guarantor as Holding Company. In the case of the Parent Guarantor, enter into or conduct any business, or engage in any activity (including, without limitation, any action or transaction that is required or restricted with respect to the Company and its Subsidiaries under Sections 9 and 10 without regard to any of the enumerated exceptions to such covenants), other than: (i) the holding of the Equity Interests of the Company; (ii) the performance of its duties as general partner of the Company; (iii) the performance of its obligations (subject to the limitations set forth in the Transaction Documents) under each Transaction Document to which it is a party; (iv) the making of equity Investments in the Company and its Subsidiaries, provided each such Investment (A) shall be on terms acceptable to the Administrative Agent (or, during the continuance of an Event of Default, the Required

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Holders), and (B) shall be evidenced by stock certificates, promissory notes or instruments in form and substance satisfactory to the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders); (v) maintenance of any deposit accounts required in connection with the conduct by the Parent Guarantor of business activities otherwise permitted under the Transaction Documents; (vi) activities permitted under the Transaction Documents, including, without limitation, the incurrence of Debt (and guaranties thereof) permitted under Sections 10.2(c) and (d); (vii) engaging in any activity necessary or desirable to continue to qualify as a REIT; and (viii) activities incidental to each of the foregoing.

10.14 Excluded Subsidiaries. Enter into or suffer to exist, or permit any Excluded Subsidiary (other than a Foreign Subsidiary) to enter into or suffer to exist, any agreement prohibiting or conditioning (i) the guaranty by such Excluded Subsidiary of the obligations of the Credit Parties under the Transaction Documents, or (ii) the creation or assumption of any Lien upon any of such Excluded Subsidiary’s property or assets, except (x) as would be permitted under Section 10.12, (y) pursuant to an Excluded Subsidiary Agreement in effect on the later of the Series A Closing Day and the date on which such Excluded Subsidiary becomes a Subsidiary of such Credit Party, or (z) in connection with the incurrence by such Excluded Subsidiary of Debt permitted under Section 10.2(b)(vii) or 10.2(c)(iii).

10.15 Terrorism Sanctions Regulations. (a) Become, or permit any Subsidiary to become, a Person described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order, or (b) knowingly engage, or permit any Subsidiary to knowingly engage, in any dealings or transactions with any such Person.

11 FINANCIAL COVENANTS.

During the Issuance Period and for so long thereafter as any of the Notes are outstanding or any amounts owing under the Transaction Documents remain unpaid, the Parent Guarantor covenants that it will:

11.1 Parent Guarantor Financial Covenants.

(a) Maximum Total Leverage Ratio: Maintain (i) at the end of each fiscal quarter of the Parent Guarantor, (ii) on the date of each Advance and the issuance or renewal of any Letter of Credit (both before and after giving effect to such Advance), and (iii) on each Closing Day on which Notes are issued (both before and after giving effect to the purchase and sale of the applicable Series of Notes), a Leverage Ratio not greater than 65.0%, provided that the Parent Guarantor shall have a one-time right to maintain a Leverage Ratio of greater than 65.0% but less than 70.0% for up to two consecutive fiscal quarters of the Parent Guarantor.

(b) Minimum Fixed Charge Coverage Ratio: Maintain (i) at the end of each fiscal quarter of the Parent Guarantor, (ii) on the date of each Advance (both before and after giving effect to such Advance), and (iii) on each Closing Day on which Notes are issued (both before and after giving effect to the purchase and sale of the applicable Series of Notes), a Fixed Charge Coverage Ratio of not less than 1.40:1.00.

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(c) Maximum Secured Debt Leverage Ratio: Maintain (i) at the end of each fiscal quarter of the Parent Guarantor, (ii) on the date of each Advance and the issuance or renewal of any Letter of Credit (both before and after giving effect to such Advance), and (iii) on each Closing Day on which Notes are issued (both before and after giving effect to the purchase and sale of the applicable Series of Notes), a Secured Debt Leverage Ratio not greater than 60.0%.

(d) Minimum Tangible Net Worth: Maintain at all times an excess of Total Asset Value minus Consolidated Debt, in each case, of the Parent Guarantor and its Subsidiaries, of not less than the sum of $1,000,000,000 plus an amount equal to 75% of the proceeds of all primary issuances or primary sales of Equity Interests of the Parent Guarantor or the Company consummated after May 31, 2007.

11.2 Unencumbered Assets Financial Covenants.

(a) Maximum Unsecured Debt to Total Unencumbered Asset Value: Not permit at any time Unsecured Debt to be greater than 70% of the Total Unencumbered Asset Value at such time.

(b) Minimum Unencumbered Assets Debt Service Coverage Ratio. Maintain (i) at the end of each fiscal quarter of the Parent Guarantor, (ii) at the time of each Advance (both before and after giving effect to such Advance), and (iii) on each Closing Day on which Notes are issued (both before and after giving effect to the purchase and sale of the applicable Series of Notes), an Unencumbered Assets Debt Service Coverage Ratio of not less than 1.50:1.00.

To the extent any calculations described in Sections 11.1 or 11.2 are required to be made on any date of determination other than the last day of a fiscal quarter of the Parent Guarantor, such calculations shall be made on a pro-forma basis to account for any acquisitions or dispositions of Assets, and the incurrence or repayment of any Debt for Borrowed Money relating to such Assets, that have occurred since the last day of the fiscal quarter of the Parent Guarantor most recently ended. All such calculations shall be reasonably acceptable to the Required Holders.

12 EVENTS OF DEFAULT.

An “Event of Default” shall exist if any of the following conditions or events shall occur and be continuing:

(a) The Company defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or

(b) the Company defaults in the payment of any interest on any Note for more than three Business Days after the same becomes due and payable; or

(c) any Credit Party defaults in the performance of or compliance with any term contained in Sections 7, 9.4, 9.5, 9.6, 9.9, 9.10, 9.11, 9.13, 9.14, 9.15, 10 or 11; or

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(d) any Credit Party defaults in the performance of or compliance with any term contained in this Agreement (other than those referred to in paragraphs (a), (b) and (c) of this Section 12) or in any other Transaction Document and such default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default, and (ii) the Company or any other Credit Party receiving written notice of such default from PIM or any holder of a Note (any such written notice to be identified as a “notice of default” and to refer specifically to this paragraph (d) of Section 12); or

(e) any representation or warranty made in writing by or on behalf of any Credit Party or by any officer of any Credit Party in this Agreement or in any other Transaction Document or in any writing furnished in connection with the transactions contemplated hereby or thereby proves to have been false or incorrect in any material respect on the date as of which made; or

(f) (i) any Credit Party or any Subsidiary thereof is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Debt that is due and payable and outstanding beyond any period of grace provided with respect thereto, or (ii) any Credit Party or any Subsidiary is in default in the performance of or compliance with any other term of any evidence of any Debt or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition (A) such Debt has become, or has been declared (by or on behalf of the holders thereof), due and payable before its stated maturity or before its regularly scheduled dates of payment, or (B) one or more Persons are entitled to declare such Debt to be due and payable before its stated maturity or before its regularly scheduled dates of payment, and such default or condition shall remain unremedied or otherwise uncured for a period of 30 days, or (iii) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Debt to convert such Debt into equity interests), (x) any Credit Party or any Subsidiary has become obligated to purchase or repay Debt before its regular maturity or before its regularly scheduled dates of payment or purchase, or (y) one or more Persons have the right to require any Credit Party or any Subsidiary so to purchase or repay such Debt prior to its regular maturity or prior to its regularly scheduled dates of payment or purchase, and such default or condition shall remain unremedied or otherwise uncured for a period of 30 days; provided that, in each of the preceding clauses (i) - (iii), the aggregate principal amount of all Debt to which such a payment default shall occur and be continuing, or such other default shall occur and be continuing or such other event causing or permitting acceleration (or required resale to any Credit Party or any Subsidiary) shall occur and be continuing (as applicable), exceeds $30,000,000 (or its equivalent in other currencies); or

(g) any Credit Party (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes a general assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate or similar action to authorize any of the foregoing; or

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(h) a court or Governmental Authority of competent jurisdiction enters an order appointing, without consent by any Credit Party or any of the Subsidiaries, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of any Credit Party, or any such petition shall be filed against any Credit Party and such petition shall not be dismissed or stayed within 30 days; or

(i) (a) a final judgment or judgments for the payment of money aggregating in excess of $30,000,000 (or its equivalent in other currencies) are rendered against one or more of the Credit Parties or the Subsidiaries and either (x) enforcement proceedings shall have been commenced upon any such judgment or (y) there shall be any period of 45 consecutive days during which a stay of enforcement of any such judgment, by reason of a pending appeal or otherwise, shall not be in effect; provided that any such judgment shall not give rise to an Event of Default under this Section 12(i) if and so long as (A) the amount of such judgment or order which remains unsatisfied is covered by a valid and binding policy of insurance between the respective Credit Party and the insurer covering full payment of such unsatisfied amount (subject to customary deductibles) and (B) such insurer, which shall be rated at least “A” by A.M. Best Company, has been notified, and has not disputed the claim made for payment, of the amount of such judgment; or (b) any non-monetary judgment or order shall be rendered against any Credit Party or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect, and there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

(j) if (i) any Plan shall fail to satisfy the minimum funding standards of the Pension Funding Rules for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under the Pension Funding Rules, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified any Credit Party or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the aggregate “amount of unfunded benefit liabilities” (within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined in accordance with Title IV of ERISA, shall exceed $20,000,000, (iv) any Credit Party or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans other than as a result of a misrepresentation by one or more Purchasers under Section 6.2, (v) any Credit Party or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) any Credit Party or any Subsidiary establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of any Credit Party or any Subsidiary thereunder; and any such event or events described in clauses (i) through (vi) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect; or

(k) a Change of Control shall occur; or

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(l) any provision of any Transaction Document after delivery thereof pursuant to Section 4 or Section 9.10 shall for any reason (other than pursuant to the terms thereof) cease to be valid and binding on or enforceable in any material respect against any Credit Party party to it, or any such Credit Party shall so state in writing.

As used in Section 12(j), the terms “employee benefit plan” and “employee welfare benefit plan” shall have the respective meanings assigned to such terms in Section 3 of ERISA.

13 REMEDIES ON DEFAULT, ETC.

13.1 Acceleration.

(a) If an Event of Default with respect to any Credit Party described in Section 12(g) or (h) (other than an Event of Default described in clause (i) of Section 12(g) or described in clause (vi) of Section 12(g) by virtue of the fact that such clause encompasses clause (i) of Section 12(g)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable.

(b) If any other Event of Default has occurred and is continuing, any holder or holders of a majority in principal amount of the Notes of any Series at the time outstanding may, during the continuance of such Event of Default, by written notice or notices to the Company, declare all the Notes of such Series then outstanding to be immediately due and payable.

Upon any Notes becoming due and payable under this Section 13.1, whether automatically or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest thereon (including, but not limited to, interest accrued thereon at the Default Rate) and (y) the Make-Whole Amount determined in respect of such principal amount (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived. The Company acknowledges, and the parties hereto agree, that each holder of a Note has the right to maintain its investment in the Notes free from prepayment by the Company (except as herein specifically provided for) and that the provision for payment of a Make-Whole Amount by the Company in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances.

13.2 Other Remedies.

If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under Section 13.1, the holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in any Note, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise.

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13.3 Rescission.

At any time after any Notes of any Series have been declared due and payable pursuant to clause (b) of Section 13.1, the holders of not less than a majority in principal amount of the Notes of such Series then outstanding, by written notice to the Company, may rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue interest on the Notes of such Series, all principal of and Make-Whole Amount, if any, on any Notes of such Series that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest in respect of the Notes of such Series, at the Default Rate, (b) neither the Company nor any other Person shall have paid any amounts which have become due solely by reason of such declaration, (c) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 18, and (d) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this Section 13.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon.

13.4 No Waivers or Election of Remedies, Expenses, etc.

No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder’s rights, powers or remedies. No right, power or remedy conferred by this Agreement, any other Transaction Document or any Note upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Company under Section 16, the Company will pay to the holder of such Note on demand such further amount as shall be sufficient to cover all costs and expenses of such holder reasonably incurred in any enforcement or collection under and in accordance with this Section 13, including, without limitation, reasonable attorneys’ fees, expenses and disbursements.

14 REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

14.1 Registration of Notes.

The Company shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary. The Company shall give to any holder of a Note that is an Institutional Investor promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes.

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14.2 Transfer and Exchange of Notes.

Upon surrender of any Note to the Company at the address and to the attention of the designated officer (all as specified in Section 19(iii)), for registration of transfer or exchange (and in the case of a surrender for registration of transfer accompanied by a written instrument of transfer duly executed by the registered holder of such Note or such holder’s attorney duly authorized in writing and accompanied by the relevant name, address and other information for notices of each transferee of such Note or part thereof), within ten Business Days thereafter, the Company shall execute and deliver, at the Company’s expense (except as provided below), one or more replacement Notes (as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such replacement Note shall be payable to such Person as such holder may request and shall be substantially in the form of the Note so surrendered. Each such replacement Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than $1,000,000 (or its equivalent if denominated in another currency); provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes of a Series, one Note may be in a denomination of less than $1,000,000 (or its equivalent if denominated in another currency). Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representation set forth in Sections 6.1 and 6.2.

14.3 Replacement of Notes.

Upon receipt by the Company at the address and to the attention of the designated officer (all as specified in Section 19(iii)) of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and

(a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser or another holder of a Note with a minimum net worth of at least $5,000,000 or a Qualified Institutional Buyer, such Person’s own unsecured agreement of indemnity shall be deemed to be satisfactory), or

(b) in the case of mutilation, upon surrender and cancellation thereof,

within ten Business Days thereafter, the Company at its own expense shall execute and deliver, in lieu thereof, a replacement Note, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon.

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15 PAYMENTS ON NOTES.

15.1 Place of Payment.

Subject to Section 15.2, payments of principal, Make-Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in New York, New York at the principal office of JPMorgan Chase Bank in such jurisdiction. The Company may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment shall be either the principal office of the Company in such jurisdiction or the principal office of a bank or trust company in such jurisdiction.

15.2 Home Office Payment.

So long as a Purchaser or its nominee shall be the holder of any Note, and notwithstanding anything contained in Section 15.1 or in such Note to the contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, and interest by the method and at the address specified for such purpose, in the case of the Series A Notes, on the Purchaser Schedule Relating to Series A Notes attached hereto as Schedule A and, in the case of any Shelf Note, on the Purchaser Schedule attached to the Confirmation of Acceptance with respect to such Note, or by such other method or at such other address as such Purchaser shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, such Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company pursuant to Section 15.1. Prior to any sale or other disposition of any Note held by any Purchaser or its nominee such Purchaser will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a replacement Note or Notes pursuant to Section 14.2. The Company will afford the benefits of this Section 15.2 to any Institutional Investor that is the direct or indirect transferee of any Note purchased by any Purchaser under this Agreement and that has made the same agreement relating to such Note as each Purchaser has made in this Section 15.2.

16 EXPENSES, ETC.

16.1 Transaction Expenses.

Whether or not the transactions contemplated hereby are consummated, the Company will pay all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees of a special counsel and, if reasonably required by the Required Holders, local or other counsel) incurred by PIM in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of this Agreement, the Notes or any of the other Transaction Documents (whether or not such amendment, waiver or consent becomes effective), and the Company will, in addition, pay, in each case to the extent incurred by PIM, the Purchasers or any holder of a Note: (a) the reasonable out-of-pocket costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this

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Agreement, the Notes or any of the other Transaction Documents or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement, the Notes or any of the other Transaction Documents, or by reason of being a holder of any Note, and (b) the reasonable out-of-pocket costs and expenses, including financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of the Company or any Guarantor or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes. The Company will pay, and will save PIM, each Purchaser and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses, if any, of brokers and finders (other than those retained by PIM, such Purchaser or other holder).

16.2 Survival.

The obligations of the Company under this Section 16 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement or the Notes, and the termination of this Agreement.

17 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

All representations and warranties contained herein or in any of the other Transaction Documents shall survive the execution and delivery of this Agreement, the Notes and the other Transaction Documents, the purchase or transfer by any Purchaser of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of any Purchaser or any other holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of any Credit Party pursuant to this Agreement or any of the other Transaction Documents shall be deemed representations and warranties of such Credit Party under this Agreement or such other Transaction Document. Subject to the preceding sentence, this Agreement (including the Multiparty Guaranty), the Notes and the other Transaction Documents embody the entire agreement and understanding among PIM, the Purchasers and the Credit Parties and supersede all prior agreements and understandings relating to the subject matter hereof.

18 AMENDMENT AND WAIVER.

18.1 Requirements.

This Agreement and the Notes may be amended, and any Credit Party may take any action herein prohibited, or omit to perform any act herein required to be performed by it, if the Credit Parties shall obtain the written consent to such amendment, action or omission to act, of the Required Holder(s) of the Notes of each Series except that, (i) with the written consent of the holders of all Notes of a particular Series at the time outstanding (and not without such written consents), the Notes of such Series may be amended or the provisions thereof waived to change the maturity thereof, to change or affect the principal thereof, or to change or affect the rate or time of payment of interest on or any Make-Whole Amount payable with respect to the Notes of such Series, (ii) without the written consent of the holder or holders of all Notes at the time outstanding, no amendment to or waiver of the provisions of this Agreement shall change or affect the provisions of Section 13 or this Section 18 insofar as such provisions relate to

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proportions of the principal amount of the Notes of any Series, or the rights of any individual holder of Notes, required with respect to any declaration of Notes to be due and payable or with respect to any consent, amendment, waiver or declaration, (iii) with the written consent of PIM (and not without the written consent of PIM) the provisions of Section 2B may be amended or waived (except insofar as any such amendment or waiver would affect any rights or obligations with respect to the purchase and sale of Notes which shall have become Accepted Notes prior to such amendment or waiver, in which case the following clause (iv) shall apply), and (iv) with the written consent of all of the Purchasers which shall have become obligated to purchase Accepted Notes of any Series (and not without the written consent of all such Purchasers), any of the provisions of Sections 2B and 4 may be amended or waived insofar as such amendment or waiver would affect only rights or obligations with respect to the purchase and sale of the Accepted Notes of such Series or the terms and provisions of such Accepted Notes. Each holder of any Note at the time or thereafter outstanding shall be bound by any consent authorized by this Section 18, whether or not such Note shall have been marked to indicate such consent, but any Notes issued thereafter may bear a notation referring to any such consent.

18.2 Solicitation of Holders of Notes. The Company will provide each holder of the Notes (irrespective of the amount of Notes then owned by it) with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof or of the Notes. The Company will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 18 to each holder of outstanding Notes promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite holders of Notes.

18.3 Binding Effect. etc.

Any amendment or waiver consented to as provided in this Section 18 applies equally to all holders of Notes and is binding upon them and upon each future holder of any Note and upon the Company without regard to whether such Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing between any Credit Party and the holder of any Note nor any delay in exercising any rights hereunder or under any Note shall operate as a waiver of any rights of any holder of such Note. As used herein, the term “this Agreement” and references thereto shall mean this Agreement as it may from time to time be amended or supplemented.

18.4 Notes Held by Company, etc.

Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes or any Series thereof then outstanding have approved or consented to any amendment, waiver or consent to be given under this Agreement or the Notes or any Series thereof, or have directed the taking of any action provided herein or in the Notes or any Series thereof to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes or any Series thereof then outstanding, Notes directly or indirectly owned by any Credit Party or any of its Affiliates shall be deemed not to be outstanding.

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19 NOTICES.

All notices and communications provided for hereunder (other than communications provided for in Section 2) shall be in writing and sent (a) by facsimile if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with charges prepaid). Any such notice must be sent:

(i) if to any Series A Purchaser or its nominee, to such Person at the address specified for such communications in the Purchaser Schedule Relating to Series A Notes attached hereto as Schedule A and, in the case of a Purchaser of any Shelf Note or its nominee, to such Person at the address specified for such communications in the Purchaser Schedule attached to the Confirmation of Acceptance with respect to such Shelf Note, or at such other address as such Person shall have specified to the Company in writing,

(ii) if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing,

(iii) if to PIM, to PIM at its address set forth at the beginning hereof to the attention of any Authorized Officer identified in the Information Schedule as being resident at such address (facsimile (415) 421-6233), or at such other address as PIM shall have specified to the Company in writing, or

(iv) if to any Credit Party, to such Credit Party care of the Company, at its address set forth at the beginning hereof to the attention of the Vice President, Capital Markets (facsimile (415) 738-6501), or at such other address as the Company, shall have specified to PIM and the holder of each Note in writing.

Notices under this Section 19 will be deemed to have been given and received when delivered at the address (or facsimile number) so specified. Any communication pursuant to Section 2 shall be made by the method specified for such communication in Section 2, and shall be effective to create any rights or obligations under this Agreement only if, in the case of a telephone communication, an Authorized Officer of the party conveying the information and of the party receiving the information are parties to the telephone call, and in the case of a facsimile communication, the communication is signed by an Authorized Officer of the party conveying the information, addressed to the attention of an Authorized Officer of the party receiving the information, and in fact received at the facsimile number that is listed for the party receiving the communication on the Information Schedule or at such other facsimile number as the party receiving the information shall have specified in writing to the party sending such information.

20 REPRODUCTION OF DOCUMENTS.

This Agreement, and all documents relating hereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by any Purchaser on any Closing Day (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to any Purchaser, may be reproduced by such Purchaser by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and such Purchaser may destroy any original document so

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reproduced. To the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such Purchaser in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This Section 20 shall not prohibit any party hereto from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction.

21 MULTIPARTY GUARANTY.

The multiparty guaranty under this Section 21 (as amended or otherwise modified from time to time, the “Multiparty Guaranty”) is made jointly and severally by each of the Guarantors in favor of the Purchasers and their respective permitted successors, assigns and transferees with respect to the Notes and the other Transaction Documents (each of such Persons being referred to herein as a “Beneficiary” and collectively, as the “Beneficiaries”).

21.1 Unconditional Guaranty.

(a) Unconditional Guaranty.

Each Guarantor hereby unconditionally, absolutely and irrevocably guarantees to each of the Beneficiaries the prompt and complete payment when due (whether at stated maturity, by acceleration or otherwise) and due performance of all Guaranteed Obligations. The term “Guaranteed Obligations” shall mean all loans, advances, debts, liabilities and obligations for monetary amounts and otherwise from time to time owing by the Company, in the Company’s capacity as the issuer of Notes, to the Purchasers in connection with this Agreement, the Notes and the other Transaction Documents, whether due or to become due, matured or unmatured, liquidated or unliquidated, contingent or non-contingent, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement or instrument, arising under or in respect of this Agreement, the Notes or the other Transaction Documents (it being understood that this term includes all principal, interest (including interest that accrues after the commencement by or against the Company of any action under bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law, whether now or hereafter in effect), the Make-Whole Amount, if any, premium or other prepayment consideration, fees, expenses, costs or other sums (including, without limitation, all fees and disbursements of any law firm or other external counsel) chargeable to the Company, in the Company’s capacity as the issuer of Notes, under this Agreement, the Notes or the other Transaction Documents).

(b) Reimbursement of Expenses.

Each Guarantor also agrees to pay upon demand all costs and expenses (including, without limitation, all fees and disbursements of any law firm or other external counsel) incurred by any Beneficiary in enforcing any rights under this Multiparty Guaranty.

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(c) Guaranteed Obligations Unaffected.

No payment or payments made by any other Guarantor or other Credit Party, or by any other guarantor or other Person, or received or collected by any of the Beneficiaries from any other Guarantor or other Credit Party or from any other guarantor or other Person by virtue of any action or proceeding or any setoff or appropriation or application at any time or from time to time in reduction of or in payment of the Guaranteed Obligations shall be deemed to modify, release or otherwise affect the liability of each of the Guarantors hereunder which shall, notwithstanding any such payments, remain liable for the Guaranteed Obligations, subject to Section 21.5 below, until the Guaranteed Obligations are paid in full.

(d) Joint and Several Liability.

All Guarantors and their respective successors and assigns shall be jointly and severally liable for the payment of the Guaranteed Obligations and the expenses required to be reimbursed to the holders of the Notes pursuant to Section 21.1(b), above, notwithstanding any relationship or contract of co-obligation by or among the Guarantors or their successors and assigns.

(e) Enforcement of Guaranteed Obligations.

Upon the occurrence and during the continuance of an Event of Default, then and in any such event (x) all of the Guaranteed Obligations shall automatically become due and payable (in the case of an Event of Default described in Section 12(g) or (h)), and (y) all or the relevant part of the Guaranteed Obligations may, at the option of the Required Holders (in the case of any Event of Default described in Section 12 other than those described in Section 12(g) or (h)) and without demand, notice or legal process of any kind, be declared, and immediately shall become, due and payable.

(f) Tolling of Statute of Limitations.

Each Guarantor agrees that any payment, performance or other act that tolls any statute of limitations applicable to the obligations, liabilities and indebtedness of the Company owing to the Beneficiaries under this Agreement, the Notes or any of the other Transaction Documents shall also toll the statute of limitations applicable to such Guarantor’s liability under this Multiparty Guaranty to the extent permitted by law.

(g) Rights of Contribution.

The Company and each Guarantor hereby agree that, to the extent that a Guarantor shall have paid an amount hereunder to any Beneficiary that is greater than the net value of the benefits received, directly or indirectly, by such paying Guarantor as a result of the issuance and sale of the Notes, such paying Guarantor shall be entitled to contribution from the Company and each other Guarantor that has not paid its

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proportionate share, based on benefits received as a result of the issuance and sale of the Notes, of the Guaranteed Obligations. Any amount payable as a contribution under this Section 21.1(g) shall be determined as of the date on which the related payment or distribution is made by the Guarantor seeking contribution, and each of the Company and the Guarantors acknowledges that the right to contribution hereunder shall constitute an asset of such Guarantor to which such contribution is owed. Notwithstanding the foregoing, the provisions of this Section 21.1(g) shall in no respect limit the obligations and liabilities of any Guarantor to the Beneficiaries hereunder or under any other Transaction Document, and each Guarantor shall remain liable for the full payment and performance guaranteed hereunder. Any indebtedness or other obligations of the Company or a Guarantor now or hereafter held by or owing to any Guarantor are hereby subordinated in time and right of payment to all indebtedness or other obligations of the Company and the Guarantors to any or all of the Beneficiaries under the Notes, this Agreement or any other Transaction Document.

(h) Fraudulent Transfer Savings Clause.

Each of the Guarantors, PIM, the Purchasers and the other Beneficiaries hereby confirms that it is the intention of all such Persons that this Multiparty Guaranty and the obligations of each Guarantor hereunder not constitute a fraudulent transfer or conveyance for purposes of bankruptcy law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or state law to the extent applicable to this Multiparty Guaranty and the obligations of each Guarantor hereunder. To effectuate the foregoing intention, each of the Guarantors, PIM, the Purchasers and the other Beneficiaries hereby irrevocably agrees that the obligations of each Guarantor under this Multiparty Guaranty at any time shall be limited to the maximum amount as will result in the obligations of such Guarantor under this Multiparty Guaranty not constituting a fraudulent transfer or conveyance.

21.2 Subrogation.

Notwithstanding any payment or payments made by any Guarantor hereunder, each Guarantor hereby waives, solely with respect to such payment or payments, any and all rights of subrogation to the rights of the Beneficiaries against the Company and, except to the extent otherwise provided in Section 21.1(g), any and all rights of contribution, reimbursement, assignment, indemnification or implied contract or any similar rights against the Company, any endorser or other guarantor of all or any part of the Guaranteed Obligations, in each case until such time as the Guaranteed Obligations have been paid in full (subject to Section 21.5 below). If, notwithstanding the foregoing, any amount shall be paid to any Guarantor on account of such subrogation at any time when all of the Guaranteed Obligations shall not have been paid in full, (x) such amount shall be held by such Guarantor in trust for the Beneficiaries, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over in the exact form received by such Guarantor (duly endorsed by such Guarantor to such Beneficiary if required), or (y) payment equal to such amount paid on account of such subrogation shall be paid, in each case, to each Beneficiary (ratably based on the principal amount outstanding of Notes held by such Beneficiary at such time as a percentage of the aggregate principal amount outstanding of Notes held by all the Beneficiaries at such time), to be applied against the Guaranteed Obligations, whether matured or unmatured, in such order as such Beneficiary may determine.

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21.3 Amendments, Etc. with Respect to Guaranteed Obligations.

Each Guarantor shall remain obligated hereunder notwithstanding that: (a) any demand for payment of any of the Guaranteed Obligations made by any Beneficiary may be rescinded by such Beneficiary, and any of the Guaranteed Obligations continued; (b) this Multiparty Guaranty, the Guaranteed Obligations, or the liability of any other party upon or for any part of the Guaranteed Obligations, or any collateral security or guaranty therefor or right of setoff with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any Beneficiary or such other party; (c) this Agreement, the Notes, the other Transaction Documents and any other document executed in connection with any of them may be renewed, extended, amended, modified, supplemented or terminated, in whole or in part; or (d) any guaranty, collateral or right of setoff at any time held by any Person for the payment of any of the Guaranteed Obligations may be sold, exchanged, waived, surrendered or released. When making any demand hereunder against any Guarantor, each Beneficiary may, but shall be under no obligation to, make a similar demand on any other Credit Party or any other Person, and any failure by such Beneficiary to make any such demand or to collect any payments from any other Credit Party or any other Person or any release of any such other Credit Party or Person shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of such Beneficiary against the Guarantors. For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.

21.4 Guaranty Absolute and Unconditional; Termination.

Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by any Beneficiary upon this Multiparty Guaranty or acceptance of this Multiparty Guaranty. This Agreement, the Notes, the other Transaction Documents and the Guaranteed Obligations in respect of any of them, shall conclusively be deemed to have been created, contracted for or incurred in reliance upon this Multiparty Guaranty; and all dealings between any of the Company or the Guarantors, on the one hand, and any of the Beneficiaries, on the other, shall likewise conclusively be presumed to have been had or consummated in reliance upon this Multiparty Guaranty. Each Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon any Credit Party or any other guarantor with respect to the Guaranteed Obligations (except, in each case, as expressly provided under the Transaction Documents). This Multiparty Guaranty shall be construed as a continuing, irrevocable, absolute and unconditional guaranty of payment, performance and compliance when due (and not of collection) and is a primary obligation of each Guarantor without regard to (a) the validity or enforceability of the provisions of this Agreement (other than the Multiparty Guaranty), the Notes, the other Transaction Documents, any of the Guaranteed Obligations or any other guaranty or right of setoff with respect thereto at any time or from time to time held by any Beneficiary, (b) any defense, setoff or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by any of the Credit Parties against any Beneficiary, or (c) any other circumstance whatsoever (with or without notice to or knowledge of any Credit Party or

54

guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of any Credit Party or any other guarantor of the Guaranteed Obligations, in bankruptcy or in any other instance (other than payment or performance in full of the Guaranteed Obligations). Each of the Guarantors hereby agrees that it has complete and absolute responsibility for keeping itself informed of the business, operations, properties, assets, condition (financial or otherwise) of the Company, the other Guarantors, any and all endorsers and any and all guarantors of the Guaranteed Obligations and of all other circumstances bearing upon the risk of nonpayment of the obligations evidenced by the Notes or the Guaranteed Obligations, and each of the Guarantors further agrees that the Beneficiaries shall have no duty, obligation or responsibility to advise it of any such facts or other information, whether now known or hereafter ascertained, and each Guarantor hereby waives any such duty, obligation or responsibility on the part of the Beneficiaries to disclose such facts or other information to such Guarantor.

When pursuing its rights and remedies hereunder against any of the Guarantors, any Beneficiary may, but shall be under no obligation to, pursue such rights and remedies as it may have against any other Credit Party or any other Person under a guaranty of the Guaranteed Obligations or any right of setoff with respect thereto, and any failure by such Beneficiary to pursue such other rights or remedies or to collect any payments from any such other Credit Party or Person or to realize upon any such guaranty or to exercise any such right of setoff, or any release of any such other Credit Party or Person or any such guaranty or right of setoff, shall not relieve the Guarantors of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of each of the Beneficiaries against the Guarantors. This Multiparty Guaranty shall remain in full force and effect until all Guaranteed Obligations shall have been satisfied by payment or performance in full, upon the occurrence of which this Multiparty Guaranty shall, subject to Section 21.5 below, terminate.

21.5 Reinstatement.

This Multiparty Guaranty shall continue to be effective, or be reinstated, as the case may be, if at any time the payment, or any part thereof, of any of the Guaranteed Obligations is rescinded or otherwise must be restored or returned by any Beneficiary in connection with the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Credit Party upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, any Credit Party or any substantial part of their respective property or assets, or otherwise, all as though such payments had not been made.

21.6 Payments.

Each Guarantor hereby agrees that the Guaranteed Obligations will be paid when due and payable in accordance herewith to each of the Beneficiaries pursuant to this Agreement without setoff or counterclaim in immediately available funds at the location and in the currency or currencies specified by such Beneficiary pursuant to this Agreement.

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21.7 Additional Guarantors.

The initial Guarantors hereunder shall be such Persons as are signatories to this Agreement as Guarantors on the date hereof. From time to time subsequent to the date hereof, additional Persons that are Subsidiaries of any Credit Party may become parties hereto, as additional Guarantors (each an “Additional Guarantor”), by executing a Joinder to Multiparty Guaranty. Upon delivery of any such Joinder to Multiparty Guaranty to each of the Beneficiaries, notice of which is hereby waived by the Guarantors, each such Additional Guarantor shall be a Guarantor and shall be as fully a party hereto in such capacity as if such Additional Guarantor were an original signatory hereof. Each Guarantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Guarantor hereunder, nor by any election of the Beneficiaries not to cause any Subsidiary of any Credit Party to become an Additional Guarantor hereunder. This Multiparty Guaranty shall be fully effective as to any Guarantor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Guarantor hereunder.

22 MISCELLANEOUS.

22.1 Successors and Assigns.

All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and permitted assigns with respect to the Notes and the other Transaction Documents (including any subsequent holder of a Note) whether so expressed or not.

22.2 Payments Due on Non-Business Days; Payment Currency.

Anything in this Agreement or the Notes to the contrary notwithstanding, any payment of principal of or Make-Whole Amount or interest on any Note that is due on a date other than a New York Business Day shall be made on the next succeeding New York Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding New York Business Day. All payments on account of any Notes denominated in Dollars (including principal, interest and Make-Whole Amounts) shall be made in Dollars, and all payments on account of any Notes denominated in any other currency (including principal, interest and Make-Whole Amounts) shall be made in such other currency. The obligation of the Company to make payment on account of any Notes in the applicable currency specified in the preceding sentence shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment, which is expressed in or converted into any currency other than such applicable currency, except to the extent the holder of the applicable Note actually receives the full amount of the currency in which the underlying obligation is denominated. The obligation of the Company to make payment in any given currency as required by the first sentence of this paragraph shall be enforceable as an alternative or additional cause of action for the purpose of recovery in such currency, of the amount, if any, by which such actual receipt shall fall short of the full amount of such currency expressed to be payable in respect of any such obligation, and shall not be affected by judgment being obtained for any other sums due under the Notes, this Agreement or any other Transaction Document, as the case may be.

22.3 Severability.

Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.

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22.4 Construction.

Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.

22.5 Counterparts.

This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.

22.6 Governing Law.

This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such state.

22.7 Several Obligations.

The sales of Notes to the Purchasers are to be several sales, and the obligations of the Purchasers under this Agreement are several obligations. No failure by any Purchaser to perform its obligations under this Agreement shall relieve any other Purchaser or the Company of any of their respective obligations hereunder, and no Purchaser shall be responsible for the obligations of, or any action taken or omitted by, any other Purchaser hereunder.

22.8 Accounting Terms. All accounting terms used and not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements of the Parent Guarantor for the Fiscal Year ended December 31, 2006 (“GAAP”).

22.9 Jurisdiction and Process; Waiver of Jury Trial. (a) Each Credit Party, PIM and each Purchaser and holder of Notes irrevocably agrees that any legal action or proceeding with respect to this Agreement, the Notes, the other Transaction Documents or any of the agreements, documents or instruments delivered in connection herewith and therewith shall be brought in the courts of the State of California, the State of New York, or the United States of America for the Northern District of California or the Southern District of New York, and, by execution and delivery hereof, each of the Credit Parties accepts and consents to, for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts and

57

agrees that such jurisdiction shall be exclusive, unless waived by the Required Holders in writing, with respect to any action or proceeding brought by any Credit Party against PIM, any Series A Purchaser or any other holder of Notes. To the fullest extent permitted by applicable law, each Credit Party, PIM and each holder of a Note irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

(b) Each Credit Party consents to process being served by or on behalf of any holder of Notes in any suit, action or proceeding of the nature referred to in Section 22.9(a) by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, return receipt requested, to it at its address specified in Section 19 or at such other address of which such holder shall then have been notified pursuant to said Section. Each Credit Party agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.

(c) Nothing in this Section 22.9 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders of any of the Notes may have to bring proceedings against any Credit Party in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

22.10 Waiver of Jury Trial. EACH CREDIT PARTY, PIM, THE SERIES A PURCHASERS AND THE OTHER PURCHASERS AND HOLDERS OF THE NOTES HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH.

WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY, if an action or other proceeding is brought in the State of California and if the above waiver of the right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature between them concerning this Agreement, the other Transaction Documents and the matters contemplated hereby or thereby (each, a “Claim”), including any and all questions of law or fact relating thereto, shall be determined by judicial reference pursuant to the California Code of Civil Procedure (“Reference”). The parties shall select a single neutral referee, who shall be a retired state or federal judge. In the event that the parties cannot agree upon a referee, the referee shall be appointed by the court. The referee shall report a statement of decision to the court. Nothing in this paragraph shall limit the right of any party at any time to exercise self-help remedies, foreclose against any collateral or obtain provisional remedies. The Company shall bear the fees and expenses of the referee unless the referee orders otherwise. The referee shall also determine all issues relating to the applicability, interpretation, and enforceability of this paragraph.

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22.11 Confidentiality.

For the purposes of this Section 22.11, “Confidential Information” means information delivered to PIM or any Purchaser by or on behalf of the Parent Guarantor or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by PIM or such Purchaser as being confidential information of the Parent Guarantor or such Subsidiary, provided that such term does not include information that (a) was publicly known or otherwise known to PIM or such Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by PIM or such Purchaser or any person acting on PIM’s or such Purchaser’s behalf, (c) otherwise becomes known to PIM or such Purchaser other than through disclosure by the Parent Guarantor or any Subsidiary, or (d) constitutes financial statements delivered to PIM or such Purchaser under Section 7.1 that are otherwise publicly available. PIM and each Purchaser will maintain the confidentiality of such Confidential Information and shall not disclose the same to any Person without the consent of the Company, provided that PIM or such Purchaser may deliver or disclose Confidential Information to (i) its directors, officers, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by its Notes), and then only on a confidential basis, (ii) its financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 22.11, (iii) any other holder of any Note, (iv) any Institutional Investor to which it sells or offers to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 22.11), (v) any Person from which PIM or such Purchaser offers to purchase any security of the Company (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 22.11), (vi) any federal or state regulatory authority having jurisdiction over PIM or such Purchaser, in each case as requested or required by such authority, (vii) the NAIC or the SVO or, in each case, any similar organization, or any nationally recognized rating agency that requires access to information about PIM’s or such Purchaser’s investment portfolio, or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or order applicable to PIM or such Purchaser, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which PIM or such Purchaser is a party, provided that PIM or such Purchaser shall have given the Company reasonable prior notice of such disclosure, or (z) if an Event of Default has occurred and is continuing, to the extent PIM or such Purchaser may reasonably determine in good faith such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under PIM’s or such Purchaser’s Notes and this Agreement. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 22.11 as though it were a party to this Agreement. On reasonable request by the Company in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Company embodying the provisions of this Section 22.11.

*   *   *   *   *

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		Very truly yours,
THE COMPANY:
		DIGITAL REALTY TRUST, L.P.
		By:	Digital Realty Trust, Inc., its sole general partner
		By:	/s/ A. William Stein
		Name:	A. William Stein
		Title:	Chief Financial Officer and Chief Investment Officer
THE GUARANTORS:
DIGITAL REALTY TRUST, INC.
By:	/s/ A. William Stein
Name:	A. William Stein
Title:	Chief Financial Officer and Chief Investment Officer
DIGITAL SERVICES, INC.
By:	/s/ A. William Stein
Name:	A. William Stein
Title:	Chief Financial Officer and Treasurer
GLOBAL ASML, LLC
By: Digital Realty Trust, L.P., its sole member
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer

GLOBAL INNOVATION SUNSHINE HOLDINGS LLC
By: Digital Realty Trust, L.P., its sole member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
GLOBAL GOLD CAMP, LLC
By: Global Gold Camp Holding Company, LLC, its sole member
By: Digital Realty Trust, L.P., its sole member
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
GLOBAL GOLD CAMP HOLDING COMPANY, LLC
By: Digital Realty Trust, L.P., its sole member
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL 833 CHESTNUT, LLC
By: Digital Realty Trust, L.P., its sole member
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer

DIGITAL CONCORD CENTER, LLC
By: Digital Realty Trust, L.P., its sole member
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL PRINTERS SQUARE, LLC
By: Digital Realty Trust, L.P., its sole member
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
GLOBAL KATO HG, LLC
By: Digital Realty Trust, L.P., its sole member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL GREENSPOINT, L.P.
By: DRT Greenspoint, LLC, its manager
By: Digital Realty Trust, L.P., its sole member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer

DRT GREENSPOINT, LLC
By: Digital Realty Trust, L.P., its sole member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL GREENSPOINT, LLC
By: Digital Realty Trust, L.P., its sole member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL 113 N. MYERS, LLC
By: Digital Realty Trust, L.P., its sole member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL 125 N. MYERS, LLC
By: Digital Realty Trust, L.P., its sole member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer

DIGITAL TORONTO BUSINESS TRUST
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Treasurer
DIGITAL AQUILA, LLC
By: Digital Realty Trust, L.P., its sole member
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL CENTREPORT, L.P.
By: DRT Centreport, LLC, its manager
By: Global Stanford Place II, LLC, its sole member and manager
By: Digital Realty Trust, L.P., its member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL PHOENIX VAN BUREN, LLC
By: Digital Realty Trust, L.P., its manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer

DIGITAL WINTER, LLC
By: Global Stanford Place II, LLC, its sole member and manager
By: Digital Realty Trust, L.P., its manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL 89TH PLACE, LLC
By: Global Stanford Place II, LLC, its sole member and manager
By: Digital Realty Trust, L.P., its member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL RESTON, LLC
By: Digital Above, LLC, its sole member and manager
By: Digital Services, Inc., its sole member and manager
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Treasurer
DIGITAL CHELSEA, LLC
By: Digital Above, LLC, its sole member and manager
By: Digital Services, Inc., its sole member and manager
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Treasurer

DIGITAL VIENNA, LLC
By: Digital Above, LLC, its sole member and manager
By: Digital Services, Inc., its sole member and manager
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Treasurer
DIGITAL WALTHAM, LLC
By: Digital Realty Trust, L.P., its sole member
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL MIDWAY, L.P.
By: Digital Midway GP, LLC, its manager
By: Digital Realty Trust, L.P., its sole member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL 21110 RIDGETOP, LLC
By: Digital Realty Trust, L.P., its sole member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer

DIGITAL 3011 LAFAYETTE, LLC
By: Digital Realty Trust, L.P., its sole member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL ASHBURN CS, LLC
By: Digital Realty Trust, L.P., its sole member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
GIP STOUGHTON, LLC
By: Digital Realty Trust, L.P., its sole member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL ARIZONA RESEARCH PARK II, LLC
By: Digital Realty Trust, L.P., its sole member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer

DIGITAL ABOVE, LLC
By: Digital Services, Inc., its sole member and manager
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Treasurer
DIGITAL SERVICES PHOENIX, LLC
By: Digital Services, Inc., its sole member and manager
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Treasurer
DIGITAL 1 SAVVIS PARKWAY, LLC
By: Digital Realty Trust, L.P., its sole member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL 210 TUCKER, LLC
By: Digital Realty Trust, L.P., its sole member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer

DIGITAL 900 WALNUT, LLC
By: Digital Realty Trust, L.P., its sole member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL 365 RANDOLPHVILLE, LLC
By: Digital Realty Trust, L.P., its sole member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL 650 RANDOLPH, LLC
By: Digital Realty Trust, L.P., its manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL BUSINESS TRUST
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Treasurer

GLOBAL MARSH MEMBER, LLC
By: Digital Realty Trust, L.P., its sole member
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
GLOBAL MARSH LIMITED PARTNER, LLC
By: Global Marsh Member, LLC, its sole member
By: Digital Realty Trust, L.P., its sole member
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
GLOBAL MARSH GENERAL PARTNER, LLC
By: Global Marsh Member, LLC, its sole member
By: Digital Realty Trust, L.P., its sole member
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer

DIGITAL NETWORK SERVICES, LLC
By: Digital Phoenix Van Buren, LLC, its manager
By: Digital Realty Trust, L.P., its manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL CONNECT, LLC
By: Digital Realty Trust, L.P., its sole member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL 717 GP, LLC
By: Digital Realty Trust, L.P., its manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
DIGITAL 717 LP, LLC
By: Digital Realty Trust, L.P., its manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer

DIGITAL 717 LEONARD, L.P.
By: Digital 717 GP, LLC, its sole general partner
By: Digital Realty Trust, L.P., its manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer
GLOBAL STANFORD PLACE II, LLC
By: Digital Realty Trust, L.P., its member and manager
By: Digital Realty Trust, Inc., its sole general partner
By:	/s/ A. William Stein
Name:	A. William Stein
Its:	Chief Financial Officer and Chief Investment Officer

The foregoing is hereby agreed to as of the date thereof.
PRUDENTIAL INVESTMENT MANAGEMENT, INC.
By:	/s/ [signature illegible]
	Vice President
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By:	/s/ [signature illegible]
	Vice President
PRUDENTIAL RETIREMENT INSURANCE AND ANNUITY COMPANY
By: Prudential Investment Management, Inc., investment manager
By:	/s/ [signature illegible]
	Vice President

SCHEDULE B

DEFINED TERMS

As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term:

“Acceptance” is defined in Section 2B(5).

“Acceptance Day” is defined in Section 2B(5).

“Acceptance Window” is defined in Section 2B(5).

“Accepted Note” is defined in Section 2B(5).

“Additional Guarantor” is defined in Section 21.7.

“Adjusted EBITDA” means an amount equal to (a) the product of four (4) times EBITDA for the fiscal quarter of the Parent Guarantor most recently ended for which financial statements are required to be delivered to the Significant Holders pursuant to Section 7.2 or 7.3, as the case may be, less (b) an amount equal to the Capital Expenditure Reserve for all Assets; provided, however, that for purposes of this definition, in the case of any acquisition or disposition of any direct or indirect interest in any Asset (including through the acquisition or disposition of Equity Interests) by the Parent Guarantor or any of its Subsidiaries during any fiscal quarter, Adjusted EBITDA will be adjusted (1) in the case of an acquisition, by adding thereto an amount equal to (A) four (4) times (B) the acquired Asset’s actual EBITDA (computed, without duplication, as if such Asset was owned by the Parent Guarantor or one of its Subsidiaries for the entire fiscal quarter) generated during the portion of such fiscal quarter that such Asset was not owned by the Parent Guarantor or such Subsidiary, and (2) in the case of a disposition, by subtracting therefrom an amount equal to (A) four (4) times (B) the actual EBITDA generated by the Asset so disposed of during such fiscal quarter.

“Adjusted Net Operating Income” means, with respect to any Asset, (a) the product of (i) four (4) times (ii) (A) Net Operating Income attributable to such Asset less (B) the amount, if any, by which (1) 3% of all rental and other income from the operation of such Asset for the fiscal quarter of the Parent Guarantor most recently ended for which financial statements are required to be delivered to the Significant Holders pursuant to Section 7.2 or 7.3, as the case may be, exceeds (2) all management fees payable in respect of such Asset for such fiscal period less (b) the Capital Expenditure Reserve for such Asset; provided, however, that for purposes of this definition, in the case of any acquisition or disposition of any direct or indirect interest in any Asset (including through the acquisition or disposition of Equity Interests) by the Parent Guarantor or any of its Subsidiaries during any fiscal quarter, Adjusted Net Operating Income will be adjusted (1) in the case of an acquisition, by adding thereto an amount equal to (A) four (4) times (B) the acquired Asset’s actual Net Operating Income (computed, without duplication, as if such Asset was owned by the Parent Guarantor or one of its Subsidiaries for the entire fiscal quarter) generated during the portion of such fiscal quarter that such Asset was not owned by the

Schedule B-1

Parent Guarantor or such Subsidiary, and (2) in the case of a disposition, by subtracting therefrom an amount equal to (A) four (4) times (B) the actual Net Operating Income generated by the Asset so disposed of during such fiscal quarter.

“Administrative Agent” has the meaning given in the Revolving Credit Agreement.

“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term “control” (including the terms “controlling”, “controlled by” and “under common control with”) of a Person means the possession, direct or indirect, of the power to vote 10% or more of the Voting Interests of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Interests, by contract or otherwise.

“Agreement” means this Note Purchase and Private Shelf Agreement, dated as of July 24, 2008, between the Company and the other Credit Parties, on the one hand and PIM, the Series A Purchasers, and each Prudential Affiliate that hereafter may become bound by certain provisions hereof, on the other hand, as it may from time to time be amended, supplemented or otherwise modified.

“Agreement Value” means, for each Hedge Agreement, on any date of determination, an amount determined by the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders) equal to: (a) in the case of a Hedge Agreement documented pursuant to the Master Agreement (Multicurrency-Cross Border) published by the International Swap and Derivatives Association, Inc. (the “Master Agreement”), the amount, if any, that would be payable by any Credit Party or any of its Subsidiaries to its counterparty to such Hedge Agreement, as if (i) such Hedge Agreement was being terminated early on such date of determination, (ii) such Credit Party or Subsidiary was the sole “Affected Party”, and (iii) the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders) was or were the sole parties determining such payment amount (with the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders) making such determination pursuant to the provisions of the form of Master Agreement); or (b) in the case of a Hedge Agreement traded on an exchange, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Credit Party or Subsidiary of a Credit Party party to such Hedge Agreement determined by the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders) based on the settlement price of such Hedge Agreement on such date of determination, or (c) in all other cases, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Credit Party or Subsidiary of a Credit Party party to such Hedge Agreement determined by the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders) as the amount, if any, by which (i) the present value of the future cash flows to be paid by such Credit Party or Subsidiary exceeds (ii) the present value of the future cash flows to be received by such Credit Party or Subsidiary pursuant to such Hedge Agreement; capitalized terms used and not otherwise defined in this definition shall have the respective meanings set forth in the above described Master Agreement.

Schedule B-2

“Anti-Terrorism Order” means Executive Order No. 13,224 of September 24, 2001, Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001), as amended.

“Assets” means Office Assets, Development Assets, Redevelopment Assets and Joint Venture Assets.

“Asset Value” means, at any date of determination, (a) in the case of any Office Asset, the Capitalized Value of such Asset; provided, however, that the Asset Value of each such Office Asset (other than a former Development Asset or Redevelopment Asset) shall be limited, during the first 12 months following the date of acquisition thereof, to the lesser of (i) the acquisition price thereof, or (ii) the Capitalized Value thereof, provided, further, that an upward adjustment shall be made to the Asset Value of any such Office Asset (in the reasonable discretion of the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders) as new Tenancy Leases are entered into in respect of such Asset, (b) in the case of any Development Asset or Redevelopment Asset, the book value of such Asset as determined in accordance with GAAP, (c) in the case of any Joint Venture Asset that, but for such Asset being owned by a Joint Venture, would qualify as an Office Asset under the definition thereof, the JV Pro Rata Share of the Capitalized Value of such Asset; provided, however, that the Asset Value of such Joint Venture Asset shall be limited, during the first 12 months following the date of acquisition thereof, to the JV Pro Rata Share of the lesser of (i) the acquisition price thereof, or (ii) the Capitalized Value thereof, provided, further, that an upward adjustment shall be made to Asset Value of any Joint Venture Asset described in this clause (c) (in the reasonable discretion of the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders) as new leases, subleases, licenses and occupancy agreements are entered into in respect of such Asset in the ordinary course of business, and (d) in the case of any Joint Venture Asset not described in clause (c) above, the JV Pro Rata Share of the book value of such Joint Venture Asset as determined in accordance with GAAP.

“Authorized Officer” means (i) in the case of the Company, its general partner’s Chief Executive Officer, Chief Financial Officer, Controller, General Counsel and any Vice President thereof designated as an “Authorized Officer” of the Company in the Information Schedule or designated as an “Authorized Officer” of the Company for purposes of this Agreement in an Officer’s Certificate executed by such Chief Executive Officer or Chief Financial Officer, and (ii) in the case of PIM, any officer of PIM designated as its “Authorized Officer” in the Information Schedule or any officer of PIM designated as its “Authorized Officer” for the purpose of this Agreement in a certificate executed by one of its Authorized Officers. Any action taken under this Agreement on behalf of the Company by any individual who on or after the date of this Agreement shall have been an Authorized Officer of the Company and whom PIM in good faith believes to be an Authorized Officer of the Company at the time of such action shall be binding on the Company even though such individual shall have ceased to be an Authorized Officer of the Company, and any action taken under this Agreement on behalf of PIM by any individual who on or after the date of this Agreement shall have been an Authorized Officer of PIM, and who the Company in good faith believes to be an Authorized Officer of PIM at the time of such action shall be binding on PIM even though such individual shall have ceased to be an Authorized Officer of PIM.

Schedule B-3

“Available Currencies” means British Pounds, Canadian Dollars, Dollars, Euros and Swiss Francs.

“Available Facility Amount” is defined in Section 2B(1).

“Bank” or “Banks” means each financial institution from time to time party to the Revolving Credit Agreement as a lender.

“Beneficiaries” is defined in Section 21.

“British Pound” means the lawful currency of the United Kingdom of Great Britain and Northern Ireland.

“Business Day” means: (a) for the purposes of Section 8.6 only, (i) if with respect to Notes denominated in Dollars, a New York Business Day, (ii) if with respect to Notes denominated in British Pounds, any day which is both a New York Business Day and a day on which commercial banks are not required or authorized to be closed in London, (iii) if with respect to Notes denominated in Canadian Dollars, any day which is both a New York Business Day and a day on which commercial banks are not required or authorized to be closed in Toronto, (iv) if with respect to Notes denominated in Euros, any day which is both a New York Business Day and a day on which commercial banks are not required or authorized to be closed in Frankfurt and Brussels, and (v) if with respect to Notes denominated in Swiss Francs, any day which is both a New York Business Day and a day on which commercial banks are not required or authorized to be closed in Zurich; (b) for the purposes of Section 2B(3) only, any day which is both a New York Business Day and a day on which PIM is open for business; and (c) for the purposes of any other provision of this Agreement, any day other than a Saturday, a Sunday or a day on which commercial banks in San Francisco or New York City are required or authorized to be closed.

“Canadian Dollars” and “C$” means lawful currency of Canada.

“Cancellation Date” is defined in Section 2B(8)(iv).

“Cancellation Fee” is defined in Section 2B(8)(iv).

“Capital Expenditure Reserve” means, with respect to any Asset on any date of determination, the product of (A) $0.25 times (B) the total number of square feet within such Asset.

“Capitalized Leases” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.

“Capitalized Value” means (a) in the case of any Asset that is a Data Center, the Adjusted Net Operating Income of such Asset divided by 8.25%, and (b) in the case of any other Asset, the Adjusted Net Operating Income of such Asset divided by 7.5%.

“Cash Equivalents” means any of the following, to the extent owned by the Parent Guarantor or any of its Subsidiaries free and clear of all Liens (other than Permitted Liens) and having a maturity of not greater than 90 days from the date of issuance thereof: (a) readily

Schedule B-4

marketable direct obligations of the Government of the United States or any agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the Government of the United States; (b) readily marketable direct obligations of any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof having, at the time of acquisition, the highest rating obtainable from either Moody’s or S&P; (c) certificates of deposit of or time deposits with any commercial bank that is a Bank or is a member of the Federal Reserve System, issues (or the parent of which issues) commercial paper rated as described in clause (d) below, is organized under the laws of the United States or any state thereof and has combined capital and surplus of at least $1,000,000,000; (d) commercial paper in an aggregate amount of not more than $50,000,000 per issuer outstanding at any time, issued by any corporation organized under the laws of any state of the United States and rated at least “Prime 1” (or the then equivalent grade) by Moody’s or “A 1” (or the then equivalent grade) by S&P; or (e) shares of any mutual fund the assets of which are primarily invested in the types of investments referred to in clauses (a) through (d) above.

“Change of Control” means the occurrence of any of the following: (a) any Person or two or more Persons acting in concert shall have acquired and shall continue to have following the date hereof beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Interests of the Parent Guarantor (or other securities convertible into such Voting Interests) representing 35% or more of the combined voting power of all Voting Interests of the Parent Guarantor; or (b) during any consecutive twenty-four month period commencing on or after March 15, 2008, individuals who at the beginning of such period constituted the Board of Directors of the Parent Guarantor (together with any new directors whose election by the Board of Directors or whose nomination for election by the Parent Guarantor stockholders was approved by a vote of at least a majority of the members of the Board of Directors then in office who either were members of the Board of Directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the members of the Board of Directors then in office, except for any such change resulting from (x) death or disability of any such member, (y) satisfaction of any requirement for the majority of the members of the Board of Directors of the Parent Guarantor to qualify under applicable law as independent directors, or (z) the replacement of any member of the Board of Directors who is an officer or employee of the Parent Guarantor with any other officer or employee of the Parent Guarantor or any of its Affiliates; or (c) any Person or two or more Persons acting in concert shall have acquired and shall continue to have following the date hereof, by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in its or their acquisition of the power to direct, directly or indirectly, the management or policies of the Parent Guarantor; or (d) the Parent Guarantor ceases to be the general partner of the Company; or (e) the Parent Guarantor ceases to be the legal and beneficial owner of all of the general partnership interests of the Company; or (f) the Parent Guarantor shall create, incur, assume or suffer to exist any Lien on the Equity Interests in the Company owned by it.

“Closing Day” means, with respect to the Series A Notes, the Series A Closing Day and, with respect to any Accepted Note, the Business Day specified for the closing of the purchase and sale of such Accepted Note in the Confirmation of Acceptance with respect to such Accepted Note; provided that (i) if the Company and the Purchaser which is obligated to

Schedule B-5

purchase such Accepted Note agree on an earlier Business Day for such closing, the “Closing Day” for such Accepted Note shall be such earlier Business Day, and (ii) if the closing of the purchase and sale of such Accepted Note is rescheduled pursuant to Section 2B(7), the “Closing Day” for such Accepted Note, for all purposes of this Agreement except references to “original Closing Day” in Section 2B(8)(iii), shall mean the final Rescheduled Closing Day with respect to such Accepted Note.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time.

“Company” is defined in the introductory paragraph of this Agreement.

“Confirmation of Acceptance” is defined in Section 2B(5).

“Consolidated” refers to the consolidation of accounts in accordance with GAAP.

“Contingent Obligation” means, with respect to any Person, any obligation or arrangement of such Person to guarantee or intended to guarantee any Debt, leases, dividends or other payment obligations (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation (and without duplication), (a) the direct or indirect guarantee, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of a primary obligor, (b) the obligation to make take-or-pay or similar payments, if required, regardless of nonperformance by any other party or parties to an agreement, or (c) any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, assets, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder), as determined by such Person in good faith, all as recorded on the balance sheet or on the footnotes to the most recent financial statements of such Person in accordance with generally accepted accounting principals as in effect from time to time in the United States of America.

“Credit Party” or “Credit Parties” means the Company and the Guarantors.

“Customary Carve-Out Agreement” has the meaning specified in the definition of Non Recourse Debt.

“Data Center” means any Office Asset that operates as a telecommunications infrastructure building or an information technology infrastructure building.

Schedule B-6

“Debt” of any Person means, without duplication for purposes of calculating financial ratios, (a) all Debt for Borrowed Money of such Person, (b) all obligations of such Person for the deferred purchase price of property or services other than trade payables incurred in the ordinary course of business and not overdue by more than 60 days, (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person as lessee under Capitalized Leases, (f) all obligations of such Person under acceptance, letter of credit or similar facilities, (g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment (but excluding for the avoidance of doubt (i) regular quarterly dividends, and (ii) special year-end dividends made in connection with maintaining the Parent Guarantor’s status as a REIT) in respect of any Equity Interests in such Person or any other Person (other than Preferred Interests that are issued by any Credit Party or Subsidiary thereof and classified as either equity or minority interests pursuant to GAAP) or any warrants, rights or options to acquire such Equity Interests, (h) all obligations of such Person in respect of Hedge Agreements, valued at the Agreement Value thereof, (i) all Contingent Obligations of such Person, and (j) all indebtedness and other payment obligations referred to in clauses (a) through (i) above of another Person secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness or other payment obligations; provided, however, that (A) in the case of the Parent Guarantor and its Subsidiaries “Debt” shall also include, without duplication, the JV Pro Rata Share of Debt for each Joint Venture, and (B) for purposes of computing the Leverage Ratio, “Debt” shall be deemed to exclude redeemable Preferred Interests issued as trust preferred securities by the Parent Guarantor and the Company to the extent the same are by their terms subordinated to the Debt evidenced by the Notes and not redeemable until at least one year after the last maturity of any Note.

“Debt for Borrowed Money” of any Person means all items that, in accordance with GAAP, would be classified as indebtedness on a Consolidated balance sheet of such Person; provided, however, that in the case of the Parent Guarantor and its Subsidiaries “Debt for Borrowed Money” shall also include, without duplication, the JV Pro Rata Share of Debt for Borrowed Money for each Joint Venture; and provided, further, however, that as used in the definition of “Fixed Charge Coverage Ratio”, in the case of any acquisition or disposition of any direct or indirect interest in any Asset (including through the acquisition of Equity Interests) by the Parent Guarantor or any of its Subsidiaries during the fiscal quarter of the Parent Guarantor most recently ended for which financial statements are required to be delivered to the Significant Holders pursuant to Section 7.2 or 7.3, as the case may be, the term “Debt for Borrowed Money” (a) shall include, in the case of an acquisition, an amount equal to the Debt for Borrowed Money directly relating to such Asset existing immediately following such acquisition (computed as if such indebtedness in respect of such Asset was in existence for the Parent Guarantor or such Subsidiary for the entire fiscal quarter), and (b) shall exclude, in the case of a disposition, an amount equal to the actual Debt for Borrowed Money to which such Asset was subject to the extent such Debt for Borrowed Money was repaid or otherwise terminated upon the disposition of such Asset during such fiscal quarter.

Schedule B-7

“Debt Rating” means, as of any date, the lowest rating that has been most recently assigned by either S&P or Moody’s, as the case may be, to the long-term senior unsecured non-credit enhanced debt of the Parent Guarantor or, if applicable, to the “implied rating” of the Parent Guarantor’s long-term senior unsecured non-credit enhanced debt. For purposes of the foregoing, (a) if any rating established by S&P or Moody’s shall be changed, such change shall be effective as of the date on which such change is first announced publicly by the rating agency making such change; and (b) if S&P or Moody’s shall change the ratings nomenclature, each reference to the Parent Guarantor’s Debt Rating announced by S&P or Moody’s, as the case may be, shall refer to the then equivalent rating by S&P or Moody’s, as the case may be.

“Default” means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default.

“Default Rate” means (i) as to any Series A Note, that rate of interest that is the greater of (a) 9.00% per annum and (b) 2% over the rate of interest publicly announced by JPMorgan Chase Bank as its “base” or “prime” rate, and (ii) as to any Shelf Note, that rate of interest that is the greater of (1) 2% over the Interest Rate specified in the caption at set forth at the top of such Shelf Note, and (2) 2% over the rate of interest publicly announced by JPMorgan Chase Bank from time to time in New York City as its “base” or “prime” rate.

“Delayed Delivery Fee” is defined in Section 2B(8)(iii).

“Development Asset” means Real Property acquired for development into an Office Asset that, in accordance with GAAP, would be classified as a development property on a Consolidated balance sheet of the Parent Guarantor and its Subsidiaries. For the avoidance of any doubt, Development Assets shall not constitute Office Assets.

“Disclosed Litigation” has the meaning specified in Section 5.8(a).

“Document Delivery Date” means (i) with respect to any Notes denominated in Dollars, the applicable Closing Day for such Notes, and (ii) with respect to any Notes denominated in any other Available Currencies, one Business Day prior to the applicable Closing Day for such Accepted Notes.

“Dollars” and “$” means lawful currency of the United States of America.

“EBITDA” means, for any period, (a) the sum of (i) net income (or net loss) (excluding gains (or losses) from extraordinary and unusual items and the non-cash component of non-recurring items), (ii) interest expense, (iii) income tax expense, (iv) depreciation expense, and (v) amortization expense, in each case of the Parent Guarantor and its Subsidiaries determined on a Consolidated basis and in accordance with GAAP for such period, plus (b) with respect to each Joint Venture, the JV Pro Rata Share of the sum of (i) net income (or net loss) (excluding gains (or losses) from extraordinary and unusual items), (ii) interest expense, (iii) income tax expense, (iv) depreciation expense and (v) amortization expense of such Joint Venture, in each case determined on a Consolidated basis and in accordance with GAAP for such period, provided that there shall be no rent leveling adjustments made (and only actual cash rents will be used) when computing EBITDA.

Schedule B-8

“Environmental Action” means any action, suit, demand, demand letter, claim, notice of non compliance or violation, notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, any Environmental Permit or Hazardous Material or arising from alleged injury or threat to health, safety or the environment, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any governmental or regulatory authority or third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief.

“Environmental Law” means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, writ, judgment, injunction, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials.

“Environmental Permit” means any permit, approval, identification number, license or other authorization required under any Environmental Law.

“Equity Interests” means, with respect to any Person, shares of capital stock of (or other ownership or profit interests in) such Person, warrants, options or other rights for the purchase or other acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or other acquisition from such Person of such shares (or such other interests), and other ownership or profit interests in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that is treated as a single employer together with the Parent Guarantor, the Company or a Subsidiary under section 414 of the Code.

“Euros” means the single currency of participating member states of the European Union.

“Event of Default” is defined in Section 12.

“Excess Canada Value” shall have the meaning specified in the definition of “Total Unencumbered Asset Value”.

“Excess Redevelopment and Development Value” shall have the meaning specified in the definition of “Total Unencumbered Asset Value”.

Schedule B-9

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

“Excluded Subsidiary” at any time means (a) any direct or indirect Subsidiary of the Company that is unable to guaranty the obligations of the Credit Parties under the Transaction Documents at such time because (i) it is party to one or more Excluded Subsidiary Agreements that prohibit such Excluded Subsidiary from entering into the Multiparty Guaranty set forth in Section 21 or a Joinder to Multiparty Guaranty, or (ii) entering into the Multiparty Guaranty set forth in Section 21 or a Joinder to Multiparty Guaranty would cause a default under an Excluded Subsidiary Agreement, (b) any direct or indirect Subsidiary of the Company listed on Schedule 5.20 on the Series A Closing Day or hereafter designated as an “Excluded Subsidiary” by the Company and approved by the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders, in its or their sole discretion), and (c) any Foreign Subsidiary.

“Excluded Subsidiary Agreement” for each Excluded Subsidiary means any agreement set forth opposite the name of such Excluded Subsidiary on Schedule 5.20 (as such Schedule may be supplemented from time to time pursuant to Sections 9.10(a) and 9.10(b)) and any agreement pursuant to which such Excluded Subsidiary (or a Subsidiary related thereto) incurs Refinancing Debt with regard to the Debt, if any, incurred pursuant to such Excluded Subsidiary Agreement.

“Facility” is defined in Section 2B(l).

“Fiscal Year” means a fiscal year of the Parent Guarantor and its Consolidated Subsidiaries ending on December 31 in any calendar year.

“Fixed Charge Coverage Ratio” means, at any date of determination, the ratio of (a) Adjusted EBITDA, to (b) the product of (i) four times (ii) the sum of (A) interest (including capitalized interest) payable in cash on, and amortization of debt discount in respect of, all Debt for Borrowed Money plus (B) scheduled amortization of principal amounts of all Debt for Borrowed Money payable (not including balloon maturity amounts) plus (C) all cash dividends payable on any Preferred Interests (which, for the avoidance of doubt, shall include Preferred Interests structured as trust preferred securities), in each case, of or by the Parent Guarantor and its Subsidiaries for the fiscal quarter of the Parent Guarantor most recently ended for which financial statements are required to be delivered to the Significant Holders pursuant to Section 7.2 or 7.3, as the case may be, determined on a Consolidated basis for such period.

“Foreign Subsidiary” means any Subsidiary of the Company (a) that is not incorporated or organized under the laws of any state of the United States of America or the District of Columbia, and (b) the principal assets, if any, of which are not located in the United States of America.

“Funds From Operations” means net income (or loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of property and extraordinary and unusual items, plus depreciation and amortization, and after adjustments for unconsolidated Joint Ventures. Adjustments for unconsolidated Joint Ventures will be calculated to reflect funds from operations on the same basis.

Schedule B-10

“GAAP” is defined in Section 22.8.

“Good Faith Contest” means the contest of an item as to which: (a) such item is contested in good faith, by appropriate proceedings; (b) reserves that are adequate are established with respect to such contested item in accordance with generally accepted accounting principals as in effect from time to time in the United States of America; and (c) the failure to pay or comply with such contested item during the period of such contest is not reasonably likely to result in a Material Adverse Effect.

“Governmental Authority” means the government of

(a) the United States of America or any state or other political subdivision thereof, or

(b) any other jurisdiction in which any of the Company, the Parent Guarantor or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of such Person, or

(c) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.

“Guaranteed Obligations” is defined in Section 21.1(a).

“Guarantors” is defined in the introductory paragraph of this Agreement.

“Hazardous Materials” means (a) petroleum or petroleum products, by-products or breakdown products, radioactive materials, friable or damaged asbestos-containing materials, polychlorinated biphenyls, radon gas and toxic mold and (b) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law.

“Hedge Agreements” means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other hedging agreements.

“Hedge Treasury Note(s)” means, with respect to any Accepted Note, the United States Treasury Note(s) whose duration (as determined by PIM) most closely matches the duration of such Accepted Note.

“holder” means, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Company pursuant to Section 14.1.

“Hostile Tender Offer” means, with respect to the use of proceeds of any of the Notes, any offer to purchase, or any purchase of, shares of capital stock of any corporation or equity interests in any other entity, or securities convertible into or representing the beneficial ownership of, or rights to acquire, any such shares or equity interests, if such shares, equity

Schedule B-11

interests, securities or rights are of a class which is publicly traded on any securities exchange or in any over-the-counter market (other than purchases of such shares, equity interests, securities or rights representing less than 5% of the equity interests or beneficial ownership of such corporation or other entity for portfolio investment purposes) and such offer or purchase has not been duly approved by the board of directors of such corporation or the equivalent governing body of such other entity prior to the date on which the Company makes the respective Request for Purchase of such Note.

“include” or “including” means, unless the context clearly requires otherwise, “including without limitation.”

“Institutional Investor” means (a) any Purchaser of a Note, (b) any holder of a Note holding (together with one or more of its affiliates) more than 5% of the aggregate principal amount of the Notes then outstanding, (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form, and (d) any Related Fund of any holder of any Note.

“Issuance Period” is defined in Section 2B(2).

“Investment” in any Person means any loan or advance to such Person, any purchase or other acquisition of any Equity Interests or Debt or the assets comprising a division or business unit or a substantial part or all of the business of such Person, any capital contribution to such Person or any other direct or indirect investment in such Person, including, without limitation, any acquisition by way of a merger or consolidation and any arrangement pursuant to which the investor incurs Debt of the types referred to in clause (i) or (j) of the definition of “Debt” in respect of such Person.

“Joinder to Multiparty Guaranty” means a joinder agreement entered into by an Additional Guarantor in substantially the form of Exhibit E.

“Joint Venture” means any joint venture (a) in which the Parent Guarantor or any of its Subsidiaries holds any Equity Interest, (b) that is not a Subsidiary of the Parent Guarantor or any of its Subsidiaries, and (c) the accounts of which would not appear on the Consolidated financial statements of the Parent Guarantor.

“Joint Venture Assets” means, with respect to any Joint Venture at any time, the assets owned by such Joint Venture at such time.

“JV Pro Rata Share” means, with respect to any Joint Venture at any time, the fraction, expressed as a percentage, obtained by dividing (a) the total book value of all Equity Interests in such Joint Venture held directly by the Parent Guarantor or any of its Subsidiaries by (b) the total book value of all outstanding Equity Interests in such Joint Venture at such time.

“Leverage Ratio” means, at any date of determination, the ratio, expressed as a percentage, of (a) Consolidated Debt of the Parent Guarantor and its Subsidiaries to (b) Total Asset Value, in each case as at the end of the most recently ended fiscal quarter of the Parent Guarantor for which financial statements are required to be delivered to the Significant Holders pursuant to Section 7.2 or 7.3, as the case may be.

Schedule B-12

“Lien” means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property.

“Limited Subsidiary” is defined in Section 9.10(b).

“Make-Whole Amount” is defined in Section 8.6.

“Material” means material in relation to the business, operations, financial condition or prospects of the Credit Parties and their Subsidiaries, taken as a whole.

“Material Adverse Effect” means a material adverse effect on (a) the business, condition (financial or otherwise), operations or prospects of the Company and its Subsidiaries, taken as a whole, (b) the rights and remedies of any holder of a Note under any Transaction Document, or (c) the ability of any Credit Party to perform its obligations under any Transaction Document to which it is or is to be a party.

“Material Contract” means each contract to which the Company or any of its Subsidiaries is a party involving aggregate consideration payable to or by the Company or such Subsidiary in an amount of $20,000,000 or more per annum or otherwise material to the business, condition (financial or otherwise), operations or prospects of the Company and its Subsidiaries, taken as a whole.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term is defined in section 4001(a)(3) of ERISA).

“Multiparty Guaranty” is defined in Section 21.

“NAIC” means the National Association of Insurance Commissioners and any successor thereto.

“Negative Pledge” means, with respect to any asset, any provision of a document, instrument or agreement (other than a Transaction Document) which prohibits or purports to prohibit the creation or assumption of any Lien on such asset as security for obligations under or in respect of the Transaction Documents; provided, however, that (a) an agreement that conditions a Person’s ability to encumber its assets upon the maintenance of one or more specified ratios that limit such Person’s ability to encumber its assets but that do not generally prohibit the encumbrance of its assets, or the encumbrance of specific assets, shall not constitute a Negative Pledge, and (b) any provision of the Revolving Credit Documents restricting the ability of any Credit Party to encumber its assets shall be deemed to not constitute a Negative Pledge so long as such provision is generally consistent with a comparable provision of the Transaction Documents.

Schedule B-13

“Net Operating Income” means (a) with respect to any Asset other than a Joint Venture Asset, (i) the total rental revenue and other income from the operation of such Asset for the fiscal quarter of the Parent Guarantor most recently ended for which financial statements are required to be delivered to the Significant Holders pursuant to Section 7.2 or 7.3, as the case may be, minus (ii) all expenses and other proper charges incurred by the applicable Credit Party or Subsidiary in connection with the operation and maintenance of such Asset during such fiscal period, including, without limitation, management fees, repairs, real estate and chattel taxes and bad debt expenses, but before payment or provision for debt service charges, income taxes and depreciation, amortization and other non-cash expenses, all as determined in accordance with GAAP, (b) with respect to any Joint Venture Asset, (i) the JV Pro Rata Share of the total rental revenue and other income from the operation of such Asset for the fiscal quarter of the Parent Guarantor most recently ended for which financial statements are required to be delivered to the Significant Holders pursuant to Section 7.2 or 7.3, as the case may be, minus (ii) the JV Pro Rata Share of all expenses and other proper charges incurred by the applicable Joint Venture in connection with the operation and maintenance of such Asset during such fiscal period, including, without limitation, management fees, repairs, real estate and chattel taxes and bad debt expenses, but before payment or provision for debt service charges, income taxes and depreciation, amortization and other non-cash expenses, all as determined in accordance with GAAP, provided that in each case there shall be no rent leveling adjustments made (and only actual cash rents will be used) when computing Net Operating Income.

“New York Business Day” means any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed.

“Non-Recourse Debt” means Debt for Borrowed Money with respect to which recourse for payment is limited to (a) any building(s) or parcel(s) of real property or any related assets encumbered by a Lien securing such Debt for Borrowed Money and/or (b) the general credit of the Property-Level Subsidiary that has incurred or guaranteed such Debt for Borrowed Money and/or the Equity Interests in such Property-Level Subsidiary and/or the general credit of the immediate parent entity of such Property-Level Subsidiary provided that no such parent entity shall own assets other than Equity Interests in one or more Property-Level Subsidiaries or immediate parent entities thereof, it being understood that the instruments governing such Debt may include customary carve-outs to such limited recourse (any such customary carve-outs or agreements limited to such customary carve-outs, being a “Customary Carve-Out Agreement”) such as, for example, personal recourse to the Parent Guarantor or any Subsidiary of the Parent Guarantor for fraud, willful misrepresentation, misapplication or misappropriation of cash, waste, environmental claims, damage to properties, non-payment of taxes or other liens despite the existence of sufficient cash flow, interference with the enforcement of loan documents upon maturity or acceleration, violation of loan document prohibitions against voluntary or involuntary bankruptcy filings, transfer of properties or ownership interests therein and liabilities and other circumstances customarily excluded at the time of the incurrence of such Debt by lenders from exculpation provisions and/or included in separate indemnification agreements in non-recourse financings of real estate. Any Debt for Borrowed Money that would otherwise qualify as Non-Recourse Debt under this definition shall not fail to qualify as Non-Recourse Debt solely by reason of any recourse guaranty of such Debt by the Parent Guarantor or any of its Subsidiaries, so long as such recourse guaranty is permitted pursuant to Section 10.2(c)(iii) (including the proviso therein).

Schedule B-14

“Note” or “Notes” are defined in Section 1B.

“Office Asset” means Real Property (other than any Joint Venture Asset) that operates or is intended to operate as a telecommunications infrastructure building, information technology infrastructure building, technology manufacturing building or technology office/corporate headquarter building.

“Officer’s Certificate” means a certificate of a Senior Financial Officer or of any other officer of the Company or the Parent Guarantor (in its capacity as the sole general partner of the Company) whose responsibilities extend to the subject matter of such certificate.

“Overnight Interest Rate” means with respect to an Accepted Note denominated in a currency other than Dollars, the actual rate of interest, if any, received by the Purchaser which intends to purchase such Accepted Note on the overnight deposit of the funds intended to be used for the purchase of such Accepted Note, it being understood that reasonable efforts will be made by or on behalf of the Purchaser to make any such deposit in an interest bearing account.

“Parent Guarantor” is defined in the introductory paragraph of this Agreement.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto.

“Pension Act” means the Pension Protection Act of 2006, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to certain Plans and set forth in, with respect to plan years ending prior to the effective date as to such Plan of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Sections 412 and 430 of the Code and Sections 302 and 303 of ERISA.

“Permitted Liens” means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (a) Liens for taxes, assessments and governmental charges or levies not yet delinquent or which are the subject of a Good Faith Contest; (b) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liens arising in the ordinary course of business securing obligations that (i) are not overdue for a period of more than 30 days, and (ii) individually or together with all other Permitted Liens outstanding on any date of determination do not materially adversely affect the use of the property to which they relate unless, in the case of (i) or (ii) above, such liens are the subject of a Good Faith Contest; (c) pledges or deposits to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations; (d) covenants, conditions and restrictions, easements, zoning restrictions, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable or materially adversely affect the use or value of such property for its present purposes; (e) Tenancy Leases and other interests of lessees and lessors under leases or real or personal property made in the ordinary course of business that do not materially and adversely affect the use of the Real Property encumbered thereby for its intended purpose or the value thereof; (f) any attachment or judgment Liens not resulting in an Event of Default under Section 12(i); and (g) Liens in favor of Secured Party pursuant to any Transaction Document.

Schedule B-15

“Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a Governmental Authority.

“PIM” means Prudential Investment Management, Inc.

“Plan” means an “employee pension benefit plan” (as defined in section 3(2) of ERISA) subject to Title I of ERISA that is or, within the preceding five years, has been established or maintained, or to which contributions are or, within the preceding five years, have been made or required to be made, by any Credit Party, any Subsidiary or any ERISA Affiliate or with respect to which any Credit Party, any Subsidiary or any ERISA Affiliate may have any liability.

“Preferred Interests” means, with respect to any Person, Equity Interests issued by such Person that are entitled to a preference or priority over any other Equity Interests issued by such Person upon any distribution of such Person’s property and assets, whether by dividend or upon liquidation.

“Property-Level Subsidiary” means any Subsidiary of the Company or any Joint Venture that holds a direct fee or leasehold interest in any single building (or group of related buildings, including, without limitation, buildings pooled for purposes of a Non-Recourse Debt financing) or parcel (or group of related parcels, including, without limitation, parcels pooled for purposes of a Non-Recourse Debt financing) of real property and related assets and not in any other building or parcel of real property.

“Proposed Unencumbered Asset” is defined in Section 9.11.

“Prudential Affiliate” means (i) any corporation or other entity controlling, controlled by, or under common control with, PIM and (ii) any managed account or investment fund which is managed by PIM or a Prudential Affiliate described in clause (i) of this definition. For purposes of this definition, the terms “control,” “controlling” and “controlled” shall mean the ownership, directly or through subsidiaries, of a majority of a corporation’s or other Person’s Voting Interests or equivalent voting securities or interests.

“Purchasers” means the (x) Series A Purchasers, and (y) PIM and any Prudential Affiliate which purchases any Notes or have agreed to purchase any Accepted Notes.

“Qualified Institutional Buyer” means any Person who is a “qualified institutional buyer” within the meaning of such term as set forth in Rule 144A(a)(1) under the Securities Act.

“Qualifying Ground Lease” means a lease of Real Property containing the following terms and conditions: (a) a remaining term (including any unexercised extension options as to which there are no conditions precedent to exercise thereof other than the giving of a notice of exercise) of 30 years or more from the Closing Date (as defined in the Revolving Credit Agreement); (b) the right of the lessee to mortgage and encumber its interest in the leased property without the consent of the lessor; (c) the obligation of the lessor to give the holder of

Schedule B-16

any mortgage Lien on such leased property written notice of any defaults on the part of the lessee and agreement of such lessor that such lease will not be terminated until such holder has had a reasonable opportunity to cure or complete foreclosures, and fails to do so; (d) reasonable transferability of the lessee’s interest under such lease, including ability to sublease; and (e) such other rights customarily required by mortgagees making a loan secured by the interest of the holder of a leasehold estate demised pursuant to a ground lease.

“Real Property” means all right, title and interest of the Company and each of its Subsidiaries in and to any land and any improvements located thereon, together with all equipment, furniture, materials, supplies and personal property in which such Person has an interest now or hereafter located on or used in connection with such land and improvements, and all appurtenances, additions, improvements, renewals, substitutions and replacements thereof now or hereafter acquired by such Person, in each case to the extent of such Person’s interest therein.

“Reclassification Date” means, with respect to any Redevelopment Asset, the date on which each of the following shall have occurred: (a) the Company shall have given notice to each Significant Holder that it desires to reclassify such Asset as an Office Asset for purposes of this Agreement; (b) the Company shall have re-satisfied the conditions set forth in clause (a) of Section 9.11 with respect to such Asset; and (c) the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders) shall have approved such reclassification (which approval shall not be unreasonably withheld).

“Recourse Debt” means Consolidated Debt of the Parent Guarantor and its Subsidiaries (whether or not secured by any Liens) for which the Parent Guarantor, the Company or any of their respective Subsidiaries has personal or recourse liability in whole or in part, exclusive of any such Debt for which such personal or recourse liability is limited to obligations under Customary Carve-Out Agreements.

“Redevelopment Asset” means an Office Asset (a) designated by the Company in a notice to each Significant Holder as a “Redevelopment Asset”, (b) which either (i) has been acquired by the Company or any of its Subsidiaries with a view toward renovating or rehabilitating such Asset at an aggregate anticipated cost in excess of 10% of the acquisition cost thereof, or (ii) the Company or a Subsidiary thereof intends to renovate or rehabilitate at an aggregate anticipated cost in excess of 10% of the Capitalized Value of such Asset, and (c) that does not qualify as a “Development Asset” by reason of, among other things, the redevelopment plan for such Asset not including a total demolition of the existing building(s) and improvements. Each Redevelopment Asset shall continue to be classified as a Redevelopment Asset hereunder until the applicable Reclassification Date for such Asset, upon and after which such Asset shall be classified as an Office Asset hereunder.

“Refinancing Debt” means, with respect to any Debt, any Debt extending the maturity of, or refunding or refinancing, in whole or in part, such Debt, provided that (a) the terms of any Refinancing Debt, and of any agreement entered into and of any instrument issued in connection therewith, do not provide for any Lien on any Unencumbered Assets and are otherwise not prohibited by the Transaction Documents, (b) the principal (or committed) amount of such Debt shall not be increased above the principal (or committed) amount thereof outstanding

Schedule B-17

immediately prior to such extension, refunding or refinancing plus the amount of any applicable premium and all fees and expenses, and the direct and contingent obligors therefor shall not be changed (other than to include new and/or additional Excluded Subsidiaries as obligors), as a result of or in connection with such extension, refunding or refinancing, and (c) the provisions relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material provisions taken as a whole, of any such Refinancing Debt, and of any agreement entered into and of any instrument issued in connection therewith, are on then current market terms, and (d) the interest rate applicable to any such Refinancing Debt does not exceed the then applicable market interest rate.

“REIT” means a Person that is qualified to be treated for tax purposes as a real estate investment trust under Sections 856-860 of the Code.

“Related Fund” means, with respect to any holder of any Note, any fund or entity that (i) invests in Securities or bank loans, and (ii) is advised or managed by such holder, the same investment advisor as such holder or by an affiliate of such holder or such investment advisor.

“Request for Purchase” is defined in Section 2B(2).

“Required Holders” means, at any time, the holder or holders of more than 50% of the aggregate principal amount of the Notes or of a Series of Notes, as the context may require, from time to time outstanding (exclusive of Notes then owned by any Credit Party, any Subsidiary or any of their respective Affiliates).

“Rescheduled Closing Day” is defined in Section 2B(7).

“Responsible Officer” means any Senior Financial Officer and any other officer with responsibility for the administration of the relevant portion of this Agreement or any other Transaction Document. Any reference to a “Responsible Officer” of the Company shall be deemed to refer to a Responsible Officer of the Parent Guarantor, in its capacity as the sole general partner of the Company.

“Revolving Credit Agreement” means the Revolving Credit Agreement, dated as of August 31, 2007, by and among the Administrative Agent named therein, the Banks and the Credit Parties, as amended, restated, supplemented, refinanced, increased, reduced or otherwise modified from time to time, and any successor Revolving Credit Agreement.

“Revolving Credit Documents” means the Revolving Credit Agreement, any promissory notes issued thereunder and any and all other agreements, documents, certificates and instruments from time to time executed and delivered by or on behalf of any Credit Party related thereto.

“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002, as amended.

“Securities” or “Security” shall have the meaning specified in Section 2(1) of the Securities Act.

Schedule B-18

“Secured Debt Leverage Ratio” means, at any date of determination, the ratio, expressed as a percentage, of (a) Consolidated secured Debt of the Parent Guarantor and its Subsidiaries to (b) Total Asset Value, in each case as at the end of the most recently ended fiscal quarter of the Parent Guarantor for which financial statements are required to be delivered to the Significant Holders pursuant to Section 7.2 or 7.3, as the case may be.

“Secured Party” means any holder of a Note and any collateral agent that is the secured party for the benefit of itself and/or any holder of a Note.

“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

“Senior Financial Officer” means the chief executive officer, chief financial officer, principal accounting officer, general manager of finance, treasurer, controller or any other officer of the applicable Person with similar responsibility. Any reference to a “Senior Financial Officer” of the Company shall be deemed to refer to a Senior Financial Officer of the Parent Guarantor, in its capacity as the sole general partner of the Company.

“Series” is defined in Section 1B.

“Series A Closing Day” is defined in Section 3.

“Series A Purchasers” means The Prudential Insurance Company of America and Prudential Retirement Insurance and Annuity Company.

“Series A Notes” is defined in Section 1A.

“Shelf Notes” is defined in Section 1B.

“Significant Holder” means (i) PIM during the Issuance Period and so long thereafter as any Prudential Affiliate shall hold any Note), and (ii) any other holder of at least 10% of the aggregate principal amount of the Notes from time to time outstanding.

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc. and any successor thereto.

“Structuring Fee” is defined in Section 2B(8)(i).

“Subsidiary” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate (i) of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such partnership, joint venture or limited liability company, or (c) the beneficial interest in such trust or estate, in each case, is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries, or (ii) the accounts of which would appear on the Consolidated financial statements of such Person in accordance with generally accepted accounting principals as in effect from time to time in the United States of America. Unless the context otherwise clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary of the Parent Guarantor.

Schedule B-19

“Subsidiary Guarantors” is defined in the introductory paragraph of this Agreement.

“Surviving Debt” means Debt of each Credit Party and its Subsidiaries outstanding immediately after the purchase and sale of the Series A Notes.

“SVO” means the Securities Valuation Office of the NAIC (or any successor organization acceding to the authority thereof).

“Swiss Francs” means the lawful currency of Switzerland.

“Tenancy Leases” means operating leases, subleases, licenses, occupancy agreements and rights-of-use entered into by the Company or any of its Subsidiaries in its capacity as a lessor or a similar capacity in the ordinary course of business that do not materially and adversely affect the use of the Real Property encumbered thereby for its intended purpose.

“Total Asset Value” means, on any date of determination, (a) the sum of the Asset Values for all Assets at such date, plus (b) all unrestricted cash and Cash Equivalents on hand of the Parent Guarantor and its Subsidiaries.

“Total Unencumbered Asset Value” means an amount equal to the sum of the Asset Values of all Unencumbered Assets; provided, however, that, if at any time (a) there shall be fewer than three Unencumbered Assets, (b) the sum of the Asset Values of all Unencumbered Assets shall not be equal to or greater than $115,000,000, or (c) the weighted average occupancy of all Unencumbered Assets (other than Development Assets and Redevelopment Assets) shall not be greater than or equal to 80%, the Total Unencumbered Asset Value shall be zero; and provided, further, that if the sum of the Asset Values of all Unencumbered Assets located in Canada shall exceed 15% of the Total Unencumbered Asset Value, then Total Unencumbered Asset Value shall be reduced by the amount of such excess (“Excess Canada Value”) other than for purposes of calculating compliance with the financial covenant set forth in Section 11.2(a), with respect to which such reduction shall not apply; and provided, still further, that if the sum of the Asset Values of all Unencumbered Assets comprised of Redevelopment Assets and Development Assets (provided that the portion of such combined total sum arising from Unencumbered Assets comprised of Development Assets shall not exceed 10% of the Total Unencumbered Asset Value) shall exceed 33% of the Total Unencumbered Asset Value, then Total Unencumbered Asset Value shall be reduced by the amount of such excess (“Excess Redevelopment and Development Value”).

“Transaction Documents” means this Agreement, the Notes and any and all other agreements, documents, certificates and instruments from time to time executed and delivered by or on behalf of any Credit Party related thereto.

“Transfer” is defined in Section 10.5.

Schedule B-20

“Unencumbered Asset Conditions” means, with respect to any Proposed Unencumbered Asset, that such Proposed Unencumbered Asset (a) is an Office Asset, Redevelopment Asset or Development Asset located in the United States of America or Canada, (b) is owned in fee simple absolute or subject to a Qualifying Ground Lease, (c) except in the case of a Redevelopment Asset or a Development Asset, is income-producing, (d) is free of all structural defects or material architectural deficiencies, title defects, environmental conditions or other matters (including a casualty event or condemnation) that could reasonably be expected to have a material adverse affect on the value, use or ability to sell or refinance such Asset, (e) except in the case of any non-income producing Redevelopment Asset or Development Asset, is operated by a property manager reasonably acceptable to the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders), (f) is not subject to mezzanine Debt financing, (g) is not subject to any Lien (other than Permitted Liens) or any Negative Pledge, (h) to the extent owned by a Credit Party that is a Subsidiary of the Company, none of the Company’s direct or indirect Equity Interests in such Subsidiary owner is subject to any Lien (other than Permitted Liens) or any Negative Pledge, (i) is an Asset with respect to which the Company directly, or indirectly through such Subsidiary owner, has the right to take the following actions without the need to obtain the consent of any Person: (A) to create Liens on such Asset as security for the obligations of the Credit Parties under or in respect of the Transaction Documents, and (B) to sell, transfer or otherwise dispose of such Asset (provided, however, that in the case of the foregoing clauses (i)(A) and (i)(B), (x) an agreement that conditions a Person’s ability to create Liens on its assets or to sell, transfer or otherwise dispose of its assets upon the maintenance of one or more specified ratios but that does not otherwise generally prohibit the creation of Liens on assets or the sale, transfer or other disposition of assets, or the taking of such actions with respect to specific assets, shall not be deemed a violation of or prohibition under this clause (i), and (y) any restriction under the Revolving Credit Documents on sales, transfers or other dispositions of assets during the existence of a default or event of default (or any such restriction under the Revolving Credit Documents that would apply if a default or event of default would result from any such sales, transfers or other dispositions) shall not be deemed a violation of or prohibition under this clause (i) so long as such provision is generally consistent with a comparable provision of the Transaction Documents), (j) is owned directly by the Company or a Guarantor, and (k) in the case of ownership by a Guarantor, one hundred percent (100%) of all of the equity interests (other than directors’ qualifying shares) and voting interests (such ownership being defined as “Wholly-Owned”) of such Guarantor are owned by one or more of the Company and/or any other Wholly-Owned Subsidiary of the Company at such time.

“Unencumbered Assets” means only those Office Assets, Redevelopment Assets and Development Assets (a) for which the applicable conditions (as may be determined by the Required Holders in their sole discretion), if applicable, in Section 9.11 have been satisfied, and (b) listed on Schedule II hereto (as supplemented from time to time pursuant to Section 9.11). Without limitation of the foregoing, no Redevelopment Asset or Development Asset shall qualify as an Unencumbered Asset after the Series A Closing Day without the prior approval of the Administrative Agent (or, during the continuance of an Event of Default, the Required Holders).

“Unencumbered Assets Certificate” means a certificate in substantially the form of Exhibit F hereto, duly certified by the Chief Financial Officer or other Responsible Officer of the Parent Guarantor.

Schedule B-21

“Unencumbered Assets Debt Service Coverage Ratio” means, at any date of determination, the ratio of (a) the aggregate Adjusted Net Operating Income for all Unencumbered Assets to (b) four times the actual interest expense of the Parent Guarantor and its Subsidiaries on all Unsecured Debt for the fiscal quarter of the Parent Guarantor most recently ended for which financial statements are required to be delivered pursuant to Section 7.2 or 7.3, as the case may be.

“Unsecured Debt” means, at any date of determination, the amount at such time of all Consolidated Debt of the Parent Guarantor and its Subsidiaries, including, without limitation, the amounts available to be drawn under outstanding letters of credit, but exclusive of (a) Debt secured by any Lien, (b) guarantee obligations in respect of Debt secured by any Lien, and (c) guaranties by parent entities of the Recourse Debt of one or more of their respective Subsidiaries in an aggregate amount not greater than 5.0% of Total Asset Value.

“USA Patriot Act” means United States Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA) PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

“Voting Interests” means shares of capital stock issued by a corporation, or equivalent Equity Interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.

Schedule B-22

THIS NOTE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY BE OFFERED AND SOLD OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR ANY SUCH STATE LAWS WHICH MAY BE APPLICABLE, OR IF AN EXEMPTION FROM REGISTRATION OR QUALIFICATION IS AVAILABLE THEREUNDER, THEN IN ACCORDANCE WITH SUCH EXEMPTION.

EXHIBIT A-1

[FORM OF SERIES A NOTE]

DIGITAL REALTY TRUST, L.P.

7.00% SERIES A SENIOR NOTE DUE 2011

No. [___]	[Date]
$[____]	PPN [________]

FOR VALUE RECEIVED, the undersigned, DIGITAL REALTY TRUST, L.P. (herein called the “Company”), a limited partnership organized under the laws of the State of Maryland, hereby promises to pay to [_____________], or registered assigns, the principal sum of [___________] DOLLARS on July 24, 2011, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 7.00% per annum from the date hereof, payable at maturity and monthly, on the 24th day of each month in each year, commencing with the 24th day of the month next succeeding the date hereof until the principal hereof shall have become due and payable, and (b) at a rate per annum from time to time equal to the greater of (i) 9.00% and (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank from time to time in New York, New York as its “base” or “prime” rate (i) on any overdue payment of interest, and (ii) following the occurrence and during the continuance of an Event of Default (as defined in the Agreement referred to below) on the unpaid principal balance, any overdue payment of interest and any overdue payment of any Make-Whole Amount, in the case of each of clause (i) and (ii), payable monthly as aforesaid (or, at the option of the registered holder hereof, on demand).

Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at JPMorgan Chase Bank, New York, New York or at such other place as the holder hereof shall designate to the Company in writing as provided in the Agreement referred to below.

This Note is one of a series of senior notes (herein called the “Notes”) issued pursuant to a Note Purchase and Private Shelf Agreement, dated as of July 24, 2008 (as from time to time amended, restated, supplemented or otherwise modified, the “Agreement”), between the Company and the other Credit Parties named therein, on the one hand, and the other Persons party thereto, on the other hand, and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, to have made the representation set forth in Sections 6.1 and 6.2.

Exhibit A-1-1

This Note is a registered Note and, as provided in the Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a replacement Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.

This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Agreement, but not otherwise.

The Notes have been unconditionally guaranteed by certain of the Company’s Subsidiaries and Affiliates pursuant to the terms of the Multiparty Guaranty.

If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect, provided in the Agreement.

Capitalized terms used and not otherwise defined herein shall have the meanings provided in the Agreement.

This Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such state that would permit the application of the laws of a jurisdiction other than such state.

DIGITAL REALTY TRUST, L.P. By: Digital Realty Trust, Inc., its sole general partner
By:
	Name:	A. William Stein
	Title:	Chief Financial Officer and Chief Investment Officer

Exhibit A-1-2

THIS NOTE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY BE OFFERED AND SOLD OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR ANY SUCH STATE LAWS WHICH MAY BE APPLICABLE, OR IF AN EXEMPTION FROM REGISTRATION OR QUALIFICATION IS AVAILABLE THEREUNDER, THEN IN ACCORDANCE WITH SUCH EXEMPTION.

EXHIBIT A-2

[FORM OF SHELF NOTE]

DIGITAL REALTY TRUST, L.P.

SERIES ____ SENIOR NOTE

No. [___]

ORIGINAL PRINCIPAL AMOUNT:

ORIGINAL ISSUE DATE:

INTEREST RATE:

INTEREST PAYMENT DATES: [Quarterly][Semi-annually] on each [STATE DATES]

FINAL MATURITY DATE: ¹

PRINCIPAL PREPAYMENT DATES AND AMOUNTS: ²

FOR VALUE RECEIVED, the undersigned, DIGITAL REALTY TRUST, L.P. (herein called the “Company”), a limited partnership organized under the laws of the State of Maryland, hereby promises to pay to [________________], or registered assigns, the principal sum of [_____________________] [DOLLARS] [OTHER AVAILABLE CURRENCY] [on the Final Maturity Date specified above] [, payable on the Principal Prepayment Dates and in the amounts specified above, and on the Final Maturity Date as specified above in an amount equal to the unpaid balance of the principal hereof,] with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the Interest Rate per annum specified above, payable on the Final Maturity Date specified above and on each Interest Payment Date specified above, commencing with the Interest Payment Date next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) at a rate per annum from time to time equal to the Default Rate (i) on any overdue payment of interest, and (ii) following the occurrence and during the continuance of an Event of Default (as defined in the Agreement referred to below) on the unpaid principal balance, any overdue payment of interest and any overdue payment of any Make-Whole Amount, in the case of each of clause (i) and (ii), payable on each Interest Payment Date as aforesaid (or, at the option of the registered holder hereof, on demand).

¹ The Final Maturity Date must be no more than 10 years after the original issuance date.

² The Remaining Average Life must be no more than 7 years after the original issuance date.

Payments of principal, Make-Whole Amount, if any, and interest are to be made in lawful money of the United States of America at JPMorgan Chase Bank, New York, New York or at such other place as the holder hereof shall designate to the Company in writing.

This Note is one of a series of senior notes (herein called the “Notes”) issued pursuant to a Note Purchase and Private Shelf Agreement, dated as of July 24, 2008 (as from time to time amended, restated, supplemented or otherwise modified, the “Agreement”), between the Company and the other Credit Parties named therein, on the one hand, and the other Persons party thereto, on the other hand, and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, to have made the representations set forth in Sections 6.1 and 6.2 of the Agreement.

This Note is a registered Note and, as provided in the Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a replacement Note for the then outstanding principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary.

This Note is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Agreement, but not otherwise.

The Notes have been unconditionally guaranteed by certain of the Company’s Subsidiaries and Affiliates pursuant to the terms of the Multiparty Guaranty.

If an Event of Default shall occur and be continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount), and with the effect, provided in the Agreement.

Capitalized terms used and not otherwise defined herein shall have the meanings provided in the Agreement.

This Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

DIGITAL REALTY TRUST, L.P. By: Digital Realty Trust, Inc., its sole general partner
By:
	Name:	A. William Stein
	Title:	Chief Financial Officer and Chief Investment Officer

Exhibit A-1-4

EX-12.1

Exhibit 12.1

Digital Realty Trust, Inc.

Statement of Computation of Ratios (1)

	The Company												The Company and the Predecessor (2)
	Six months ended June 30,					Year ended December 31,
	2008			2007		2007			2006		2005		2004
Income (loss) from continuing operations before minority interests	$	25,648		$	14,454	$	25,221		$	25,893	$	24,460	$	(5,340	)
Interest expense		28,913			31,858		64,404			49,595		35,381		21,768
Interest within rental expense		1,261			854		1,971			680		147		113
Minority interests in consolidated joint ventures		—			—		—			—		—			(6)
Earnings available to cover fixed charges	$	55,822		$	47,166	$	91,596		$	76,168	$	59,988	$	16,535
Fixed charges:
Interest expense	$	28,913		$	31,858	$	64,404		$	49,595	$	35,381	$	21,768
Interest within rental expense		1,261			854		1,971			680		147		113
Capitalized interest		8,920			4,298		11,609			3,851		279		—
		39,094			37,010		77,984			54,126		35,807		21,881
Preferred stock dividends		18,360			8,612		19,330			13,780		10,014		—
Fixed charges and preferred stock dividends	$	57,454		$	45,622	$	97,314		$	67,906	$	45,821	$	21,881
Ratio of earnings to fixed charges		1.43			1.27		1.17			1.41		1.68		—	(5)
Ratio of earnings to fixed charges and preferred stock dividends		—	(3)		1.03		—	(4)		1.12		1.31		—

(1) All numbers presented in this exhibit exclude 7979 East Tufts Avenue (sold July 2006), 100 Technology Center Drive (sold in March 2007) and 4055 Valley View Lane (sold in March 2007).

(2) The Predecessor is not a legal entity; rather it is a combination of certain of the real estate subsidiaries of Global Innovation Partners, LLC, a Delaware limited liability company (GI Partners) contributed to the Company in connection with the IPO in November 2004, along with an allocation of certain assets, liabilities, revenues and expenses of GI Partners related to the real estate owned by such subsidiaries.

(3) For the six months ended June 30, 2008, earnings were insufficient to cover fixed charges and preferred dividends by $1,632.

(4) For the year ended December 31, 2007, earnings were insufficient to cover fixed charges and preferred dividends by $5,718.

(5) For the year ended December 31, 2004, earnings were insufficient to cover fixed charges by $5,346.

EX-31.1

Exhibit 31.1

Certification Of Principal Executive Officer

Pursuant To Section 302 Of The Sarbanes–Oxley Act Of 2002

I, Michael F. Foust, certify that:

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

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

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

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

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

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

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

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

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

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

Dated: August 8, 2008
By:	/s/ MICHAEL F. FOUST
	Michael F. Foust Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification Of Principal Financial Officer

Pursuant To Section 302 Of The Sarbanes–Oxley Act Of 2002

I, A. William Stein, certify that:

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

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

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

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

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

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

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

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

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

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

Dated: August 8, 2008
By:	/s/ A. WILLIAM STEIN
	A. William Stein Chief Financial Officer and Chief Investment Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as

Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Digital Realty Trust, Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2008 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

Dated: August 8, 2008

/s/ MICHAEL F. FOUST

Michael F. Foust

Chief Executive Officer

Pursuant to Securities and Exchange Commission Release 33-8238, dated June 5, 2003, this certification is being furnished and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any registration statement of the Company filed under the Securities Act of 1933, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as

Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Digital Realty Trust, Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2008 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

Dated: August 8, 2008

/s/ A. WILLIAM STEIN

A. William Stein

Chief Financial Officer

Pursuant to Securities and Exchange Commission Release 33-8238, dated June 5, 2003, this certification is being furnished and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any registration statement of the Company filed under the Securities Act of 1933, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.