10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009.

[    ] 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: 001-13577

PREMIERE GLOBAL SERVICES, INC.
(Exact name of registrant as specified in its charter)

Georgia	59-3074176
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3280 Peachtree Road, N.W., The Terminus Building, Suite 1000, Atlanta, Georgia 30305
(address of principal executive office)
(Registrant's telephone number, including area code): (404) 262-8400

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, Par Value $0.01 Per Share	New York Stock Exchange
(Title of each class)	(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [    ] Yes   [X] No

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. [    ] Yes   [X] No

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

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

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [    ]

     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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer [X]    Accelerated filer [    ]    Non-accelerated filer [    ]    Smaller reporting company [    ]

(Do not check if a smaller reporting company)

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

     The aggregate market value of the voting and non-voting common equity held by nonaffiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, on June 30, 2009 as reported by the New York Stock Exchange was approximately $614,677,842.

     As of February 23, 2009, 60,048,311 shares of the registrant's common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the registrant’s proxy statement for its 2010 annual meeting of shareholders are incorporated by reference in Part III of this Form 10-K.

FORWARD-LOOKING STATEMENTS

     When used in this annual report on Form 10-K and elsewhere by us or by management from time to time, the words “believes,” “anticipates,” “expects,” “will,” “may,” “should,” “intends,” “plans,” “estimates,” “predicts,” “potential,” “continue” and similar expressions are intended to identify forward-looking statements concerning our operations, economic performance and financial condition. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These statements are based on a number of assumptions and estimates that are inherently subject to significant risks and uncertainties, many of which are beyond our control and reflect future business decisions which are subject to change. A variety of factors could cause actual results to differ materially from those anticipated in our forward-looking statements, including the following factors:

• Our ability to compete based on price and services and against our existing and future competitors;

• Our ability to respond to rapid technological change and the development of alternatives to our services;

• Market acceptance of new services and enhancements to existing services;

• Costs or difficulties related to the integration of any new or acquired businesses and technologies;

• Concerns regarding the security of transactions and transmitting confidential information over the Internet and public networks;

• Our ability to upgrade our equipment or increase our network capacity to meet customer demands;

• Our services may be interrupted due to failure of our or third-party platforms and network infrastructure utilized in providing our services;

• Continued weakness in our legacy broadcast fax services, which is part of our PGiSend solution;

• Our ability to efficiently utilize or re-negotiate our telecommunications supply agreements;

• Increased leverage may harm our financial condition and results of operations;

• Our dependence on our subsidiaries for cash flow may negatively affect our business and our ability to pay amounts due under our indebtedness;

• Our financial performance could cause future write-downs of goodwill or other intangible assets in future periods;

• Assessment of income, state sales and other taxes by government authorities for which we have not accrued;

• Our ability to attract and retain qualified key personnel;

• Our ability to successfully identify suitable acquisition candidates, complete acquisitions, integrate acquired operations into our existing operations or expand into new markets;

• Our ability to protect our proprietary technology and intellectual property rights;

• Possible adverse results of pending or future litigation or adverse results of current or future infringement claims;

• Regulatory or legislative changes may adversely affect our business;

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• Possible adverse results if our services become subject to government regulations applicable to traditional telecommunications service providers;

• Risks associated with expansion of our international operations and fluctuations in currency exchange rates;

• Domestic and international terrorist activity, war and political instability may adversely affect the level of services utilized by our customers and the ability of those customers to pay for services utilized;

• General economic or business conditions, internationally, nationally or in the local jurisdiction in which we are doing business, may be less favorable than expected;

• Risks associated with weakening global economic and credit conditions, including customer consolidations, bankruptcies and payment defaults;

• Changes in and the successful execution of restructuring and cost reduction initiatives and the market reaction thereto;

• Factors described under the caption Item 1A. “Risk Factors” in this annual report; and

• Factors described from time to time in our press releases, reports and other filings made with the Securities and Exchange Commission.

We caution that these factors are not exclusive. Consequently, all of the forward-looking statements made in this annual report and in other documents filed with the Securities and Exchange Commission, or SEC, are qualified by these cautionary statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this annual report. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this annual report, or the date of the statement, if a different date.

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INDEX

		Page
Part I
Item 1.	Business	1
Item 1A.	Risk Factors	8
Item 1B	Unresolved Staff Comments	19
Item 2.	Properties	19
Item 3.	Legal Proceedings	19
Item 4.	Submission of Matters to a Vote of Security Holders	20
Part II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases
	of Equity Securities	21
Item 6.	Selected Financial Data	23
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 8.	Financial Statements and Supplementary Data	44
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	76
Item 9A.	Controls and Procedures	76
Item 9B.	Other Information	78
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	78
Item 11.	Executive Compensation	78
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
	Matters	78
Item 13.	Certain Relationships and Related Transactions and Director Independence	78
Item 14.	Principal Accountant Fees and Services	78
Part IV
Item 15.	Exhibits and Financial Statement Schedules	79
Signatures		80

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PART I

Item 1. Business

Overview

     Premiere Global Services, Inc., or PGi, is a leading global provider of conferencing and collaboration solutions that enable companies and individuals to meet and collaborate in a more productive and efficient manner. We have a global presence in 24 countries and an established base of more than 50,000 customers, including nearly 90% of the Fortune 500. Every month, we facilitate approximately 3 million virtual group meetings with greater than 12 million participants worldwide.

     We offer our solutions in the on-demand, software-as-a-service, or SaaS, model, meaning our customers are not burdened with the up-front expense and complexity associated with purchasing and installing hardware and software solutions. Further, our model enables customers to avoid the headcount and ongoing operating costs required to support internal solutions, the expense of platform upgrades and the business risk of technology obsolescence.

     In 2009, we expanded our offerings to include a managed services model to deliver comprehensive collaboration solutions via SaaS and private, dedicated virtual environments that enable global enterprise customers to consolidate and outsource all of their collaboration technologies. We also began developing a new collaboration platform intended to bring together the benefits of audio, web and video collaboration into a single, browser-based application. We believe both of these initiatives will significantly increase the addressable market opportunity for our solutions by integrating new technologies that are currently outside the conferencing industry as traditionally defined.

     Our solutions are scalable and customizable and can be integrated with other technologies, including a customer’s existing voice-over-Internet-protocol, or VoIP, infrastructure. We host our solutions on our secure, enterprise-class platforms that are located around the world in our server and network operations centers and in third-party co-location facilities. This integrated network of platforms, our PGi Communications Operating System, utilizes our proprietary software and a variety of leading third-party applications.

     Our solutions are available online through our website at www.pgi.com as well as through mobile device applications and access or jump-off points embedded in third-party applications. We also offer open standards access to our technology, which enables our customers and technology partners to integrate our capabilities directly into their existing systems.

     Our collaboration solutions facilitate synchronous, real-time group meetings, as opposed to other technology providers that specialize in point-to-point communications or asynchronous, near-time communications. Our product strategy is focused on continuing to meet evolving user preferences for easier-to-use, visually compelling and more intuitive products. Although our current revenue mix is weighted toward audio conferencing services, we intend to transition our revenue mix toward more integrated, online meetings that deliver higher value to customers and to PGi.

     In addition to conferencing and collaboration solutions, we also offer a broad suite of advanced messaging solutions that enable companies to communicate important, time-sensitive information to their constituents. These solutions empower customers to automate their paper-based or manual business processes with email, text messaging, Internet Protocol, or IP, fax, automated speech and other communication technologies.

     We market our solutions globally through a multi-channel sales approach, including direct sales, resellers and strategic distribution technology partners, web-based marketing and direct telesales. We group our services into two solution sets: PGiMeet, which includes our conferencing and collaborations services, and PGiSend, which includes our advanced messaging services. In 2009, as part of our efforts to streamline our business, we divested our PGiMarket email marketing solutions, and we integrated our PGiNotify solutions into our PGiSend solutions.

     We were incorporated in Florida in 1991 and reincorporated in Georgia in 1995. As of December 31, 2009, we had approximately 2,250 employees conducting business within our three reportable segments, which include North America, Europe and Asia Pacific. See Note 17 to our consolidated financial statements for the year ended December 31, 2009 included in this annual report for information concerning operations in our reportable segments.

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     Our corporate headquarters are located at 3280 Peachtree Road, N.W., The Terminus Building, Suite 1000, Atlanta, GA 30305, and our telephone number is (404) 262-8400.

Industry Background

     According to Wainhouse Research, the global conferencing and collaboration market is projected to exceed $6 billion in 2010, with a projected compound annual growth rate through 2013 of approximately 6%. We believe the industry will continue to grow, driven by companies’ increasing reliance on collaboration technologies as a result of recessionary pressures, the growing costs and hassle of business travel, environmental concerns and the constant need to improve productivity to remain competitive, among other factors. Collaboration has become a mission-critical backbone of modern business, as even the most basic tasks rely on the ability of individuals to communicate and share information in a cost-effective, real-time and productive manner.

     Collaboration is at the core of our focus and expertise at PGi. Over our more than two decades of experience in this business, we have generated meaningful revenue growth, garnered a world-class customer base of leading companies in nearly every industry and region of the world, increased our market share and helped lead and expand the industry through product innovation. We believe that these strengths, combined with our longstanding history of delivering results to our customers provide us with a significant competitive advantage in the market.

     Today, the way in which people meet and collaborate is changing, supported by significant advances in communication technologies and evolving user habits and expectations. The past decade saw widespread adoption of audio conferencing around the world and across almost every industry vertical and business function. We believe the decade ahead will likely be defined by next-generation collaboration technologies that leverage software, the web, and desktop and mobile computing to deliver a more robust and engaging collaborative experience.

     Our strategy is to lead this industry transition by leveraging our competitive strengths. In addition, we believe that our continuing innovation of new products, features and capabilities will greatly expand the addressable market for our services.

Solutions

     We offer a broad suite of business applications in our two solution sets, including audio and web conferencing and collaboration and webcasting services in our PGiMeet solutions and digital fax, document delivery and notifications services in our PGiSend solutions. Our customers benefit from our anytime/anywhere access, global scalability, the freedom to pick from the precise collaboration tools they need, along with the option to work with SaaS-based or managed services delivery models.

PGiMeet

     Our PGiMeet solutions include a full suite of traditional and VoIP-based audio and web conferencing and collaboration services for all forms of real-time group meetings, from large events, such as investor calls and training sessions, to smaller meetings, such as sales planning calls and project team meetings. PGiMeet services include automated reservationless conferencing, global reservationless conferencing with approximately 90 local access points, operator-assisted event conferencing, web collaboration and streaming webcast events. A few examples of meetings our PGiMeet solutions support include team meetings, employee training, company-wide events, sales meetings, customer webcasts, focus groups, investor relations calls and press announcements.

PGiSend

     Our PGiSend solutions include fax and document delivery tools integrated with reliable IP fax technology and compelling notifications and reminders between businesses and their constituents delivered via automated speech, email, fax and SMS technologies. Users can send and receive faxes using their computer and existing email account with no additional hardware or software required. Paper documents can be converted into electronic files that can be distributed securely across the enterprise, archived remotely and accessed through an existing email account or web interface. Our PGiSend notifications provide customizable features, including recipient authentication, personalized messages with text-to-speech capabilities, hot key transfer for interactive messaging, data collection and real-time, online summary reports. A few examples of our many PGiSend applications include invoice processing, claims processing, delivery confirmations, travel confirmations, appointment reminders, fraud alerts and accounts receivable management.

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PGiConnect^®

     Given our experience integrating and deploying accounts for large enterprises, we identified the need to streamline and better support customer integrations and application development. Our online developer community at www.PGiConnect.com allows developers, partners and customers to access PGi’s open-source, standards-based application program interfaces, or APIs, to facilitate seamless large scale integrations, account provisioning and new product development.

Customers

     Our established base of greater than 50,000 customers, including nearly 90% of the Fortune 500, is diverse across industry vertical, region and size of company. Our customers, including leading software and technology companies, commercial and investment banks, retailers, travel and hospitality firms, healthcare companies and logistics companies, utilize our solutions to drive efficiencies and enhanced productivity within their businesses. We are focused on providing greater customer value by innovating new business applications backboned by our existing technologies that address the individual needs and requirements of targeted customer segments.

     Most of our customer agreements have initial terms of one to three years, subject to automatic renewal unless a customer sends a notice of non-renewal prior to the end of an initial or renewal term. Customers may generally terminate without penalty, unless their agreement contains a minimum revenue commitment that requires payment by the customer of any unused shortfall amount upon termination.

     While our business is generally not seasonal, we typically experience lower levels of sales and usage during periods that have reduced numbers of working days. For example, our operating results have historically decreased during the summer months, particularly in our Europe operations, as well as during the Thanksgiving, December and New Year holidays. We expect our revenues during these periods will not grow at the same rates as compared with other periods of the year because of decreased use of our services by our enterprise customers.

Sales and Marketing

     To promote domain expertise and a greater understanding of our enterprise customers’ needs, we have segmented our sales professionals according to our solutions sets. Additionally, we have implemented a multi-channel sales approach to promote the transfer and adoption of best practices. Our current channels of distribution include global, enterprise, small and medium businesses, indirect partners and online web sales:

• We sell directly to customers through our approximately 720 sales and marketing professionals worldwide;

• We sell indirectly through distribution partners, including agents and resellers;

• We actively pursue strategic technology partners to integrate and resell our services with their own; and

• We employ web-based marketing and direct telesales to generate increased activity for our sales channels.

     As a service organization, our customer service teams play a major role in managing customer relationships, as well as selling additional value-added services to existing accounts. We currently employ approximately 750 customer service professionals deployed in local markets around the world.

     In 2009, we formed a new managed services sales force within our global accounts channel to meet an increasing customer demand to outsource the overall management of their collaboration technologies. In 2010, we began marketing our services around the world under the brand PGi supported by a new logo, website redesign and enhanced marketing collateral. We believe that these rebranding efforts will help us to build a brand that is a globally recognized asset for our company.

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Research and Development

     We believe that designing, developing, testing, deploying and supporting innovative technology in a timely manner allows us to better meet our customers’ needs and to differentiate and position ourselves in larger market segments. For example, during 2009, our new service launches included our PGiMeet iPhone® application, PGiMeet webcast streaming service and SaaS-based email delivery platform, as well as enhancements to Fax2Mail to integrate with Adobe® PDF functionality and upgrades to Netspoke®. We also deployed our GlobalMeet® 2 platform of media servers, which enables us to smart route traffic around the world using local access points. In 2010, we will continue our development efforts on our new meeting platform, which we intend to launch this year.

     We devote significant resources to the innovation and development of new services, enhancements to existing services and to our website. We employ more than 140 research and development professionals, including overseas development teams. Our research and development costs from continuing operations for 2009, 2008 and 2007 were $17.0 million, $15.7 million and $12.5 million, respectively.

Competition

     We believe the combination of communication technologies-based solutions supported by our global platforms is unique to the industry and that our broad range of solutions provide us with an advantage over many of our competitors that have more limited service offerings. In addition, our global reach allows us to pursue contract opportunities with multinational enterprises providing an advantage over competitors that only focus on limited geographies.

     While we are unaware of any single competitor that provides all of the services we deliver, the markets for our solutions are highly competitive, rapidly evolving and subject to changing technology, shifting customer needs and introductions of new products and services.

     In our PGiMeet solutions, we compete with major telecommunications service providers around the world such as AT&T Inc., Verizon Communications, Inc., Global Crossing Limited and international public telephone companies, such as BT Group plc. Additionally, we compete with independent conferencing service providers like West Corporation, ACT Teleconferencing, Inc., Westell Technologies, Inc. and Arkadin, Inc. We also compete with traditional and IP-based equipment manufacturers, business suite software providers and application service providers, such as Cisco Systems, Inc., Microsoft Corp., IBM Corporation, Adobe Systems Incorporated, Oracle Corporation, Saba Software, Inc. and Citrix Systems, Inc., which offer applications that enable web collaboration. These providers may attempt to leverage their dominant market positions through additional technical integration or bundled offerings to further expand their presences in the conferencing and collaboration market. In addition, we have entered into distribution and reseller arrangements with companies, including some of the companies listed above, that offer competitive conferencing and collaboration services that could choose to increase their emphasis on offerings competitive to us, cease to offer some or all of their services or our services, or both. For example, Cisco Systems offers web collaboration functionality within its WebEx suite of products and Microsoft offers Microsoft® Office Live Meeting and web collaboration functionality in its Microsoft® Office Communicator 2007 version. We also face competition for internally developed solutions for companies who choose to insource these needs.

     In our PGiSend solutions, we compete with companies like Protus IP Solutions, EasyLink Services International Corporation and j2 Global Communications, Inc. Additionally, we compete with a range of equipment and software providers that enable enterprises to address these requirements internally. For certain of these solutions, we also compete with West Corporation, Varolii Corporation, SoundBite Communications, Inc. and Adeptra Limited.

Suppliers

     We purchase telecommunications services pursuant to supply agreements with telecommunications service providers. Some of our agreements with telecommunications service providers contain commitments that require us to purchase a minimum amount of services through 2011. We expect these commitments to total approximately $32.9 million and $28.6 million in 2010 and 2011, respectively.

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Government Regulation

     We are subject to various federal, state, local and international laws regulating the provision of traditional telecommunications services. The following is a brief description of the major laws and regulations that could impact our business and the business of our customers. For a discussion of how these regulations may adversely impact our business, see Item 1A. Risk Factors – “Risks Related to Government Regulation.”

Telecommunications

     We believe that we operate as a provider of enhanced information services and not as a common carrier. Consequently, we do not believe that we are subject to all Federal Communications Commission, or FCC, or state public service or utility commission regulations applicable to providers of traditional telecommunications services in the United States. We are subject to certain regulations imposed by the FCC and by international telecommunications regulatory authorities, however, and we may be affected by regulatory decisions, trends or policies issued or implemented by these regulatory authorities. In addition, telecommunications regulatory authorities may conclude that our services are subject to additional regulations and requirements applicable to providers of traditional telecommunications services. For example, on June 30, 2008, the FCC issued an order ruling that audio conferencing providers must contribute directly to the federal Universal Service Fund, or USF, on a prospective basis. In accordance with FCC rules, since August 1, 2008, we have filed quarterly and annual reports of revenues of certain of our conferencing subsidiaries with the Universal Service Administration Company, or USAC, and we make contributions to USF and recover those contributions from our applicable PGiMeet customers. Several providers of audio conferencing services have filed petitions requesting reconsideration of all or portions of the FCC’s order, which are currently pending.

     There continues to be regulatory uncertainty as to the imposition of certain traditional common carrier regulations on VoIP services, which we use with respect to the delivery of many of our services. The adoption of, or changes in, such telecommunications laws and regulations could increase our operating costs and may affect the available delivery methods for and costs associated with our services. Regulatory authorities may also seek to regulate aspects of our services under new regulations on VoIP-enabled services, which would require us to comply with laws and regulations that currently are not applicable to us and could adversely affect our business.

Fax

     The Telephone Consumer Protection Act of 1991, or TCPA, and the FCC rules implementing the TCPA, as amended by the Junk Fax Prevention Act of 2005, or JFPA, prohibit sending unsolicited fax advertisements and proscribe certain telemarketing practices. The FCC is authorized to take enforcement action against companies that send so-called “junk faxes” and individuals also may have a private cause of action. The FCC retained an exemption from liability for fax broadcast providers that solely transmit such advertisements on behalf of others. Fax broadcast providers, such as our subsidiary, Xpedite Systems, LLC, generally are not liable for their customers’ violations of the TCPA, although fax broadcast providers who have a “high degree of involvement” in their customers’ fax advertisements or “actual knowledge” of a customer’s violation of the TCPA may be held liable under certain circumstances under the TCPA. Although we have conducted our operations to meet the fax broadcaster provider exemption, third parties may seek to challenge this exemption. In addition, we may be subject to state laws and regulations regulating the unsolicited transmission of faxes, which may restrict fax solicitations more broadly than the federal law with respect to intrastate faxes. For example, in October 2005, the state of California passed a law purporting to regulate intrastate and interstate fax advertisements that did not contain an exemption that allowed fax advertisements to be sent to persons or entities with whom a sender had an established business relationship, or EBR, which is allowed with certain exceptions under the JFPA. Together with the U.S. Chamber of Commerce, we challenged this law in federal district court in California, with the court ruling that California’s regulation of interstate fax transmissions was impermissible.

Telemarketing

     The FCC, along with the Federal Trade Commission, or FTC, has also instituted a national “do not call” registry for residential and wireless telephone numbers. Telemarketers making telephonic solicitations are barred from calling consumers who register their telephone numbers in the national database, with certain exceptions. Consumers are no longer required to re-register every five years, so numbers will remain on the list unless the consumer affirmatively removes a number or the number is deleted from the database in monthly administrative updates, such as in the case of an abandoned number. In summary, with certain exceptions, telemarketers are

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required to access the list before engaging in telemarketing in any particular area code. In addition to the federal regulations, numerous state laws and regulations govern telemarketing activities, including state “do not call” list requirements and registration and bonding requirements. For instance, certain states regulate or restrict prerecorded telemarketing and other messages, and certain states may restrict or make political calls subject to “do not call” and other requirements even though such calls are exempt from the federal “do not call” requirements. As a service provider to companies that engage in telemarketing, we subscribe to the federal and certain state “do not call” registries.

     Effective September 1, 2009, the FTC rules prohibit prerecorded telemarketing calls except in instances of written prior express consent. The rules also imposed certain other requirements, as of December 1, 2008, for permitted prerecorded telemarketing calls, including providing an interactive or key press opt-out mechanism for recipients to select to be added to an entity-specific “do not call” list. In January 2010, the FCC issued a notice of proposed rulemaking in which it is seeking comment on whether it should harmonize its prerecorded calling rules with those of the FTC. Currently, the FCC allows prerecorded telemarketing calls to residences if there is an EBR or prior consent, which is broader than the FTC's prior express written consent requirement. The FCC's rules also cover entities that are exempt from the FTC's jurisdiction, such as telecommunications carriers, banks, airlines and nonprofits. In addition, the FCC may require that prerecorded telemarketing calls include an automated, interactive mechanism by which a consumer may “opt out" of receiving future calls from the telemarketer. The FCC would continue to exempt non-telemarketing calls such as political, informational and transactional calls. The FTC rules, and if adopted the corresponding FCC proposals, could impact customer use of our broadcast voice services to the extent a customer sought to use these services for marketing messages, distinct from informational, transactional, political or other messages exempt under the agencies' rules.

Email

     Federal legislation known as the Can Spam law regulates unsolicited commercial emails, or spam. This law allows the FTC to impose fines and permits states and Internet service providers to bring lawsuits. The Can Spam law requires unsolicited email marketing messages to have a valid postal address. Email marketers may not use false or misleading headers or deceptive subject lines, must identify commercial email and are also required to remove customers from their emailing lists if requested. The Can Spam requirements apply to senders of email messages, but do not apply to entities who engage in “routine conveyance” of email messages, such as the transmission, routing or relaying, through an automatic technical process, emails for which another person has identified the recipients or provided the recipient addresses. We believe that our PGiSend email solutions fall within Can Spam’s routine conveyance exemption. The Can Spam law also preempts state laws in many respects, although it allows states to continue to regulate deceptive emails. A number of states have adopted laws restricting and/or governing the distribution of unsolicited emails, including child protection registry laws. Although we have a policy that prohibits the use of our services to send spam and requires our customers to comply with all laws and regulations pertaining to spam, we can offer no assurance that we are immune to litigation or enforcement actions alleging a violation of applicable federal and state laws.

Data Privacy

     A number of legislative and regulatory proposals are under consideration or have already been enacted by federal and state lawmakers and regulatory bodies and may be adopted with respect to the Internet, data protection and privacy. Many states and foreign jurisdictions have passed laws requiring notification to consumers when there is a security breach of personal data, including credit card and other personally identifiable information, and mandating certain data security standards. For example, Massachusetts recently enacted new data privacy requirements for entities that receive, store, maintain, process or otherwise have access to “personal information” concerning Massachusetts residents in connection with the provision of goods or services. We could incur additional costs or be required to change our business practices in order to comply with these laws and regulations by their terms, where applicable, or if our customers seek to have us assume obligations as part of contractual negotiations.

     In addition, we provide services to healthcare industry customers that are subject to the Health Insurance Portability and Accountability Act of 1996, or HIPAA, as modified and expanded by the Health Information Technology for Economic and Clinical Health Act, or HITECH Act, that was signed into law in February 2009. The HIPAA privacy and security rules, the recent HITECH Act changes to those rules and the related implementing regulations apply to our services to the extent we may be considered a “business associate” of one of our healthcare customers. These rules impose compliance obligations, breach notification requirements and extensive restrictions on the uses and disclosures of “protected health information,” or PHI. For example, with regard to our PGiSend solutions, there may be circumstances when a healthcare industry customer discloses PHI to us so that we can send notifications or

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reminders to their clients. Depending on the facts, we arguably may be considered a business associate in such cases. In addition, we may have contractual obligations under business associate provisions with some of our customers. To the extent we are not subject to these rules, the Federal Trade Commission, or FTC, Health Breach Notification Rule, effective September 2009, may impose certain notification obligations on us as it relates to “personal health records,” or PHR, to the extent we are considered a “PHR-related entity” or “third party service provider” under such rule. Regulations to be issued in 2010 are expected to help further clarify the new requirements and their applicability. We are currently in the process of implementing a new privacy and security compliance program, including a risk assessment, policies and procedures, encryption of data to limit our access and outside access to PHI, auditing and notification of breach processes and training of applicable employees.

International Regulations

     We are also subject to regulation by various international regulatory authorities, and because our services are accessible worldwide over the web, foreign jurisdictions may claim that we are required to comply with their laws. For example, countries within the European Union have specific regulations related to sending personal information from one country to another. The EU member states adopted a safe harbor arrangement that provides that U.S. organizations can adopt procedures that comply with European privacy regulations and can certify their compliance through notice to the U.S. Department of Commerce. Participation in the safe harbor is voluntary and indicates that the organization provides an adequate level of privacy protection and qualifies the company to receive data from EU member states. U.S. companies that avail themselves of the safe harbor arrangement are subject to oversight and possible enforcement actions by the FTC if they do not comply with the provisions of their certification. Our subsidiaries, Xpedite and American Teleconferencing Services, Ltd., have certified compliance with the EU safe harbor through the U.S. Department of Commerce. The European Privacy and Communications Directive also imposes restrictions on sending unsolicited communications to individuals via automatic calling machines, fax, email and SMS messages. Generally, companies are required to obtain prior explicit, or “opt-in,” consent before they can contact users via this type of marketing. In Canada, the Personal Information and Electronic Documents Act, or PIEDA, similarly regulates the collection and use of personal data and applies broadly to U.S. companies that conduct commercial activities in Canada. As we continue to expand and localize our international activities, we may become obligated to comply with the laws of additional jurisdictions, which may be more stringent or impose more significant burdens on businesses than those in the United States. Compliance in foreign jurisdictions may be more costly or may require us to change or restrict our business practices or services relative to those in the United States.

     We monitor and have compliance procedures in place regarding applicable federal and state laws and regulations, and our customer agreements generally provide that our customers are responsible for their compliance with all applicable laws and regulations. We could, nevertheless, be subject to litigation by private parties and governmental bodies, including governmental enforcement actions, alleging a violation of such laws or regulations, which could result in damages, regulatory fines, penalties and possible other relief under such laws and regulations and the accompanying costs and uncertainties of litigation and enforcement actions.

Proprietary Rights and Technology

     Our ability to compete is dependent in part upon our proprietary rights and technology. We currently have nine issued U.S. patents and 20 pending U.S. patent applications, as well as one issued international patent and 14 pending international patent applications. Our patents and patent applications relate to our audio and web conferencing, mobile solutions, document generation and delivery and fax distribution. We own and use a number of federally registered trademarks and pending applications for trademarks in the United States and in other countries, including Premiere Global Services & Design®, PGI & Design®, PGiConnect®, Powered by Premiere & Design®, Auditorium®, Fax2Mail (Stylized)®, faxREACH®, GlobalMeet®, iMeet®, Intellisend®, Irgent®, messageREACH®, Netspoke & Design®, ReadyCast®, ReadyConference®, ReadyConference® Plus, SaveOnConferences.com®, Soundpath®, smsREACH®, VisionCast® and voiceREACH®. We rely primarily on a combination of intellectual property laws and contractual provisions to protect our proprietary rights and technology. These laws and contractual provisions provide only limited protection of our proprietary rights and technology, which include confidential information and trade secrets that we attempt to protect through confidentiality and nondisclosure provisions in our agreements. We typically attempt to protect our confidential information and trade secrets through these contractual provisions for the terms of the applicable agreement and, to the extent permitted by applicable law, for some negotiated period of time following termination of the agreement. Despite our efforts to protect our proprietary rights and technology, third parties may misappropriate our proprietary rights or technology or independently develop technologies that are similar or superior to our technology.

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     We believe that our secure, proprietary technology platforms are a key element of our success, and we take substantial precautions to protect ourselves and our customers from events that could interrupt delivery of our services. These precautions include physical security systems, uninterruptible power supplies, on-site power generators, upgraded back-up hardware, fire protection systems and other contingency plans. In addition, some of our networks are designed so that the data on each network server is duplicated on a separate network server.

Available Information

     Our website is www.pgi.com. Except as explicitly noted, the information on our website is not incorporated by reference in this annual report, or in any information furnished or submitted to the SEC. We make available, free of charge through our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as practicable after such material is electronically filed with, or furnished to, the SEC. Follow the “Investor Relations” tab to “SEC Filings” to access these filings.

Employees

     As of December 31, 2009, we employed approximately 2,250 people worldwide. Our employees are not represented by a labor union or covered by any collective bargaining agreements. We consider our employee relations to be good.

Item 1A. Risk Factors

Risks Relating to Our Industry

The markets for our services are intensely competitive, and we may not be able to compete successfully against existing and future competitors and, as a result, we may not be able to maintain or increase our market share and revenues.

     The markets for our services are intensely competitive, and we expect competition to increase in the future. For information regarding the markets in which we compete, see “Business – Competition.” Many of our current and potential competitors, such as major telecommunications, equipment, software and application service providers, have longer operating histories, greater name recognition, more robust service offerings, more comprehensive support organizations, larger customer bases and substantially greater financial, personnel, marketing, engineering, technical and other resources than we do. As a result, our competitors may be able to respond more quickly than we can to new or emerging technologies and changes in customer demands. They may also be able to devote greater resources than we can to the development, promotion and sale of their products and services. We believe that our current competitors are likely to expand their service offerings and new competitors are likely to enter our markets. Some of our existing and potential competitors may enter into or expand their positions in the markets in which we compete through acquisitions, strategic alliances and the development of integrated service offerings. For example, West acquired several conferencing services providers, including Genesys, Raindance Communications, Inc., InterCall, ConferenceCall.com, ECI Conference Call Services, LLC and Sprint Nextel Corporation’s conferencing division, as well as Televox Software, Incorporated and CenterPost Communications in the automated notifications space. For example, Cisco Systems acquired WebEx Communications to augment its premises-based conferencing offerings, and now offers web collaboration functionality within its WebEx suite of products, and Microsoft acquired PlaceWare, Inc. and integrated PlaceWare’s services into its suite of Office series of applications, and now offers web collaboration capabilities through its Microsoft^® Office Live Meeting web conferencing services. Also, we compete with companies with whom we also have distribution relationships or with whom we resell certain of their services, as well as with internally developed solutions for companies who choose to insource these needs. Increased competition could result in price pressure on our products and services and a decrease in our market share in the various markets in which we compete, either of which could hinder our ability to grow our revenues.

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Technological changes, the development of alternatives to our services and our non-exclusive customer arrangements may cause us to lose market share and may hinder our ability to maintain or grow our revenues.

     The market for our services is characterized by rapid technological change, frequent new service introductions and evolving industry standards. We expect new services and enhancements to existing services to be developed and introduced that will compete with our services. Technological advances may result in the development and commercial availability of alternatives to or new methods of delivering our services and pricing options that could be more attractive to our customers. These developments could cause our existing services to become obsolete, result in significant pricing pressure on our services or allow our existing and potential customers to meet their own business communications needs without using our services. Because we do not typically have long-term or exclusive contractual agreements with our customers or revenue commitments, and many of our larger enterprise customers allocate their business among multiple service providers, any of these developments could result in significant customer and associated revenue loss.

     We must continually introduce new services and enhancements to existing services in response to technological changes, evolving industry standards and customer demands. Our ability to successfully develop and market such new services and enhancements depends, in part, on our ability to:

• foresee changes in industry standards;

• anticipate and apply advances in technologies;

• enhance our software, applications, equipment, systems and networks; and

• attract and retain qualified and creative technical personnel.

     For example, in 2009, we began developing our new collaboration platform. In order for this new platform to succeed in the future, we believe the demand for collaboration technology will need to shift from the products and services currently offered by our competitors and by us, or from other technologies that facilitate information sharing that are currently outside the collaboration industry as traditionally defined, to this next generation technology. Our new services and enhancements may not be as successful as our competitors’ solutions. In addition, if we are unable to develop new services and enhancements or if we experience delays in their introduction, we will not be able to gain market share and increase our revenues.

We are subject to pricing pressures for our services which could cause us to lose market share and decrease revenues and profitability.

     We compete for customers based on several factors, including price. If we cannot compete based on price, we may lose market share. If we reduce our rates without increasing our volume or our market share, our revenues could decrease. For example, we have experienced declines in the average selling price per minute of services across our solution sets, including within our PGiMeet solutions, which we currently expect to continue. In some cases, our competitors may offer their services at reduced rates or free on a trial basis in order to win customers. In addition, telecommunications service providers will generally have lower telecommunications costs as a result of their ownership of an underlying telecommunications network and may offer services similar to ours at reduced rates. Due to competitive factors and the rapidly changing marketplace for our services, we have reduced our pricing in certain circumstances and expect we may be required to further reduce our pricing in the future. Further, an increase in our rates or a reduction in our rates without a proportionate decrease in our associated costs could have a material adverse effect on our results of operations.

Risks Relating to Our Business

Recent global economic trends or a prolonged recession could adversely affect our business and financial results.

     As widely reported, the recent disruption in the global financial markets, including severely diminished liquidity and credit availability, stock market volatility, substantially increased unemployment, reduced corporate profits and capital spending and continuing economic uncertainties have significantly adversely impacted global economic conditions. Our business trends and revenue growth continue to be affected by the challenging economic climate, higher global unemployment and lower global business activity. These difficult economic conditions as well as a prolonged recession could adversely affect our business and results of operations, primarily though our access to credit and the adverse impact these conditions may have on our customers. These conditions have resulted in a substantial tightening of the credit markets, including lending by financial institutions, which is our source for borrowing and liquidity, and have increased the cost of capital and reduced the availability of credit. Although we

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anticipate refinancing our existing credit facility in the first half of 2010, prior to its scheduled maturity in April 2011, we expect pricing to be higher than our current level due to general credit market conditions. Any such refinancing could require significantly more expensive interest rates and covenants that restrict our operations to a significantly greater extent. In addition, a prolonged recession and the uncertainty about future economic conditions may adversely affect our customers’ level of spending, ability to obtain financing for purchases, ability to make timely payments to us for our services and adoption of new technologies, which could require us to increase our allowance for doubtful accounts, negatively impact our days sales outstanding, lead to increased price competition and adversely affect our results of operations. These conditions may also force some of our customers, such as customers in the financial services or other industries, to announce additional layoffs, consolidate or declare bankruptcy, which could decrease the market for our services.

Our future success depends on market acceptance of our new services.

     Market acceptance of our new services often requires that individuals and enterprises accept new ways of communicating and exchanging information. Our growth depends on the successful development and introduction of new services and enhancements to our existing services. For example, we recently announced our intention to launch a virtual meeting platform this year. We believe that the success of this new platform will depend on customer perceptions as to the technological and operational benefits or improved user experience associated with it as compared to alternative products and services. A failure to achieve broad market acceptance of or a decline in the demand for our new services could hinder our ability to maintain and increase our revenues. We believe that broad market acceptance of our new services will depend on several factors, including:

• ease of use;

• price;

• reliability;

• accessibility to our services;

• quality of service;

• system security;

• product functionality; and

• the effectiveness of our strategic marketing and sales efforts and distribution relationships.

If we do not meet these challenges, our new services may not achieve broad market acceptance or market acceptance may not occur quickly enough to justify our investment in these services.

     We believe that continuing to strengthen our current services and brands and effectively launching new services and brands will require continued focus on active marketing efforts. For example, we currently anticipate an increase in selling and marketing expense in 2010 as compared to 2009 relating to the launch of our new meeting platform later this year. The demand for and cost of advertising have been increasing and may continue to increase. Accordingly, we may need to spend increasing amounts of money on, and devote greater resources to, advertising, marketing and other efforts to create and maintain brand loyalty among users. Promotional efforts may not yield increased revenues, and even if they do, any increased revenues may not offset the expenses incurred in building our brand. If we fail to promote and maintain our brand, or if we incur substantial expense in an unsuccessful attempt to promote and maintain our brand, our business could be harmed.

Our success depends on our ability to attract, retain and further penetrate large global enterprise customers.

     We must retain and continue to expand our ability to reach and penetrate large global enterprise customers. These customers may request special pricing, such as bundled pricing or volume discounts, and generally have longer sales cycles, which could negatively impact our revenues. In 2009, we formed a new managed services sales force within our global accounts channel to meet an increasing customer demand for this method of delivering our services. Our inability to attract and retain these types of customers could have a material adverse effect on our results of operations, and these efforts may result in additional expenses without proportionally increasing our revenues.

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If we cannot successfully integrate new technologies, we may not generate sufficient revenues and operational synergies may not develop.

     We have experienced and may continue to experience difficulty integrating new technologies into our existing systems. For example, in 2009, we began accepting direct Session Initiation Protocol, or SIP, from our customers, which requires significant coordination and planning. If we cannot successfully integrate new technologies, we may not generate sufficient revenues and operational synergies may not develop.

Concerns regarding security of transactions and transmitting confidential information over the Internet and public networks may have an adverse impact on the use of our web-based services.

     Concerns regarding the security of confidential information, such as customers’ business, credit card or other personally identifiable information, transmitted over the Internet and public networks may prevent customers from using our web-based services. Despite the security measures we have taken, our infrastructure is potentially vulnerable to physical or electronic break-ins, viruses or similar problems. If someone is able to circumvent our security measures, they could misappropriate our proprietary information or cause interruption in our operations. Because the techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and often are not recognized until launched, we may be unable to anticipate these techniques or to implement adequate preventative measures.

     Actual or perceived security breaches could damage our reputation, expose us to a risk of loss or liability and result in a loss of confidence in the security of our services that could potentially have an adverse effect on our business. We may be required to make additional significant investments in efforts to protect against and remedy these types of security breaches. In addition, some of our customers are subject to varying degrees of government regulation, particularly in the insurance, healthcare and financial services industries. Increased interest in data privacy protections and information security obligations could impose additional regulatory pressures on our customers’ businesses, and indirectly, on our operations. Some of our customers may seek to impose certain data privacy and information security obligations on us. If we are unable to adequately address these concerns, our business and results of operations could suffer. Compliance with new privacy and security laws, requirements and regulations, where required or undertaken by us, may result in cost increases due to potential systems changes, the development of additional administrative processes and increased enforcement actions and fines and penalties. While we strive to comply with all applicable data protection laws and regulations as well as our own posted privacy policies, any failure or perceived failure to comply or any misappropriation, loss or other unauthorized disclosure of sensitive or confidential information may result in proceedings or actions against us by government entities or others, or could cause us to lose customers, which could potentially have an adverse effect on our business, reputation and results of operations.

Technological obsolescence of our equipment could result in substantial capital expenditures.

     Technological advances may result in the development of new equipment and changing industry standards, which could cause our equipment to become obsolete. These events could require us to invest significant capital in upgrading or replacing our equipment. For example, we have significantly increased our number of VoIP ports on a global basis. We believe these media servers effectively address our current requirements and enable us to grow our business effectively; however, new standards could be introduced in the future and may require us to upgrade some of these servers in certain regions around the world.

If we fail to increase our network capacity to meet customer demands, the quality of our service offerings may suffer.

     We continuously attempt to predict growth in our network usage and add capacity accordingly. If we do not accurately predict and efficiently manage growth in our network usage, the quality of our service offerings may suffer and we may lose customers. For example, during 2009, we increased capacity requirements as a result of local access arrangements with certain of our large customers.

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Downtime in our network infrastructure could result in the loss of significant customers and revenues.

     We currently maintain facilities with telecommunications equipment in locations throughout the world. The delivery of our services is dependent, in part, upon our ability to protect the equipment and data at our facilities against damage that may be caused by fire, power loss, technical failures, unauthorized intrusion, natural disasters, sabotage and other similar events. Despite taking a variety of precautions, we have experienced downtime in our networks from time to time due to service or network outages and periodic system upgrades, and we may experience downtime in the future. For example, in 2009, we continued to migrate to third-party colocation facilities in order to better service our expanding infrastructure demands. As a result, we may experience configuration demands with these colocation facilities that could impact our service quality. Although we believe that we take substantial precautions to protect ourselves and our customers from events that could interrupt delivery of our services, service interruptions could still occur and result in the loss of significant customers, which could cause us to lose revenues. While we maintain business interruption insurance providing for aggregate coverage of approximately $80 million per policy year, we may not be able to maintain insurance for this risk in the future, or it may not continue to be available at reasonable prices. Even if we maintain insurance for this risk, it may not be sufficient to compensate us for losses that we experience due to our inability to provide services to our customers.

Interruption in third-party services that we use could result in service delays and disruptions and a loss of significant customers and revenues.

     Our ability to maintain and expand our business depends, in part, on our ability to continue to obtain telecommunications, financial systems hosting services and web-based services on favorable terms from traditional and VoIP telecommunications service providers, local exchange carriers, financial systems hosting providers and Internet service providers. We do not own a telecommunications network and host a significant portion of our financial systems. As a result, we depend on a variety of third-party providers for telecommunications services, web conferencing services, call origination and termination local transmission, Internet access and financial systems. We have experienced delays and disruptions in our services in the past due to service interruptions from telecommunications service providers. For example, we have experienced interruptions in service as a result of our underlying carriers’ network outages and as a result of increased traffic volumes. Any interruptions in the delivery of our services due to third-party outages could result in a loss of significant customers and revenues.

Continued weakness in our legacy broadcast fax services may negatively impact our financial performance.

     We have experienced declines in revenue from our legacy broadcast fax services and expect continued declines in the future. Our future success is dependent in part upon our ability to transition our broadcast fax customers to our newer technologies, such as email and voice delivery services. If we are unable to convert these customers to our alternative solutions, our results of operations could be adversely impacted.

Our inability to efficiently utilize or re-negotiate minimum purchase requirements in our telecommunications supply agreements could decrease our profitability.

     Our ability to maintain and expand our business depends, in part, on our ability to continue to obtain telecommunications services on favorable terms from telecommunications service providers. The total amount of our minimum purchase requirements in 2009 was approximately $37.8 million, and we incurred telecommunications costs in excess of these minimums. Agreements with some of our telecommunications service providers contain minimum purchase requirements through 2011. These commitments total approximately $61.5 million, with annual costs of approximately $32.9 million and $28.6 million in 2010 and 2011, respectively. In addition, certain circuits and colocation services that we purchase are subject to term requirements, including penalties for early termination. Other telecommunications suppliers may provide similar services at lower prices, and we may not be able to re-negotiate our current supply agreements to achieve comparable lower rates. Such additional costs may require us to increase the prices for our services to our customers. We can give no assurance that we will be able to utilize the minimum amount of services that we are required to purchase under our telecommunications supply agreements. Moreover, if we are unable to obtain telecommunications services on favorable terms or if we are required to purchase more services than we are able to utilize in the operation of our business, the costs of providing our services would likely increase, which could decrease our profitability and have a material adverse effect on our business, financial condition and results of operations.

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Our level of indebtedness may harm our financial condition and results of operations.

     As of December 31, 2009, we have utilized approximately $260.8 million of indebtedness, including approximately $254.9 million in borrowings and $5.9 million in letters of credit outstanding under our $375.0 million credit facility. From time to time, we enter into interest rate swaps to reduce our exposure to market risk from changes in interest rates on interest payments associated with our credit facility. As of December 31, 2009, we had one $100.0 million interest rate swap, for a three-year period ending in August 2010 with a fixed rate of approximately 4.75%.

     Our level of indebtedness will have several important effects on our future operations, including, without limitation:

• A portion of our cash flows from operations will be dedicated to the payment of any interest or amortization required with respect to outstanding indebtedness;

• Increases in our outstanding indebtedness and leverage will increase our vulnerability to adverse changes in general economic and industry conditions, as well as to competitive pressure;

• Depending on the levels of our outstanding debt, our ability to obtain additional financing for working capital, acquisitions, capital expenditures, general corporate and other purposes may be limited; and

• Recent credit market events and the subsequent tightening of the availability of capital both from financial institutions and the debt markets may have an adverse effect on our ability to access additional capital.

     At the scheduled maturity of our credit facility in April 2011 or in the event of an acceleration of the indebtedness under our credit facility following an event of default, the entire outstanding principal amount of the indebtedness under the facility, together with all other amounts payable thereunder from time to time, will become due and payable. It is possible that we may not have sufficient funds to pay such obligations in full at maturity or upon such acceleration. If we default and are not able to pay any such obligations due, our lenders have liens on substantially all of our assets and could foreclose on our assets in order to satisfy our obligations. We anticipate refinancing our existing credit facility in the first half of 2010. However, given the current uncertainty in the credit and financial markets, we may not be able to enter into a new credit facility on substantially similar terms or otherwise on terms favorable to us or, alternatively, extend the tenor of our existing credit facility when it matures, which may affect our future results of operations. In addition, we currently expect pricing on a new credit facility to be higher than current levels due to general credit market conditions.

Our dependence on our subsidiaries for cash flow may negatively affect our business and our ability to meet our debt service obligations.

     We conduct substantially all of our business through our subsidiaries. Our ability to pay amounts due under our indebtedness in the future will be dependent upon the ability of our subsidiaries to make cash distributions of earnings, loans or other payments to us based on their earnings and cash flows. Our subsidiaries may not have sufficient funds or may not be able to distribute sufficient funds to us to enable us to service or repay such indebtedness.

We may not realize the anticipated savings of our restructuring and cost reduction initiatives.

     To allow us to operate more efficiently and control costs, we incurred several restructuring charges in 2009 related to the consolidation and streamlining of various functions of our workforce. As part of these consolidations, we incurred severance costs related to the elimination of approximately 500 positions and lease termination costs associated with office locations in North America and Europe. We will continue to pay the costs associated with these charges over the next nine years. We may not realize the expected benefits of these initiatives and may incur additional restructuring costs in the future. In addition, we could experience delays, business disruptions, unanticipated employee turnover and increased litigation-related costs in connection with our restructuring efforts. The complex nature of these restructuring initiatives could cause difficulties or delays in the implementation of any such initiative or the impact of the restructuring initiatives may not be immediately apparent. There can be no

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assurance that our estimates of the savings achievable by these initiatives will be realized, which could have an adverse impact on our financial condition or results of operations.

Our financial performance could cause future write-downs of goodwill or other intangible assets in future periods, which could have a material adverse effect on our results of operations.

     As of December 31, 2009, we had $354.6 million of goodwill not subject to amortization and $24.8 million of other intangible assets, net of amortization, reflected in our consolidated financial statements including $22.1 million for which amortization will continue. During 2009, we determined that goodwill and intangible assets with a net book value of approximately $0.9 million and $0.3 million, respectively, were impaired. We wrote off the related assets and recorded the net book value as asset impairments reflected as discontinued operations during the year ended December 31, 2009. Goodwill is not subject to amortization but is subject to an annual impairment review. We are required to exercise significant judgment in identifying and assessing whether impairment indicators exist or if events or changes in circumstances have occurred, including market conditions, operating results, competition and general economic conditions. Any change in our key assumptions could result in an impairment charge that could materially adversely affect our results of operations and financial condition.

We may be subject to assessment of income, state sales and other taxes for which we have not accrued.

     We have reserves for certain state sales and excise tax contingencies based on the likelihood of obligation. At December 31, 2009 and 2008, we had reserved $4.4 and $4.6 million, respectively, for certain state sales and excise tax contingencies. These reserved amounts are included in “Accrued taxes, other than income taxes” in our consolidated balance sheets. We believe we have appropriately accrued for these contingencies. In the event that actual results differ from these reserves, we may need to make adjustments, which could materially impact our financial condition and results of operations.

     Historically, we have collected and remitted state sales tax from our non-PGiMeet solutions customers in applicable states, but we have not collected and remitted state sales tax from our PGiMeet solutions customers in all applicable jurisdictions. However, we have learned that certain of our PGiMeet solutions may be subject to telecommunications excise tax statutes in certain states. During the years ended December 31, 2009 and 2008, we paid $0.1 million and $2.8 million related to the settlement of certain of these state sales and excise tax contingencies.

     In addition, states may disagree with our method of assessing and remitting such taxes or additional states may subject us to inquiries regarding such taxes. For example, in May 2009, one of our former subsidiaries, PTEKVentures.com, Inc., a Nevada corporation formally dissolved in 2002, received a notice of proposed income tax assessment from the Georgia Department of Revenue totaling approximately $22.7 million as of June 15, 2009. Because we are at a preliminary stage of the process for resolving this dispute with the Georgia Department of Revenue, we cannot, at this time, reasonably estimate the amount, if any, of taxes or other interest, penalties or additions to tax that would ultimately be assessed at the conclusion of the process, and therefore have not accrued any amounts related to this assessment. We are also not able to currently estimate when the administrative procedures and review within the Georgia Department of Revenue will be completed. We believe we have meritorious defenses and will continue to vigorously contest this matter. However, if the Georgia Department of Revenue’s initial position is sustained, the amount assessed would result in a material adjustment to our consolidated financial statements and would adversely impact our financial condition and results of operations.

If our quarterly results do not meet the expectations of public market analysts and investors, our stock price may decrease.

     Our quarterly revenues are difficult to forecast because the market for our services is rapidly evolving and our services are primarily usage-based and event-driven, as we have operated historically without subscription fees or minimum commitments. Our expense levels are based, in part, on our expectations as to future revenues. If our revenue levels are below expectations, we may be unable or unwilling to reduce expenses proportionately, and our operating results would likely be adversely affected. In addition, we believe that unlike many technology companies, we entered into 2009 with good business momentum and revenue growth in our PGiMeet solutions, which will make quarterly prior period comparisons difficult. As a result, we believe that period-to-period comparisons of our results of operations are not necessarily meaningful and should not be relied upon as indications of future performance. It is possible that our operating results may fail to meet the expectations of public market analysts and investors in a future quarter, which will likely cause the market price of our common stock to decline.

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     Our operating results have varied significantly in the past and may vary significantly in the future. Specific factors that may cause our future operating results to vary include:

• fluctuations in operating expenses;

• increased competition and pricing pressure;

• the reliability and performance of our services;

• the timing of new service announcements;

• market acceptance of new and enhanced versions of our services;

• changes in regulations and legislation that may affect the competitive environment for our services; and

• general economic and seasonal factors.

Our stock has been volatile and we expect that it will continue to be volatile.

     Our stock price has been volatile, and we expect it will continue to be volatile. For example, during the year ended December 31, 2009, the closing price of our common stock ranged from a high of $12.52 to a low of $6.89. The volatility of our stock price can be due to factors such as:

• fluctuating operating results;

• announcements by us or our competitors of significant technological innovations, customer contracts, acquisitions, strategic alliances, joint ventures or capital commitments; and

• changes in security analysts’ estimates of our performance or our failure to meet analysts’ expectations.

Many of these factors are beyond our control. In addition, broad market and industry factors may negatively impact our stock price, regardless of our operating performance.

The performance of our business depends on attracting and retaining qualified key personnel.

     Our performance depends on attracting and retaining key personnel, including executive, sales and marketing personnel and customer support, product development and other technical personnel. Failure to do so could have a material adverse effect on the performance of our business and the results of our operations.

Our articles and bylaws and Georgia corporate law may inhibit a takeover which may be in the best interests of our shareholders.

     There are several provisions in our articles and bylaws and under Georgia corporate law that may inhibit a takeover, even when a takeover may be in the interests of our shareholders. For example, our board of directors is empowered to issue preferred stock without shareholder action. The existence of this “blank-check” preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a tender offer, merger, proxy contest or otherwise. We are also subject to provisions of the Georgia corporate law that relate to business combinations with interested shareholders, which can serve to inhibit a takeover. In addition to considering the effects of any action on us and our shareholders, our articles permit our board to consider the interests of various constituencies, including employees, customers, suppliers, creditors, communities in which we maintain offices or operations and other factors which they deem pertinent, in carrying out and discharging their duties and responsibilities and in determining what the board believes to be in our best interests.

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Risks Related to Acquisitions

We face risks in connection with completed or potential acquisitions.

     Our growth has been enhanced through acquisitions of businesses, products and technologies that we believe will complement our business. We regularly evaluate acquisition opportunities, frequently engage in acquisition discussions, conduct due diligence activities in connection with possible acquisitions and, if appropriate, engage in acquisition negotiations. We may not be able to successfully identify suitable acquisition candidates, complete acquisitions, integrate acquired operations into our existing operations or expand into new markets. In addition, we compete for acquisitions and expansion opportunities with companies that have substantially greater resources, and competition with these companies for acquisition targets could result in increased prices for possible targets. Acquisitions also involve numerous additional risks to us and our investors, including:

• risk in retaining key acquired management, employees and acquired customers;

• difficulties in the assimilation of the operations, services and personnel of the acquired assets or company;

• outages of operations infrastructure of acquired businesses prior to transition to our infrastructure;

• diversion of our management’s attention from other business concerns;

• assumption of known and unknown or contingent liabilities;

• adverse financial impact from the amortization of expenses related to intangible assets;

• incurrence of indebtedness;

• potential adverse financial impact from failure of acquisitions to meet internal revenue and earnings expectations;

• entry into markets in which we have little or no direct prior experience; and

• potentially dilutive issuances of equity securities.

     If we fail to adequately manage these acquisition risks, the acquisitions may not result in revenue growth, operational synergies or service or technology enhancements, which could adversely affect our financial results. In connection with the integrations of our acquisitions, we have experienced some delays in obtaining anticipated cost savings and increases in past due receivables due to delays in integrations and technology enhancements required of our infrastructure.

Risks Related to Intellectual Property

We may not be able to protect our proprietary technology and intellectual property rights, which could result in the loss of our rights or increased costs.

     We rely primarily on a combination of patents, trademarks, trade secrets, copyrights and contractual provisions to protect our proprietary technology and intellectual property rights. These measures provide only limited protection. If we are not able to protect our proprietary technology and intellectual property rights, we could lose those rights and incur substantial costs policing and defending those rights. If our means of protecting these proprietary rights are not adequate, our competitors may independently develop similar or competitive technologies and the perception of our services to customers and potential customers may become confused in the marketplace. In addition, the laws of some foreign countries do not protect our proprietary rights to as great an extent as the laws of the United States.

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Successful prosecution of claims alleging patent, copyright or trademark infringement against us could result in substantial costs.

Many patents, copyrights and trademarks have been issued in the general areas of information services, telecommunications, computer telephony and the Internet. From time to time, in the ordinary course of our business, we have received and expect to continue to receive notices, or be subject to third-party claims or proceedings, alleging that our current or future products or services infringe the patent, copyright or trademark rights or other intellectual property rights of third parties. In addition, our resellers or customers may allege that we are obligated to indemnify them for similar claims made against them. We evaluate such claims when they arise to determine whether the claims are valid or infringed by our operations and whether it would be more effective to obtain a license or dispute that any infringement is occurring. We have at times in the past obtained licenses from parties claiming to hold patents that they contended were infringed by our services. For example, in June 2008, we settled a lawsuit filed by Ronald A. Katz Technology Licensing, L.P. against three conferencing service providers, including us, alleging patent infringement relating to our automated conferencing services and paid Katz for a non-exclusive, fully paid license and release pursuant to this settlement. We have also received a letter from an affiliate of j2Global Communications, Inc. offering the license of certain of j2 Global’s patents and informing us of the existence and potential applicability of those patents on certain of our PGiSend services. Due to the inherent uncertainties of litigation, we are unable to predict the outcome of any infringement proceedings or claims, and an adverse outcome could have a material effect on our business, financial condition and results of operations. We ultimately may not prevail on any such claims and any claiming parties may have significantly greater resources than we have to pursue litigation of these types of claims. Any infringement claim, whether with or without merit, could:

• be time consuming and a diversion to management;

• result in costly litigation;

• cause delays in introducing new services or enhancements; and

• result in costly royalty or licensing agreements.

If a successful claim is made against us and we fail to develop non-infringing technology, our business, financial condition and results of operations could be materially adversely affected.

Risks Related to Government Regulation

If our services are subject to further government regulations applicable to traditional telecommunications service providers, our ability to deliver our services could be adversely impacted and our results of operations could be impaired.

     Our business is affected by regulatory decisions, trends and policies made by international, federal and state telecommunications regulatory agencies, including the FCC and state public service or utility commissions, as well as state taxing authorities. We do not believe that our enhanced information services are subject to the same regulations as those applicable to traditional telecommunications service providers in the United States. However, it is possible that regulatory authorities may take a different position and may seek to require us to submit to traditional telecommunications carrier regulation under the Communications Act of 1934, as amended. For example, on June 30, 2008, the FCC issued an order ruling that audio conferencing providers must contribute directly to the federal USF on a prospective basis. In accordance with the FCC rules, since August 1, 2008, we have filed quarterly and annual reports of revenues of certain of our conferencing subsidiaries with the USAC and we make contributions to USF and recover those contributions from applicable PGiMeet customers. The extent to which our services are viewed as the provision of telecommunications rather than as an offering of enhanced information services will affect our USF contribution payments, as well as the federal regulations with which we must comply. It is possible that state regulatory authorities may also seek to require us to submit to traditional telecommunications carrier regulation under various state laws and that state taxing authorities may similarly attempt to subject our PGiMeet solutions to their telecommunications excise tax statutes. For example, we accrued approximately $4.0 million in the second quarter of 2008 in connection with one such state’s telecommunications excise tax statutes. It is too early to predict how regulatory requirements may affect customer demand for our PGiMeet solutions or our existing or future competitors, as well as whether regulatory or taxing authorities will

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impose additional requirements, regulations, charges or taxes on the provision of certain of our services. Although we use reasonable efforts to monitor applicable regulatory requirements, if we fail to comply with any applicable government regulations, or if we were required to submit to the jurisdiction of state government authorities as providers of traditional telecommunications services, we could become subject to additional reporting and compliance obligations and/or could be subject to litigation, fines, forfeitures, taxes, regulatory surcharge remittance requirements or other penalties arising from any noncompliance. Subjecting our services to these regulations would increase our operating costs and could have a material adverse affect on our business, financial condition and results of operations.

Regulatory and legislative changes may discourage our customers from using some of our services and could adversely impact our results of operations.

     Regulatory and legislative changes have imposed, or could impose, additional restrictions that may impact our business, including the passage of federal, state, local and international laws, rules and regulations relating to unsolicited fax advertising, telemarketing, spam and data privacy. For example, the TCPA and associated FCC rules prohibit the sending of unsolicited fax advertisements and proscribe certain telemarketing practices. Other federal laws implemented by the FTC also substantially regulate telemarketing, including the establishment of a nationwide “do not call” registry for residential and wireless telephone numbers. The Can Spam law places certain requirements on senders of commercial email, including requiring senders to honor opt-out requests and banning false and deceptive headers and subject lines. In addition to federal laws and regulations, numerous state laws and regulations govern such activities.

     Many states and foreign jurisdictions have passed laws requiring notification to consumers when there is a security breach of personal data, including credit card and other personally identifiable information. Failure to comply with any applicable data privacy laws could subject us to lawsuits, fines, criminal penalties, statutory damages, adverse publicity and other losses that could harm our business. Further, any failure by us to protect our users’ privacy and data could result in a loss of user confidence in our services and ultimately in a loss of users, which could adversely affect our business. In addition, to the extent we are considered a “business associate” under HIPAA or the recent HITECH Act changes, violations of these rules could subject us to criminal and civil penalties, as well as possible contractual penalties, tort remedies and other losses that could harm our business. To the extent we are not subject to these rules, we may be subject to the FTC Health Breach Notification Rule to the extent we are considered a “PHR-related entity” or “third party service provider” under such rule, violations of which would be treated as unfair and deceptive acts or practices.

     Compliance with applicable laws and regulations could have an adverse impact on the volume of fax, voice and email messages sent utilizing our PGiSend solutions. Although we believe we comply with laws and regulations applicable to us, we could nevertheless be subject to litigation, fines, losses or other penalties under such laws and regulations.

Risks Related to International Operations and Expansion

There are risks inherent in international operations that could hinder our international growth strategy.

     Our ability to achieve future success will depend in part on the expansion of our international operations. For example, we are currently in the process of forming subsidiaries in India and China. Conducting our business internationally presents numerous inherent difficulties and risks that could prevent us from selling our services in other countries or hinder our expansion once we have established international operations, including, among other things, the following:

• burdensome regulatory requirements and unexpected changes in these requirements;

• export restrictions and controls relating to technology;

• data privacy laws that may apply to the transmission of our customers’ data to the United States;

• tariffs and other trade barriers;

• difficulties in staffing and managing international operations including utilizing foreign telecommunication providers;

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• localization of our services, including translation into foreign languages and associated expenses;

• accounting (including managing internal control over financial reporting in our non-U.S. subsidiaries), tax and legal complexities arising from international operations;

• longer accounts receivable payment cycles and collection difficulties;

• political and economic instability, including terrorist activity and war;

• fluctuations in currency exchange rates;

• potential difficulties in transferring funds generated overseas to the U.S. in a tax efficient manner;

• seasonal reductions in business activity during the summer months in Europe and other parts of the world; and

• potentially adverse tax consequences.

We have experienced, and will likely continue to experience, losses from fluctuations in currency exchange rates.

     A risk inherent in our international operations is the exposure to fluctuations in currency exchange rates. We conduct business in 24 countries with approximately 41% of our consolidated net revenues and 35% of our operating expenses generated in countries outside the United States. As a result, we may experience material losses in revenues and earnings from fluctuations in foreign currencies. For example, current global economic conditions have caused extreme and unprecedented volatility in foreign currency exchange rates, which we estimate negatively impacted our consolidated revenues by approximately $11.6 million in the year ended December 31, 2009 as compared to the same period in 2008. We anticipate that such fluctuations will continue to impact our financial results. We cannot predict when this volatility will cease or the extent of its impact on our future financial results. We typically denominate foreign transactions in foreign currencies and have not engaged in hedging transactions, although we may engage in hedging transactions from time to time in the future relating to foreign currency exchange rates.

Item 1B. Unresolved Staff Comments

     None.

Item 2. Properties

     Our current corporate headquarters occupy approximately 55,000 square feet of office space in Atlanta, Georgia under leases entered into by two of our subsidiaries that are guaranteed by us, which expire in August 2018. We occupy additional space of approximately 94,000 square feet in Colorado Springs, Colorado under a lease expiring in August 2010, approximately 88,000 square feet in Olathe, Kansas under a lease expiring in November 2018 and approximately 45,000 square feet in Tinton Falls, New Jersey under a lease expiring in May 2016. We will move our Colorado Springs operations to another location in Colorado Springs in September 2010 under a lease we entered into for approximately 88,000 square feet expiring in November 2020.

     We have also entered into leases for sales offices and server equipment within and outside the United States. We believe that our current facilities and office space are sufficient to meet our present needs and do not anticipate any difficulty securing additional space, as needed, on terms acceptable to us.

Item 3. Legal Proceedings

     In May 2009, one of our former subsidiaries, PTEKVentures.com, Inc., a Nevada corporation formally dissolved in 2002, received a notice of proposed income tax assessment from the Georgia Department of Revenue totaling approximately $22.7 million as of June 15, 2009. Because we are at a preliminary stage of the process for

19

resolving this dispute with the Georgia Department of Revenue, we cannot, at this time, reasonably estimate the amount, if any, of taxes or other interest, penalties or additions to tax that would ultimately be assessed at the conclusion of the process, and therefore have not accrued any amounts related to this assessment. We are also not able to currently estimate when the administrative procedures and review within the Georgia Department of Revenue will be completed. We believe we have meritorious defenses and will continue to vigorously contest this matter. However, if the Georgia Department of Revenue’s initial position is sustained, the amount assessed would result in a material adjustment to our consolidated financial statements and would adversely impact our financial condition and results of operations.

     We are involved from time to time in other legal proceedings that we do not believe will have a material adverse effect upon our business, financial condition or results of operations, although we can offer no assurance as to the ultimate outcome of any such proceedings.

Item 4. Submission of Matters to a Vote of Security Holders

     No matter was submitted to a vote of our security holders during the fourth quarter of the fiscal year covered by this report.

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Part II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

     Our common stock, $.01 par value per share, is listed on the New York Stock Exchange under the symbol “PGI”. The following table sets forth the high and low sales prices of our common stock as reported on the NYSE for the periods indicated.

2009	High	Low
Fourth Quarter	$  8.34	$ 7.20
Third Quarter	$10.97	$ 7.63
Second Quarter	$12.93	$ 8.41
First Quarter	$10.74	$ 6.80
2008	High	Low
Fourth Quarter	$14.02	$  5.18
Third Quarter	$16.90	$13.48
Second Quarter	$16.00	$13.40
First Quarter	$15.70	$10.64

     The closing price of our common stock as reported on the NYSE on February 23, 2009 was $8.31. As of February 23, 2009 there were 584 record holders of our common stock.

     We have never paid cash dividends on our common stock, and the current policy of our board of directors is to retain any available earnings for use in the operation and expansion of our business. The payment of cash dividends on our common stock is unlikely in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of our board and will depend upon our earnings, capital requirements, financial condition and any other factors deemed relevant by our board.

     Our credit facility contains customary prohibitions on our ability to declare any cash dividends on our common stock until all obligations under the credit facility are paid in full and all letters of credit have been terminated. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this annual report.

Issuer Purchases of Equity Securities

     The following table sets forth repurchases in the fourth quarter of 2009 of our common stock pursuant to our stock repurchase program:

Period	Total Number of Shares Purchased	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs(1)
October 1 - 31, 2009	339,600	$ 7.73	339,600	2,560,100
November 1-31, 2009	810,400	$ 7.72	810,400	1,749,700
Total	1,150,000	$ 7.72	1,150,000	1,749,700

⁽¹⁾      In June 2006, our board of directors authorized, and we announced, a stock repurchase program under which we could purchase up to 7.0 million shares of our common stock. Through December 31, 2009, we had repurchased 5,250,300 shares pursuant to our stock repurchase program. Our stock repurchase program does not have an expiration date.

     In 2007, we also completed a self-tender offer pursuant to which we repurchased and retired approximately 9.7 million shares of our common stock.

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Stock Performance Graph

     The following graph shows the cumulative total shareholder return on our common stock, the Standard & Poor's 500 Composite Stock Price Index and the S&P 500 Software & Services Index for the period beginning December 31, 2004 and ending December 31, 2009. The graph assumes an investment in our common stock, the S&P 500 and the S&P 500 Software & Services Index of $100 on December 31, 2004, and that all dividends were reinvested. Total return calculations were prepared by the Research Data Group, Inc. The stock price performance in this graph is not necessarily indicative of the future performance of our common stock.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Among Premiere Global Services, Inc., The S&P Index
And The S&P 500 Software & Services Index

	12/31/04	12/31/05	12/31/06	12/31/07	12/31/08	12/31/09
Premiere Global Services, Inc.	100.00	75.91	88.14	138.66	80.39	77.03
S&P 500	100.00	104.91	121.48	128.16	80.74	102.11
S&P 500 Software & Services Index	100.00	98.26	106.15	127.42	74.16	116.79

This performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

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Item 6. Selected Financial Data

     The following selected consolidated statement of operations data, balance sheets data and statement of cash flows data as of and for the years ended December 31, 2009, 2008, 2007, 2006 and 2005 have been derived from our audited consolidated financial statements. The selected consolidated financial data should be read in conjunction with Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the notes hereto in Item 8. “Financial Statements and Supplementary Data” included in this annual report.

		2009			2008			2007			2006			2005
Statement of Operations Data:
Net revenues	$	601,522		$	620,400		$	554,920		$	493,336		$	497,473
Operating income		44,323			76,138			66,217			48,706			75,279
Income from continuing operations attributable to
common and common equivalent shares for:
—basic earnings per share		21,330			40,594			33,385			26,980			48,686
—diluted earnings per share		21,330			40,594			33,385			26,980			48,686
Income from continuing operations per common
and common equivalent shares for:
—basic (1)	$	0.36		$	0.68		$	0.53		$	0.39		$	0.69
—diluted (1)	$	0.36		$	0.67		$	0.52		$	0.39		$	0.67
Loss from discontinued operations		(7,721	)		(4,491	)		(2,943	)		(1,471	)		(1,269	)
Net income attributable to common and common
equivalent shares for:
—basic earnings per share		13,609			36,103			30,442			25,509			47,417
—diluted earnings per share		13,609			36,103			30,442			25,509			47,417
Net income per common and common
equivalent shares for:
—basic (1)	$	0.23		$	0.61		$	0.49		$	0.37		$	0.67
—diluted (1)	$	0.23		$	0.60		$	0.48		$	0.37		$	0.66
Shares used in computing income from continuing
operations and earnings per common and
common equivalent shares for:
—basic		58,823			59,356			62,654			68,933			70,392
—diluted		59,310			60,477			63,940			69,787			72,366
Balance Sheets Data (at year end):
Cash and equivalents	$	41,402		$	27,535		$	18,259		$	18,977		$	20,508
Working capital		46,444			42,896			21,669			30,169			32,201
Total assets		678,226			661,007			625,656			549,315			495,290
Total debt		266,523			271,489			269,481			138,782			100,474
Total shareholders' equity		281,042			253,834			239,294			316,291			303,750
Statement of Cash Flows Data:
Cash provided by (used in) operating activities from:
Continuing operations	$	92,360		$	110,112		$	95,322		$	75,802		$	92,582
Discontinued operations		(2,958	)		(4,024	)		(4,385	)		(2,642	)		(2,025	)
Total	$	89,402		$	106,088		$	90,937		$	73,160		$	90,557
Cash (used in) investing activities from:
Continuing operations	$	(46,103	)	$	(76,117	)	$	(91,173	)	$	(79,681	)	$	(107,640	)
Discontinued operations		(2,650	)		(4,605	)		(2,917	)		(1,285	)		—
Total	$	(48,753	)	$	(80,722	)	$	(94,090	)	$	(80,966	)	$	(107,640	)
Cash (used in) provided by financing activities	$	(28,012	)	$	(14,025	)	$	1,901		$	5,712		$	15,447

(1)      Basic earnings per share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed using the weighted-average number of shares of common stock and dilutive common stock equivalents outstanding during the period from unvested restricted shares, stock options and warrants (using the treasury stock method).

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     Our results of operations include net revenues and associated costs for all acquisitions as discussed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” from the effective date of each acquisition. In addition, unless otherwise stated, current and prior period results reflect our results from continuing operations and exclude the effect of current and prior period discontinued operations.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

     PGi is a leading global provider of conferencing and collaboration solutions that enable companies and individuals to meet and collaborate in a more productive and efficient manner. We have a global presence in 24 countries in our three segments in North America, Europe and Asia Pacific.

     During the year ended December 31, 2009, we initiated a plan to divest our PGiMarket business and completed its sale on November 5, 2009. Prior period results in the following discussion and analysis have been reclassified to present this business as discontinued operations. As a result, and except as provided herein, the following discussion and analysis reflects our results from continuing operations.

     Key highlights of our financial and strategic accomplishments for 2009 include:

• Generated net cash provided by operating activities from continuing operations of $92.4 million;

• Decreased capital expenditures by 13.6% from $45.0 million in 2008 to $38.9 million in 2009;

• Decreased our long-term debt less cash and equivalents by 8.3% from $241.5 million at December 31, 2008 to $221.5 million at December 31, 2009; and

• Repurchased approximately 1.5 million shares of our common stock in the open market.

     Our primary corporate objectives in 2010 are focused on continuing to:

• Develop and launch innovative products and customer self-service tools that improve our user experience;

• Transition our customers to more integrated, online collaboration solutions that provide a richer experience; and

• Further establish our customer-centric PGi brand to broaden our market presence, stengthen our customer relationships and differentiate us from our competitors.

     Specifically, in 2010, our strategic plan includes our continued focus on our managed services model and our new collaboration platform to be launched later this year. We believe both of these initiatives will significantly increase the addressable market opportunity for our solutions by integrating new technologies that are currently outside the conferencing industry as traditionally defined.

     In 2009, nearly 41% of our consolidated net revenues were generated in countries outside the United States. Because we generate a significant portion of our consolidated net revenues from our international operations, movements in foreign currency exchange rates affect our reported results. We estimate that changes in foreign currency exchange rates during 2009 negatively impacted our consolidated net revenues by approximately $11.6 million as compared to 2008.

     We have historically generated net revenue growth in our PGiMeet solutions through increases in volume, offset in part by declines in average selling prices. We believe that this is consistent with industry trends, which we expect will continue in the foreseeable future. Our business trends and revenue growth in our PGiMeet solutions continue to be affected by the challenging economic climate, higher global unemployment and lower global business activity. Net revenue from our PGiMeet solutions in 2009, 2008, and 2007 were $454.0 million, $443.3 million, and $358.6 million, respectively.

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     We have experienced revenue declines in our broadcast fax services, primarily as a result of decreased volume. Net revenue from these services in 2009, 2008 and 2007 were approximately $43.4 million, $58.0 million and $73.7 million, respectively. Although we intend to continue to convert these customers to our alternative solutions, we expect this overall revenue decline to continue.

     We have historically used our cash flows from operating activities for debt repayments, acquisitions, capital expenditures and stock repurchases. As of December 31, 2009, borrowings under our credit facility were $254.9 million. We anticipate refinancing our existing credit facility in the first half of 2010, prior to its scheduled maturity in April 2011. We currently expect pricing on this credit facility to be higher than our current level due to general credit market conditions.

     In addition, we intend to continue to prudently invest in our PGiMeet solutions, specifically in technology innovation and platform development, as well as new market strategies to better meet the needs of our large, global enterprise customers and to better attract, engage and acquire small- and medium-size business customers. We currently anticipate an increase in selling and marketing expense in 2010 as compared to 2009 relating to the launch of our new meeting platform later this year. We will also continue to evaluate our cost structure in 2010 to ensure that our businesses are operating as efficiently as possible.

     The preparation of financial statements in conformity with generally accepted accounting principles in the United States, or GAAP, requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of net revenues and expenses during the reporting period. Actual results could differ from the estimates. See the section in this annual report entitled “—Critical Accounting Policies.” The following discussion and analysis provides information which we believe is relevant to an assessment and understanding of our consolidated results of operations and financial condition. This discussion should be read in conjunction with our consolidated financial statements contained herein and notes thereto. All significant intercompany accounts and transactions have been eliminated in consolidation.

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Results of Operations

     The following table presents the percentage relationship of our consolidated statements of operations line items to our consolidated net revenues for the periods indicated:

	Years Ended December 31,
	2009	2008	2007
Net revenues	100.0%	100.0%	100.0%
Operating expenses:
Cost of revenues (exclusive of depreciation and amortization
shown separately below)	42.8	40.8	40.4
Selling and marketing	23.8	24.4	24.8
General and administrative (exclusive of expenses shown separately
below)	10.9	10.6	11.8
Research and development	2.8	2.5	2.3
Excise tax expense	—	0.5	—
Depreciation	6.2	5.1	5.3
Amortization	1.8	2.4	2.7
Restructuring costs	3.6	0.5	0.6
Asset impairments	0.6	0.6	—
Net legal settlements and related expenses	0.1	0.4	0.1
Acquisition-related costs	0.1	—	—
Total operating expenses	92.6	87.7	88.1
Operating income	7.4	12.3	11.9
Other (expense) income
Interest expense	(2.2)	(3.1)	(2.5)
Unrealized gain (loss) on change in fair value of interest rate swaps	0.6	(0.0)	(0.8)
Interest income	0.1	0.1	0.1
Other, net	0.0	0.1	0.3
Total other (expense)	(1.7)	(2.9)	(2.9)
Income from continuing operations before income taxes	5.7	9.4	9.1
Income tax expense	2.2	2.8	3.1
Net income from continuing operations	3.5	6.5	6.0
Loss from discontinued operations, net of taxes	(1.3)	(0.7)	(0.5)
Net income	2.3%	5.8%	5.5%

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Net Revenues

     The following table presents certain financial information about our segments for the periods presented (in thousands, except percentages):

		Years Ended
		December 31,								Change from 2008 to 2009				Change from 2007 to 2008
		2009			2008			2007		$		%		$		%
Net revenues:
North America
PGiMeet solutions	$	313,860		$	307,802		$	269,616		6,058		2.0		38,186		14.2
Broadcast fax solutions		7,285			12,432			17,664		(5,147	)	(41.4	)	(5,232	)	(29.6	)
Other PGiSend solutions		52,197			61,742			65,355		(9,545	)	(15.5	)	(3,613	)	(5.5	)
Total North America	$	373,342		$	381,976		$	352,635		(8,634	)	(2.3	)	29,341		8.3
Europe
PGiMeet solutions	$	86,735		$	79,595		$	46,560		7,140		9.0		33,035		71.0
Broadcast fax solutions		6,979			13,225			23,630		(6,246	)	(47.2	)	(10,405	)	(44.0	)
Other PGiSend solutions		22,274			29,309			32,824		(7,035	)	(24.0	)	(3,515	)	(10.7	)
Total Europe	$	115,988		$	122,129		$	103,014		(6,141	)	(5.0	)	19,115		18.6
Asia Pacific
PGiMeet solutions	$	53,367		$	55,876		$	42,450		(2,509	)	(4.5	)	13,426		31.6
Broadcast fax solutions		29,105			32,304			32,437		(3,199	)	(9.9	)	(133	)	(0.4	)
Other PGiSend solutions		29,720			28,115			24,384		1,605		5.7		3,731		15.3
Total Asia Pacific	$	112,192		$	116,295		$	99,271		(4,103	)	(3.5	)	17,024		17.1
Consolidated
PGiMeet solutions	$	453,962		$	443,273		$	358,626		10,689		2.4		84,647		23.6
Broadcast fax solutions		43,369			57,961			73,731		(14,592	)	(25.2	)	(15,770	)	(21.4	)
Other PGiSend solutions		104,191			119,166			122,563		(14,975	)	(12.6	)	(3,397	)	(2.8	)
Total consolidated	$	601,522		$	620,400		$	554,920		(18,878	)	(3.0	)	65,480		11.8
Operating income:
North America	$	629		$	28,809		$	34,306		(28,180	)	(97.8	)	(5,497	)	(16.0	)
Europe		21,722			22,451			14,386		(729	)	(3.2	)	8,065		56.1
Asia Pacific		21,972			24,878			17,525		(2,906	)	(11.7	)	7,353		42.0
Total operating income	$	44,323		$	76,138		$	66,217		(31,815	)	(41.8	)	9,921		15.0
Percent of net revenues:
North America		62.0	%		61.6	%		63.5	%
Europe		19.3	%		19.7	%		18.6	%
Asia Pacific		18.7	%		18.7	%		17.9	%
Consolidated net revenues		100.0	%		100.0	%		100.0	%

     The following table details the changes in net revenues from the year ended December 31, 2007 to the year ended December 31, 2009 (in millions):

	Consolidated net revenues			North America net revenue			Europe net revenue			Asia Pacific net revenue
2007	$	554.9		$	352.6		$	103.0		$	99.3
Change in volume		56.0			41.8			7.8			6.4
Change in selling prices		(23.4	)		(23.5	)		(5.3	)		5.4
Impact of acquisitions		24.4			11.0			13.4			—
Impact of fluctuations in foreign
currency exchange rates		8.5			0.1			3.2			5.2
2008		620.4			382.0			122.1			116.3
Change in volume		36.3			22.8			16.9			(3.4	)
Change in selling prices		(53.5	)		(39.2	)		(12.8	)		(1.5	)
Impact of acquisitions		9.9			9.9			—			—
Impact of fluctuations in foreign
currency exchange rates		(11.6	)		(2.2	)		(10.2	)		0.8
2009	$	601.5		$	373.3		$	116.0		$	112.2

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     With the exception of our Asia Pacific operating segment, volume and pricing changes have followed similar trends. In North America and Europe, volume increases in our net revenue for the years ended December 31, 2009 and 2008 from comparable prior year periods were driven by our PGiMeet solutions, offset in part by volume decreases in our broadcast fax and other PGiSend solutions. Decreases in average selling prices from comparable prior year periods resulted from a higher mix of large volume enterprise customers and price reductions from existing customers, primarily related to our PGiMeet solutions. In 2008, these decreases in average selling prices in Europe were partially offset by pricing increases in our broadcast fax services.

     Our Asia Pacific operating segment has experienced different trends than our North America and Europe operating segments. Volume decreases in our Asia Pacific net revenue for the year ended December 31, 2009 from the comparable prior year period was driven by declines in our PGiMeet solutions and broadcast fax services, offset in part by volume increases in our other PGiSend solutions. Volume increases in our Asia Pacific net revenue for the year ended December 31, 2008 from the comparable prior year period was driven by our PGiMeet solutions and other PGiSend solutions, offset in part by volume decreases in our broadcast fax services. In Asia Pacific, the decrease in average selling prices for the year ended December 31, 2009 from the comparable prior year period was primarily associated with our PGiMeet solutions, partially offset by increases in our broadcast fax services. The increases in average selling prices for the year ended December 31, 2008 from the comparable prior year period were primarily associated with our PGiMeet solutions and broadcast fax services.

Cost of Revenues

	Years Ended December 31,			Change from 2008 to 2009				Change from 2007 to 2008
	2009	2008	2007	$		%		$	%
North America	$165,035	$158,197	$139,125	6,838		4.3		19,072	13.7
Europe	38,459	40,891	37,031	(2,432	)	(5.9	)	3,860	10.4
Asia Pacific	53,700	54,052	48,276	(352	)	(0.7	)	5,776	12.0
Consolidated	$257,194	$253,140	$224,432	4,054		1.6		28,708	12.8

	Years Ended December 31,
	2009	2008	2007
		(in percentages)
Cost of revenues as a percent of net revenues:
North America	44.2	41.4	39.5
Europe	33.2	33.5	35.9
Asia Pacific	47.9	46.5	48.6
Consolidated	42.8	40.8	40.4

     Consolidated cost of revenues as a percentage of consolidated net revenues increased in 2009 and 2008, each from the previous year, as a result of decreased average selling prices, growth in higher cost of revenue large enterprise customers in our PGiMeet solutions and declines in lower cost of revenue customers in our broadcast fax, transactional fax and email delivery services. The increases in consolidated cost of revenues in 2008 from 2007 were offset in part by cost reductions primarily from our fax service delivery organization re-engineering efforts in North America and Europe which began in the second quarter of 2007, and network upgrades to our fax delivery platform in Asia Pacific during the second half of 2007. Fluctuations in foreign currency exchange rates resulted in a decline in consolidated cost of revenues of approximately $3.8 million in 2009 and growth of approximately $3.1 million in 2008 from the previous year.

     The increase in North America cost of revenue as a percentage of operating segment net revenue in 2009 from the previous year was attributable primarily to growth in higher cost of revenue large enterprise customers in our PGiMeet solutions and declines in our lower cost of revenue customers in our broadcast fax, transactional fax, and email delivery services. The increase in North America cost of revenue as a percentage of operating segment net revenue in 2008 from the previous year was attributable primarily to our acquisitions of the U.S.-based audio conferencing businesses of iLinc Communications, Inc. and Soundpath Conferencing Services, LLC, growth in higher cost of revenue large enterprise customers in our PGiMeet solutions and declines in lower cost of revenue customers in our broadcast fax services. Fluctuations in foreign currency exchange rates from our Canadian operations resulted in a decline in North America cost of revenue of approximately $0.6 million in 2009 and growth

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of approximately $0.1 million in 2008 from the previous year.

     The decrease in Europe cost of revenue as a percentage of operating segment net revenue in 2009 from the previous year was attributable primarily to declines in our higher cost of revenue customers in our broadcast fax services, growth in lower cost of revenue customers in our PGiMeet solutions and network upgrades to our fax delivery platform in the first half of 2008. The decrease in Europe cost of revenue as a percentage of operating segment net revenue in 2008 compared to the previous year was attributable primarily to declines in our higher cost of revenue customers in our broadcast fax services, growth in lower cost of revenue customers in our PGiMeet solutions, cost savings associated with our service delivery organization re-engineering efforts in Europe that began in the second quarter of 2007 and network upgrades to our fax delivery platform in the first half of 2008, partially offset by our acquisition of Meet24. Fluctuations in foreign currency exchange rates resulted in a decline in Europe cost of revenue of approximately $3.5 million in 2009 and growth of approximately $1.1 million in 2008 from the previous year.

     The increase in Asia Pacific cost of revenue as a percentage of operating segment net revenue in 2009 from the previous year was attributable primarily to growth in higher cost of revenue large enterprise customers in our PGiMeet solutions and our Maritime PGiSend solutions (which we resell from a third party to shipping companies in the region). The decrease in Asia Pacific cost of revenue as a percentage of operating segment net revenue in 2008 from the previous year was attributable primarily to network cost savings related to upgrades in our fax delivery platform during the second half of 2007 and growth in lower cost of revenue customers in our PGiMeet solutions. Fluctuations in foreign currency exchange rates resulted in Asia Pacific cost of revenue growth of approximately $0.3 million in 2009 and $1.9 million in 2008 from the previous year.

Selling and Marketing Expenses

	Years Ended December 31,				Change from 2008 to 2009					Change from 2007 to 2008
		2009	2008	2007		$		%		$	%
North America		$  87,652	$  89,414	$  84,693		(1,762	)	(2.0	)	4,721	5.6
Europe		31,586	36,970	31,827		(5,384	)	(14.6	)	5,143	16.2
Asia Pacific		23,704	24,794	21,371		(1,090	)	(4.4	)	3,423	16.0
Consolidated		$142,942	$151,178	$137,891		(8,236	)	(5.4	)	13,287	9.6

	Years Ended December 31,
	2009	2008	2007
		(in percentages)
Selling and marketing expenses as a percent of net revenues:
North America	23.5	23.4	24.0
Europe	27.2	30.3	30.9
Asia Pacific	21.1	21.3	21.5
Consolidated	23.8	24.4	24.8

     Consolidated selling and marketing expenses decreased in 2009 from the previous year primarily as a result of our expense structure optimization efforts and the weakening of various currencies to the U.S. Dollar, offset in part by our acquisitions of LINK Conference Service, LLC, Soundpath and iLinc. Consolidated selling and marketing expenses increased in 2008 from the previous year primarily as a result of our acquisitions of Budget Conferencing Inc. Meet24, iLinc and Soundpath, our investment in selling and marketing resources in all of our operating segments and the strengthening of various currencies to the U.S. Dollar. Fluctuations in foreign currency exchange rates resulted in a decline in consolidated selling and marketing expense of approximately $4.0 million in 2009 and growth of approximately $2.1 million in 2008 from the previous year.

     The decrease in North America selling and marketing expense in 2009 from the previous year was primarily attributable to our expense structure optimization efforts, offset in part by our acquisitions of LINK, Soundpath and iLinc. The increase in North America selling and marketing expense in 2008 from the previous year was primarily attributable to our acquisitions of Budget Conferencing, iLinc and Soundpath, offset in part by increased optimization of selling and marketing expense toward growth in our PGiMeet solutions net revenue. Fluctuations in foreign currency exchange rates from our Canadian operations resulted in a decline in North America selling and marketing expense of approximately

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$0.5 million in 2009 and had a minimal impact on North America selling and marketing expense in 2008 from the previous year.

     The decrease in Europe selling and marketing expense in 2009 from the previous year was primarily attributable to our expense structure optimization efforts and the weakening of the Euro and the British Pound to the U.S. Dollar. The increase in Europe selling and marketing expense in 2008 from the previous year was attributable primarily to our acquisition of Meet24, strengthening of the Euro against the U.S. Dollar and our investment in selling and marketing resources in our PGiMeet solutions. Fluctuations in foreign currency exchange rates resulted in a decline in Europe selling and marketing expense of approximately $3.6 million in 2009 and growth of approximately $1.0 million in 2008 from the previous year.

     The decrease in Asia Pacific selling and marketing expense in 2009 from the previous year was primarily attributable to our expense structure optimization efforts. The increase in Asia Pacific selling and marketing expense in 2008 compared to the previous year was attributable primarily to the strengthening of the Japanese Yen to the U.S. Dollar and our investment in selling and marketing resources in our PGiMeet solutions. Fluctuations in foreign currency exchange rates resulted in Asia Pacific selling and marketing expense growth of approximately $0.1 million in 2009 and $1.1 million in 2008 from the previous year.

General and Administrative Expenses

	Years Ended December 31,				Change from 2008 to 2009				Change from 2007 to 2008
		2009	2008	2007	$		%		$		%
North America		$  44,412	$  43,667	$  44,401	745		1.7		(734	)	(1.7	)
Europe		12,087	12,532	12,551	(445	)	(3.6	)	(19	)	(0.2	)
Asia Pacific		8,979	9,327	8,388	(348	)	(3.7	)	939		11.2
Consolidated		$  65,478	$  65,526	$  65,340	(48	)	(0.1	)	186		0.3

	Years Ended December 31,
	2009	2008	2007
		(in percentages)
General and administrative expenses as a percent of net revenues:
North America	11.9	11.4	12.6
Europe	10.4	10.3	12.2
Asia Pacific	8.0	8.0	8.4
Consolidated	10.9	10.6	11.8

     Consolidated general and administrative expenses decreased in 2009 from the previous year primarily as a result of our expense structure optimization efforts, decreased equity-based compensation expense and the weakening of various currencies to the U.S. Dollar, partially offset by our acquisitions of LINK, Soundpath and iLinc. Consolidated general and administrative expenses increased in 2008 from the previous year primarily as a result of our acquisitions of Budget Conferencing, Meet24, iLinc and Soundpath and the strengthening of various currencies to the U.S. Dollar. Fluctuations in foreign currency exchange rates resulted in a decline in consolidated general and administrative expense of approximately $1.0 million in 2009 and growth of approximately $0.8 million in 2008 from the previous year.

     The increase in North America general and administrative expense in 2009 from the previous year was attributable primarily to our acquisitions of LINK, Soundpath and iLinc, partially offset by our expense structure optimization efforts. The decrease in North America general and administrative expense in 2008 from the previous year was attributable primarily to our 2007 proxy contest costs, offset in part by our acquisitions of Budget Conferencing, Soundpath and iLinc. Fluctuations in foreign currency exchange rates from our Canadian operations resulted in a decline in North America general and administrative expense of approximately $0.1 million in 2009 and had a minimal impact on North America general and administrative expense in 2008 from the previous year.

     The decrease in Europe general and administrative expense in 2009 from the previous year was primarily attributable to the weakening of the Euro and the British Pound against the U.S. Dollar. Europe general and administrative expense was flat in 2008 from the previous year, attributable primarily to the strengthening of the

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Euro against the U.S. Dollar and our acquisition of Meet24, offset in part by a reduction in finance and accounting costs from our centralization plan that began in the first quarter of 2007. Fluctuations in foreign currency exchange rates resulted in a decline in Europe general and administrative expense of approximately $1.0 million in 2009 and growth of approximately $0.4 million in 2008 from the previous year.

     The decrease in Asia Pacific general and administrative expense in 2009 from the previous year was primarily attributable to savings from our expense structure optimization efforts. The increase in Asia Pacific general and administrative expense in 2008 from the previous year was attributable primarily to strengthening of the Japanese Yen against the U.S. Dollar. Fluctuations in foreign currency exchange rates resulted in Asia Pacific general and administrative expense growth of approximately $0.1 million in 2009 and $0.4 million in 2008 from the previous year.

Research and Development Expenses

     Consolidated research and development expenses from continuing operations as a percentage of consolidated net revenues were 2.8%, 2.5% and 2.3% in 2009, 2008 and 2007, respectively. Consolidated research and development expenses from continuing operations increased 8.5% to $17.0 million in 2009 from $15.7 million in 2008 and increased 25.4% in 2008 from $12.5 million in 2007. We incurred the majority of research and development costs in North America. The increase in consolidated research and development expenses is primarily associated with additional resources invested in the maintenance and support of our PGiMeet solutions and our non-broadcast fax PGiSend solutions.

Excise Tax Expense

     During the second quarter of 2008, we learned that certain of our PGiMeet solutions may be subject to a certain state’s telecommunications excise tax statute. We are currently working with this state’s department of revenue to resolve this matter, which spans tax years 2001 – 2007. Accordingly, we have accrued approximately $4.0 million of excise tax and interest for the applicable time period as of December 31, 2009.

Depreciation Expense

	Years Ended December 31,				Change from 2008 to 2009		Change from 2007 to 2008
		2009	2008	2007	$	%	$		%
North America		$  30,590	$  25,621	$  23,543	4,969	19.4	2,078		8.8
Europe		3,870	3,611	3,359	259	7.2	252		7.5
Asia Pacific		2,739	2,455	2,770	284	11.6	(315	)	(11.4	)
Consolidated		$  37,199	$  31,687	$  29,672	5,512	17.4	2,015		6.8

	Years Ended December 31,
	2009	2008	2007
		(in percentages)
Depreciation expense as a percent of net revenues:
North America	8.2	6.7	6.7
Europe	3.3	3.0	3.3
Asia Pacific	2.4	2.1	2.8
Consolidated	6.2	5.1	5.3

     Consolidated depreciation expense increased in 2009 from the previous year primarily as a result of increases in our productive asset base and as a result of a non-recurring reduction in depreciation expense during 2008 of $0.7 million for revisions made to the estimated remaining economic life of a specific group of assets. Consolidated depreciation expense increased in 2008 from the previous year primarily as a result of increases in our productive asset base, offset in part by the non-recurring $0.7 million adjustment.

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Amortization Expense

	Years Ended December 31,				Change from 2008 to 2009				Change from 2007 to 2008
		2009	2008	2007	$		%		$		%
North America		$   8,726	$  11,249	$  12,884	(2,523	)	(22.4	)	(1,635	)	(12.7	)
Europe		1,673	3,484	1,739	(1,811	)	(52.0	)	1,745		100.3
Asia Pacific		238	396	436	(158	)	(39.9	)	(40	)	(9.2	)
Consolidated		$  10,637	$  15,129	$  15,059	(4,492	)	(29.7	)	70		0.5

	Years Ended December 31,
	2009	2008	2007
		(in percentages)
Amortization expense as a percent of net revenues:
North America	2.3	2.9	3.7
Europe	1.4	2.9	1.7
Asia Pacific	0.2	0.3	0.4
Consolidated	1.8	2.4	2.7

     Consolidated amortization expense decreased in 2009 from the previous year as a result of the decrease in North America amortization expense related to customer list intangible assets from acquisitions made in 2003 that have become fully amortized, partially offset by intangible amortization expense resulting from our acquisitions of LINK, Soundpath and iLinc. Consolidated amortization expense was flat in 2008 from the previous year primarily as a result of the decrease in North America amortization expense related to customer list intangible assets from acquisitions made in 2003 that became fully amortized during the year, offset in part by our acquisitions of Budget Conferencing, iLinc and Soundpath.

Restructuring Costs

     Consolidated restructuring costs from continuing operations as a percentage of consolidated net revenues were 3.6%, 0.5% and 0.6% in 2009, 2008 and 2007, respectively. Consolidated restructuring costs from continuing operations were $21.8 million, $3.3 million and $3.4 million in 2009, 2008 and 2007, respectively.

Realignment of Workforce – 2009

     During the year ended December 31, 2009, we executed a restructuring plan to consolidate and streamline various functions of our work force. As part of these consolidations we eliminated approximately 500 positions. During the year ended December 31, 2009, we recorded total severance and exit costs of $14.8 million, which included the acceleration of vesting of restricted stock with a fair market value of $0.2 million. Severance costs for 2009 included $0.4 million associated with the decision to divest our PGiMarket business. Additionally, during the year ended December 31, 2009, we recorded $4.4 million of lease termination costs associated with office locations in North America and Europe. The expenses associated with these activities are reflected in “Restructuring costs” in our consolidated statements of operations. On a segment basis, these restructuring costs total $12.0 million in North America, $6.6 million in Europe, and $0.6 million in Asia Pacific. Our reserve for the 2009 restructuring costs was $9.3 million at December 31, 2009. We anticipate these severance-related costs will be paid over the next year, and these lease termination costs will be paid over the next nine years.

Realignment of Workforce – 2008

     During the year ended December 31, 2008, we executed a restructuring plan to consolidate the senior management of our technology development and network operations functions and to consolidate our corporate communications function into our marketing department. As part of these consolidations, we eliminated 11 positions, including entering into a separation agreement with our president, global operations. During the year ended December 31, 2008, we expensed total restructuring costs of $3.4 million associated with this realignment of our workforce, representing severance costs associated with the elimination of these positions. On a segment basis, the total restructuring costs initially incurred were $2.0 million in North America, $1.3 million in Europe and $0.1 million in Asia Pacific, with total adjustments in 2009 in Europe of $(0.1) million and in North America of $0.1

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million. As of December 31, 2009 we have completed this restructuring plan and, accordingly, no reserves for the 2008 restructuring costs remain.

Realignment of Workforce – 2007

     During the year ended December 31, 2007, we executed a restructuring plan to consolidate our non-PGiMeet solutions service delivery organizations. As part of this consolidation, we eliminated 84 positions. We initially expensed total restructuring costs of $4.2 million, representing $4.1 million in severance costs associated with the elimination of these positions and $0.1 million of lease termination costs associated with our Paris, France office. During the years ended December 31, 2008 and 2007, we adjusted the initially recorded charge by $(0.1) million and $(0.2) million, respectively, related to actual severance payments being less than originally estimated. The expenses associated with these charges are reflected in “Restructuring costs” in our consolidated statements of operations. On a segment basis, the total restructuring costs initially incurred were $1.1 million in North America, $2.7 million in Europe and $0.4 million in Asia Pacific, with total adjustments in Europe of $(0.1) million and $(0.2) million in 2008 and 2007, respectively. As of December 31, 2009, we have completed this restructuring plan and, accordingly, no reserves for the 2007 restructuring costs remain.

Realignment of Workforce – Prior to 2007

     Amounts paid in cash during the year ended December 31, 2009 for restructuring costs incurred prior to 2007 totaled $0.9 million. During the year ended December 31, 2009, we revised assumptions used in determining the estimated costs associated with lease terminations incurred prior to 2007. As a result, we recorded an additional $3.2 million of lease termination costs. The expenses associated with these activities are reflected in “Restructuring costs” in our consolidated statements of operations. At December 31, 2009, our reserve for restructuring costs incurred prior to 2007 totaled $3.9 million and is associated with lease termination costs. We anticipate these remaining lease termination costs will be paid over the next seven years.

Asset Impairments

     Asset impairments were $3.7 million in 2009 associated primarily with the abandonment of certain software projects previously included in “Property and equipment, net.” Asset impairments were $3.4 million in 2008 associated primarily with the abandonment of billing system software projects in North America associated with our fax delivery services developed in 2005 and 2006 and a customer list in Europe associated with the acquisition of I-Media, SA and its affiliates, a broadcast fax company acquired in December of 2004.

Net Legal Settlements and Related Expenses

     Net legal settlements and related expenses were $0.6 million, $2.2 million and $0.3 million in 2009, 2008 and 2007, respectively. Net legal settlements and related expenses in 2009, 2008, and 2007 resulted from our settlement of several litigation matters and disputes, including certain matters as previously disclosed in our “Commitments and Contingencies” note to our consolidated financial statements and in Part II, “Item 1. Legal Proceedings” in our SEC filings.

Interest Expense

     The majority of our interest expense from continuing operations is incurred in North America and was $13.5 million, $19.4 million and $13.6 million in 2009, 2008 and 2007, respectively. Interest expense decreased during 2009 primarily as a result of the expiration of one of our $100.0 million interest rate swaps and the reduction of average one-month LIBOR rates as compared to prior years. In addition, 2008 interest expense included $1.1 million of non-recurring excise tax interest. Interest expense increased during 2008 compared to 2007 as a result of $1.1 million in excise tax interest and an increase in the weighted-average outstanding balance on our credit facility. The weighted-average outstanding balance on our credit facility was $282.0 million, $290.0 million and $204.1 million during 2009, 2008 and 2007, respectively.

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Unrealized Gain (Loss) on Change in Fair Value of Interest Rate Swaps

     In August 2007, we entered into two $100.0 million two-year interest rate swaps at a fixed rate of approximately 4.99%. In December 2007, we amended the life of one of the $100.0 million swaps to three years and reduced the fixed rate to approximately 4.75%. One of the swaps matured in August 2009, and one swap remains outstanding at December 31, 2009 with a maturity date of August 2010. We did not initially designate these interest rate swaps as cash flow hedges and, as such, we did not account for them under hedge accounting. During the fourth quarter of 2008, we prospectively designated these interest rate swaps as hedges using the long-haul method of effectiveness testing. Any changes in fair value prior to designation as a hedge and any ineffectiveness subsequent to such designation are recognized as “Unrealized gain (loss) on change in fair value of interest rate swaps” as a component of “Other (expense) income” in our consolidated statements of operations and amounted to a gain of $3.4 million and losses of $0.1 million and $4.5 million during the years ended December 31, 2009, 2008 and 2007, respectively.

Other, Net

     Other, net was a loss of $0.3 million and a gain of $0.5 million and $1.4 million in 2009, 2008, and 2007, respectively. Other, net was comprised primarily of foreign currency exchange gains and losses related to cash settlements of intercompany transactions and the revaluation of foreign currency denominated payables and receivables into their respective functional currency.

Income Taxes

     Income tax expense for the years ended December 31, 2009, 2008 and 2007 from continuing operations was $13.0 million, $17.4 million and $17.0 million, respectively. The decline in income tax expense between 2009 and 2008 was primarily related to the decrease in income from continuing operations in 2009 partially offset by the impact of establishing an accounting valuation allowance against deferred tax assets for certain foreign subsidiaries. The increase in income tax expense between 2008 and 2007 is primarily due to increased income from continuing operations as well as expenses associated with uncertain tax matters.

     As of December 31, 2009 and 2008, we have $5.7 million and $5.4 million, respectively, of unrecognized tax benefits, all of which if recognized would affect our annual effective tax rate. We do not expect our unrecognized tax benefit to change significantly over the next 12 months.

Acquisitions

     We seek to acquire complementary companies that increase our market share and provide us with additional customers, technologies, applications and sales personnel. All revenues and related costs from these transactions have been included in our consolidated financial statements as of the effective date of each acquisition.

North America

     In February 2009, we acquired certain technology assets of a provider of web collaboration services in exchange for warrants to purchase 105,000 shares of our common stock. We allocated the $0.3 million fair value of the warrant to in-process research and development in other intangible assets. The in-process research and development is not currently being amortized but is subject to periodic impairment testing. We incurred transaction fees and closing costs of $0.2 million, which we expensed as incurred.

     In February 2009, we acquired certain assets and assumed certain liabilities of LINK, a U.S.-based provider of audio and web conferencing services. We paid $7.1 million in cash at closing and $0.3 million in transaction fees and closing costs, which we expensed as incurred. We funded the purchase through our credit facility and cash and equivalents on hand. We allocated $0.7 million to accounts receivable, $0.1 million to prepaid assets, $0.3 million to acquired fixed assets, $0.3 million to other acquisition liabilities, $2.4 million to identifiable customer lists and $0.1 million to non-compete agreements, with the customer lists amortized over ten years and the non-compete agreements amortized over five years. We allocated the residual $3.8 million of the purchase price to goodwill, which is subject to a periodic impairment assessment.

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     In July 2008, we acquired certain assets of Soundpath, a U.S.-based provider of audio conferencing services. We paid $20.1 million in cash at closing and $0.3 million in transaction fees and closing costs. We funded the purchase through our credit facility and cash and equivalents on hand. We allocated $6.0 million to identifiable customer lists and $1.0 million to non-compete agreements, with the customer lists amortized over ten years and the non-compete agreements amortized over five years. We allocated the residual $13.4 million of the aggregate purchase price to goodwill, which is subject to a periodic impairment assessment.

     In May 2008, we acquired certain assets and assumed certain liabilities of the U.S.-based audio conferencing business of iLinc. We paid $3.9 million in cash at closing and $0.1 million in transaction fees and closing costs. We funded the purchase with cash and equivalents on hand. We allocated $0.6 million to acquired working capital, $0.8 million to other acquisition liabilities and $1.2 million to identifiable intangible assets, which will be amortized over five years. We allocated the residual $3.0 million of the aggregate purchase price to goodwill, which is subject to a periodic impairment assessment.

     In July 2007, we acquired the assets and stock of Budget Conferencing, a Canadian-based provider of audio and web conferencing services. We paid $19.8 million in cash at closing and $0.6 million in transaction fees and closing costs. In June 2008, we paid an additional $0.7 million in cash to finalize the working capital component of the purchase price. We funded the purchase through our credit facility. We allocated approximately $0.2 million to acquired fixed assets, $0.1 million to other acquisition liabilities, $6.6 million to identifiable customer lists, $1.3 million to trademarks and $1.4 million to a non-compete agreement, with the identifiable customer lists and non-compete agreements amortized over five years. In addition, we allocated $2.6 million to long-term deferred tax liabilities to record the step-up in basis for the customer lists and developed technology purchased. We allocated the residual $14.3 million of the aggregate purchase price to goodwill, which is subject to a periodic impairment assessment.

Europe

     In November 2007, we acquired the stock of Meet24, a Nordic-based provider of conferencing and web collaboration services. We paid $26.3 million in cash at closing and $0.2 million in transaction fees and closing costs. We funded the purchase through our credit facility and cash and equivalents on hand. We allocated approximately $0.2 million to acquired fixed assets, $1.4 million to acquired working capital, $0.9 million to acquired deferred tax assets, $3.8 million to other acquisition liabilities, $8.8 million to identifiable customer lists and $0.7 million to a non-compete agreement, with the identifiable customer lists and non-compete agreements amortized over five years. In addition, we allocated $2.7 million to long-term deferred tax liabilities. We allocated the residual $21.0 million of the aggregate purchase price to goodwill, which is subject to a periodic impairment assessment.

Discontinued Operations

     On November 5, 2009, we completed the sale of our PGiMarket business. Prior period results have been reclassified to present this business as discontinued operations. In connection with this divestiture, we recorded a non-cash charge of $7.0 million in discontinued operations to reduce the carrying value of the assets associated with this business to their estimated fair value of $1.4 million, of which $1.0 million was cash received at closing and $0.4 million is an estimate of cash to be received based on the achievement of certain revenue targets in 2010 under an earn-out provision.

     As part of the adjustment, we reduced the net book value of property and equipment associated with this business by $6.9 million and adjusted goodwill and other intangibles by $0.9 million and $0.3 million, respectively. In addition, we incurred charges of $0.2 million for costs associated with the sale and recorded a receivable of $0.4 million for the revenue achievement earn-out estimate.

     The following amounts associated with our PGiMarket business have been segregated from continuing operations and are reflected as discontinued operations for 2009, 2008 and 2007 (in thousands):

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	Years Ended December 31,
	2009			2008			2007
Net revenue from discontinued operations	$	2,634		$	3,829		$	4,786
Operating loss		(4,509	)		(6,639	)		(4,671	)
Loss on disposal		(6,972	)		—			—
Income tax benefit		3,760			2,148			1,728
Loss from discontinued operations, net of taxes	$	(7,721	)	$	(4,491	)	$	(2,943	)

Liquidity and Capital Resources

     At December 31, 2009, we have utilized $260.8 million of our $375.0 million credit facility, with $254.9 million in borrowings and $5.9 million in letters of credit outstanding. From time to time, we enter into interest rate swaps to reduce our exposure to market risk from changes in interest rates on interest payments associated with our credit facility. As of December 31, 2009, we have one $100.0 million interest rate swap outstanding, which has a fixed rate of 4.75% and expires in August 2010.

     At the scheduled maturity of our credit facility in April 2011 or in the event of an acceleration of the indebtedness under the credit facility following an event of default, the entire outstanding principal amount of the indebtedness under the facility, together with all other amounts payable thereunder, will become due and payable. We may not have sufficient funds to pay such obligations in full at maturity or upon such acceleration. If we default and are not able to pay any such obligations due, our lenders have liens on substantially all of our assets and could foreclose on our assets in order to satisfy our obligations.

     As of December 31, 2009, we had $41.4 million in cash and equivalents compared to $27.5 million as of December 31, 2008. Cash balances residing outside of the United States as of December 31, 2009 were $40.4 million compared to $26.5 million as of December 31, 2008. We repatriate cash for repayment of royalties and management fees charged to international locations from the United States. Therefore, we record foreign currency exchange gains and losses resulting from these transactions in “Other, net” in our consolidated statements of operations. We generally consider intercompany loans with foreign subsidiaries to be permanently invested for the foreseeable future. Therefore, we record foreign currency exchange fluctuations resulting from these transactions in the cumulative translation adjustment account on our consolidated balance sheets. Based on our potential cash position and potential conditions in the capital markets, we could require repayment of these intercompany loans despite the long-term intention to hold them as permanent investments.

Cash Provided by Operating Activities

     Consolidated operating cash flows were $92.4 million, $110.1 million and $95.3 million for the years ended December 31, 2009, 2008 and 2007, respectively. The decrease in net cash provided by operating activities in 2009 from the prior year was primarily due to higher restructuring cost payments and higher income tax payments net of income tax refunds in 2009 compared to 2008. The increase in net cash provided by operating activities in 2008 from the prior year was primarily due to increased net income, the deferral of income tax payments and decreased restructuring cost payments, offset in part by working capital changes associated with the timing of accounts payable.

Cash Used-in Investing Activities

     Consolidated investing activities used cash of approximately $46.1 million, $76.1 million and $91.2 million in 2009, 2008 and 2007, respectively. The principal uses of cash in investing activities for in 2009 included $38.9 million of capital expenditures and $7.5 million related primarily to our acquisition of LINK. The principal uses of cash in investing activities in 2008 included $45.0 million of capital expenditures and $30.4 million relating to our 2008 business acquisitions and working capital settlements for our acquisitions prior to 2008. The principal uses of cash in investing activities in 2007 included $47.8 million used to fund our acquisitions and $43.4 million of capital expenditures.

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Cash Provided by Financing Activities

     Consolidated financing activities used cash of approximately $28.0 million and $14.0 million and provided cash of approximately $1.9 million in 2009, 2008 and 2007, respectively. The primary uses of cash for financing activities in 2009 included $15.7 million of net payments on our credit facility and $14.5 million in treasury stock purchases. The primary uses of cash for financing activities in 2008 included $1.1 million of net proceeds on our credit facility offset by $18.8 million in treasury stock purchases. The primary sources of cash for financing activities in 2007 included $125.7 million of net proceeds from our credit facility and $8.6 million from the exercise of stock options offset by $136.0 million in treasury stock purchases.

Off-balance Sheet Arrangements

     As of December 31, 2009, we did not have any off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Commitments and Contingencies

The following table summarizes our contractual obligations at December 31, 2009 (in thousands):

	Amounts committed			2010		2011		2012		2013		2014		There- after
Contractual obligation:
Current borrowings on credit	$	254,880	$	—	$	254,880	$	—	$	—	$	—	$	—
facility
Operating leases		88,024		13,093		11,835		10,042		9,148	$	9,040		34,866
Telecommunications service
agreements		61,543		32,915		28,628		—		—		—		—
Restructuring costs		14,445		7,969		1,693		1,078		1,065		1,073		1,567
Capital leases and interest		13,385		4,683		3,785		3,226		1,639		52		—
Credit facility commitment fees
and interest		9,192		7,676		1,516		—		—		—		—
Uncertain tax positions		3,924		3,924		—		—		—		—		—
Asset retirement obligation		854		104		549		15		—		67		119
Acquisitions		543		294		166		83		—		—		—
	$	446,790	$	70,658	$	303,052	$	14,444	$	11,852	$	10,232	$	36,552

     The table above contains only the portion of the liability accrued for uncertain tax positions that are expected to be settled during 2010. The remaining amount that has been accrued is not included in the contractual obligations table because we are unable to determine when, or if, payment of these amounts will be made.

State Sales Tax and Excise Taxes

     Historically, we have collected and remitted state sales tax from our non-PGiMeet solutions customers in applicable states, but we have not collected and remitted state sales tax from our PGiMeet solutions customers in all applicable jurisdictions. In addition, we have learned that certain of our PGiMeet solutions may be subject to telecommunications excise tax statutes in certain states. During the years ended December 31, 2009 and 2008, we paid $0.1 million and $2.8 million, respectively, related to the settlement of certain of these state sales and excise tax contingencies.

     We have reserves for certain state sales and excise tax contingencies based on the likelihood of obligation. At December 31, 2009 and 2008, we had reserved $4.4 and $4.6 million, respectively, for certain state sales and excise tax contingencies. These reserved amounts are included in “Accrued taxes, other than income taxes” in our consolidated balance sheets. We believe we have appropriately accrued for these contingencies. In the event that actual results differ from these reserves, we may need to make adjustments, which could materially impact our financial condition and results of operations. In addition, states may disagree with our method of assessing and remitting such taxes or additional states may subject us to inquiries regarding such taxes

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Capital Resources

     We have a $375.0 million committed revolving credit facility, which consists of an original revolving credit facility of $300.0 million with a $100.0 million accordion feature, of which $75.0 million has been exercised to date. This accordion feature allows for additional credit commitments to increase the revolving credit facility up to a maximum of $400.0 million, subject to its terms and conditions. Our credit facility matures in April 2011. Certain of our material domestic subsidiaries have guaranteed our obligations under the credit facility, which is secured by substantially all of our assets and the assets of our material domestic subsidiaries. In addition, we have pledged as collateral all of the issued and outstanding stock of our material domestic subsidiaries and 65% of our material foreign subsidiaries.

     At December 31, 2009, we were in compliance with the covenants under our credit facility. Proceeds drawn under our credit facility may be used for refinancing of existing debt, working capital, capital expenditures, acquisitions and other general corporate purposes. The annual interest rate applicable to borrowings under the credit facility, at our option, is the base rate (the greater of either the federal funds rate plus one-half of one percent, the prime rate or the Eurocurrency rate plus one and three-quarters of one percent) or one-month LIBOR plus an applicable margin that varies based upon our leverage ratio at the end of each fiscal quarter. At December 31, 2009, our applicable margin with respect to LIBOR loans was 1.50%. At December 31, 2009, our interest rate on one-month U.S. Dollar LIBOR loans, which comprise materially all of our outstanding borrowings, was 1.73% for our borrowings on which we did not have an interest rate swap agreement in place. At December 31, 2009, we had $254.9 million of borrowings and $5.9 million in letters of credit outstanding under our credit facility.

     In August 2007, we entered into two $100.0 million two-year interest rate swaps at a fixed rate of 4.99%. In December 2007, we amended the life of one of the $100.0 million swaps to three years and reduced the fixed rate to 4.75%. One of the swaps matured in August 2009, and one swap remains outstanding at December 31, 2009. We did not initially designate these interest rate swaps as hedges and, as such, we did not account for them under hedge accounting. During the fourth quarter of 2008, we prospectively designated these interest rate swaps as cash flow hedges of our interest rate risk associated with our credit facility using the long-haul method of effectiveness testing. Any changes in fair value prior to designation as a hedge and any ineffectiveness subsequent to such designation are recognized as “Unrealized gain (loss) on change in fair value of interest rate swaps” as a component of “Other (expense) income” in our consolidated statements of operations and amounted to $3.4 million, $(0.1) million, and $(4.5) million during the years ended December 31, 2009, 2008, and 2007, respectively. Any changes in fair value that are determined to be effective are recorded as a component of “Accumulated other comprehensive loss” in our consolidated balance sheets and amounted to a gain of $1.6 million, net of taxes, for the year ended December 31, 2009. We recognize the fair value of derivatives in our consolidated balance sheets as part of “Accrued expenses” under “Current Liabilities” or “Long-Term Liabilities” depending on the maturity date of the contract. The amount recognized in current liabilities was $2.8 million and $2.6 million at December 31, 2009 and 2008, respectively. The amount recognized in “Long-Term Liabilities” was $6.0 million at December 31, 2008. As of December 31, 2009, we have one $100.0 million interest rate swap outstanding, which has a fixed rate of 4.75% and expires in August 2010.

Liquidity

     As of December 31, 2009, we had $41.4 million of cash and cash equivalents. We generated positive operating cash flows from each of our geographic business segments for the year ended December 31, 2009. Each geographic business segment had sufficient cash flows from operations to service existing debt obligations, to fund capital expenditure requirements, which have historically been 5% to 8% of annual consolidated net revenues, and to fund research and development costs for new services and enhancements to existing services, which have historically been 2% to 3% of annual consolidated net revenues. Assuming no material change to these costs, which we do not anticipate, we believe that we will generate adequate operating cash flows for capital expenditures and contractual commitments and to satisfy our indebtedness and fund our liquidity needs for at least the next 12 months. At December 31, 2009, we had $114.2 million of available credit on our existing $375.0 million credit facility, without regard to the uncommitted $25.0 million of the accordion feature.

     During 2007, net borrowings on our credit facility of $125.7 million resulted primarily from our self-tender offer and stock repurchases in the open market. We have historically used our cash flows from operations for debt repayments, acquisitions, capital expenditures and stock repurchases. At December 31, 2009, borrowings under our credit facility were $254.9 million. In 2010, we anticipate continuing to use our cash flows to pay down our debt, while still continuing to be optimistic in possible acquisitions and share repurchases.

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     We regularly review our capital structure and evaluate potential alternatives in light of current conditions in the capital markets. Depending upon conditions in these markets, cash flows from our operating segments and other factors, we may engage in other capital transactions. These capital transactions include, but are not limited to, debt or equity issuances or credit facilities with banking institutions. We anticipate refinancing our existing credit facility in the first half of 2010, prior to its maturity in April 2011.

Critical Accounting Policies

     “Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based upon our consolidated financial statements and the notes thereto, which have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net revenues and expenses during the reported periods. On an ongoing basis, management evaluates its estimates and judgments, including those related to revenue recognition, allowance for uncollectible accounts, goodwill and other intangible assets, income taxes, restructuring costs, legal contingencies and derivative instruments.

     Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates.

     We have identified the policies below as critical to our business operations and the understanding of our results of operations. For a detailed discussion on the application of these and other accounting policies, see Note 2 to our consolidated financial statements.

Revenue Recognition

     We recognize revenues when persuasive evidence of an arrangement exists, services have been rendered, the price to the buyer is fixed or determinable and collectability is reasonably assured. Revenues consist primarily of usage fees generally based on per minute, per fax page or per transaction methods. To a lesser extent, we charge subscription fees and have fixed-period minimum revenue commitments. Unbilled revenue consists of earned but unbilled revenue that results from non-calendar month billing cycles and the one-month lag time in billing related to certain of our services. Deferred revenue consists of payments made by customers in advance of the time services are rendered. Should changes in conditions cause management to determine these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected.

Allowance for Uncollectible Accounts Receivable

     Prior to the recognition of revenue, we make a decision that collectability is reasonably assured. Over time, management analyzes accounts receivable balances, historical bad debts, customer concentrations, customer creditworthiness, current economic trends, changes in our customer payment terms and other trends when evaluating the adequacy of the allowance for uncollectible accounts receivable. Significant management judgment and estimates must be made and used in connection with establishing the allowance for uncollectible accounts receivable in any accounting period. The accounts receivable balance was $89.9 million and $94.5 million, net of allowance for uncollectible accounts receivable of $1.7 million and $2.1 million, as of December 31, 2009 and 2008, respectively. If the financial condition of our customers were to deteriorate, resulting in impairment to their ability to make payments, additional allowances may be required.

Goodwill and Other Intangible Assets

     We evaluate intangible assets and long-lived assets for potential impairment indicators whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that management considers important which could trigger an impairment review include the following:

• significant decrease in the market value of an asset;

• significant adverse change in physical condition or manner of use of an asset;

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• significant adverse change in legal factors or negative industry or economic trends;

• a current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset;

• significant decline in our stock price for a sustained period; and

• an expectation that, more likely than not, an asset will be sold or otherwise disposed of before the end of its previously estimated useful life.

     Goodwill is not subject to amortization but is subject to an annual impairment review. We completed these reviews as of December 31, 2009, 2008 and 2007 with no impairments identified. We did recognize an impairment of our goodwill during 2009 associated with the sale of our PGiMarket business. See “—Discontinued Operations.”

     Other intangible assets with finite lives continue to be amortized. We recognize an impairment loss when the fair value is less than the carrying value of such assets and the carrying value of these assets is not recoverable. The impairment loss, if applicable, is calculated based on the discounted estimated future cash flows using our weighted average cost of capital compared to the carrying value of the long-lived asset. We recorded asset impairments related to other intangible assets during 2009 and 2008. See “—Asset Impairments” and “Discontinued Operations.” Net intangible assets and goodwill amounted to $379.4 million and $376.0 million as of December 31, 2009 and 2008, respectively. Future events could cause us to conclude that the current estimates used should be changed and that goodwill and intangible assets associated with acquired businesses are impaired. Any resulting impairment loss could have a material adverse impact on our financial condition and results of operations.

Income Taxes

     As part of the process of preparing our consolidated financial statements, we are required to estimate our taxes in each of the jurisdictions in which we operate. This process involves significant management judgment in estimating our actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. We must then assess the likelihood that the deferred tax assets will be recovered from future taxable income and, to the extent we believe that recovery is not likely, we must establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, an expense is recorded within the tax provision in our consolidated statements of operations.

     Our net deferred tax asset as of December 31, 2009 was $1.1 million and our net deferred tax liability as of December 31, 2008 was $3.1 million, net of a valuation allowance of $17.2 million and $12.6 million, respectively. We have recorded our valuation allowance due to uncertainties related to our ability to utilize some of our deferred tax assets, primarily consisting of certain net operating losses carried forward and capital loss carried forward. The valuation allowance is based on our estimates of taxable income by jurisdiction in which we operate and the period over which the deferred tax assets will be recoverable. In the event that actual results differ from these estimates or we adjust these estimates in future periods, we may need to establish an additional valuation allowance or reverse an existing valuation allowance which could materially impact our financial condition and results of operations.

     Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. The total amount of unrecognized tax benefits at December 31, 2009 and 2008 was $5.7 million and $5.4 million, respectively, all of which, if recognized, would affect our annual effective tax rate.

     We also have reserves for certain asserted international, federal and state tax contingencies based on the likelihood of obligation. In the normal course of business, we are subject to inquiries from U.S. and non-U.S. tax authorities regarding the amount of income taxes due. These challenges may result in adjustments of the timing or amount of taxable income or deductions or the allocation of income among tax jurisdictions. Further, during the ordinary course of business, other facts and circumstances may impact our ability to utilize tax benefits as well as the estimated income taxes to be paid in future periods. We believe we have appropriately accrued for tax exposures. If we are required to pay an amount less than or exceeding our provisions for uncertain tax matters, the financial impact will be reflected in the period in which the matter is resolved. In the event that actual results differ

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from these estimates, we may need to adjust tax accounts which could materially impact our financial condition and results of operations.

Restructuring Costs

     Restructuring accruals are based on certain estimates and judgments related to severance and exit costs, contractual lease obligations and related costs. Our estimated severance costs could be impacted if actual severance payments are different from initial estimates. Contractual lease obligations could be materially affected by factors such as our ability to secure sublessees, the creditworthiness of sublessees and the success at negotiating early termination agreements with lessors. In the event that actual results differ from these estimates, we may need to establish additional restructuring accruals or reverse accrual amounts accordingly.

Legal Contingencies

     We are currently involved in certain litigation matters as disclosed in Item 3. “Legal Proceedings” of this annual report. We accrue an estimate of the probable costs for the resolution of legal claims. These estimates are developed in consultation with outside counsel handling these matters and based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. Our estimates are subject to change, and we adjust the financial impact in the period in which such matters are resolved.

Derivative Instruments

     We have entered into interest rate swaps that are classified as derivatives with the intention of hedging the cash flow risk of variable one-month LIBOR interest rate changes on the interest payments associated with our credit facility. We did not initially designate these interest rate swaps as hedges and, as such, we did not account for them under hedge accounting. During the fourth quarter of 2008, we prospectively designated these interest rate swaps as cash flow hedges using the long-haul method of effectiveness testing. Any changes in fair value prior to designation as a hedge and any ineffectiveness subsequent to such designation are recognized as “Unrealized gain (loss) on change in fair value of interest rate swaps” as a component of “Other (expense) income” in our consolidated statements of operations throughout the contract periods. Any changes in fair value that are determined to be effective are recorded as a component of “Other Comprehensive Income” in our consolidated balance sheets. The fair value of derivatives is recognized in our consolidated balance sheets as “Accrued expenses” under “Current Liabilities” or “Long-Term Liabilities.”

New and Recently Adopted Accounting Pronouncements

     In June 2009, the FASB issued Accounting Standards Update No. 2009-01, “Generally Accepted Accounting Principles” (Accounting Standards Codification, or ASC, Topic 105) which establishes the ASC as the official single source of authoritative GAAP. All existing accounting standards are superseded. All other accounting guidance not included in the ASC will be considered non-authoritative. The ASC also includes all relevant SEC guidance organized using the same topical structure in separate sections within the ASC. The ASC is effective for financial statements for interim or annual reporting periods ending after September 15, 2009.

     In January 2010, the FASB issued Accounting Standards Update No. 2010-06 “Fair Value Measurements and Disclosures,” which requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. The new disclosures are effective for interim and annual reporting periods beginning after December 15, 2009. Adoption of the provisions of Update No. 2010-06 will be limited to expanded disclosure in our consolidated financial statements.

     In October 2009, the FASB issued Accounting Standards Update No. 2009-13, “Revenue Recognition, Multiple-Deliverable Revenue Arrangements,” an amendment to its accounting guidance on revenue arrangements with multiple deliverables. This new accounting guidance addresses the unit of accounting for arrangements involving multiple deliverables and how consideration should be allocated to separate units of accounting, when applicable. In the same month, the FASB also issued Accounting Standards Update No. 2009-14, “Software, Certain Revenue Arrangements That Include Software Elements,” which changes revenue recognition for tangible products containing software and hardware elements. This update excludes from software revenue recognition all tangible products containing both software and non-software components that function together to deliver the product’s essential functionality and includes such products in the multiple-deliverable revenue guidance discussed above. This guidance will be effective for fiscal years beginning on or after June 15, 2010. Early adoption is permitted. All guidance contained within these updates must be adopted in the same period. We do not expect this guidance to have a material impact on our consolidated financial position or results of operations.

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     In June 2009, the FASB updated ASC 855, “Subsequent Events,” which incorporates the subsequent events guidance contained in the auditing standards literature into authoritative accounting literature. The updated accounting guidance requires entities to disclose the date through which they have evaluated subsequent events and whether the date corresponds with the issuance of their financial statements. The updated provisions of ASC 855 are effective for all interim and annual periods ending after June 15, 2009. The adopted provisions of ASC 855 are limited to expanded disclosure in our consolidated financial statements.

     In April 2009, the FASB issued ASC 825, “Financial Instruments,” which requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This standard also requires those disclosures in summarized financial information at interim reporting periods beginning after March 15, 2009. We adopted the provisions of ASC 825 effective as of April 1, 2009, and it had no material impact on our consolidated financial statements.

     In April 2008, the FASB issued new accounting guidance related to the determination of the useful life of intangible assets. This guidance indicates that in developing assumptions about renewal or extension options used to determine the useful life of an intangible asset, an entity needs to consider its own historical experience adjusted for entity-specific factors. In the absence of that experience, an entity shall consider the assumptions that market participants would use about renewal or extension option. The new accounting guidance is to be applied to intangible assets acquired after January 1, 2009. We adopted the provisions of the new accounting guidance, and it had no material impact on our consolidated financial statements.

     In March 2008, the FASB issued new accounting guidance related to disclosures about derivative instruments and hedging activities. This guidance amends and expands disclosure requirements to provide a better understanding of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for and their effect on an entity’s financial position, financial performance and cash flows. This guidance is effective for fiscal years beginning after November 15, 2008. We adopted this guidance as of January 1, 2009, and it had no financial impact other than expanded disclosure in our consolidated financial statements. See Note 10 to our consolidated financial statements.

     In December 2007, the FASB issued new accounting guidance related the principles and requirements for how an acquiror recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired, as well as adding the requirement that acquisition-related costs be expensed as incurred rather than included in the purchase price. The guidance also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. This guidance is effective for fiscal years beginning after December 15, 2008. We adopted this guidance on January 1, 2009, and it had no material impact on our consolidated financial statements. The impact of its adoption in future periods will depend on the nature and size of business combinations completed subsequent to the date of adoption.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     We are exposed to market risk from changes in interest rates and foreign currency exchange rates. We manage our exposure to these market risks through our regular operating and financing activities and the timing of intercompany payable settlements. In addition, from time to time, we enter into interest rate swaps to hedge the cash flow risk of interest rate changes associated with our credit facility. At December 31, 2009, our interest rate swap effectively converted the interest payments of $100.0 million of our LIBOR-based borrowings to a fixed rate.

     At December 31, 2009, we had borrowings of approximately $154.9 million outstanding under our credit facility that are subject to interest rate risk. Each 100 basis point increase in interest rates relative to these borrowings would impact our annual pre-tax earnings and cash flows by approximately $1.5 million based on our December 31, 2009 debt level.

     We generated 40.7% of our consolidated net revenues and 35.2% of our operating expenses in countries outside of the United States in 2009. Additionally, we have foreign currency denominated debt as part of our credit

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facility. At December 31, 2009, we had debt outstanding of CA$4.5 million. As a result, fluctuations in exchange rates impact the amount of our reported consolidated net revenues, operating income and debt. A hypothetical positive or negative change of 10% in foreign currency exchange rates would positively or negatively change our consolidated net revenues for 2009 by approximately $24.5 million, operating expenses for 2009 by approximately $19.6 million and outstanding debt by $0.4 million. Our principal exposure has been related to local currency sales and operating costs in Australia, Canada, the Euro Zone, Japan, Norway and the United Kingdom. We have not used derivatives to manage foreign currency exchange risk, and we did not have any foreign currency exchange derivatives outstanding at December 31, 2009.

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Item 8. Financial Statements and Supplementary Data

Premiere Global Services, Inc. and Subsidiaries Index to Consolidated Financial Statements

	Page
Report of Independent Registered Public Accounting Firm	45
Report of Independent Registered Public Accounting Firm	46
Consolidated Balance Sheets, December 31, 2009 and 2008	47
Consolidated Statements of Operations, Years Ended December 31, 2009, 2008 and 2007	48
Consolidated Statements of Shareholders' Equity, Years Ended December 31, 2009, 2008 and 2007	49
Consolidated Statements of Cash Flows, Years Ended December 31, 2009, 2008 and 2007	50
Notes to Consolidated Financial Statements	51
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting	77

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Premiere Global Services, Inc.

We have audited the accompanying consolidated balance sheet of Premiere Global Services, Inc. and subsidiaries (the Company) as of December 31, 2009, and the related consolidated statements of operations, shareholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Premiere Global Services, Inc. and subsidiaries at December 31, 2009, and the consolidated results of their operations and their cash flows for the year ended December 31, 2009, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Premiere Global Services, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2010 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Atlanta, Georgia
February 26, 2010

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Premiere Global Services, Inc.

We have audited the accompanying consolidated balance sheets of Premiere Global Services, Inc. and subsidiaries (the “Company”) as of December 31, 2008, and the related consolidated statements of income, shareholders’ equity, and cash flows for the years ended December 31, 2008 and 2007. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2008, and the results of their operations and their cash flows for the years ended December 31, 2008 and 2007, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 5 to the consolidated financial statements, the accompanying 2008 and 2007 consolidated financial statements have been retrospectively adjusted for discontinued operations.

/s/ Deloitte & Touche LLP

Atlanta, GA
February 27, 2009
(February 26, 2010 as to Note 5)

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2009 and 2008
(in thousands, except share data)

ASSETS	2009			2008
CURRENT ASSETS
Cash and equivalents	$	41,402		$	27,535
Accounts receivable (less allowances of $1,702 and $2,069, respectively)		89,906			94,469
Prepaid expenses and other current assets		10,735			12,623
Deferred income taxes, net		7,261			11,184
Total current assets		149,304			145,811
PROPERTY AND EQUIPMENT, NET		137,235			129,077
OTHER ASSETS
Goodwill		354,609			343,954
Intangibles, net of amortization		24,840			32,080
Deferred income taxes, net		2,703			—
Restricted cash		103			306
Other assets		9,432			9,779
Total assets	$	678,226		$	661,007
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	51,502		$	52,710
Income taxes payable		4,507			3,063
Accrued taxes, other than income taxes		6,947			9,818
Accrued expenses		28,543			33,787
Current maturities of long-term debt and capital lease obligations		3,596			2,455
Accrued restructuring costs		7,765			1,082
Total current liabilities		102,860			102,915
LONG-TERM LIABILITIES
Long-term debt and capital lease obligations		262,927			269,034
Accrued restructuring costs		5,392			771
Accrued expenses		17,133			20,150
Deferred income taxes, net		8,872			14,303
Total long-term liabilities		294,324			304,258
COMMITMENTS AND CONTINGENCIES (Notes 11 and 15)
SHAREHOLDERS' EQUITY
Common stock, $.01 par value; 150,000,000 shares authorized, 59,392,311
and 60,792,441 shares issued and outstanding, respectively		594			608
Additional paid-in capital		544,896			545,801
Notes receivable, shareholder		(1,814	)		(1,803	)
Accumulated other comprehensive gain (loss)		6,217			(8,312	)
Accumulated deficit		(268,851	)		(282,460	)
Total shareholders' equity		281,042			253,834
Total liabilities and shareholders’ equity	$	678,226		$	661,007

Accompanying notes are integral to these consolidated financial statements.

47

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2009, 2008 and 2007
(in thousands, except per share data)

		2009			2008			2007
Net revenues	$	601,522		$	620,400		$	554,920
Operating expenses
Cost of revenues (exclusive of depreciation and amortization
shown separately below)		257,194			253,140			224,432
Selling and marketing		142,942			151,178			137,891
General and administrative (exclusive of expenses shown
separately below)		65,478			65,526			65,340
Research and development		17,028			15,697			12,513
Excise tax expense		—			2,890			—
Depreciation		37,199			31,687			29,672
Amortization		10,637			15,129			15,059
Restructuring costs		21,834			3,339			3,447
Asset impairments		3,682			3,446			—
Net legal settlements and related expenses		593			2,230			349
Acquisition-related costs		612			—			—
Total operating expenses		557,199			544,262			488,703
Operating income		44,323			76,138			66,217
Other (expense) income
Interest expense		(13,451	)		(19,411	)		(13,598	)
Unrealized gain (loss) on change in fair value of interest rate
swaps		3,366			(106	)		(4,482	)
Interest income		419			923			780
Other, net		(278	)		493			1,418
Total other expense		(9,944	)		(18,101	)		(15,882	)
Income from continuing operations before income taxes		34,379			58,037			50,335
Income tax expense		13,049			17,443			16,950
Net income from continuing operations		21,330			40,594			33,385
Loss from discontinued operations, net of taxes		(7,721	)		(4,491	)		(2,943	)
Net income	$	13,609		$	36,103		$	30,442
BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING		58,823			59,356			62,654
Basic net income (loss) per share
Continuing operations	$	0.36		$	0.68		$	0.53
Discontinued operations		(0.13	)		(0.08	)		(0.05	)
Net income per share	$	0.23		$	0.61		$	0.49
DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING		59,310			60,477			63,940
Diluted net income (loss) per share
Continuing operations	$	0.36		$	0.67		$	0.52
Discontinued operations		(0.13	)		(0.07	)		(0.05	)
Net income per share	$	0.23		$	0.60		$	0.48

Accompanying notes are integral to these consolidated financial statements.

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years Ended December 31, 2009, 2008 and 2007
(in thousands)

	Common Stock Issued			Additional Paid-In Capital			Notes Receivable, Shareholder			Accumulated Deficit			Accumulated Other Comprehensive Income			Total Shareholders’ Equity
BALANCE, December 31, 2006	$	702		$	663,232		$	(2,004	)	$	(347,727	)	$	2,088		$	316,291
Comprehensive income, net of taxes:
Net income		—			—			—			30,442			—			30,442
Translation adjustments, net of taxes		—			—			—			—			8,435			8,435
Comprehensive income, net of taxes																	38,877
Adoption of FIN No. 48		—			—			—			(1,278	)		—			(1,278	)
Issuance of common stock:
Exercise of stock options		13			8,540			—			—			—			8,553
Equity-based compensation		—			8,914			—			—			—			8,914
Treasury stock purchase and retirement		(104	)		(132,882	)		—			—			—			(132,986	)
Redemption of restricted shares, net		7			(2,710	)		—			—			—			(2,703	)
Income tax benefit from equity awards		—			3,324			—			—			—			3,324
Payments and interest related to notes receivable,
shareholder		—			—			302			—			—			302
BALANCE, December 31, 2007	$	618		$	548,418		$	(1,702	)	$	(318,563	)	$	10,523		$	239,294
Comprehensive income, net of taxes:
Net income		—			—			—			36,103			—			36,103
Translation adjustments, net of taxes		—			—			—			—			(16,252	)		(16,252	)
Change in unrealized gain (loss), derivatives, net of taxes		—			—			—			—			(2,583	)		(2,583	)
Comprehensive income, net of taxes																	17,268
Issuance of common stock:
Exercise of stock options		3			2,523			—			—			—			2,526
Equity-based compensation		—			11,663			—			—			—			11,663
Treasury stock purchase and retirement		(15	)		(14,236	)		—			—			—			(14,251	)
Redemption of restricted shares, net		2			(3,230	)		—			—			—			(3,228	)
Income tax benefit from equity awards		—			663			—			—			—			663
Payments and interest related to notes receivable,
shareholder		—			—			(101	)		—			—			(101	)
BALANCE, December 31, 2008	$	608		$	545,801		$	(1,803	)	$	(282,460	)	$	(8,312	)	$	253,834
Comprehensive income, net of taxes:
Net income		—			—			—			13,609			—			13,609
Translation adjustments, net of taxes		—			—			—			—			12,955			12,955
Change in unrealized gain (loss), derivatives, net of taxes		—			—			—			—			1,574			1,574
Comprehensive income, net of taxes																	28,138
Issuance of common stock:
Exercise of stock options		2			561			—			—			—			563
Equity-based compensation		—			10,646			—			—			—			10,646
Treasury stock purchase and retirement		(16	)		(11,585	)		—			—			—			(11,601	)
Redemption of restricted shares, net		—			(2,515	)		—			—			—			(2,515	)
Warrants issued		—			344			—			—			—			344
Income tax benefit from equity awards		—			1,644			—			—			—			1,644
Payments and interest related to notes receivable,
shareholder		—			—			(11	)		—			—			(11	)
BALANCE, December 31, 2009	$	594		$	544,896		$	(1,814	)	$	(268,851	)	$	6,217		$	281,042

Accompanying notes are integral to these consolidated financial statements

49

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2009, 2008 and 2007
(in thousands)

	2009			2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	13,609		$	36,103		$	30,442
Loss from discontinued operations, net of taxes		7,721			4,491			2,943
Income from continuing operations		21,330			40,594			33,385
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		37,199			31,687			29,672
Amortization		10,637			15,129			15,059
Amortization of deferred financing costs		614			564			513
Net legal settlements and related expenses		593			2,230			349
Payments for legal settlements and related expenses		(329	)		(2,254	)		—
Deferred income taxes, net of effect of acquisitions		(3,108	)		14,133			919
Restructuring costs		21,834			3,339			3,447
Payments for restructuring costs		(10,766	)		(4,214	)		(7,109	)
Asset impairments		3,682			3,446			—
Equity-based compensation		10,776			12,473			10,590
Excess tax benefits from share-based payment arrangements		(1,716	)		(1,149	)		(3,323	)
Unrealized gain (loss) on change in fair value of interest rate swaps		(3,366	)		106			4,482
Provision (recovery) for doubtful accounts		1,119			412			(770	)
Excise tax expense		—			2,890			—
Changes in assets and liabilities, net of effect of acquisitions:
Accounts receivable, net		6,742			(7,881	)		33
Prepaid expenses and other assets		2,899			(4,290	)		(606	)
Accounts payable and accrued expenses		(5,780	)		2,897			8,681
Net cash provided by operating activities from continuing operations		92,360			110,112			95,322
Net cash used in operating activities from discontinued operations		(2,958	)		(4,024	)		(4,385	)
Net cash provided by operating activities		89,402			106,088			90,937
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(38,881	)		(45,020	)		(43,424	)
Other investing activities		274			(681	)		—
Business acquisitions, net of cash acquired		(7,496	)		(30,416	)		(47,749	)
Net cash used in investing activities from continuing operations		(46,103	)		(76,117	)		(91,173	)
Net cash used in investing activities from discontinued operations		(2,650	)		(4,605	)		(2,917	)
Net cash used in investing activities		(48,753	)		(80,722	)		(94,090	)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments under borrowing arrangements		(201,765	)		(529,710	)		(344,388	)
Proceeds from borrowing arrangements		186,019			530,841			470,099
Payments of debt issuance costs		(147	)		(8	)		(50	)
Repayment of notes receivable, shareholder		93			—			413
Excess tax benefits from share-based payment arrangements		1,716			1,149			3,323
Purchase of treasury stock, at cost		(14,491	)		(18,824	)		(136,049	)
Exercise of stock options		563			2,527			8,553
Net cash (used-in) provided by financing activities		(28,012	)		(14,025	)		1,901
Effect of exchange rate changes on cash and equivalents		1,230			(2,065	)		534
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS		13,867			9,276			(718	)
CASH AND EQUIVALENTS, beginning of period		27,535			18,259			18,977
CASH AND EQUIVALENTS, end of period	$	41,402		$	27,535		$	18,259
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	12,635		$	16,338		$	13,687
Income tax payments	$	19,139		$	15,627		$	7,617
Income tax refunds	$	8,871		$	9,812		$	2,052
Capital lease additions	$	10,913		$	3,738		$	2,901
Capital expenditures in total current liabilities	$	4,628		$	4,960		$	6,059
Capitalized interest	$	328		$	1,086		$	1,104

Accompanying notes are integral to these consolidated financial statements.

50

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY AND ITS BUSINESS

     We are a leading global provider of conferencing and collaboration solutions that enable companies and individuals to meet and collaborate in a more productive and efficient manner. We have a global presence in 24 countries in our three segments in North America, Europe and Asia Pacific.

2. SIGNIFICANT ACCOUNTING POLICIES

Accounting Estimates

     Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of net revenues and expenses during the reporting period. Financial statement line items that include significant estimates consist of goodwill, net intangibles, accrued restructuring costs, tax accounts, certain accrued liabilities and the allowance for uncollectible accounts receivable. Changes in the facts or circumstances underlying these estimates could result in material changes, and actual results could differ from those estimates. These changes in estimates are recognized in the period they are realized.

Principles of Consolidation and Basis of Presentation

     The financial statements include our accounts consolidated with our wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Unless otherwise stated, current and prior period results in our consolidated statements of operations and cash flows and these notes reflect our results from continuing operations and exclude the effect of current and prior period discontinued operations. See Note 5 to our consolidated financial statements.

Cash and Equivalents and Restricted Cash

     Cash and equivalents include cash on hand and highly liquid investments with a maturity at date of purchase of three months or less. Cash balances that are legally restricted as to usage or withdrawal are separately disclosed on the face of our consolidated balance sheets and are classified as either current or long-term depending on the restrictions. At December 31, 2009 and 2008, we had $0.1 million and $0.3 million, respectively, of restricted cash held in long-term other assets that consist of cash held in escrow by third parties associated with several of our facility leases in our Asia Pacific operating segment.

Accounts Receivable and Allowance for Doubtful Accounts

     Included in accounts receivable at December 31, 2009 and 2008 was earned but unbilled revenue of approximately $8.5 million and $5.9 million, respectively, which results from non-calendar month billing cycles and the one-month lag in billing of certain of our services. Earned but unbilled revenue is billed within 30 days. Provision (recovery) for doubtful accounts was approximately $1.1 million, $0.4 million and $(0.8) million in 2009, 2008 and 2007, respectively. Write-offs against the allowance for doubtful accounts were $1.5 million, $2.9 million and $2.3 million in 2009, 2008 and 2007, respectively. Our allowance for doubtful accounts represents reserves for receivables that reduce accounts receivable to amounts expected to be collected. Management uses significant judgment in estimating uncollectible amounts. In estimating uncollectible amounts, management considers factors such as historical and anticipated customer payment performance and industry-specific economic conditions. Using these factors, management assigns reserves for uncollectible amounts by accounts receivable aging categories to specific customer accounts.

Property and Equipment

     Property and equipment are recorded at cost. Depreciation is recorded under the straight-line method over the estimated useful lives of the assets, commencing when the assets are placed in service. The estimated useful lives are five to seven years for furniture and fixtures, two to five years for software and three to ten years for

51

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

computer servers and Internet and telecommunications equipment. The cost of installation of equipment is capitalized, as applicable. Amortization of assets recorded under capital leases is included in depreciation. Assets recorded under capital leases and leasehold improvements are depreciated over the shorter of their useful lives or the term of the related lease.

Research and Development

     Research and development costs primarily related to developing new services, features and enhancements to existing services that do not qualify for capitalization are expensed as incurred.

Software Development Costs

     We capitalize certain costs incurred to develop software features sold as part of our service offerings, as part of “Property and Equipment, Net” on our consolidated balance sheets. For the years ended December 31, 2009, 2008 and 2007, we capitalized approximately $17.2 million, $22.7 million and $12.2 million, respectively, of these costs. We amortize these capitalized costs on a straight-line basis over the estimated life of the related software, not to exceed five years. Depreciation expense recorded for developed software for the years ended December 31, 2009, 2008, and 2007 was approximately $9.5 million, $5.1 million and $3.4 million, respectively.

Goodwill

     Goodwill is subject to a periodic impairment assessment by applying a fair value-based test based upon a two-step method. The first step is to identify potential goodwill impairment by comparing the estimated fair value of the reporting unit to their carrying amounts. The second step measures the amount of the impairment based upon a comparison of “implied fair value” of goodwill with its carrying amount. We have adopted December 31 of a given calendar year as our valuation date and have evaluated goodwill as of December 31, 2009, 2008 and 2007 with no impairments identified.

Valuation of Long-Lived Assets

     We evaluate the carrying values of long-lived assets when significant adverse changes in the economic value of these assets require an analysis, including property and equipment and other intangible assets. A long-lived asset is considered impaired when its fair value is less than its carrying value. In that event, a loss is calculated based on the amount the carrying value exceeds the future cash flows, as calculated under the best-estimate approach, of such asset. We believe that long-lived assets in our consolidated balance sheets are appropriately valued. Asset impairments were $3.7 million and $3.4 million during 2009 and 2008, respectively, and are recognized as “Asset impairments” in our consolidated statements of operations.

Revenue Recognition

     We recognize revenues when persuasive evidence of an arrangement exists, services have been rendered, the price to the buyer is fixed or determinable and collectability is reasonably assured. Revenues consist primarily of usage fees generally based on per minute, per fax page or per transaction methods. To a lesser extent, we charge subscription fees and fixed-period minimum revenue commitments. Unbilled revenue consists of earned but unbilled revenue which results from non-calendar month billing cycles and the one-month lag time in billing related to certain of our services. Deferred revenue consists of payments made by customers in advance of the time services are rendered.

USF Charges

     In accordance with FCC rules, we are required to contribute to the USF for some of our PGiMeet solutions, which we recover from our applicable PGiMeet customers and remit to the USAC. ASC 605-45-50-03 provides the choice of presenting this type of charge on a gross basis (included in revenues and costs) or a net basis (excluded from revenues). The USF charges that we collect and remit are presented on a net basis.

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Foreign Currency Translation

     The assets and liabilities of subsidiaries with a functional currency other than the U.S. Dollar are translated at rates of exchange existing at our consolidated balance sheet dates. Revenues and expenses are translated at average rates of exchange prevailing during the year. The resulting translation adjustments are recorded in the “Accumulated other comprehensive gain (loss)” component of shareholders’ equity. In addition, intercompany loans with foreign subsidiaries generally are considered to be permanently invested for the foreseeable future. Therefore, all foreign currency exchange gains and losses related to these balances are recorded in the “Accumulated other comprehensive gain (loss)” component of shareholders’ equity in our consolidated balance sheets.

Treasury Stock

     All treasury stock transactions are recorded at cost. During each of the years ended December 31, 2009 and December 31, 2008, we repurchased approximately 1.5 million shares of our common stock in the open market for approximately $11.6 million and $14.2 million, respectively. We retire all shares of treasury stock repurchased.

     During the years ended December 31, 2009 and 2008, we withheld approximately 316,000 and 327,000 shares, respectively, of our common stock to satisfy certain of our employees’ tax withholdings due upon the vesting of their restricted stock grants and remitted approximately $2.9 million and $4.6 million, respectively, in taxes on our employees’ behalf.

Preferred Stock

     We have 5.0 million shares of authorized $0.01 par value preferred stock, none of which are issued or outstanding. Under the terms of our amended and restated articles of incorporation, our board of directors is empowered to issue preferred stock without shareholder action.

Comprehensive Income (Loss)

     Comprehensive income (loss) represents the change in equity of a business during a period, except for investments by owners and distributions to owners. Comprehensive income for the years ended December 31, 2009, 2008 and 2007 was $28.1 million, $17.3 million and $38.9 million, respectively. The primary differences between net income, as reported and comprehensive income are foreign currency translation adjustments, net of taxes, and changes in unrealized gain (loss), derivatives, net of taxes.

     The components of accumulated other comprehensive income at December 31, 2009, 2008 and 2007 are as follows (in thousands):

	Translation adjustments				Change in unrealized gain (loss), derivatives			Total
Balance at December 31, 2006	$	2,088		$	—		$	2,088
Current-period change		8,435			—			8,435
Tax effect		—			—			—
Balance at December 31, 2007		10,523			—			10,523
Current-period change		(16,317	)		(3,974	)		(20,291	)
Tax effect		65			1,391			1,456
Balance at December 31, 2008		(5,729	)		(2,583	)		(8,312	)
Current-period change		12,955			2,421			15,376
Tax effect		—			(847	)		(847	)
Balance at December 31, 2009	$	7,226		$	(1,009	)	$	6,217

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income Taxes

     Significant judgment is required to determine our provision for income taxes, including deferred tax assets, deferred tax liabilities and valuation allowances and in evaluating our uncertain tax positions. Deferred tax assets and liabilities reflect the tax effect of temporary differences between asset and liability amounts recognized for income tax purposes and the amounts recognized for financial reporting purposes. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates applicable to future years in which the deferred tax assets or liabilities are expected to be settled or realized. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized on a more likely than not basis. Under current accounting principles, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained.

Restructuring Costs

     Restructuring reserves are based on certain estimates and judgments related to severance and exit costs, contractual obligations and related costs, and are recorded as “Restructuring costs” in our consolidated statements of operations. See Note 3 to our consolidated financial statements for additional information and related disclosures regarding our restructuring costs.

Legal Contingencies

     We are involved from time to time in litigation matters as disclosed in Note 15. We accrue an estimate of the probable costs for the resolution of legal claims. These estimates are developed in consultation with outside counsel handling these matters and based upon an analysis of potential results, assuming a combination of litigation and settlement strategies.

New and Recently Adopted Accounting Pronouncements

     In June 2009, the FASB issued Accounting Standards Update No. 2009-01, “Generally Accepted Accounting Principles” (ASC Topic 105) which establishes the ASC as the official single source of authoritative GAAP. All existing accounting standards are superseded. All other accounting guidance not included in the ASC will be considered non-authoritative. The ASC also includes all relevant SEC guidance organized using the same topical structure in separate sections within the ASC. The ASC is effective for financial statements for interim or annual reporting periods ending after September 15, 2009.

     In January 2010, the FASB issued Accounting Standards Update No. 2010-06 “Fair Value Measurements and Disclosures,” which requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. The new disclosures are effective for interim and annual reporting periods beginning after December 15, 2009. Adoption of the provisions of Update No. 2010-06 will be limited to expanded disclosure in our consolidated financial statements.

     In October 2009, the FASB issued Accounting Standards Update No. 2009-13, “Revenue Recognition, Multiple-Deliverable Revenue Arrangements,” an amendment to its accounting guidance on revenue arrangements with multiple deliverables. This new accounting guidance addresses the unit of accounting for arrangements involving multiple deliverables and how consideration should be allocated to separate units of accounting, when applicable. In the same month, the FASB also issued Accounting Standards Update No. 2009-14, “Software, Certain Revenue Arrangements That Include Software Elements,” which changes revenue recognition for tangible products containing software and hardware elements. This update excludes from software revenue recognition all tangible products containing both software and non-software components that function together to deliver the product’s essential functionality and includes such products in the multiple-deliverable revenue guidance discussed above. This guidance will be effective for fiscal years beginning on or after June 15, 2010. Early adoption is permitted. All guidance contained within these updates must be adopted in the same period. We do not expect this guidance to have a material impact on our consolidated financial position or results of operations.

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     In June 2009, the FASB updated ASC 855, “Subsequent Events,” which incorporates the subsequent events guidance contained in the auditing standards literature into authoritative accounting literature. The updated accounting guidance requires entities to disclose the date through which they have evaluated subsequent events and whether the date corresponds with the issuance of their financial statements. We have evaluated the financial statements for subsequent events through February 26, 2010, the date of issuance of our financial statements, and determined that no events or transactions met the definition of a subsequent event for purposes of recognition or disclosure. The updated provisions of ASC 855 are effective for all interim and annual periods ending after June 15, 2009. The adopted provisions of ASC 855 are limited to expanded disclosure in our consolidated financial statements.

     In April 2009, the FASB issued ASC 825, “Financial Instruments,” which requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This standard also requires those disclosures in summarized financial information at interim reporting periods beginning after March 15, 2009. We adopted the provisions of ASC 825 effective as of April 1, 2009, and it had no material impact on our consolidated financial statements.

     In April 2008, the FASB issued new accounting guidance related to the determination of the useful life of intangible assets. This guidance indicates that in developing assumptions about renewal or extension options used to determine the useful life of an intangible asset, an entity needs to consider its own historical experience adjusted for entity-specific factors. In the absence of that experience, an entity shall consider the assumptions that market participants would use about renewal or extension option. The new accounting guidance is to be applied to intangible assets acquired after January 1, 2009. We adopted the provisions of the new accounting guidance, and it had no material impact on our consolidated financial statements.

     In March 2008, the FASB issued new accounting guidance related to disclosures about derivative instruments and hedging activities. This guidance amends and expands disclosure requirements to provide a better understanding of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for and their effect on an entity’s financial position, financial performance and cash flows. This guidance is effective for fiscal years beginning after November 15, 2008. We adopted this guidance as of January 1, 2009, and it had no financial impact other than expanded disclosure in our consolidated financial statements. See Note 12 to our consolidated financial statements.

     In December 2007, the FASB issued new accounting guidance related the principles and requirements for how an acquiror recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired, as well as adding the requirement that acquisition-related costs be expensed as incurred rather than included in the purchase price. The guidance also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. This guidance is effective for fiscal years beginning after December 15, 2008. We adopted this guidance on January 1, 2009, and it had no material impact on our consolidated financial statements. The impact of its adoption in future periods will depend on the nature and size of business combinations completed subsequent to the date of adoption.

3. RESTRUCTURING COSTS

     Consolidated restructuring costs for the years ended December 31, 2009, 2008 and 2007, including costs related to our discontinued operations in 2009, are as follows (in thousands):

	Balance at December 31, 2006		Provisions		Cash payments			Equity released		Non-cash			Balance at December 31, 2007
Accrued restructuring costs:
Severance and exit costs	$	4,027	$	4,098	$	(6,448	)	$	—	$	(751	)	$	926
Contractual obligations		3,112		100		(846	)		—		—			2,366
Total restructuring costs	$	7,139	$	4,198	$	(7,294	)	$	—	$	(751	)	$	3,292

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Balance at December 31, 2007			Provisions	Cash payments			Equity released			Non-cash			Balance at December 31, 2008
Accrued restructuring costs:
Severance and exit costs	$	926	$	3,431	$	(3,446	)	$	(549	)	$	(92	)	$	270
Contractual obligations		2,366		—		(783	)		—			—			1,583
Total restructuring costs	$	3,292	$	3,431	$	(4,229	)	$	(549	)	$	(92	)	$	1,853
	Balance at December 31, 2008		Provisions		Cash payments			Equity released			Non-cash			Balance at December 31, 2009
Accrued restructuring costs:
Severance and exit costs	$	270	$	14,776	$	(9,519	)	$	(164	)	$	129		$	5,492
Contractual obligations		1,583		7,623		(1,548	)		—			7			7,665
Total restructuring costs	$	1,853	$	22,399	$	(11,067	)	$	(164	)	$	136		$	13,157

Realignment of Workforce – 2009

     During the year ended December 31, 2009, we executed a restructuring plan to consolidate and streamline various functions of our work force. As part of these consolidations we eliminated approximately 500 positions. During the year ended December 31, 2009, we recorded total severance and exit costs of $14.8 million, which included the acceleration of vesting of restricted stock with a fair market value of $0.2 million. Severance costs for 2009 included $0.4 million associated with the decision to divest our PGiMarket business. Additionally, during the year ended December 31, 2009, we recorded $4.4 million of lease termination costs associated with office locations in North America and Europe. The expenses associated with these activities are reflected in “Restructuring costs” in our consolidated statements of operations. On a segment basis, these restructuring costs total $12.0 million in North America, $6.6 million in Europe, and $0.6 million in Asia Pacific. Our reserve for the 2009 restructuring costs was $9.3 million at December 31, 2009. We anticipate these severance-related costs will be paid over the next year, and these lease termination costs will be paid over the next nine years.

Realignment of Workforce – 2008

     During the year ended December 31, 2008, we executed a restructuring plan to consolidate the senior management of our technology development and network operations functions and to consolidate our corporate communications function into our marketing department. As part of these consolidations, we eliminated 11 positions, including entering into a separation agreement with our president, global operations. During the year ended December 31, 2008, we expensed total restructuring costs of $3.4 million associated with this realignment of our workforce, representing severance costs associated with the elimination of these positions. On a segment basis, the total restructuring costs initially incurred were $2.0 million in North America, $1.3 million in Europe and $0.1 million in Asia Pacific, with total adjustments in 2009 in Europe of $(0.1) million and in North America of $0.1. As of December 31, 2009, we have completed this restructuring plan and, accordingly, no reserves for the 2008 restructuring costs remain.

Realignment of Workforce – 2007

     During the year ended December 31, 2007, we executed a restructuring plan to consolidate our non-PGiMeet solutions service delivery organizations. As part of this consolidation, we eliminated 84 positions. We initially expensed total restructuring costs of $4.2 million, representing $4.1 million in severance costs associated with the elimination of these positions and $0.1 million of lease termination costs associated with our Paris, France office. During the years ended December 31, 2008 and 2007, we adjusted the initially recorded charge by $(0.1) million and $(0.2) million, respectively, related to actual severance payments being less than originally estimated. The expenses associated with these charges are reflected in “Restructuring costs” in our consolidated statements of operations. On a segment basis, the total restructuring costs initially incurred were $1.1 million in North America, $2.7 million in Europe and $0.4 million in Asia Pacific, with total adjustments in Europe of $(0.1) million and $(0.2)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

million in 2008 and 2007, respectively. As of December 31, 2009, we have completed this restructuring plan and, accordingly, no reserves for the 2007 restructuring costs remain.

Realignment of Workforce – Prior to 2007

     Amounts paid in cash during the year ended December 31, 2009 for restructuring costs incurred prior to 2007 totaled $0.9 million. During the year ended December 31, 2009, we revised assumptions used in determining the estimated costs associated with lease terminations incurred prior to 2007. As a result, we recorded an additional $3.2 million of lease termination costs. The expenses associated with these activities are reflected in “Restructuring costs” in our consolidated statements of operations. At December 31, 2009, our reserve for restructuring costs incurred prior to 2007 totaled $3.9 million and is associated with lease termination costs. We anticipate these remaining lease termination costs will be paid over the next seven years.

4. ACQUISITIONS

     We seek to acquire complementary companies that increase our market share and provide us with additional customers, technologies, applications and sales personnel. All revenues and related costs from these transactions have been included in our consolidated financial statements as of the effective date of each acquisition.

North America

     In February 2009, we acquired certain technology assets of a provider of web collaboration services in exchange for warrants to purchase 105,000 shares of our common stock. We allocated the $0.3 million fair value of the warrants to in-process research and development in other intangible assets. The in-process research and development is not currently being amortized but is subject to periodic impairment testing. We incurred transaction fees and closing costs of $0.2 million, which we expensed as incurred.

     In February 2009, we acquired certain assets and assumed certain liabilities of LINK, a U.S.-based provider of audio and web conferencing services. We paid $7.1 million in cash at closing and $0.3 million in transaction fees and closing costs, which we expensed as incurred. We funded the purchase through our credit facility and cash and equivalents on hand. We allocated $0.7 million to accounts receivable, $0.1 million to prepaid assets, $0.3 million to acquired fixed assets, $0.3 million to other acquisition liabilities, $2.4 million to identifiable customer lists and $0.1 million to non-compete agreements, with the customer lists amortized over ten years and the non-compete agreements amortized over five years. We allocated the residual $3.8 million of the purchase price to goodwill, which is subject to a periodic impairment assessment.

     In July 2008, we acquired certain assets of Soundpath, a U.S.-based provider of audio conferencing services. We paid $20.1 million in cash at closing and $0.3 million in transaction fees and closing costs. We funded the purchase through our credit facility and cash and equivalents on hand. We allocated $6.0 million to identifiable customer lists and $1.0 million to non-compete agreements, with the customer lists amortized over ten years and the non-compete agreements amortized over five years. We allocated the residual $13.4 million of the aggregate purchase price to goodwill, which is subject to a periodic impairment assessment.

     In May 2008, we acquired certain assets and assumed certain liabilities of the U.S.-based audio conferencing business of iLinc. We paid $3.9 million in cash at closing and $0.1 million in transaction fees and closing costs. We funded the purchase with cash and equivalents on hand. We allocated $0.6 million to acquired working capital, $0.8 million to other acquisition liabilities and $1.2 million to identifiable intangible assets, which will be amortized over five years. We allocated the residual $3.0 million of the aggregate purchase price to goodwill, which is subject to a periodic impairment assessment.

     In July 2007, we acquired the assets and stock of Budget Conferencing. We paid $19.8 million in cash at closing and $0.6 million in transaction fees and closing costs. In June 2008, we paid an additional $0.7 million in cash to finalize the working capital component of the purchase price. We funded the purchase through our credit facility. We allocated approximately $0.2 million to acquired fixed assets, $0.1 million to other acquisition

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

liabilities, $6.6 million to identifiable customer lists, $1.3 million to trademarks, and $1.4 million to a non-compete agreement, with the identifiable customer lists and non-compete agreements amortized over five years. In addition, we allocated $2.6 million to long-term deferred tax liabilities to record the step-up in basis for the customer lists and developed technology purchased. We allocated the residual $14.3 million of the aggregate purchase price to goodwill, which is subject to a periodic impairment assessment.

Europe

     In November 2007, we acquired the stock of Meet24. We paid $26.3 million in cash at closing and $0.2 million in transaction fees and closing costs. We funded the purchase through our credit facility and cash and equivalents on hand. We allocated approximately $0.2 million to acquired fixed assets, $1.4 million to acquired working capital, $0.9 million to acquired deferred tax assets, $3.8 million to other acquisition liabilities, $8.8 million to identifiable customer lists, and $0.7 million to a non-compete agreement, with the identifiable customer lists and non-compete agreements amortized over five years. In addition, we allocated $2.7 million to long-term deferred tax liabilities. We allocated the residual $21.0 million of the aggregate purchase price to goodwill, which is subject to a periodic impairment assessment.

5. DISCONTINUED OPERATIONS

     On November 5, 2009, we completed the sale of our PGiMarket business. Prior period results have been reclassified to present this business as discontinued operations. In connection with this divestiture, we recorded a non-cash charge of $7.0 million in discontinued operations to reduce the carrying value of the assets associated with this business to their estimated fair value of $1.4 million, of which $1.0 million was cash received at closing and $0.4 million is an estimate of cash to be received based on the achievement of certain revenue targets of the business in 2010 under an earn-out provision.

     As part of the adjustment, we reduced the net book value of property and equipment associated with this business by $6.9 million and adjusted goodwill and other intangibles by $0.9 million and $0.3 million, respectively. In addition, we incurred charges of $0.2 million for costs associated with the sale and recorded a receivable of $0.4 million for the revenue achievement earn-out estimate.

     The following amounts associated with our PGiMarket business have been segregated from continuing operations and are reflected as discontinued operations for 2009, 2008 and 2007 (in thousands):

	Years Ended December 31,
	2009			2008			2007
Net revenue from discontinued operations	$	2,634		$	3,829		$	4,786
Operating loss		(4,509	)		(6,639	)		(4,671	)
Loss on disposal		(6,972	)		—			—
Income tax benefit		3,760			2,148			1,728
Loss from discontinued operations, net of taxes	$	(7,721	)	$	(4,491	)	$	(2,943	)

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. PROPERTY AND EQUIPMENT, NET

Property and equipment at December 31, 2009 and 2008 is as follows (in thousands):

	2009			2008
Operations equipment	$	123,069		$	122,361
Furniture and fixtures		7,415			10,658
Office equipment		5,328			8,063
Leasehold improvements		25,990			24,195
Capitalized software		99,459			82,354
Construction in progress		11,221			17,834
Building		1,597			1,442
		274,079			266,907
Less accumulated depreciation		(136,844	)		(137,830	)
Property and equipment, net	$	137,235		$	129,077

     During 2009, asset impairments were $3.7 million, associated primarily with the abandonment of certain software projects previously included in “Property and equipment, net.” During 2008, included in total asset impairments was $2.3 million associated primarily with the abandonment of billing system software projects previously included in “Property and equipment, net.”

     Assets under capital leases included in property and equipment at December 31, 2009 and 2008 are as follows (in thousands):

	2009			2008
Operations equipment	$	16,853		$	10,695
Less accumulated depreciation		(4,616	)		(5,152	)
Assets under capital lease, net	$	12,237		$	5,543

7. GOODWILL AND INTANGIBLE ASSETS

Goodwill by reportable business segment at December 31, 2009, 2008 and 2007 (in thousands):

	North America			Europe				Asia Pacific			Total
Goodwill	$	377,718			$	46,529		$	4,570			$	428,817
Accumulated impairment losses		(91,571	)			—			—				(91,571	)
Carrying value at December 31, 2007		286,147				46,529			4,570				337,246
Additions		16,862				—			—				16,862
Adjustments		(3,474	)			(5,885	)		(795	)			(10,154	)
Goodwill		391,106				40,644			3,775				435,525
Accumulated impairment losses		(91,571	)			—			—				(91,571	)
Carrying value at December 31, 2008		299,535				40,644			3,775				343,954
Additions		3,770				—			—				3,770
Impairment loss		(852	)			—			—				(852	)
Adjustments		2,887				3,941			909				7,737
Goodwill		397,763				44,585			4,684				447,032
Accumulated impairment losses		(92,423	)			—			—				(92,423	)
Carrying value at December 31, 2009	$	305,340			$	44,585		$	4,684			$	354,609

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Goodwill is not subject to amortization but is subject to periodic reviews for impairment. Additions to the goodwill carrying value during 2009 are primarily due to our acquisition of certain assets of LINK. Additions to the goodwill carrying value during 2008 are primarily due to our acquisition of certain assets of Soundpath and iLinc. Adjustments to the goodwill carrying value since December 31, 2007 are primarily due to working capital adjustments related to prior period acquisitions and foreign currency fluctuations against the U.S. Dollar. Impairments to the goodwill carrying value since December 31, 2008 are associated with the decision to divest our PGiMarket business.

Other Intangible Assets

     Summarized below are the carrying value and accumulated amortization, if applicable, by intangible asset class at December 31, 2009 and 2008 (in thousands):

	2009								2008
	Gross carrying value		Accumulated amortization			Net carrying value		Gross carrying value			Accumulated amortization			Net carrying value
Other Intangible assets:
Customer lists		$  132,704		$  (112,975	)		$  19,729			$  128,564		$  (102,705	)		$  25,859
Non-compete agreements		6,087		(3,974	)		2,113			5,799		(2,821	)		2,978
Developed technology		39,626		(39,421	)		205			40,069		(39,598	)		471
Other		2,855		(62	)		2,793			2,842		(70	)		2,772
Total other intangible
assets		$  181,272		$  (156,432	)		$  24,840			$  177,274		$  (145,194	)		$  32,080

     Other intangible assets include $22.1 million of net intangible assets at December 31, 2009 that are subject to amortization. Our weighted-average useful lives from the date of acquisition for finite lived intangible assets acquired during 2009 was 9.3 years and 0.2 years for customer lists and non-compete agreements, respectively, and 9.5 years for total finite lived intangibles acquired during the period. Other intangible assets that are subject to amortization are amortized over an estimated useful life between one and ten years. Amortization expense related to our other intangible assets for the full year 2009 was approximately $10.6 million. Estimated amortization expense for the next five years is as follows (in thousands):

	Estimated
	amortization
Year	expense
2010	$7,553
2011	5,906
2012	3,557
2013	1,124
2014	847

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. INDEBTEDNESS

Long-term debt and capital lease obligations at December 31, 2009 and 2008 are as follows (in thousands):

	December 31,   2009		December 31, 2008
Borrowings on credit facility	$    254,880		$    266,199
Capital lease obligations	11,643		5,290
Subtotal	$    266,523		$    271,489
Less current portion	(3,596	)	(2,455	)
Total long-term debt and capital lease obligations	$    262,927		$    269,034

     The fair value of our long-term debt and capital lease obligations was $262.9 million and $253.7 million at December 31, 2009 and 2008, respectively. Fair value is determined using current interest rates offered to us on debt of the same remaining maturity and characteristics, including credit quality.

     Future minimum lease payments under capital leases consist of the following at December 31, 2009 (in thousands):

2010	$	4,683
2011		3,785
2012		3,226
2013		1,639
2014		52
Total minimum lease payments		13,385
Less amounts representing interest		(1,742	)
Present value of minimum lease payments		11,643
Less current portion		(3,596	)
	$	8,047

     We have a $375.0 million committed revolving credit facility, which consists of an original revolving credit facility of $300.0 million with a $100.0 million accordion feature, of which $75.0 million has been exercised to date. This accordion feature allows for additional credit commitments to increase the revolving credit facility up to a maximum of $400.0 million, subject to its terms and conditions. Our credit facility matures in April 2011. Certain of our material domestic subsidiaries have guaranteed our obligations under the credit facility, which is secured by substantially all of our assets and the assets of our material domestic subsidiaries. In addition, we have pledged as collateral all of the issued and outstanding stock of our material domestic subsidiaries and 65% of our material foreign subsidiaries.

     At December 31, 2009, we were in compliance with the covenants under our credit facility. Proceeds drawn under our credit facility may be used for refinancing of existing debt, working capital, capital expenditures, acquisitions and other general corporate purposes. The annual interest rate applicable to borrowings under the credit facility, at our option, is the base rate (the greater of either the federal funds rate plus one-half of one percent, the prime rate or the Eurocurrency rate plus one and three-quarters of one percent) or one-month LIBOR plus an applicable margin that varies based upon our leverage ratio at the end of each fiscal quarter. At December 31, 2009, our applicable margin with respect to LIBOR loans was 1.50%. At December 31, 2009, our interest rate on one-month U.S. Dollar LIBOR loans, which comprise materially all of our outstanding borrowings, was 1.73% for our borrowings on which we did not have an interest rate swap agreement in place. At December 31, 2009, we had $254.9 million of borrowings and $5.9 million in letters of credit outstanding under our credit facility.

     In August 2007, we entered into two $100.0 million two-year interest rate swaps at a fixed rate of 4.99%. In December 2007, we amended the life of one of the $100.0 million swaps to three years and reduced the fixed rate to 4.75%. We did not initially designate these interest rate swaps as hedges and, as such, we did not account for them under hedge accounting. During the fourth quarter of 2008, we prospectively designated these interest rate

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

swaps as cash flow hedges of our interest rate risk associated with our credit facility using the long-haul method of effectiveness testing. Any changes in fair value prior to designation as a hedge and any ineffectiveness subsequent to such designation are recognized as “Unrealized gain (loss) on change in fair value of interest rate swaps” as a component of “Other (expense) income” in our consolidated statements of operations and amounted to $3.4 million, $(0.1) million, and $(4.5) million during the years ended December 31, 2009, 2008, and 2007, respectively. Any changes in fair value that are determined to be effective are recorded as a component of “Accumulated other comprehensive loss” in our consolidated balance sheets and amounted to a gain of $1.6 million, net of taxes, for the year ended December 31, 2009. We recognize the fair value of derivatives in our consolidated balance sheets as part of “Accrued expenses” under “Current Liabilities” or “Long-Term Liabilities” depending on the maturity date of the contract. The amount recognized in current liabilities was $2.8 million and $2.6 million at and December 31, 2009 and 2008, respectively. The amount recognized in “Long-Term Liabilities” was $6.0 million at December 31, 2008. As of December 31, 2009, we have one $100.0 million interest rate swap outstanding, which has a fixed rate of 4.75% and expires in August 2010.

9. EQUITY-BASED COMPENSATION

     We may issue restricted stock awards, stock options, stock appreciation rights, restricted stock units and other stock-based awards to employees, directors, non-employee consultants and advisors under our amended and restated 2004 long-term incentive plan and our amended and restated 2000 directors stock plan. Options issued under these plans, other than the directors stock plan, may be either incentive stock options, which permit income tax deferral upon exercise of options, or non-qualified options not entitled to such deferral. The compensation committee of our board of directors administers these stock plans.

     In April 2008, our board of directors adopted and, in June 2008, our shareholders approved our amended and restated 2004 long-term incentive plan. The amendment and restatement of our 2004 plan increased the total number of shares authorized for issuance by 2.0 million shares to 6.0 million shares. The maximum number of stock-based awards that we may grant under our 2004 plan during any one calendar year to any one grantee is 1.0 million shares. We may not grant more than 3,975,176 of stock-based awards in the form of “full value” awards, such as restricted stock, subject to anti-dilution adjustments under our 2004 plan.

     In April 2008, our board of directors adopted and, in June 2008, our shareholders approved our amended and restated 2000 directors stock plan. Only non-employee directors can participate in our directors stock plan. Under our directors stock plan, we have reserved a total of 2.0 million shares of our common stock in connection with stock-based awards. We may not grant more than 325,431 of stock-based awards in the form of restricted stock, subject to anti-dilution adjustments, and may only grant non-qualified stock options under our directors stock plan.

     Equity-based compensation expense is measured at the grant date, based on the fair value of the award, and is recognized over the vesting periods. The following table presents total equity-based compensation expense for non-qualified stock options and restricted stock awards included in the line items below in our consolidated statements of operations (in thousands):

	Years Ended December 31,
	2009			2008			2007
Cost of revenues	$	408		$	279		$	416
Selling and marketing		2,187			2,942			2,238
Research and development		1,267			1,174			827
General and administrative		6,914			8,078			7,109
Equity-based compensation expense		10,776			12,473			10,590
Income tax benefits		(3,664	)		(4,241	)		(3,601	)
Total equity-based compensation expense, net of tax	$	7,112		$	8,232		$	6,989

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock

     The fair value of restricted stock awards is the market value of the stock on the date of grant. The effect of vesting conditions that apply only during the requisite service period is reflected by recognizing compensation cost only for the restricted stock awards for which the requisite service is rendered. As a result, we are required to estimate an expected forfeiture rate, as well as the probability that performance conditions that affect the vesting of certain stock-based awards will be achieved, and only recognize expense for those shares expected to vest. We estimate that forfeiture rate based on historical experience of our stock-based awards that are granted, exercised and voluntarily cancelled. If our actual forfeiture rate is materially different from our estimate, the stock-based compensation expense could be significantly different from what we have recorded in the current period. During the year ended December 31, 2007, we elected to adjust our forfeiture rate to 1.5% from 0%. The financial impact of this adjustment was $0.3 million and was recognized as a reduction of equity-based compensation in the year ended December 31, 2007. We continued to use a forfeiture rate of 1.5% for the year ended December 31, 2009.

     The following table summarizes the activity of our unvested restricted stock awards under our stock plans for the year ended December 31, 2009:

	Shares		Weighted- average grant date fair value
Unvested at December 31, 2008	1,926,507		$	11.18
Granted	378,463			9.70
Vested/released	(991,351	)		10.35
Forfeited	(118,348	)		12.24
Unvested at December 31, 2009	1,195,271		$	11.30

     The weighted-average grant date fair value of restricted stock awards granted during the years ended December 31, 2009, 2008 and 2007, was $9.70, $12.95 and $12.71, respectively. The aggregate fair value of restricted stock vested during the years ended December 31, 2009, 2008 and 2007, was $9.0 million, $13.9 million and $11.9 million, respectively. As of December 31, 2009, we had $9.4 million of unvested restricted stock, which we will record in our statements of operations over a weighted average recognition period of less than two years.

Stock Options

     The fair value of stock options is estimated at the date of grant with the Black-Scholes option pricing model using various assumptions such as expected life, volatility, risk-free interest rate, dividend yield and forfeiture rates. The expected life of stock-based awards granted represents the period of time that they are expected to be outstanding and is estimated using historical data. Using the Black-Scholes option valuation model, we estimate the volatility of our common stock at the date of grant based on the historical volatility of our common stock. We base the risk-free interest rate used in the Black-Scholes option valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award. We have not paid any cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future. Consequently, we used an expected dividend yield of zero in the Black-Scholes option valuation model. Finally, we use historical data to estimate pre-vesting option forfeitures. Stock-based compensation is recorded for only those awards that are expected to vest. No stock options have been issued since the year ended December 31, 2005.

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The following table summarizes the activity of stock options under our stock plans for the year ended December 31, 2009:

	Options		Weighted- average exercise price			Weighted- average remaining contractual life (in years)	Aggregate intrinsic value
Options outstanding at December 31, 2008	747,175			$	8.22
Granted	—				—
Exercised	(181,420	)			3.11
Expired	(3,417	)			5.08
Options outstanding at December 31, 2009	562,338				9.89	2.49		$	12,284
Options exercisable at December 31, 2009	562,338			$	9.89	2.49		$	12,284

     The total intrinsic value of options exercised during the years ended December 31, 2009, 2008, and 2007 was $1.0 million, $2.0 million and $8.6 million, respectively. The total fair value of options vested during the years ended December 31, 2008 and 2007, was million, $0.5 million and $1.4 million, respectively. As of December 31, 2009, we had no remaining unvested stock options to be recorded as an expense in our statements of operations for future periods.

10. EARNINGS PER SHARE

Basic and Diluted Net Income Per Share

     Basic earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period. The weighted-average number of common shares outstanding does not include any potentially dilutive securities or any unvested restricted shares of common stock. These unvested restricted shares, although classified as issued and outstanding at December 31, 2009, 2008 and 2007 are considered contingently returnable until the restrictions lapse and will not be included in the basic earnings per share calculation until the shares are vested.

     Diluted earnings per share gives the effect to all potentially dilutive securities on earnings per share. Our outstanding stock options and unvested restricted shares are potentially dilutive securities. The difference between basic and diluted weighted-average shares outstanding was the dilutive effect of stock options, unvested restricted shares, and warrants.

     The following table represents a reconciliation of the basic and diluted earnings per share from continuing operations, or EPS, computations contained in our consolidated financial statements (in thousands, except per share data):

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Years Ended December 31,
	2009						2008					2007
	Net income		Weighted- average shares	Earnings per share				Net income	Weighted- average shares	Earnings per share		Net income		Weighted- average shares	Earnings per share
Basic EPS	$	21,330	58,823		$	0.36	$	40,594	59,356	$	0.68	$	33,385	62,654	$	0.53
Effect of dilutive
securities:
Stock options		—	81			—		—	334		—		—	588		—
Unvested restricted
shares		—	404			—		—	787		—		—	698		—
Warrants		—	2			—		—	—		—		—	—		—
Diluted EPS	$	21,330	59,310		$	0.36	$	40,594	60,477	$	0.67	$	33,385	63,940	$	0.52

     The weighted-average diluted common shares outstanding for the year ended December 31, 2009, 2008, 2007 excludes the effect of 701,000, 116,000, and 6,000 restricted shares and out-of-the-money options because their effect would be anti-dilutive.

11. ACCRUED EXPENSES

Accrued expenses at December 31, 2009 and 2008 are as follows (in thousands):

	2009		2008
Accrued wages and wage related taxes	$	10,928	$	12,861
Accrued sales commissions		4,823		3,430
Employee benefits		1,375		4,139
Accrued professional fees		2,588		2,737
Fair value of derivative instruments		2,777		2,600
Other		6,052		8,020
	$	28,543	$	33,787

Sales tax and excise tax

     Historically, we have collected and remitted state sales tax from our non-PGiMeet solutions customers in applicable states, but we have not collected and remitted state sales tax from our PGiMeet solutions customers in all applicable jurisdictions. In addition, we have learned that certain of our PGiMeet solutions may be subject to telecommunications excise tax statutes in certain states. During the years ended December 31, 2009 and 2008, we paid $0.1 million and $2.8 million related to the settlement of certain of these state sales and excise tax contingencies.

     We have reserves for certain state sales and excise tax contingencies based on the likelihood of obligation. At December 31, 2009 and 2008, we had reserved $4.4 and $4.6 million, respectively, for certain state sales and excise tax contingencies. These reserved amounts are included in “Accrued taxes, other than income taxes” in our consolidated balance sheets. We believe we have appropriately accrued for these contingencies. In the event that actual results differ from these reserves, we may need to make adjustments, which could materially impact our financial condition and results of operations. In addition, states may disagree with our method of assessing and remitting such taxes or additional states may subject us to inquiries regarding such taxes.

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

     The fair value amounts for cash and equivalents, accounts receivable, net, and accounts payable and accrued expenses approximate carrying amounts due to the short maturities of these instruments. The estimated fair value of our long-term debt and capital lease obligations at December 31, 2009 and 2008 was based on expected future payments discounted using current interest rates offered to us on debt of the same remaining maturity and characteristics, including credit quality. See Note 8 to our consolidated financial statements. The fair value of our derivative instruments is calculated at the end of each period and carried on our consolidated balance sheets in the appropriate category, as further discussed below.

     Fair value is defined as an exit price representing the amount that would be received to sell an asset or paid to transfer a liability at the measurement date in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820, “Fair Value Measurements and Disclosures,” establishes a three-tier fair value hierarchy as a basis for such assumptions which prioritizes the inputs used in measuring fair value as follows:

• Level 1 – Quoted prices in active markets for identical assets or liabilities;

• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

• Level 3 – Unobservable inputs for the asset or liability in which there is little or no market data.

     We value our interest rate swaps using a market approach based on interest rate yield curves observable in market transactions. The fair value of our interest rate swaps is based on models whose inputs are observable; therefore, the fair value of these financial instruments is based on Level 2 inputs.

     We have segregated all financial assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below (in thousands):

	December 31, 2009
		Fair value	Level 1		Level 2		Level 3
Liabilities:
Interest rate swap		$2,777	$	—	$	2,777	$	—
Total		$2,777	$	—	$	2,777	$	—
	December 31, 2008
		Fair value	Level 1		Level 2		Level 3
Liabilities:
Interest rate swaps		$8,563	$	—	$	8,563	$	—
Total		$8,563	$	—	$	8,563	$	—

     We use derivative instruments to manage risks related to interest rates. During the years ended December 31, 2009 and 2008, our derivative instruments are limited to interest rate swaps. We designated our interest rate swaps as cash flow hedges using the long-haul method in October 2008, and subsequently our derivative instruments qualified for hedge accounting treatment. For further disclosure on our policy for accounting for derivatives and hedges, see Notes 8 and 2 to our consolidated financial statements.

     In addition to assets and liabilities that are recorded at fair value on a recurring basis, we are required to record certain assets and liabilities at fair value on a nonrecurring basis. Generally, assets and liabilities recorded at fair value on a nonrecurring basis are the result of impairment charges.

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     We have segregated all assets and liabilities that are measured at fair value on a nonrecurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below (in thousands):

	December 31, 2009
		Fair value	Level 1	Level 2	Level 3	Total losses
Assets:
Property and equipment		$ —	$ —	$ —	$ —	$ 3,682
Total		$ —	$ —	$ —	$ —	$ 3,682

     During the year ended December 31, 2009, we abandoned development efforts associated primarily with certain software projects and recorded an other-than-temporary impairment charge in North America. As a consequence, we wrote-off accumulated costs associated with these projects of $3.7 million previously included in “Property and equipment, net,” as asset impairments in our consolidated statements of operations. We determined the fair value of the assets based on Level 3 inputs of unobservable market data that indicate these software projects would never reach their intended use.

     In connection with the decision to divest our PGiMarket business, we recorded an other-than-temporary impairment charge in North America of $7.0 million in September 2009 recognized in discontinued operations in our consolidated statements of operations to reduce the carrying value of the assets associated with this business to their estimated fair value of $1.0 million, originally classified as assets held for sale in “Prepaid expenses and other current assets” in our consolidated balance sheet as of September 30, 2009. Subsequently, we completed the sale of these assets and, as of December 31, 2009, no associated asset was included in our consolidated balance sheet. We determined the fair value of the assets based on Level 2 inputs of observable market data. See Note 5 to our consolidated financial statements for further information on this impairment.

Fair Value of Derivative Instruments

     We are exposed to one-month LIBOR interest rate risk on our $375.0 million credit facility. In August 2007, we entered into two $100.0 million pay fixed, receive floating interest rate swaps to hedge the variability in our cash flows associated with changes in one-month LIBOR interest rates. One of these interest rate swaps expired in August 2009, and the other will expire in August 2010. As of December 31, 2009, our outstanding interest rate swap is designated as a cash flow hedge, and the fair value is recorded in current liabilities as summarized in the table below (in thousands):

	December 31, 2009
	Interest Rate Swaps
		Total
Liabilities:
Current liabilities
Accrued expenses	$ 2,777	$ 2,777
Total liabilities	$ 2,777	$ 2,777

Cash-Flow Hedges

     For a derivative instrument designated as a cash-flow hedge, the effective portion of the derivative’s gain (loss) is initially reported as a component of other comprehensive income and is subsequently recognized in earnings in the same period or periods during which the hedged exposure is recognized in earnings. Gains and losses on the derivative representing hedge ineffectiveness are recognized in current earnings. Monthly settlements with the counterparties are recognized in the same line item, “Interest expense,” as the interest costs associated with our credit facility. Accordingly, cash settlements are included in operating cash flows and were $7.5 million for the year ended December 31, 2009. During the year ended December 31, 2009, we recognized the following gains (losses) and interest expense related to interest rate swaps (in thousands):

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Year Ended December 31, 2009
	Interest Rate Swaps
Effective portion:
Gain recognized in other comprehensive income, net
of tax effect of $0.8 million	$ 1,574
Ineffective portion:
Unrealized gain on change in fair value of interest rate swaps
recognized in other income	$ 3,366
Interest expense related to monthly cash settlements:
Interest expense	$ (7,323)

13. EMPLOYEE BENEFIT PLANS

     We sponsor a defined contribution plan covering substantially all of our U.S. employees. We also sponsor similar voluntary contribution arrangements for certain of our employees outside the United States that meet applicable eligibility requirements. We may make discretionary contributions for the benefit of employees under these plans. In 2009, 2008 and 2007, we paid cash of approximately $0.6 million, $2.0 million and $1.9 million, respectively, to fund our discretionary employer contributions under these plans.

14. RELATED-PARTY TRANSACTIONS

Notes receivable, shareholder

     We have made loans in prior years to our chief executive officer and to a limited partnership in which he has an indirect interest, pursuant to extensions of credit agreed to by us prior to July 30, 2002. These loans were made pursuant to his then current employment agreement for the exercise price of certain stock options and the taxes related thereto. Each of these loans is evidenced by a recourse promissory note bearing interest at the applicable federal rate and secured by the common stock purchased. These loans mature in 2010. These loans, including accrued interest, are recorded in the equity section of our consolidated balance sheets under the caption “Notes receivable, shareholder.” The principal amount outstanding under all remaining loans owed to us by our chief executive officer is approximately $1.8 million as of December 31, 2009.

15. COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments

     We lease office space, computer and other equipment and automobiles under noncancelable lease agreements. The leases generally provide that we pay the taxes, insurance and maintenance expenses related to the leased assets. Future minimum lease payments for noncancelable operating leases as of December 31, 2009 are as follows (in thousands):

2010	$14,641
2011	13,266
2012	11,423
2013	10,483
2014	10,383
Thereafter	37,063
Net minimum lease payments	$97,259

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Included in our future minimum lease payments is an aggregate of $9.2 million for leases included in our restructuring efforts. Rent expense under operating leases was $16.1 million, $13.8 million and $9.3 million for the years ended December 31, 2009, 2008 and 2007, respectively. Facilities rent was reduced by sublease income of approximately $0.1 million for the year ended December 31, 2007, with no sublease income in 2009 or 2008. In 2009, 2008 and 2007, facilities rent was reduced by approximately $1.5 million, $0.8 million and $0.8 million, respectively, associated with contractual obligations provided for in the restructuring charge.

Asset Retirement Obligation

     Our recorded asset retirement obligation liability represents the estimated costs to bring certain office buildings that we lease back to their original condition after the termination of the lease. In instances where our lease agreements either contain make-whole provision clauses or subject us to remediation costs, we establish an asset retirement obligation liability with a corresponding increase to leasehold improvements. These amounts are included in “Accrued expenses” under “Current Liabilities” and “Long-Term Liabilities” in our consolidated balance sheets. For the year ended December 31, 2009, asset retirement obligation liabilities increased by approximately $0.4 million for remediation costs, offset in part by $0.4 million of asset retirement obligations that were satisfied. The current and long-term portion of the asset retirement obligation liability balance was $0.9 million at each of December 31, 2009 and December 31, 2008.

Supply Agreements

     We purchase telecommunications services pursuant to supply agreements with telecommunications service providers. Some of our agreements with telecommunications service providers contain commitments that require us to purchase a minimum amount of services through 2011. These commitments total approximately $32.9 million and $28.6 million in 2010 and 2011, respectively. Our total minimum purchase requirements were approximately $37.8 million, $18.7 million and $16.8 million in 2009, 2008 and 2007, respectively, of which we incurred costs in excess of these minimums.

State Income Tax Matter

     In May 2009, one of our former subsidiaries, PTEKVentures.com, Inc., a Nevada corporation formally dissolved in 2002, received a notice of proposed income tax assessment from the Georgia Department of Revenue totaling approximately $22.7 million as of June 15, 2009. Because we are at a preliminary stage of the process for resolving this dispute with the Georgia Department of Revenue, we cannot, at this time, reasonably estimate the amount, if any, of taxes or other interest, penalties or additions to tax that would ultimately be assessed at the conclusion of the process, and therefore have not accrued any amounts related to this assessment. We are also not able to currently estimate when the administrative procedures and review within the Georgia Department of Revenue will be completed. We believe we have meritorious defenses and will continue to vigorously contest this matter. However, if the Georgia Department of Revenue’s initial position is sustained, the amount assessed would result in a material adjustment to our consolidated financial statements and would adversely impact our financial condition and results of operations.

Litigation and Claims

     We are involved from time to time in legal proceedings that we do not believe will have a material adverse effect upon our business, financial condition or results of operations, although we can offer no assurance as to the ultimate outcome of any such proceedings.

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16. INCOME TAXES

     Income tax expense (benefit) from continuing operations for 2009, 2008 and 2007 is as follows (in thousands):

	2009			2008			2007
Current:
Federal	$	589		$	(6,168	)	$	8,320
State		386			(207	)		1,629
International		11,612			11,378			6,860
Total current	$	12,587		$	5,003		$	16,809
Deferred:
Federal	$	4,083		$	13,861		$	(285	)
State		184			1,109			932
International		(3,805	)		(2,530	)		(506	)
Total deferred	$	462		$	12,440		$	141
Income tax expense	$	13,049		$	17,443		$	16,950

     The difference between the statutory federal income tax rate and our effective income tax rate applied to income before income taxes from continuing operations for 2009, 2008 and 2007 is as follows (in thousands):

	2009			2008			2007
Federal rate	$	12,033		$	20,313		$	17,617
State taxes, net of federal benefit		215			(1,492	)		(341	)
Foreign taxes		(2,716	)		(3,937	)		(1,651	)
Change in valuation allowance		1,650			2,643			2,303
Non-deductible employee compensation		1,410			1,407			989
Other, net		465			(2,323	)		(904	)
Uncertain tax matters		(8	)		832			(1,063	)
Income taxes at our effective rate	$	13,049		$	17,443		$	16,950

     Significant judgment is required in evaluating our uncertain tax positions in federal, state and international tax jurisdictions where we file income tax returns. In major tax jurisdictions, tax years from 2000 to 2009 remain subject to income tax examinations by tax authorities. A reconciliation of unrecognized tax benefits at the beginning and end of the years presented is as follows (in thousands):

Balance at January 1, 2008	$	4,559
Increase based on tax positions related to 2008		707
Re-measurement of prior liability		189
Other		(64	)
Balance at December 31, 2008	$	5,391
Increase based on tax positions related to 2009		213
Re-measurement of prior liability		(73	)
Expiration of the statute of limitation for the assessment of taxes		78
Decrease due to settlements of assessed liability		(30	)
Other		128
Balance at December 31, 2009	$	5,707

     Our unrecognized tax benefits of $5.7 million and $5.4 million at December 31, 2009 and 2008, respectively, if recognized, would affect our annual effective tax rate. The unrecognized tax benefits at December 31, 2009 are included in “Other assets,” “Income taxes payable” and “Accrued expenses” under “Long-Term Liabilities” in our consolidated balance sheets. We do not expect our unrecognized tax benefit to change significantly over the next 12 months.

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     We recognize interest and penalties related to uncertain tax positions in “Interest expense” and “Operating expenses,” respectively, in our consolidated statements of operations. During the years ended December 31, 2009, 2008 and 2007, we recognized interest and penalties (benefit) expense of ($0.1) million, $0.9 million and $0.2 million, respectively. As of December 31, 2009 and 2008, we had accrued interest and penalties of approximately $1.7 million and $1.8 million, respectively, related to uncertain tax positions. Including interest and penalties, our total accrual for uncertain tax positions was $6.4 million and $6.2 million at December 31, 2009 and 2008, respectively.

     In the normal course of business, we are subject to inquiries from U.S. and non-U.S. tax authorities regarding the amount of taxes due. These inquiries may result in adjustments of the timing or amount of taxable income or deductions or the allocation of income among tax jurisdictions. Further, during the ordinary course of business, other changing facts and circumstances may impact our ability to utilize income tax benefits as well as the estimated taxes to be paid in future periods. We believe we are appropriately accrued for income taxes. In the event that actual results differ from these estimates, we may need to adjust “Income taxes payable” in our consolidated balance sheets, which could materially impact our financial condition and results of operations.

     Differences between the financial accounting and tax basis of assets and liabilities giving rise to deferred tax assets and liabilities are as follows at December 31, 2009 and 2008 (in thousands):

	2009			2008
Deferred tax assets:
Net operating loss carryforwards	$	16,758		$	17,200
Intangible assets		7,031			6,492
Restructuring costs		3,305			703
Accrued expenses		5,199			6,332
Other tax credits		8,894			2,558
Gross deferred tax assets		41,187			33,285
Valuation allowance		(17,157	)		(12,631	)
Total deferred tax assets	$	24,030		$	20,654
Deferred tax liabilities:
Property and equipment	$	(21,061	)	$	(15,597	)
Intangible assets		(1,599	)		(7,964	)
Other liabilities		(278	)		(212	)
Total deferred tax liabilities	$	(22,938	)	$	(23,773	)
Deferred income taxes, net	$	1,092		$	(3,119	)

     We are required to estimate our taxes in each jurisdiction in which we operate. This process involves management estimating its tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. The ultimate recognition of uncertain tax matters is realized in the period of resolution.

     At December 31, 2009, we had federal income tax net operating loss carryforwards of approximately $8.2 million expiring in 2009 through 2019. The utilization of some of our net operating losses is subject to Section 382 limitations due to a prior change in control related to one of our previous acquisitions. Excess tax benefits of approximately $1.6 million, $0.7 million, and $3.3 million in 2009, 2008 and 2007, respectively, are associated with non-qualified stock option exercises and restricted stock award releases, the impact of which was recorded directly to additional paid-in capital.

     The undistributed earnings of our foreign subsidiaries that are not considered permanently reinvested and have not been remitted to the United States totaled $103.5 million and $78.2 million as of December 31, 2009 and 2008. These earnings are not subject to U.S. income tax until they are distributed to the United States. Historically, we have provided for deferred U.S. federal income taxes in our consolidated statements of operations only on the

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

undistributed earnings that were determined not to be indefinitely reinvested. The foreign subsidiaries not considered permanently reinvested are Australia, Japan and New Zealand. We made the determination of permanent reinvestment on the basis of sufficient evidence that demonstrates that we will invest the undistributed earnings overseas indefinitely for use in working capital as well as foreign acquisitions and expansion.

     The valuation allowance at December 31, 2009 primarily relates to certain foreign and state loss carryforwards that, in the opinion of management, are more likely than not to expire unutilized. During the year ended December 31, 2009, our valuation allowance increased by approximately $4.5 million, primarily a result of a $5.6 million increase in the valuation reserves placed on the capital loss realized on the sale of our PGiMarket business.

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17. SEGMENT REPORTING

     We manage our operations on a geographic regional basis, with reportable segments in North America, Europe and Asia Pacific. The accounting policies as described in the summary of significant accounting policies are applied consistently across our segments. Our North America segment is comprised of operations in the United States and Canada. Beginning with our quarterly report on Form 10-Q for the three months ended March 31, 2009, we present “Operating income” for each of our reportable segments as a measure of segment profit, which differs from the presentation in our annual report on Form 10-K for the year ended December 31, 2008, where we reported “Net income” as a measure of segment profit. Beginning in 2009, our chief operating decision makers use operating income internally, as a means of analyzing segment performance, and believe that it more clearly represents our segment profit, without the impact of income taxes and other non-operating items. The sum of these regional results may not agree to the consolidated results due to rounding. Information concerning our operations in our reportable segments is as follows (in thousands):

	Reportable Segments
	North America		Europe		Asia Pacific		Consolidated
Year ended December 31, 2009:
Statement of operations:
Net revenues	$	373.3	$	116.0	$	112.2	$	601.5
Depreciation		30.6		3.9		2.7		37.2
Amortization		8.7		1.7		0.2		10.6
Asset impairments		3.7		—		—		3.7
Interest expense		13.4		—		0.1		13.5
Interest income		0.1		0.1		0.2		0.4
Income tax expense		7.3		2.1		3.6		13.0
Operating income		0.6		21.7		22.0		44.3
Balance Sheet:
Goodwill		305.3		44.6		4.7		354.6
Intangibles, net of amortization		19.5		4.8		0.5		24.8
Property and equipment, net		118.2		12.1		6.9		137.2
Total assets		517.9		102.9		57.5		678.2
Expenditures for long-lived assets:
Capital expenditures		34.9		1.9		2.1		38.9
Business acquisitions, net of cash acquired	$	7.3	$	0.2	$	—	$	7.5
Year ended December 31, 2008:
Statement of operations:
Net revenues	$	382.0	$	122.1	$	116.3	$	620.4
Depreciation		25.6		3.6		2.5		31.7
Amortization		11.2		3.5		0.4		15.1
Asset impairments		2.5		0.8		0.1		3.4
Interest expense		19.2		0.2		—		19.4
Interest income		0.5		0.3		0.1		0.9
Income tax expense		11.1		1.8		4.5		17.4
Operating income		28.8		22.5		24.9		76.1
Balance Sheet:
Goodwill		299.6		40.6		3.8		344.0
Intangibles, net of amortization		25.8		5.7		0.6		32.1
Property and equipment, net		112.2		10.9		6.0		129.1
Total assets		516.1		94.0		50.9		661.0
Expenditures for long-lived assets:
Capital expenditures		40.0		2.3		2.7		45.0
Business acquisitions, net of cash acquired	$	28.0	$	2.4	$	—	$	30.4

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PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Reportable Segments (continued)
	North America		Europe		Asia Pacific		Consolidated
Year ended December 31, 2007:
Statement of operations:
Net revenues	$	352.6	$	103.0	$	99.3	$	554.9
Depreciation		23.5		3.4		2.8		29.7
Amortization		12.9		1.7		0.4		15.1
Interest expense		13.6		—		—		13.6
Interest income		0.4		0.4		—		0.8
Income tax expense		12.1		2.5		2.4		17.0
Operating income		34.3		14.4		17.5		66.2
Balance Sheet:
Goodwill		286.1		46.5		4.6		337.2
Intangibles, net of amortization		30.4		11.6		1.1		43.1
Property and equipment, net		92.0		13.3		5.5		110.8
Total assets		472.1		109.9		43.7		625.7
Expenditures for long-lived assets:
Capital expenditures		36.0		4.2		3.2		43.4
Business acquisitions, net of cash acquired	$	21.2	$	26.5	$	—	$	47.7

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SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

     The following table presents certain unaudited quarterly consolidated statement of operations data from continuing operations for each of the eight quarters in the periods ended December 31, 2009 and 2008. The information has been derived from our unaudited financial statements, which have been prepared on substantially the same basis as the audited consolidated financial statements contained in this annual report. We have presented quarterly earnings per share numbers as reported in our earnings releases. The sum of these quarterly results may differ from annual results due to rounding and the impact of the difference in the weighted shares outstanding for the stand-alone periods. The results of operations for any quarter are not necessarily indicative of the results to be expected for any future period.

	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
					(in thousands, except per share data)
Year Ended December 31, 2009
Net revenues	$	155,082		$	153,933		$	148,002		$	144,506		$	601,522
Cost of Revenue		65,370			65,628			64,471			61,726			257,194
Gross profit		89,712			88,305			83,531			82,780			344,328
Operating income		19,750			15,219			(1,223	)		10,577			44,323
Income (loss) from continuing operations		11,315			8,456			(4,556	)		6,113			21,330
Income (loss) on discontinued operations		(1,091	)		(672	)		(8,060	)		2,103			(7,721	)
Net income		10,224			7,784			(12,616	)		8,216			13,609
Basic net income (loss) per share:
Continuing operations	$	0.19		$	0.14		$	(0.08	)	$	0.10		$	0.36
Discontinued operations		(0.02	)		(0.01	)		(0.14	)		0.04			(0.13	)
Net income per share	$	0.17		$	0.13		$	(0.21	)	$	0.14		$	0.23
Diluted net income (loss) per share:
Continuing operations	$	0.19		$	0.14		$	(0.08	)	$	0.10		$	0.36
Discontinued operations		(0.02	)		(0.01	)		(0.14	)		0.04			(0.13	)
Net income per share	$	0.17		$	0.13		$	(0.21	)	$	0.14		$	0.23
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
					(in thousands, except per share data)
Year Ended December 31, 2008
Net revenues	$	151,889		$	160,465		$	156,532		$	151,513		$	620,400
Cost of Revenue		60,886			65,328			64,185			62,739			253,140
Gross profit		91,003			95,137			92,347			88,774			367,260
Operating income		20,741			15,368			21,719			18,311			76,138
Income (loss) from continuing operations		9,780			9,463			11,859			9,492			40,594
Income (loss) on discontinued operations		(745	)		(925	)		(1,101	)		(1,720	)		(4,491	)
Net income		9,035			8,538			10,758			7,772			36,103
Basic net income (loss) per share:
Continuing operations	$	0.16		$	0.16		$	0.20		$	0.16		$	0.68
Discontinued operations		(0.01	)		(0.02	)		(0.02	)		(0.03	)		(0.08	)
Net income per share	$	0.15		$	0.14		$	0.18		$	0.13		$	0.61
Diluted net income (loss) per share:
Continuing operations	$	0.16		$	0.16		$	0.20		$	0.16		$	0.67
Discontinued operations		(0.01	)		(0.02	)		(0.02	)		(0.03	)		(0.07	)
Net income per share	$	0.15		$	0.14		$	0.18		$	0.13		$	0.60

75

     The results of operations in all the quarters in 2009 and 2008 include charges associated with some or all of the following: equity-based compensation, amortization, unrealized gain (loss) on change in fair values of interest rate swaps, restructuring costs, asset impairments, net legal settlements and related expenses, excise tax expense and interest in 2008, and acquisition-related costs.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

     Not applicable.

Item 9A.  Controls and Procedures

Disclosure Controls and Procedures

     Our management has evaluated, under the supervision and with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures as of December 31, 2009. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, 2009, our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), were effective and designed to ensure that (a) information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and instructions, and (b) information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

Management’s Report on Internal Control Over Financial Reporting

     Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f)/15d-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control – Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2009. The effectiveness of our internal control over financial reporting as of December 31, 2009 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report included on page 77 of this annual report.

Changes in Internal Control Over Financial Reporting

     There were no changes in our internal control over financial reporting during the quarter ended December 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

76

Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting

The Board of Directors and Shareholders of Premiere Global Services, Inc.

We have audited Premiere Global Services, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Premiere Global Services, Inc. and subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Premiere Global Services, Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Premiere Global Services, Inc. and subsidiaries as of December 31, 2009, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the year ended December 31, 2009 and our report dated February 26, 2010 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Atlanta, Georgia
February 26, 2010

77

Item 9.B. Other Information

     None.

PART III

     Certain information required by Part III is omitted from this report and is incorporated by reference to our definitive proxy statement pursuant to Regulation 14A for our 2010 annual meeting of shareholders, which we will file not later than 120 days after the end of the fiscal year covered by this annual report.

Item 10. Directors, Executive Officers and Corporate Governance

     The information required by this item is incorporated herein by reference to our proxy statement under the headings “Proposal 1: Election of Directors – Information Regarding Nominees and Continuing Directors and Executive Officers,” “Corporate Governance Matters – Audit Committee” and “Section 16(a) Beneficial Ownership Reporting Compliance.”

     Our board of directors adopted our Code of Conduct and Ethics that applies to all employees, directors and officers, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. This code is posted on our website at www.pgi.com (follow the “Investor Relations” tab to “Corporate Governance”). We will satisfy any disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, any provision of this code with respect to our principal executive officer, our principal financial officer, principal accounting officer, or controller or persons performing similar functions by disclosing the nature of such amendment or waiver on our website.

Item 11. Executive Compensation

     The information required by this item is incorporated herein by reference to our proxy statement under the headings “Corporate Governance Matters – Compensation Committee,” “—Compensation Committee Interlocks and Insider Participation,” “—Director Compensation,” “—Director Compensation for the 2000 Fiscal Year,” “Compensation Committee Report,” which shall not be deemed filed in this annual report, “Compensation Discussion and Analysis” and “Executive Compensation.”

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

     The information required by this item is incorporated herein by reference to our proxy statement under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information.”

Item 13. Certain Relationships and Related Transactions and Director Independence

     The information required by this item is incorporated herein by reference to our proxy statement under the headings “Corporate Governance Matters – Independent Directors,” “—Audit Committee,” “—Compensation Committee,” “—Nominating and Governance Committee” and “Certain Transactions.”

Item 14. Principal Accountant Fees and Services

     The information required by this item is incorporated herein by reference to our proxy statement under the heading “Audit Matters.”

78

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)      1. Financial Statements

          The financial statements listed in the index set forth in Item 8. “Financial Statements and Supplementary Data” of this report are filed as part of this annual report.

          2. Financial Statement Schedules

          Financial statement schedules of valuation and qualifying accounts are not applicable or the required information is included in our consolidated financial statements or notes thereto.

          3. Exhibits

         The exhibits filed with this report are listed on the “Exhibit Index” following the signature page of this annual report, which are incorporated herein by reference.

79

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.

Premiere Global Services, Inc.

By:	/s/ Boland T. Jones
	Boland T. Jones, Chairman of the Board
	and Chief Executive Officer
	Date: February 26, 2010

POWER OF ATTORNEY

     KNOW BY ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints jointly and severally, Boland T. Jones and Scott Askins Leonard, and each one of them, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this annual report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Boland T. Jones	Chairman of the Board and Chief	February 26, 2010
	Executive Officer (principal
Boland T. Jones	executive officer) and Director
/s/ David E. Trine	Chief Financial Officer	February 26, 2010
	(principal financial and
David E. Trine	accounting officer)
/s/ Jeffrey T. Arnold	Director	February 26, 2010
Jeffrey T. Arnold
/s/ Wilkie S. Colyer	Director	February 26, 2010
Wilkie S. Colyer
/s/ John R. Harris	Director	February 26, 2010
John R. Harris
/s/ W. Steven Jones	Director	February 26, 2010
W. Steven Jones
/s/ Raymond H. Pirtle, Jr.	Director	February 26, 2010
Raymond H. Pirtle, Jr.
/s/ J. Walker Smith, Jr.	Director	February 26, 2010
J. Walker Smith, Jr.

80

EXHIBIT INDEX

Exhibit Number	Description
2.1	Agreement and Plan of Merger, together with exhibits, dated November 13, 1997, by and among the Registrant, Nets Acquisition Corp. and Xpedite Systems, Inc. (incorporated by reference to Exhibit 99.2 to the Registrant's Current Report on Form 8-K dated November 13, 1997 and filed December 5, 1997, as amended by Form 8-K/A and filed on December 23, 1997).
2.2	Agreement and Plan of Merger, dated April 22, 1998, by and among the Registrant, American Teleconferencing Services, Ltd. ("ATS"), PTEK Missouri Acquisition Corp. and the shareholders of ATS (incorporated by reference to Exhibit 99.1 of the Company's Current Report on Form 8-K dated April 23, 1998 and filed on April 28, 1998).
3.1	Amended and Restated Articles of Incorporation of the Registrant dated March 15, 2006 (incorporated by reference to Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2005 and filed on March 16, 2006).
3.2	Second Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2005 and filed on March 16, 2006).
3.3	Amendment No. 1 to Second Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K dated April 18, 2007 and filed on April 19, 2007).
3.4	Amendment No. 2 to Second Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K dated and filed on June 27, 2007).
4.1	See Exhibits 3.1-3.4. for provisions of the Articles of Incorporation and Bylaws defining the rights of the holders of common stock of the Registrant.
4.2	Specimen Stock Certificate (incorporated by reference to Exhibit 4.2 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2005 and filed on March 16, 2006).
10.1	Amended and Restated 1998 Stock Plan of the Registrant (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 and filed on August 16, 1999). +
10.2	Amendment No. 1 to the Amended and Restated 1998 Stock Plan of the Registrant (incorporated by reference to Exhibit 10.45 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999 and filed on March 30, 2000). +
10.3	1995 Stock Plan of the Registrant (incorporated by reference to Appendix C to the Registrant’s Definitive Proxy Statement distributed in connection with the Registrant’s June 5, 2002 Annual Meeting of Shareholders, filed on April 30, 2002). +
10.4	Intellivoice Communications, Inc. 1995 Incentive Stock Plan (assumed by the Registrant) (incorporated by reference to Exhibit 10.52 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999 and filed on March 30, 2000).
10.5	Standard Office Lease, dated May 23, 1996, by and between 2221 Bijou, LLC and American Teleconferencing Services, Ltd., as amended by First Amendment to Standard Office Lease dated May 4, 1999, as amended by Second Amendment to Standard Office Lease dated May 1998, as amended by Third Amendment to Standard Office Lease dated September 1999 (incorporated by reference to Exhibit 10.53 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2002 and filed on March 31, 2003).

Exhibit Number	Description
10.6	Lease Agreement from Townsend XPD, LLC to Xpedite Systems, Inc., dated June 15, 2000, (incorporated by reference to Exhibit 10.68 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2002 and filed on March 31, 2003).
10.7	Agreement for Assignment of Stock Options, dated February 5, 1999, by and among Boland T. Jones, Seven Gables Management Company, LLC, Seven Gables Partnership, L.P. and the Registrant (incorporated by reference to Exhibit 10.74 to Amendment No. 1 to the Registrant’s Annual Report on Form 10-K/A for the year ended December 31, 2002 and filed on December 23, 2003). +
10.8	Promissory Note, dated October 31, 2000, payable to the Registrant by Boland T. Jones (incorporated by reference to Exhibit 10.75 to Amendment No. 1 to the Registrant’s Annual Report on Form 10-K/A for the year ended December 31, 2002 and filed on December 23, 2003). +
10.9	Stock Pledge Agreement, dated October 31, 2000, by and between Seven Gables Partnership, L.P. and the Registrant (incorporated by reference to Exhibit 10.76 to Amendment No. 1 to the Registrant’s Annual Report on Form 10-K/A for the year ended December 31, 2002 and filed on December 23, 2003). +
10.10	Promissory Note, dated April 17, 2001, payable to the Registrant by Boland T. Jones (incorporated by reference to Exhibit 10.81 to Amendment No. 1 to the Registrant’s Annual Report on Form 10-K/A for the year ended December 31, 2002 and filed on December 23, 2003). +
10.11	Form of Director Indemnification Agreement between the Registrant and Non-employee Directors (incorporated by reference to Exhibit 10.67 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003 and filed on March 14, 2004). +
10.12	Form of Officer Indemnification Agreement between the Registrant and each of the executive officers (incorporated by reference to Exhibit 10.68 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003 and filed on March 14, 2004). +
10.13	Credit Agreement, dated June 30, 2004, among the Registrant, as Borrower, Certain Subsidiaries and Affiliates of the Borrower, as Guarantors, the Lenders Party thereto, Bank of America, N.A., as Administrative Agent and Collateral Agent, and LaSalle Bank National Association, as Syndication Agent and Co-Lead Arranger (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 and filed on August 9, 2004).
10.14	Security Agreement, dated June 30, 2004, among the Registrant, American Teleconferencing Services, Ltd., Premiere Conferencing Network Services, Inc., PTEK Services, Inc., Xpedite Network Services, Inc., Xpedite Systems, Inc., Xpedite Systems Worldwide, Inc. and Bank of America, N.A., as Collateral Agent (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 and filed on August 9, 2004).
10.15	Pledge Agreement, dated June 30, 2004, among the Registrant, American Teleconferencing Services, Ltd., Premiere Conferencing Networks, Inc., PTEK Services, Inc., Xpedite Network Services, Inc., Xpedite Systems, Inc., Xpedite Systems Worldwide, Inc. and Bank of America, N.A., as Collateral Agent (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 and filed on August 9, 2004).
10.16	Amendment No. 1 to Credit Agreement, dated February 2, 2005, by and among the Registrant, as Borrower, Bank of America, N.A., as Administrative Agent, and the Guarantors and the Lenders that are parties thereto (incorporated by reference Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated February 2, 2004 and filed on February 3, 2004).

Exhibit Number	Description
10.17	Fourth Amendment to Standard Office Lease, effective March 1, 2005, by and between 2221 Bijou, LLC and American Teleconferencing Services, Ltd. to the Standard Office Lease dated May 23, 1996, as amended (incorporated by reference to Exhibit 10.57 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2004 and filed on March 15, 2005).
10.18	Fourth Amended and Restated Executive Employment Agreement between Boland T. Jones and the Registrant, effective January 1, 2005 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated and filed on April 20, 2005). +
10.19	Restricted Stock Agreement between Boland T. Jones and the Registrant, effective April 18, 2005, under the Registrant’s 2004 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K dated and filed on April 20, 2005). +
10.20	Restricted Stock Agreement between Boland T. Jones and the Registrant, effective April 18, 2005, under the Registrant’s 1995 Stock Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K dated and filed on April 20, 2005). +
10.21	Form of NonStatutory Stock Option Agreement under the Registrant’s 2004 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 and filed on May 6, 2005. +
10.22	Form of NonStatutory Stock Option Agreement under the Registrant’s 1995 Stock Plan (incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 and filed on May 6, 2005).
10.23	Form of Restricted Stock Award Agreement under the Registrant’s 1995 Stock Plan (incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 and filed on May 6, 2005).
10.24	Summary of the Registrant’s Non-Employee Director Compensation (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated and filed on December 22, 2005).
10.25	Lease Agreement, dated October 28, 2005, between Xpedite Systems, LLC and 3280 Peachtree I LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated and filed on February 1, 2006).
10.26	Guaranty to the Lease Agreement between Xpedite Systems, LLC and 3280 Peachtree I LLC, dated October 28, 2005, by the Registrant (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated and filed on February 1, 2006).
10.27	Lease Agreement, dated October 28, 2005, between American Teleconferencing Services, Ltd. and 3280 Peachtree I LLC (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K dated and filed on February 1, 2006).
10.28	Guaranty to the Lease Agreement between American Teleconferencing Services, Ltd. and 3280 Peachtree I LLC, by the Registrant (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K dated and filed on February 1, 2006).
10.29	Fifth Amendment to Standard Office Lease, dated February 9, 2006, by and between 2221 Bijou, LLC and American Teleconferencing Services, Ltd., to the Standard Office Lease, dated May 23, 1996, as amended (incorporated by reference to Exhibit 10.62 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2005 and filed on March 16, 2006).

Exhibit Number	Description
10.30	Amendment No. 2 and Waiver to Credit Agreement, dated August 3, 2005, by and among the Registrant, as Borrower, Bank of America, N.A., as Administrative Agent, and the Guarantors and the Lenders that are parties thereto (incorporated by reference to Exhibit 10.65 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2005 and filed on March 16, 2006).
10.31	Amendment No. 3 to Credit Agreement, dated April 24, 2006, by and among the Registrant as Borrower, Bank of America, N.A. as Administrative Agent, and the Guarantors and the Lenders that are parties thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated and filed April 25, 2006).
10.32	Amendment to Fifth Amendment to Standard Office Lease, effective March 13, 2006, by and between 2221 Bijou, LLC and American Teleconferencing Services, Ltd. to the Standard Office Lease, dated May 23, 1996, as amended (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 and filed on May 9, 2006).
10.33	Restricted Stock Agreement by and between Theodore P. Schrafft and the Registrant, dated May 5, 2006, under the Registrant’s 1995 Stock Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated May 10, 2006 and filed on May 11, 2006). +
10.34	Revised Summary of the Equity Compensation Component to the Registrant’s Non-Employee Director Compensation (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated and filed on July 26, 2006).
10.35	Amended and Restated Employment Agreement between Theodore P. Schrafft and the Registrant, dated September 15, 2006 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated and filed September 19, 2006). +
10.36	First Amendment to Fourth Amended and Restated Executive Employment Agreement between Boland T. Jones and the Registrant, dated September 15, 2006 (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K dated and filed on September 19, 2006). +
10.37	Second Amendment to Fifth Amendment to the Standard Office Lease, dated September 11, 2006, by and between 2221 Bijou, LLC and American Teleconferencing Services, Ltd., to the Standard Office Lease, dated May 23, 1996, as amended (incorporated by reference to Exhibit 10.9 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 and filed on November 9, 2006).
10.38	Amendment No. 4 and Waiver to Credit Agreement, dated October 3, 2006, by and among the Registrant as Borrower, Bank of America, N.A. as Administrative Agent, and the Guarantors and the Lenders that are parties thereto (incorporated by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 and filed on November 9, 2006).
10.39	Amendment No. 5 and Waiver, dated April 19, 2007, to the Credit Agreement by and among the Registrant as Borrower, Bank of America, N.A., as Administrative Agent, and the Guarantors and the Lenders that are parties thereto (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated April 18, 2007 and filed on April 19, 2007).
10.40	Second Amendment to Fourth Amended and Restated Executive Employment Agreement between Boland T. Jones and the Registrant dated December 21, 2007 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated December 20, 2007 and filed on December 21, 2007). +
10.41	First Amendment to Amended and Restated Employment Agreement between Theodore P. Schrafft and the Registrant dated December 21, 2007 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated December 20, 2007 and filed on December 21, 2007). +

Exhibit Number	Description
10.42	Second Amendment to Amended and Restated Employment Agreement between Theodore P. Schrafft and the Registrant dated January 23, 2008 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated January 22, 2007 and filed on January 25, 2008). +
10.43	Restricted Stock Agreement between Theodore P. Schrafft and the Registrant dated September 30, 2007 under the Registrant’s 1995 Stock Plan (incorporated by reference to Exhibit 10.65 to the Registrant’s Annual Report on Form 10-K/A for the year ended December 31, 2007 and filed on January 30, 2009). +
10.44	Amended and Restated 2004 Long-Term Incentive Plan of the Registrant (incorporated by reference to Appendix A of the Company’s Definitive Proxy Statement on Schedule 14A filed on April 18, 2008). +
10.45	Amended and Restated 2000 Directors Stock Plan of the Registrant (incorporated herein by reference to Appendix B of the Company’s Definitive Proxy Statement on Schedule 14A filed on April 18, 2008). +
10.46	Amended and Restated Employment Agreement between David M. Guthrie and the Registrant dated May 19, 2008 and effective as of June 30, 2008 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated May 16, 2008 and filed on May 19, 2008). +
10.47	Restricted Stock Agreement between David M. Guthrie and the Registrant, dated June 30, 2005, under the Registrant’s 2004 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008). +
10.48	Restricted Stock Agreement between David M. Guthrie and the Registrant, dated May 5, 2006, under the Registrant’s 1995 Stock Plan (incorporated by reference to Exhibit 10.6 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008). +
10.49	First Amendment to Restricted Stock Agreement dated May 5, 2006 between David M. Guthrie and the Registrant, effective July 13, 2006 (incorporated by reference to Exhibit 10.7 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008). +
10.50	Restricted Stock Agreement between David M. Guthrie and the Registrant, dated September 30, 2007, under the Registrant’s 1995 Stock Plan (incorporated by reference to Exhibit 10.8 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008). +
10.51	Form of Restricted Stock Agreement under the Registrant’s Amended and Restated 2004 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.9 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008).+
10.52	Form of Restriction Agreement for non-employee directors under the Amended and Restated 2000 Directors Stock Plan (incorporated by reference to Exhibit 10.10 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008). +
10.53	Form of Restricted Stock Agreement to be issued to Boland T. Jones as Stock Bonuses pursuant to the terms of his Fourth Amended and Restated Executive Employment Agreement with the Registrant (incorporated by reference to Exhibit 10.11 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008). +
10.54	First Amendment to Lease Agreement, dated July 14, 2006, by and between American Teleconferencing Services, Ltd. and 3280 Peachtree I LLC (incorporated by reference to Exhibit 10.12 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008).
10.55	Acknowledgment, Consent and Reaffirmation of Guarantor of Lease to the First Amendment to Lease Agreement between American Teleconferencing Services, Ltd. and 3280 Peachtree I LLC, dated July 14, 2006, by the Registrant (incorporated by reference to Exhibit 10.13 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008).

Exhibit Number	Description
10.56	Second Amendment to Lease Agreement, dated March 15, 2007, by and between American Teleconferencing Services, Ltd. and 3280 Peachtree I LLC (incorporated by reference to Exhibit 10.14 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008).
10.57	Acknowledgment, Consent and Reaffirmation of Guarantor of Lease to the Second Amendment to Lease Agreement between American Teleconferencing Services, Ltd. and 3280 Peachtree I LLC, dated March 15, 2007, by the Registrant (incorporated by reference to Exhibit 10.15 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008).
10.58	Third Amendment to Lease Agreement, dated June 3, 2008, by and between American Teleconferencing Services, Ltd. and 3280 Peachtree I LLC (incorporated by reference to Exhibit 10.16 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008).
10.59	Acknowledgment, Consent and Reaffirmation of Guarantor of Lease to the Third Amendment to Lease Agreement between American Teleconferencing Services, Ltd. and 3280 Peachtree I LLC, dated June 3, 2008, by the Registrant (incorporated by reference to Exhibit 10.17 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008).
10.60	First Amendment to Lease Agreement, dated July 14, 2006, by and between Xpedite Systems, LLC and 3280 Peachtree I LLC (incorporated by reference to Exhibit 10.18 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008).
10.61	Acknowledgment, Consent and Reaffirmation of Guarantor of Lease to the First Amendment to Lease Agreement between Xpedite Systems, LLC and 3280 Peachtree I LLC, dated July 14, 2006, by the Registrant (incorporated by reference to Exhibit 10.19 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008).
10.62	Second Amendment to Lease Agreement, dated March 15, 2007, by and between Xpedite Systems, LLC and 3280 Peachtree I LLC (incorporated by reference to Exhibit 10.10 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008).
10.63	Acknowledgment, Consent and Reaffirmation of Guarantor of Lease to the Second Amendment to Lease Agreement between Xpedite Systems, LLC and 3280 Peachtree I LLC, dated March 15, 2007, by the Registrant (incorporated by reference to Exhibit 10.21 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008).
10.64	Third Amendment to Lease Agreement, dated June 3, 2008, by and between Xpedite Systems, LLC and 3280 Peachtree I LLC to the Lease Agreement, dated October 28, 2005 (incorporated by reference to Exhibit 10.22 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008).
10.65	Acknowledgment, Consent and Reaffirmation of Guarantor of Lease to the Third Amendment to Lease Agreement between Xpedite Systems, LLC and 3280 Peachtree I LLC, dated June 3, 2008, by the Registrant (incorporated by reference to Exhibit 10.23 to the Registrant’s Form 10-Q/A for the quarter ended June 30, 2008 and filed on October 14, 2008).
10.66	Fourth Amendment to Lease Agreement, dated August 27, 2008, by and between American Teleconferencing Services, Ltd. and 3280 Peachtree I LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and filed on November 7, 2008). +
10.67	Acknowledgment, Consent and Reaffirmation of Guarantor of Lease to the Fourth Amendment to Lease Agreement between American Teleconferencing Services, Ltd. and 3280 Peachtree I LLC, dated August 27, 2008, by the Registrant (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and filed on November 7, 2008). +

Exhibit Number	Description
10.68	Third Amendment to Fourth Amended and Restated Executive Employment Agreement between Boland T. Jones and the Registrant dated December 23, 2008 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated and filed December 23, 2008). +
10.69	Third Amendment to Amended and Restated Employment Agreement between Theodore P. Schrafft and the Registrant dated December 23, 2008 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated and filed December 23, 2008). +
10.70	First Amendment to Amended and Restated Employment Agreement between David M. Guthrie and the Registrant dated December 23, 2008 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated and filed December 23, 2008). +
10.71	Employment Agreement between David E. Trine and the Registrant dated February 19, 2008 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated and filed February 19, 2009). +
10.72	Fifth Amendment to Lease Agreement, dated October 15, 2008, by and between American Teleconferencing Services, Ltd. and 3280 Peachtree I LLC.
10.73	Acknowledgement, Consent and Ratification of Guarantor of Lease to the Fifth Amendment to Lease Agreement, dated October 15, 2008, by and between American Teleconferencing Services, Ltd. and 3280 Peachtree I LLC.
10.74	Office Lease Agreement, dated September 29, 2008, by and between Corporate Ridge, L.L.C. and American Teleconferencing Services, Ltd.
10.75	Lease Guaranty to the Office Lease Agreement, dated September 29, 2008, by and between Corporate Ridge, L.L.C. and American Teleconferencing Services, Ltd.
10.76	Wells Fargo Defined Contribution Prototype Plan and Trust Agreement, 401(K) Plan and Participation Agreement (1.23(D)) of the Registrant, effective January 1, 2009.
10.77	Restricted Stock Agreement between David E. Trine and the Registrant, dated March 31, 2009, under the Registrant’s Amended and Restated 2004 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated March 31, 2009 and filed April 1, 2009). +
10.78	Amendment No. 6 to Credit Agreement, dated April 9, 2009, by and among the Registrant as Borrower, Bank of America, N.A. as Administrative Agent, and the Guarantors and the Lenders that are parties thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q dated and filed August 7, 2009).
10.79	Office Building Lease, dated November 12, 2009, between Verizon Business Network Services and American Teleconferencing Services, Ltd.
21.1	Subsidiaries of the Registrant.
23.1	Consent of Ernst & Young LLP.
23.2	Consent of Deloitte & Touche LLP.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.

Exhibit Number	Description
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
32.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
32.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.

+ Management contract or compensatory plan or arrangement required to be filed as an exhibit to this form pursuant to Item 15(b) of this report.

EX-10.79

EXHIBIT 10.79

OFFICE BUILDING LEASE

This Lease between Verizon Business Network Services, a Delaware corporation (“Landlord”), and American Teleconferencing Services, Ltd., dba Premiere Global Services (“Tenant”), is dated as of November 12, 2009 for reference purposes only.

1. LEASE OF PREMISES.

In consideration of the Rent (as defined in Section 5.2 below) and the provisions of this Lease, Landlord leases to Tenant and Tenant leases from Landlord the Premises, as defined in Section 2.i below and shown on the floor plan attached hereto as Exhibit “A.” The Premises are located within the Building described in Section 2.c and Project described in Section 2.j. Tenant shall have the non-exclusive right (unless otherwise provided herein) in common with Landlord, other tenants, subtenants and invitees, to use of the Common Areas (as defined at Section 2.e).

2. DEFINITIONS.

As used in this Lease, the following terms shall have the following meanings:

a.	Base Rent:
	Months of Term	Annual Base Rent	Monthly Base Rent
	(As of Commencement Date)	(Per Sq. Ft. Rentable Area)
	1 – 12*	$11.25	$82,247.81
	13 – 24	$11.75	$85,903.26
	25 – 36	$12.25	$89,558.73
	37 – 48	$12.75	$93,214.18
	49 – 60	$13.25	$96,869.64
	61 – 72	$13.75	$100,525.10
	73 – 84	$14.25	$104,180.55
	85 – 96	$14.75	$107,836.01
	97 – 108	$15.25	$111,491.47
	109 – 120	$15.75	$115,146.93
	121 – 132	$16.25	$118,802.39
	*Base Rent is not actually payable until the Rent Commencement Date. The first month of the Term is inclusive of any initial partial calendar month in the event the Commencement Date is not the first day of the month.
b.	Broker(s):
	Landlord’s: Cushman and Wakefield Inc. and Palmer McAllister, a Cushman & Wakefield Alliance
	Tenant’s: Colliers Bennett & Kahnweiler, Inc., d/b/a Colliers International
c.	Building: Building F.

     d. Commencement Date: For purposes of this Lease, the “Commencement Date” shall be three (3) business days following the date of full execution of this Lease. For purposes of this Lease, the “Rent Commencement Date” shall be the earlier of (i) Tenant’s occupancy of all or any portion of the Premises for purposes of conducting business (however, Tenant shall not be deemed to be conducting business if it is only constructing improvements, installing fixtures or equipment and moving personal

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property into the Premises and not otherwise conducting business from all or any portion of the Premises), or (ii) September 1, 2010.

     e. Common Areas: The building lobbies, utility closets, common corridors and hallways, and restrooms, garage and parking areas, stairways, elevators, spline, the cafeteria located in Building D of the Project, the conference rooms located on the second floor of Building D which are available for common use, the loading dock in Building D which is available for use on a "first-come, first-served" basis, and other generally understood public or common areas that are available for use by Tenant. Landlord shall have the right to impose reasonable rules and regulations on the use of the Common Areas at all times so long as such rules and regulations are uniformly enforced, non-discriminatory and do not materially increase Tenant's monetary obligations hereunder.

     f. Expiration Date: The last day of the one hundred thirty-second (132^nd) full calendar month after the Commencement Date, unless otherwise sooner terminated or extended in accordance with the provisions of this Lease.

Landlord’s Mailing Address:	Verizon Business Network Services
	c/o Cushman & Wakefield of Florida, Inc.
	Mail Code FLG1-300
	8800 Adamo Drive
	Tampa, FL 33619-3526
	Attention: Real Estate Administration
With copy to:	Verizon Business Network Services
	15505 Sand Canyon Drive
	Building C
	Irvine, CA 92618
	Attn: Manager, Real Estate, West Area
Tenant’s Mailing Address:	American Teleconferencing Services, Ltd.
	d/b/a Premiere Global Services
	3280 Peachtree Road, NW
	Suite 1000
	Atlanta, GA 30305

g. Monthly Installments of Base Rent (initial): $82,247.81 per month.

     h. Parking: Tenant shall have at no additional charge the right to use six (6) parking stalls per one thousand (1,000) rentable square feet of the Premises, for a total of five hundred twenty-six (526) parking stalls, on a non-exclusive basis in the areas designated by Landlord for parking. Landlord shall not charge Tenant's guests and visitors for parking, provided that Tenant's guests and visitors park in designated visitor spaces in the Project or in Tenant's non-exclusive parking area, and further provided that the total number of parking stalls used by Tenant and its visitors and guests does not exceed five hundred twenty-six (526) parking stalls.

     i. Premises: For purposes of this Lease, the “Premises” shall be those portions of the Building, shown on Exhibit “A,” consisting of 18,624 square feet of Rentable Area on the second (2^nd) floor, 33,384 square feet of Rentable Area on the third (3^rd) floor, and 35,723 square feet of Rentable Area on the fifth (5^th) floor. The parties hereto hereby acknowledge that the purpose of Exhibit “A” is to show the approximate location of the Premises in the Building only, and such Exhibit is not meant to constitute an agreement, representation or warranty as to the construction of the Premises, the precise area thereof or the specific location of the Common Areas, or the elements thereof or of the accessways to the Premises or the Project. The parties stipulate that the Rentable Area of the Premises is 87,731 square feet and the Rentable Area of the Project is 773,800 square feet. If Tenant leases any Additional Space (as defined in Article 41 below) in accordance with the terms of Articles 41 and 42 below, the square footage of the Additional Space shall be determined in accordance with the standards set forth in

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ANSI/BOMA Z65.1 1996, as promulgated by the Building Owners and Managers Association (“BOMA Standards”), plus a load factor of no more than twenty-eight percent (28%) to account for amenities located within the Common Areas of the Project, including but not limited to the cafeteria and spline. Additionally, Tenant shall have the option to add to the Premises one of the existing training rooms on the second (2^nd) floor of Building D of the Project to the extent available at the time Tenant requests such addition and subject to mutually agreeable terms between Landlord and Tenant in connection with, but not limited to, access to the training room, term length, location, and the amount of rent. Except as otherwise agreed by Landlord and Tenant, all terms and conditions of this Lease shall apply to such training room (except for the Tenant Improvement Allowance), including the payment of Base Rent and Direct Expenses. The leasing of such training room shall be subject to the parties’ mutual agreement on a space plan for the training room.

     j. Project: The Building and any other buildings or improvements on the real property (the “Property”) located at 2424 Garden of the Gods Road, City of Colorado Springs, County of El Paso, State of Colorado and further described at Exhibit “B.” The Project is known as Garden of the Gods.

     k. Rentable Area: As to the Premises, Building and the Project, the respective measurements of floor area as may from time to time be subject to lease by Tenant and all tenants of the Building and Project, respectively, as determined by Landlord and applied on a consistent basis throughout the Building and Project.

     l. Security Deposit (Article 7): Tenant shall deliver to Landlord on or before the Commencement Date a letter of credit in the amount of $3,000,000 from a financial institution reasonably acceptable to Landlord in the form attached hereto as Exhibit “E” to secure Tenant’s obligations under this Lease.

     m. State: The State of Colorado.

     n. Tenant’s Share: “Tenant’s Share” shall be 11.34%. Such share is a fraction, the numerator of which is the Rentable Area of the Premises, and the denominator of which is the Rentable Area of the Project, as determined by Landlord from time to time in accordance with BOMA Standards.

     o. Tenant’s Use Clause (Article 8): Subject to Tenant’s compliance with all laws and regulations, including but not limited to zoning regulations, general office and call center use.

     p. Term: The period commencing on the Commencement Date and expiring at midnight on the Expiration Date.

     q. Extension Options (Article 40): Upon expiration of the initial Term, Tenant have two (2) options to extend the Term for five (5) years each, as more particularly described in Article 40.

3. EXHIBITS.

The exhibits listed below are incorporated by reference in this Lease:

a.	Exhibit “A” - Floor Plan showing the Premises.
b.	Exhibit “B-1” - Site Plan of the Project.
c.	Exhibit “B-2” – Legal Description of the Project.
d.	Exhibit “C” - Building Standard Work Letter.
e.	Exhibit “D” - Rules and Regulations.

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f.	Exhibit “E” – Letter of Credit.
g.	Exhibit "F" – Additional Exceptions to Operating Expenses.
h.	Exhibit "G" – Generator Pad Site.

4. DELIVERY OF POSSESSION.

4.1 Delivery. Landlord shall deliver the Premises to Tenant on or before the Commencement Date with all Delivery Requirements being satisfied. For purposes hereof, the “Delivery Requirements” are as follows: (a) to the current actual knowledge of Brett Laplant, as operations manager at the Project, Tenant has not received any written notice that the Premises is in violation of any laws, codes, regulations or ordinances, (b) to the current actual knowledge of Brett Laplant, as operations manager at the Project, all heating, ventilation, air conditioning, mechanical, electrical, plumbing, life safety, elevator and other systems serving the Building and Premises are in good, operating condition, (c) the Premises shall be free of all tenancies and rights of third parties (other than Tenant’s rights), (d) all Existing FF&E (as defined below) shall be free of all liens of every kind, and (e) to the current actual knowledge of Brett Laplant, as operations manager at the Project, the roof (and all components thereof) and all structural components of the Building are in good condition. In the event that Tenant provides notice to Landlord within sixty (60) days of the Commencement Date that the Delivery Requirements were not satisfied when the Premises was delivered to Tenant, Landlord, at Landlord's sole cost and expense and without any reimbursement by Tenant, shall promptly cause the Delivery Requirements to be satisfied as determined in Landlord's sole, but reasonable discretion, and the Rent Commencement Date shall be extended one day for each day the Tenant is delayed in completing its buildout of the Premises and/or commencing business operations in the Premises as a result of the Delivery Requirements not being satisfied on or before the Commencement Date. Except as specifically set forth in this Lease, Tenant hereby agrees to accept the Premises in its “as-is” condition and Tenant hereby acknowledges that Landlord shall not be obligated to provide or pay for any improvement work or services related to the improvement of the Premises, except that after the Commencement Date, Landlord shall promptly, at its sole cost and expense, repair and cover any core drillings within the Premises as reasonably identified by Tenant. Landlord shall not be required to complete such repairs prior to the Commencement Date, and a delay in completion of such repairs shall not constitute a delay in Landlord’s delivery of the Premises to Tenant. Tenant also acknowledges that, except as provided herein, Landlord has made no representation or warranty regarding the condition of the Premises (including any existing furniture, fixtures and equipment located within the Premises as of the date hereof). The acceptance of the Premises by Tenant, and Tenant’s failure to provide notice that Delivery Requirements were not met during the sixty (60) day time frame described above, shall presumptively establish that the Premises and the Building were at such time in good and sanitary order, condition and repair, and that the Delivery Requirements were met.

4.2 Construction Phase.

     a. At no additional cost to Tenant, Tenant may enter the Premises after the Commencement Date in order to commence the design and construction of the Tenant Improvements in accordance with Exhibit “C” attached hereto; provided, however, that Tenant has paid the Security Deposit (as defined below) and Tenant has obtained the insurance required by this Lease, and provided further that Landlord shall have the right to post the appropriate notices of non-responsibility and to require Tenant to provide Landlord with evidence that Tenant has fulfilled its obligation to provide insurance pursuant to Article 23 hereof. In connection with Tenant’s After Hours (as hereinafter defined) access to the Premises prior to the Rent Commencement Date, Landlord shall provide supplemental security guard services at $15.25 per hour for each additional security guard required to provide access to the Premises to Tenant and to monitor Tenant’s activities within the Premises. Tenant shall pay such security guard charges within thirty (30) days after receipt of an invoice identifying such charges. Other than the payment of Base Rent, all of the terms and conditions of this Lease shall apply following the Commencement Date, including the payment of Direct Expenses.

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     b. Tenant shall have the right (to be exercised at Tenant's option within thirty (30) days after the Commencement Date) to use during the Term approximately 100 Systems Panel Furniture cubicles (the “Existing FF&E”) currently located in Suites D4 and/or D5 on the 4^th and 5th floors of Building D. If Tenant fails to exercise such option within such thirty (30) day period, Tenant shall be deemed to have elected not to use the Existing FF&E. If Tenant elects to use the Existing FF&E, Tenant shall relocate the Existing FF&E to the Premises, at its sole cost and expense, no later than thirty (30) days after the full execution of this Lease. Alternatively, Tenant may elect to relocate the Existing FF&E within such thirty (30) day period to a location identified by Landlord on the second (2^nd) floor of the Building outside of the Premises for a period of ninety (90) days at no additional charge to Tenant for such storage, provided that Tenant shall have sole liability for any damage that occurs to the Existing FF&E while it is being stored outside of the Premises. Except as otherwise provided herein, Tenant shall accept the Existing FF&E in its “as-is” condition. Landlord represents and warrants that Landlord owns the Existing FF&E free and clear of all liens and encumbrances. Tenant shall protect, defend, indemnify and hold Landlord harmless from and against any and all claims, losses and liabilities in any way arising or resulting from or in connection with the Existing FF&E which arise after the delivery of the Premises to Tenant. If Tenant elects within the thirty (30) day period provided above to use the Existing FF&E in the Premises, Tenant shall be responsible for disposing of any of the Existing FF&E it will not use at Tenant's sole cost and expense within the time frames provided above. If Tenant elects within the thirty (30) day period provided above not to use the Existing FF&E in the Premises, Landlord shall be responsible for disposing of the Existing FF&E at Landlord's sole cost and expense.

5. RENT.

5.1 Payment of Base Rent. Commencing on the Rent Commencement Date, Tenant agrees to pay the Base Rent for the Premises. Commencing on the Rent Commencement Date, Monthly Installments of Base Rent shall be payable in advance on the first day of each calendar month of the Term to Landlord at Landlord’s mailing address above. If the Term begins (or ends) on other than the first (or last) day of a calendar month, the Base Rent for the partial month shall be prorated on a per diem basis. The Security Deposit shall be due and payable by Tenant to Landlord upon Tenant’s execution of this Lease. The Rent (as hereinafter defined) shall be paid to Landlord at such place as Landlord may from time to time designate by not less than thirty (30) days written notice to Tenant, without any prior demand therefor and, except as set forth herein, without deduction or offset, in lawful money of the United States of America.

5.2 Additional Rent.

     a. General Terms. In addition to paying the Base Rent specified in Section 5.1 of this Lease, commencing on the Commencement Date, Tenant shall pay “Tenant’s Share” of the annual “Direct Expenses,” as those terms are defined in Sections 2.n and 5.2(b)(1) of this Lease, respectively. Such payments by Tenant, together with any and all other amounts payable by Tenant to Landlord pursuant to the terms of this Lease, are hereinafter collectively referred to as the “Additional Rent,” and the Base Rent and the Additional Rent are herein collectively referred to as “Rent.” All amounts due under this Section 5.2 as Additional Rent shall be payable for the same periods (however, the payment of Additional Rent commences on the Commencement Date) and in the same manner as the Base Rent. Without limitation on other obligations of Tenant which survive the expiration of the Term, the obligations of Tenant to pay the Additional Rent provided for in this Section 5.2 shall survive the expiration of the Term. Landlord may upon expiration of the Term deliver to Tenant an estimate of any Base Rent, Additional Rent or other obligations outstanding, and Landlord may either deduct such amount from any funds otherwise payable to Tenant upon expiration or require Tenant to pay such funds immediately. Landlord shall make necessary adjustments for differences between actual and estimated Additional Rent in accordance with Section 5.2(d) below.

     b. Definitions of Key Terms Relating to Additional Rent. As used in this Section 5.2, the following terms shall have the meanings hereinafter set forth:

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               (1) “Direct Expenses” shall mean “Operating Expenses” and “Tax Expenses,” as those terms are defined in subsections (b)(3) and (b)(5)(a), below, respectively.

               (2) “Expense Year” shall mean each calendar year in which any portion of the Term falls, through and including the calendar year in which the Term expires.

               (3) “Operating Expenses” shall mean all expenses, costs and amounts of every kind and nature which Landlord pays or accrues during any Expense Year because of or in connection with the ownership, management, maintenance, security, repair, replacement, restoration or operation of the Project, or any portion thereof. Without limiting the generality of the foregoing, Operating Expenses shall specifically include any and all of the following: (i) the cost of supplying all utilities, except for electricity to the Premises as provided in Article 9 below, the cost of operating, maintaining, repairing, replacing, renovating and managing the utility systems, mechanical systems, sanitary, storm drainage systems, communication systems and escalator and elevator systems, and the cost of supplies, tools, and equipment and maintenance and service contracts in connection therewith; (ii) the cost of licenses, certificates, permits and inspections and the cost of contesting any governmental enactments which may affect Operating Expenses, and the costs incurred in connection with a transportation system management program or similar program; (iii) the cost of Landlord’s Insurance (as defined below); (iv) the cost of landscaping, decorative lighting, and relamping, the cost of maintaining and repairing fountains, sculptures, bridges and all supplies, tools, equipment and materials used in the operation, repair and maintenance of the Project, or any portion thereof; (v) the cost of parking area repair, restoration, and maintenance, including, without limitation, resurfacing, repainting, restriping and cleaning; (vi) fees, charges and other costs, including management fees (or amounts in lieu thereof), consulting fees (including, without limitation, any consulting fees incurred in connection with the procurement of insurance), legal fees and accounting fees, of all contractors, engineers, consultants and all other persons engaged by Landlord or otherwise incurred by or charged by Landlord in connection with the management, operation, administration, maintenance and repair of the Building and the Project; (vii) payments under any equipment rental agreements or management agreements related to the management or operations of the Building or Project (including the cost of any actual or charged management fee and the actual or charged rental of any management office space); (viii) wages, salaries and other compensation and benefits, including taxes levied thereon, of all persons engaged in the operation, maintenance and security of the Project; (ix) costs under any instrument pertaining to the sharing of costs by the Project; (x) operation, repair, maintenance and replacement of all systems and equipment and components thereof of the Project; (xi) the cost of janitorial, alarm, security and other services, replacement of wall and floor coverings, ceiling tiles and fixtures in common areas, maintenance and replacement of curbs and walkways, repair to roofs and re-roofing; (xii) amortization (including interest on the unamortized cost) of the cost of acquiring or the rental expense of personal property used in the maintenance, operation and repair of the Project, or any portion thereof; (xiii) the cost of capital repairs, improvements or replacements, or other costs incurred, in connection with the Project (A) which are intended to effect economies in the operation, cleaning or maintenance of the Project, or any portion thereof, (B) that are required to comply with present or anticipated conservation programs, (C) which are replacements or modifications of nonstructural items located in the Common Areas required to keep the Common Areas in good order or condition, (D) that are required under any governmental law or regulation, or (E) which are repairs, replacements or modifications of related to the “Building Systems,” as that term is defined in Section 11.1 of this Lease, below; provided, however, that any capital expenditure shall be amortized (including interest on the unamortized cost) over its useful life as Landlord shall reasonably determine; (xiv) costs, fees, charges or assessments imposed by, or resulting from any mandate imposed on Landlord by, any federal, state or local government for fire and police protection, trash removal, community services, or other services which do not constitute “Tax Expenses” as that term is defined in subsection (b)(5)(a) below; (xv) the cost of operating the cafeteria in Building D (net of any revenue generated by the cafeteria and paid to Landlord); and (xvi) payments under any easement, license, operating agreement, declaration, restrictive covenant, or instrument pertaining to the sharing of costs by the Project or related to the use or operation of the Project to the extent such payments would otherwise be passed through as Operating Expenses if directly incurred by Landlord. Notwithstanding anything to the contrary herein, Operating Expenses shall not include any items listed on Exhibit "F". If any party related to Landlord performs any services or supplies any goods, the cost of which is included

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in Operating Expenses, the amount included in Operating Expenses with respect to such services or supplies shall not exceed the amount that would have been charged by a third party in an arms length transaction.

               (4) If Landlord is not furnishing any particular work or service (the cost of which, if performed by Landlord, would be included in Operating Expenses) to a tenant who has undertaken to perform such work or service in lieu of the performance thereof by Landlord, Operating Expenses shall be deemed to be increased by an amount equal to the additional Operating Expenses which would reasonably have been incurred during such period by Landlord if it had at its own expense furnished such work or service to such tenant. If the Project is not at least ninety-five percent (95%) occupied during all or a portion of any Expense Year, Landlord may elect to make an appropriate adjustment to the components of Operating Expenses for such year to determine the amount of Operating Expenses that would have been incurred had the Project been ninety-five percent (95%) occupied; and the amount so determined shall be deemed to have been the amount of Operating Expenses for such year. Furthermore, and notwithstanding anything to the contrary contained herein, Landlord shall not collect or be entitled to collect Operating Expenses from all of its tenants in the Project in an amount which is in excess of one hundred percent (100%) of the Operating Expenses actually paid by Landlord in connection with the operation of the Project.

               (5) Taxes.

                         (a) “Tax Expenses” shall mean all federal, state, county, or local governmental or municipal taxes, fees, charges or other impositions of every kind and nature, whether general, special, ordinary or extraordinary (including, without limitation, real estate taxes, general and special assessments, transit taxes, business taxes, leasehold taxes or taxes based upon the receipt of rent, including gross receipts or sales taxes applicable to the receipt of rent, unless required to be paid by Tenant, personal property taxes imposed upon the fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances, furniture and other personal property used in connection with the Project, or any portion thereof), which shall be paid or accrued during any Expense Year (without regard to any different fiscal year used by such governmental or municipal authority) because of or in connection with the ownership, leasing and operation of the Project, or any portion thereof. Notwithstanding anything to the contrary contained herein, Tax Expenses shall not include personal and corporate income taxes, inheritance and estate taxes, franchise, gift and transfer taxes, all other real estate taxes attributable to a period outside of the term of the Lease, and all other real estate taxes initiated as a means of financing improvements to the Building/Project and surrounded areas thereof.

                         (b) Any reasonable out-of-pocket costs and expenses (including, without limitation, reasonable attorneys’ and consultants’ fees) incurred in attempting to protest, reduce or minimize Tax Expenses shall be included in Tax Expenses in the Expense Year such expenses are incurred. Tax refunds shall be credited against Tax Expenses and refunded to Tenant regardless of when received, based on the Expense Year to which the refund is applicable, provided that in no event shall the amount to be refunded to Tenant for any such Expense Year exceed the total amount paid by Tenant as Additional Rent under this Section 5.2 for such Expense Year. If Tax Expenses for any period during the Term or any extension thereof are increased after payment thereof for any reason, including, without limitation, error or reassessment by applicable governmental or municipal authorities, Tenant shall pay Landlord within 30 days after receipt of written demand and reasonable backup documentation Tenant’s Share of any such increased Tax Expenses included by Landlord as Tax Expenses pursuant to the terms of this Lease. Notwithstanding anything to the contrary contained in this subsection (5) (except as set forth in subsection (5)(i), above), there shall be excluded from Tax Expenses (i) all excess profits taxes, franchise taxes, gift taxes, capital stock taxes, inheritance and succession taxes, estate taxes, federal and state income taxes, and other taxes to the extent applicable to Landlord’s general or net income (as opposed to rents, receipts or income attributable to operations at the Project), (ii) any items included as Operating Expenses, and (iii) any items paid by Tenant under Section 5.2 of this Lease.

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     c. Allocation of Direct Expenses.

               (1) Method of Allocation. The parties acknowledge that the Building is a part of a multi-building project and that the costs and expenses incurred in connection with the Project (i. e., the Direct Expenses) should be shared between the tenants of the Building and the tenants of the other buildings in the Project. Accordingly, as set forth in Section 5.2(b) above, Direct Expenses (which consist of Operating Expenses and Tax Expenses) are determined annually for the Project as a whole, and a portion of the Direct Expenses, which portion shall be determined by Landlord on an equitable basis, shall be allocated to the tenants of the Building (as opposed to the tenants of any other buildings in the Project) and, subject to the limitations set forth in this Lease, such portion shall be the Direct Expenses for purposes of this Lease. Such portion of Direct Expenses allocated to the tenants of the Building shall include all Direct Expenses attributable solely to the Building and an equitable portion of the Direct Expenses attributable to the Project as a whole.

               (2) Cost Pools. Landlord shall have the right, from time to time, to equitably allocate some or all of the Direct Expenses for the Project among different portions or occupants of the Project (the “Cost Pools”), in Landlord’s reasonable discretion. Such Cost Pools may include, but shall not be limited to, the office space tenants of a building of the Project or of the Project, and the retail space tenants of a building of the Project or of the Project. The Direct Expenses allocable to each such Cost Pool shall be allocated to such Cost Pool and charged to the tenants within such Cost Pool in an equitable manner.

     d. Calculation and Payment of Additional Rent. Tenant shall pay to Landlord, in the manner set forth in subsection (d)(1), below, and as Additional Rent, Tenant’s Share of Direct Expenses for each Expense Year.

               (1) Statement of Actual Direct Expenses and Payment by Tenant. Landlord shall give to Tenant within one hundred eighty (180) days after the end of each Expense Year, a statement (the “Statement”) which shall state the Direct Expenses incurred or accrued for such preceding Expense Year, and which shall indicate the amount of Tenant’s Share of Direct Expenses. Such Statement shall be accompanied by a reasonably detailed breakdown for all Operating Expenses. Upon receipt of the Statement for each Expense Year commencing or ending during the Term, Tenant shall pay, with its next installment of Base Rent due or within thirty (30) days, whichever is later, the full amount of Tenant’s Share of Direct Expenses for such Expense Year, less the amounts, if any, paid during such Expense Year as “Estimated Direct Expenses,” as that term is defined in subsection (d)(2), below, and if Tenant paid more as Estimated Direct Expenses than the actual Tenant’s Share of Direct Expenses (an “Excess”), Tenant shall receive a credit in the amount of such Excess against Rent next due under this Lease, or if the Term has expired, Landlord will pay the Excess to Tenant in cash within thirty (30) days after demand. Even though the Term has expired and Tenant has vacated the Premises, when the final determination is made of Tenant’s Share of Direct Expenses for the Expense Year in which this Lease terminates, if Tenant’s Share of Direct Expenses is greater than the amount of Estimated Direct Expenses previously paid by Tenant to Landlord, Tenant shall, within thirty (30) days after receipt of the Statement, pay to Landlord such amount, and if Tenant paid more as Estimated Direct Expenses than the actual Tenant’s Share of Direct Expenses (again, an Excess), Landlord shall, within thirty (30) days, deliver a check payable to Tenant in the amount of such Excess. The provisions of this subsection (d)(1) shall survive the expiration or earlier termination of the Term.

               (2) Statement of Estimated Direct Expenses. In addition, Landlord shall endeavor to give Tenant a yearly expense estimate statement (the “Estimate Statement”) which shall set forth Landlord’s reasonable estimate (the “Estimate”) of what the total amount of Direct Expenses for the then-current Expense Year shall be and the estimated Tenant’s Share of Direct Expenses (the “Estimated Direct Expenses”). The failure of Landlord to timely furnish the Estimate Statement for any Expense Year shall not preclude Landlord from enforcing its rights to collect any Estimated Direct Expenses under this Section 5.2, nor shall Landlord be prohibited from revising any Estimate Statement theretofore delivered to the extent necessary (but Landlord may not increase the Estimate more than two times in any Expense Year). Thereafter, Tenant shall pay, with its next installment of Base Rent due, a fraction of

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the Estimated Direct Expenses for the then-current Expense Year (reduced by any amounts paid pursuant to the last sentence of this subsection (d)(2)). Such fraction shall have as its numerator the number of months which have elapsed in such current Expense Year, including the month of such payment, and twelve (12) as its denominator. Until a new Estimate Statement is furnished (which Landlord shall have the right to deliver to Tenant at any time), Tenant shall pay monthly, with the monthly Base Rent installments, an amount equal to one-twelfth (1/12) of the total Estimated Direct Expenses set forth in the previous Estimate Statement delivered by Landlord to Tenant.

     e. Tenant’s Audit Rights. Tenant shall be deemed to have accepted the calculation of Tenant’s Share of Operating Expenses if Tenant does not object in writing to the Statement within one (1) year after Tenant’s receipt of the Statement. If Tenant properly notifies Landlord of a dispute as to the amount of any Additional Rent due hereunder, Tenant shall have the right, at reasonable times and upon an additional thirty (30) days notice, to inspect and audit Landlord’s accounting records at Landlord’s accounting office at Tenant's sole cost and expense, and if, after such inspection and audit, Tenant still disputes the amount of Additional Rent owed, a certification as to the proper amount shall be made by a neutral certified public accountant selected by Landlord and approved by Tenant (which approval shall not be unreasonably withheld, conditioned or delayed), which certification shall be final and conclusive. Tenant agrees to pay the cost of such certification unless it is determined that Landlord’s original Statement overstated Operating Expenses by more than five percent (5%).

5.3 Rent Control. If the amount of Rent or any other payment due under this Lease violates the terms of any governmental restrictions on such Rent or payment, then the Rent or payment due during the period of such restrictions shall be the maximum amount allowable under those restrictions. Upon termination of the restrictions, Landlord shall, to the extent it is legally permitted, recover from Tenant the difference between the amounts received during the period of the restrictions and the amounts Landlord would have received had there been no restrictions.

5.4 Taxes Payable by Tenant. In addition to the Rent and any other charges to be paid by Tenant hereunder, Tenant shall reimburse Landlord upon demand for any and all taxes payable by Landlord (other than net income taxes) which are not otherwise reimbursable under this Lease, whether or not now customary or within the contemplation of the parties, where such taxes are upon, measured by or reasonably attributable to (a) the cost or value of Tenant’s equipment, furniture, fixtures and other personal property located in the Premises, or the cost or value of any leasehold improvements made in or to the Premises by or for Tenant, regardless of whether title to such improvements is held by Tenant or Landlord; (b) the gross or net Rent payable under this Lease, including, without limitation, any rental or gross receipts tax levied by any taxing authority with respect to the receipt of the Rent hereunder; (c) the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or any portion thereof; or (d) this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises. If it becomes unlawful for Tenant to reimburse Landlord for any costs as required under this Lease, the Base Rent shall be revised to net Landlord the same net Rent after imposition of any tax or other charge upon Landlord as would have been payable to Landlord but for the reimbursement being unlawful.

6. INTEREST AND LATE CHARGES.

If either party fails to pay within ten (10) days after the date due any Rent or other amounts or charges which such party is obligated to pay under the terms of this Lease to the other party, the unpaid amounts shall bear interest at the lesser of (i) the rate of twelve percent (12%) per annum or (ii) the maximum rate then allowed by law. Tenant acknowledges that the late payment of any Monthly Installment of Base Rent will cause Landlord to lose the use of that money and incur costs and expenses not contemplated under this Lease, including without limitation, administrative and collection costs and processing and accounting expenses, the exact amount of which is extremely difficult to ascertain. Therefore, in addition to interest, if any such installment is not received by Landlord within ten (10) days from the date it is due, Tenant shall pay Landlord a late charge equal to five percent (5%) of such installment; provided, however, as to the first late payment of Base Rent in any calendar year, such late payment charge shall not be due and payable unless and until Tenant shall have failed to pay such Base Rent for ten (10) days

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after receipt from Landlord of notice of such failure. Landlord and Tenant agree that this late charge represents a reasonable estimate of such costs and expenses and is fair compensation to Landlord for the loss suffered from such nonpayment by Tenant. Acceptance of any interest or late charge shall not constitute a waiver of Tenant’s default with respect to such nonpayment by Tenant nor prevent Landlord from exercising any other rights or remedies available to Landlord under this Lease.

7. DEPOSIT.

7.1 Security. Tenant shall deposit with Landlord on or before the Commencement Date the sum of $3,000,000 (the “Security Deposit”) in the form of a Letter of Credit (as further set forth in Section 7.2 below) as security for the performance of Tenant’s covenants and obligations under this Lease. Upon the occurrence of any event of default by Tenant (after notice and the expiration of the applicable cure period), Landlord may notify the Issuing Bank (as defined in Section 7.2 below) and thereupon receive all or a portion of the Security Deposit represented by the Letter of Credit to the extent required to cure such event of default, and use, apply, or retain the whole or any part of such proceeds to the extent necessary to make good any arrears of rent and any other damage, injury, expense or liability caused by such event of default; and thereupon, Tenant shall pay unto Landlord on demand the amount so applied in order to restore the security deposit to its original amount. Upon the termination or expiration of this Lease, Landlord shall return to Tenant any remaining balance of such deposit within thirty (30) days. Upon a sale of the Building or the Project or any financing of Landlord’s interest therein, Landlord shall have the right to transfer the Letter of Credit, to the vendee or mortgagee. With respect to the Letter of Credit, within fifteen (15) business days after notice from Landlord of any such anticipated sale, leasing or financing, Tenant, at Landlord’s sole cost, shall arrange for the transfer of the Letter of Credit to the new landlord or mortgagee, as designated by Landlord in the foregoing notice, or to have the Letter of Credit reissued in the name of the new landlord or mortgagee. To the extent actually provided to such new landlord or mortgagee by Landlord, Tenant shall look solely to the new purchaser or mortgagee for the return of such Letter of Credit, and the provisions of this Section 7.1 shall apply to every transfer or assignment made of the Security Deposit to a new landlord. Tenant will not assign or encumber, or attempt to assign or encumber, the Letter of Credit, and neither Landlord nor its successors or assigns shall be bound by any such actual or attempted assignment or encumbrance.

7.2 Letter of Credit. Tenant shall deliver the Security Deposit to Landlord in the form of an irrevocable letter of credit in the amount of the Security Deposit in the form attached hereto as Exhibit E (the “Letter of Credit”) issued by and drawable upon any commercial bank, trust company, national banking association or savings and loan association with offices for banking and drawing purposes in California (the “Issuing Bank”) that is reasonably approved by Landlord and is then rated, without regard to qualification of such rating by symbols such as “+” or “-” or numerical notation, “Aa” or better by Moody’s Investors Service and “AA” or better by Standard & Poor’s Ratings Service (and is not on credit-watch with negative implications). Except as otherwise provided in the form attached as Exhibit E, the Letter of Credit shall (i) name Landlord as beneficiary, (ii) be in the amount of the Security Deposit, (iii) have a term of not less than one year, (iv) permit multiple drawings, (v) be fully transferable by Landlord multiple times without the consent of Tenant, and without the payment of any fees or charges, (vi) be unconditional except for any reasonable demand requirements of the Issuing Bank (such as a statement from Landlord that Tenant is in default), and (vii) otherwise be in form and content reasonably satisfactory to Landlord. If upon any transfer of the Letter of Credit, any fees or charges shall be so imposed, then such fees or charges shall be payable solely by Tenant. The Letter of Credit shall provide that it shall be deemed automatically renewed, without amendment, for consecutive periods of one year each thereafter during the Term through the date that is at least sixty (60) days after the final Expiration Date (as may be extended pursuant to Tenant’s right to renew pursuant to Section 41), unless the Issuing Bank sends a notice (the “Non-Renewal Notice”) to Landlord by registered mail, return receipt requested, or by receipted courier service, not less than thirty (30) days prior to the then-current expiration date of the Letter of Credit, stating that the Issuing Bank has elected not to renew the Letter of Credit. If Tenant fails to provide a Replacement Letter of Credit (as defined below) within ten (10) business days of Landlord’s receipt of a Non-Renewal Notice, Landlord shall have the right, upon receipt of a Non-Renewal Notice, to draw the full amount of the Letter of Credit, by sight draft on the Issuing Bank, and shall thereafter hold or apply the cash proceeds of the Letter of Credit pursuant to the terms of Section 7.1 and this Section 7.2

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until the Tenant provides the Replacement Letter of Credit, at which time Landlord must return the cash Security Deposit to Tenant, and Landlord shall retain the Replacement Letter of Credit pursuant to the terms hereof. The Letter of Credit shall state that drafts drawn under and in compliance with the terms of the Letter of Credit will be duly honored upon presentation to the Issuing Bank at an office location in California. The Letter of Credit shall be subject in all respects to the International Standby Practices 1998, International Chamber of Commerce. Tenant shall cooperate, at Tenant’s expense, with Landlord to promptly execute and deliver to Landlord any and all modifications, amendments and replacements of the Letter of Credit, as Landlord may reasonably request to carry out the intent, terms and conditions of this Section 7.2.

7.3 Replacement Letter of Credit. If the Issuing Bank that has issued the Letter of Credit is, for any reason (i) closed, (ii) declared insolvent by the Federal Deposit Insurance Corporation (the “FDIC”), (iii) placed in receivership by the FDIC, or (iv) placed on credit-watch with negative implications (individually or collectively, an “Issuing Bank Default”), Landlord shall, upon ten (10) business days notice to Tenant, have the right to require Tenant to provide a substitute letter of credit, in the amount of the then existing Security Deposit Letter of Credit (the “Replacement Letter of Credit”) from a new Issuing Bank reasonably satisfactory to Landlord. The Replacement Letter of Credit must conform to the requirements set forth in Section 7.2. If Tenant fails to provide the Replacement Letter of Credit within such ten (10) business day period, TIME BEING OF THE ESSENCE WITH RESPECT TO SUCH DATE, Landlord may notify the Issuing Bank and thereupon draw all of the Security Deposit represented by the Letter of Credit, and hold such proceeds in accordance with Section 7.1 hereof until the Tenant provides the Replacement Letter of Credit, at which time Landlord must promptly return the cash Security Deposit to Tenant, and Landlord shall retain the Replacement Letter of Credit pursuant to the terms hereof.

7.4 Reduction in Security Deposit. Notwithstanding anything to the contrary contained herein, subject to the terms of this Section 7 and provided this Lease is in full force and effect, the amount of the Security Deposit shall be reduced by ten percent (10%) of the then-existing amount on the fourth (4^th) anniversary of the Commencement Date and on each anniversary of the Commencement Date thereafter (each, a "Reduction Date") for the remainder of the Term (including any extensions of the Term as provided in this Lease); provided, however, that in no event shall the Security Deposit be reduced below $250,000. Any excess Security Deposit which has been paid in cash shall be returned to Tenant within ten (10) days of the above dates.

     The amount of the Security Deposit shall not be reduced if: (i) Tenant is in default, beyond applicable notice or cure periods, on the applicable Reduction Date or on the date that Landlord consummates such reduction, or (ii) within the twelve (12) months immediately preceding the applicable Reduction Date Landlord has drawn on any portion of the security deposited hereunder by reason of a Tenant default hereunder. If Tenant is not entitled to a reduction on the applicable Reduction Date due to subsection (ii) of the preceding sentence, Tenant shall be entitled to a reduction of the Security Deposit in the amount of (a) the reduction which would have occurred but for Tenant's failure to comply with subsection (ii) of the preceding sentence on the following Reduction Date if the requirements of subsections (i) and (ii) are met on such following Reduction Date, plus (b) the applicable new reduction due on such following Reduction Date. If Tenant is entitled to any such reduction in accordance with the terms of this Section 7.4, and provided that Tenant desires to provide Landlord a replacement Letter of Credit or an amendment to the Letter of Credit (which amendment or replacement must be consistent with Exhibit E in all material respects) on or following each reduction date for the reduced amount of the Security Deposit, Landlord shall exchange the Letter of Credit then held by Landlord for the replacement Letter of Credit tendered by Tenant, or execute the amendment, as applicable.

7.5 Cash Deposit. At any time during the Term of the Lease, if Tenant so elects, Tenant may, in lieu of all or a portion of the Security Deposit being held in the form of a Letter of Credit, pay a cash deposit to Landlord to be held as the Security Deposit. In the event the Security Deposit has been paid in cash in full, the Letter of Credit shall be returned to Tenant and Landlord shall agree to the termination of the same. To the extent Tenant has paid to Landlord a cash Security Deposit less than the Security Deposit due, provided that Tenant tenders to Landlord a replacement Letter of Credit or an amendment to the Letter of Credit (which amendment or replacement must be consistent with Exhibit “E” in all material

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respects) on or following the payment of such cash Security Deposit, Landlord shall exchange the Letter of Credit then held by Landlord for the replacement Letter of Credit tendered by Tenant, or execute the amendment, as applicable, in the amount of the Security Deposit required to be maintained under this Lease minus the cash payment. LANDLORD SHALL NOT BE REQUIRED TO KEEP THE CASH SECURITY DEPOSIT SEPARATE FROM ITS GENERAL ACCOUNTS AND TENANT SHALL NOT BE ENTITLED TO ANY INTEREST ON ITS CASH SECURITY DEPOSIT. Upon the occurrence of any default (beyond any applicable notice and cure periods) by Tenant, Landlord may use or apply the Security Deposit to the extent necessary to cure any such default. Upon the termination or expiration of this Lease, Landlord shall return to Tenant any remaining balance of such Security Deposit within thirty (30) days.

8. TENANT’S USE OF THE PREMISES.

Tenant shall use the Premises solely for the purposes set forth in Tenant’s Use Clause. Tenant shall not use or occupy the Premises in violation of law or any covenant, condition or restriction affecting the Building or Project or the certificate of occupancy issued for the Building or Project, and shall, upon notice from Landlord, immediately discontinue any use of the Premises which is declared by any governmental authority having jurisdiction to be a violation of law or the certificate of occupancy. Tenant, at Tenant’s own cost and expense, shall comply with all laws, statutes, ordinances and governmental rules, regulations or requirements now in force or which may hereafter be in force, and with the requirements of any board of fire insurance underwriters or other similar bodies now or hereafter constituted, and/or any directions of any governmental agencies or authorities having jurisdiction (collectively, “Laws”) that shall apply to the Premises by virtue of Tenant’s specific use or specific manner of use of the Premises. A judgment of any court of competent jurisdiction or the admission by Tenant in any action or proceeding against Tenant that Tenant has violated any such laws, ordinances, regulations, rules and/or directions shall be deemed to be a conclusive determination of that fact as between Landlord and Tenant. Tenant shall not do or permit to be done anything which will invalidate or increase the cost of any fire, extended coverage or other insurance policy covering the Building or Project and/or property located therein, and shall comply with all rules, orders, regulations, requirements and recommendations of the Insurance Services Office or any other organization performing a similar function. Tenant shall not do or permit to be done anything which will invalidate or increase the cost of any fire, extended coverage or other insurance policy covering the Building or Project and/or property located therein, and shall comply with all rules, orders, regulations, requirements and recommendations of the Insurance Services Office or any other organization performing a similar function. Tenant shall promptly upon demand reimburse Landlord for any additional premium charged for such policy by reason of Tenant’s failure to comply with the provisions of this Article. Tenant shall not do or permit anything to be done in or about the Premises which will in any way materially injure or unreasonably annoy other tenants or occupants of the Building or Project, or use or allow the Premises to be used for any unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or about the Premises. Tenant shall not commit or suffer to be committed any waste in or upon the Premises.

9. SERVICES AND UTILITIES.

Provided Tenant is not in default beyond applicable notice and cure periods, Landlord agrees to furnish utilities to Tenant (i.e., water, gas, electric, and standard heating and air conditioning) during normal operating hours. If any utilities are not separately metered, then Tenant shall pay to Landlord as Additional Rent Tenant’s Share of charges for the use of such utilities. Landlord may impose a reasonable charge for any utilities or services utilized by Tenant in excess of the amount or type that Landlord reasonably determines is typical for general office use. Nothing in this Article shall restrict Landlord’s right to require at any time separate metering of utilities furnished to the Premises, which shall be installed at Landlord’s sole cost and expense, except as otherwise provided herein. In the event utilities are separately metered, Tenant shall pay directly to the providing utility the charges for such utilities, and the cost of such utilities shall not be part of Direct Expenses. As of the date of execution of this Lease, Landlord intends to install a separate meter at Landlord’s sole cost and expense to measure Tenant’s electrical use.

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Tenant shall also pay to Landlord as an item of Additional Rent, within thirty (30) days after delivery of Landlord’s statement or invoice therefor, Landlord’s “Standard Charges” (as hereinafter defined) for “After Hours” usage by Tenant of utilities and HVAC servicing the Premises. “After Hours” shall mean those hours outside of normal operating hours of Tenant, which normal operating hours are 8:00 a.m. to 5:00 p.m. Monday through Friday, exclusive of Federal holidays. As used herein, “Standard Charges” shall initially mean $50.00 for each hour of “After Hours” use. However, such Standard Charges is subject to adjustment by Landlord at its reasonable discretion in order to reflect changes in the cost to provide such services to Tenant at any time upon thirty (30) days notice to Tenant.

Landlord shall maintain in a manner determined in Landlord’s sole, but reasonable discretion, the Project and Common Areas in a good working order and condition, including providing lighting to all Common Areas, passenger and freight elevator service and, at Landlord’s sole discretion, security. Except as provided herein, Landlord shall not be in default hereunder or be liable for any damages directly or indirectly resulting from, nor shall the Rent be abated by reason of (i) the installation, use or interruption of use of any equipment in connection with the furnishing of any of the foregoing services, (ii) failure to furnish or delay in furnishing any such services or any utilities where such failure or delay is caused by accident or any condition or event beyond the reasonable control of Landlord, or by the making of necessary repairs or improvements to the Premises, Building or Project, or (iii) the limitation, curtailment or rationing of, or restrictions on, use of water, electricity, gas or any other form of energy serving the Premises, Building or Project pursuant to applicable law. If Tenant uses heat generating machines or equipment in the Premises which affect the temperature otherwise maintained by the HVAC system, or in the event occupancy levels are greater than the current HVAC system can comfortably accommodate, Landlord reserves the right to require Tenant to install supplementary air conditioning units in the Premises and the cost thereof, including the cost of installation, operation and maintenance thereof shall be paid by Tenant to Landlord upon demand by Landlord.

Landlord shall furnish elevator service, lighting replacement for building standard lights, restroom supplies, and window washing services in a manner that such services are customarily furnished to comparable buildings in the area. Tenant shall provide its own janitorial services for the Premises at its sole cost and expense.

In the event that any utilities or any of the services to be provided by Landlord are interrupted or terminated as a result of Landlord's negligence, but not as the result of (i) curtailment in services imposed by any governmental authority, (ii) failure of the public utilities to furnish necessary services, or (iii) Tenant’s negligence, gross negligence or willful misconduct (a “Service Interruption”), and Tenant is prevented from using, and does not use, the Premises or any portion thereof for the purpose for which Tenant was using the Premises or such portion of the Premises immediately prior to such Service Interruption, for five (5) consecutive business days following notice to Landlord of such Service Interruption (“Eligibility Period”), then Rent payable under this Lease shall be abated or reduced, as the case may be, after expiration of the Eligibility Period for such time that Tenant continues to be prevented from using, and does not use, the Premises or a portion thereof in the proportion that the rentable area of the portion of the Premises that Tenant is prevented from using, and does not use, bears to the total rentable area of the Premises. However, if Tenant reoccupies and conducts its business from any portion of the Premises during such period, the rent allocable to such reoccupied portion, based on the proportion that the rentable area of such reoccupied portion of the Premises bears to the total rentable area of the Premises, shall be payable by Tenant from the date such business operations commence.

If Tenant shall require electric current in excess of what Landlord determines is reasonably necessary for standard office use of the Premises, Tenant shall first obtain the written consent of Landlord, which Landlord may refuse in its sole, but reasonable discretion.

10. CONDITION OF THE PREMISES.

Except as otherwise as specifically set forth in this Lease, Landlord shall not be obligated to provide or pay for any improvements, work or services related to the improvement, remodeling or refurbishment of the Premises, and subject to Landlord’s obligation to satisfy the Delivery Requirements, Tenant shall

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accept the Premises in its “AS IS” condition on the Commencement Date. No promise of Landlord to alter, remodel, repair or improve the Premises, the Building or the Project and no representation, express or implied, respecting any matter or thing relating to the Premises, Building, Project or this Lease (including, without limitation, the condition of the Premises, the Building or the Project) have been made to Tenant by Landlord or its broker, other than as may be contained herein or in a separate exhibit or addendum signed by Landlord and Tenant. Tenant also acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty regarding the condition of the Premises, the Building or the Project or with respect to the suitability of any of the foregoing for the conduct of Tenant’s business.

11. CONSTRUCTION, REPAIRS AND MAINTENANCE.

11.1 Landlord’s Obligations. In accordance with the cost allocation set forth in Section 5.2, Landlord shall maintain and repair (i) the structural portions of the Building (the “Building Structure”), (ii) the Building’s mechanical, electrical, life safety, plumbing, sprinkler and HVAC systems (other than fixtures located inside the Premises) (collectively, the “Building Systems”), and (iii) the Common Areas. The manner in which the Common Areas are maintained and operated shall be at the sole, but reasonable discretion of Landlord. Landlord reserves the right to close temporarily, make alterations or additions to, or change the location of elements of the Project and the Common Areas; provided that such alterations or additions do not materially interfere with or unreasonably disturb Tenant’s use and occupancy of the Premises. Notwithstanding anything in this Lease to the contrary, Tenant shall be required to pay for the cost of repairs or upgrades to the Building Structure, the Building Systems and/or the Common Areas to the extent required because of (i) Tenant’s use of the Premises for other than normal and customary office operations, (ii) excessive use of the HVAC systems (i.e, use during non-standard business hours), and/or (iii) Tenant’s improvements and alterations. Except as otherwise expressly provided in this Lease, Landlord shall have no liability to Tenant nor shall Tenant’s obligations under this Lease be reduced or abated in any manner whatsoever by reason of any inconvenience, annoyance, interruption or injury to business arising from Landlord’s making any repairs or changes which Landlord is required or permitted by this Lease or by any other tenant’s lease or required by law to make in or to any portion of the Project, Building or the Premises. Tenant shall give Landlord prompt notice of any damage to or defective condition in any part or appurtenance of the Building’s mechanical, electrical, plumbing, HVAC or other systems serving, located in, or passing through the Premises. Landlord shall use commercially reasonable efforts to not interfere with Tenant’s business operations in connection with Landlord performing any maintenance, repair or replacement in the Project.

11.2 Tenant’s Obligations.

     a. Tenant shall perform Tenant’s Work to the Premises as described in Exhibit “C.”

     b. Tenant at Tenant’s sole expense shall, except for services furnished by Landlord pursuant to Article 9 hereof, maintain the Premises in good order, condition and repair, including the interior surfaces of the ceilings, walls and floors, all doors, all interior windows, all plumbing, pipes and fixtures, electrical wiring, switches and fixtures, HVAC equipment within the Premises, Building Standard furnishings and special items and equipment installed by or at the expense of Tenant.

     c. Tenant shall be responsible for all repairs and alterations in and to the Premises, Building and Project and the facilities and systems thereof, the need for which arises out of (i) Tenant’s use or occupancy of the Premises, (ii) the installation, removal, use or operation of Tenant’s Property (as defined in Article 13) in the Premises, (iii) the moving of Tenant’s Property into or out of the Building, or (iv) the act, omission, misuse or negligence of Tenant, it agents, contractors, employees or invitees.

     d. If Tenant fails to maintain the Premises in good order, condition and repair, Landlord shall give Tenant notice to do such acts as are reasonably required to so maintain the Premises. If Tenant fails to promptly commence such work and diligently prosecute it to completion within thirty (30) days after receipt of notice from Landlord (or, in the case of an emergency, such shorter time as is reasonable given the situation), then Landlord will have the right to do such acts and expend such funds at the expense of

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Tenant as are reasonably required to perform such work. Any amount so expended by Landlord shall be paid by Tenant promptly after demand with interest at the prime commercial rate then being charged by Bank of America NT&SA plus two percent (2%) per annum, from the date of such work, but not to exceed the maximum rate then allowed by law. Except to the extent of Landlord's negligence or willful misconduct, Landlord shall have no liability to Tenant for any damage, inconvenience, or interference with the use of the Premises by Tenant as a result of performing any such work.

11.3 Compliance With Law. Landlord and Tenant shall each do all acts required to comply with all Applicable Laws (as defined in Section 33 below) relating to their respective maintenance obligations as set forth herein. Tenant shall do all acts required to comply with all covenants and restrictions recorded against the Project as of the date hereof.

11.4 Waiver by Tenant. Tenant expressly waives the benefits of any statute now or hereafter in effect which would otherwise afford the Tenant the right to make repairs at Landlord’s expense or to terminate this Lease because of Landlord's failure to keep the Premises in good order, condition and repair.

11.5 Load and Equipment Limits. Tenant shall not place a load upon any floor of the Premises which exceeds the load per square foot which such floor was designed to carry, as determined by Landlord or Landlord’s structural engineer. The cost of any such determination made by Landlord’s structural engineer shall be paid for by Tenant within thirty (30) days of demand. Tenant shall not install business machines or mechanical equipment which cause noise or vibration to such a degree as to be reasonably objectionable to Landlord or other Building tenants.

11.6 Notice to Landlord. Tenant shall give Landlord prompt notice of any damage to or defective condition in any part or appurtenance of the Building’s mechanical, electrical, plumbing, HVAC or other systems serving, located in, or passing through the Premises, but in no event later than ten (10) days following Tenant’s discovery of such damage or defect.

11.7 Repair at Termination of Lease. Upon the expiration or earlier termination of this Lease, Tenant shall return the Premises to Landlord clean and in good condition, except for normal wear and tear and damage by casualty that Tenant is not obligated to repair. Any damage to the Premises, including any structural damage, resulting from Tenant’s use or from the removal of Tenant’s fixtures, furnishings and equipment pursuant to Section 13.2 shall be repaired by Tenant at Tenant’s expense.

11.8 Building Renovations. Except as expressly provided herein, it is specifically understood and agreed that Landlord has made no representation or warranty to Tenant and has no obligation and has made no promises to alter, remodel, improve, renovate, repair or decorate the Premises, Building, the Project or any part thereof and that no representations respecting the condition of the Premises, the Building, the Project or any part thereof have been made by Landlord to Tenant except as specifically set forth herein or in the Work Letter. However, Tenant hereby acknowledges that Landlord may during the Term renovate, improve, alter, or modify (collectively, the “Renovations”) the buildings in the Project and/or the Common Areas of the Project. In connection with any Renovations, Landlord may, among other things, erect scaffolding or other necessary structures in the Building, limit or eliminate access to portions of the Project, including portions of the common areas, or perform work in the Building, which work may create noise, dust or leave debris in the Building; provided that Landlord shall use commercially reasonable efforts to ensure that such Renovations do not materially interfere with or unreasonably disturb Tenant’s use, occupancy, access to and improvement of the Premises. Provided Landlord's performance of the Renovations does not prevent Tenant’s reasonable use of and access to the Premises, Tenant hereby agrees that such Renovations and Landlord’s actions in connection with such Renovations shall in no way constitute a constructive eviction of Tenant nor entitle Tenant to any abatement of Rent. Provided Landlord's performance of the Renovations does not prevent Tenant’s reasonable use of and access to the Premises, Landlord shall have no responsibility or for any reason be liable to Tenant for any direct or indirect injury to or interference with Tenant’s business arising from the Renovations, nor shall Tenant be entitled to any compensation or damages from Landlord for loss of the use of the whole or any part of the Premises. In the event Landlord's performance of the Renovations requires the temporary closing of the cafeteria located in Building D, Landlord shall use commercially

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reasonable efforts to provide substitute food service within reasonable proximity to the Premises during such temporary closure. In the event Landlord's performance of the Renovations requires temporary closing of the conference rooms located on the second floor of Building D, Landlord shall provide alternate conference rooms in the Project within reasonable proximity to the Premises for Tenant's use to the extent such alternate conference rooms are available.

12. ALTERATIONS AND ADDITIONS.

12.1 Landlord’s Consent; Performance. Tenant shall not make any additions, alterations or improvements to the Premises without obtaining the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. Landlord’s consent may be conditioned on Tenant’s removing any such additions, alterations or improvements upon the expiration of the Term (provided that if requested by Tenant, Landlord shall advise Tenant at the time Landlord consents to such additions, alterations or improvements whether removal of the same by Tenant will be required at the expiration of the Lease), and restoring the Premises to the same condition as on the date Tenant took possession. All work with respect to any addition, alteration or improvement shall be done in a good and workmanlike manner by properly qualified and licensed personnel approved by Landlord, and such work shall be diligently prosecuted to completion. Landlord may, at Landlord’s option, require that any work required in connection with Tenant's alterations relating to the Building Structure or Building Systems be performed by Landlord’s contractor, in which case the cost of such work shall be paid for before commencement of the work. Tenant shall pay to Landlord upon completion of any such work by Landlord’s contractor, an administrative fee of ten percent (10%) of the cost of the work. Notwithstanding the foregoing, Tenant shall have the right to make interior, non-structural alterations and improvements to the Premises without Landlord’s consent provided the same does not affect the exterior of the Building or any portion of the Building Structure or Building System, and such alterations do not exceed $50,000.00 in the aggregate in any given calendar year.

12.2 Liens. Tenant shall pay the costs of any work done on the Premises pursuant to Section 12.1, and shall keep the Premises, Building and Project free and clear of any liens or encumbrances arising out of the work performed, materials furnished or obligations incurred by or on behalf of Tenant, and shall protect, defend, indemnify and hold Landlord harmless from and against any claims, liabilities, judgments or costs (including, without limitation, reasonable attorneys’ fees and costs) arising out of same or in connection therewith. Tenant shall give Landlord notice at least twenty (20) days prior to the commencement of any such work on the Premises (or such additional time as may be necessary under Applicable Laws) to afford Landlord the opportunity of posting and recording appropriate notices of non-responsibility and Landlord shall have the right to enter the Premises and post such notices at any reasonable time. Tenant shall remove any such lien or encumbrance by bond or otherwise within twenty (20) days after notice by Landlord, and if Tenant shall fail to do so, Landlord may pay the amount necessary to remove such lien or encumbrance, without being responsible for investigating the validity thereof. The amount so paid shall be deemed additional rent under this Lease payable within thirty (30) days after written request by Landlord, and shall be without limitation as to other remedies available to Landlord under this Lease. Nothing contained in this Lease shall authorize Tenant to do any act which shall subject Landlord’s title to the Building or Premises to any liens or encumbrances whether claimed by operation of law or express or implied contract. Any claim to a lien or encumbrance upon the Building or Premises arising in connection with any such work or respecting the Premises not performed by or at the request of Landlord shall be null and void, or at Landlord’s option shall attach only against Tenant’s interest in the Premises and shall in all respects be subordinate to Landlord’s title to the Project, Building and Premises.

12.3 Completion Bond. In the event the total estimated cost of any proposed additions, alterations or improvements to be made in or to the Premises is in excess of the then current Security Deposit, Landlord may require, at Landlord’s sole option, that Tenant provide to Landlord, at Tenant’s expense, a lien and completion bond in an amount equal to the excess of such total estimated cost over the amount of the then current Security Deposit, to protect Landlord against any liability for mechanic’s and materialmen’s liens and to insure timely completion of the work. Nothing contained in this Section 12.3

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shall relieve Tenant of its obligation under Section 12.2 to keep the Premises, Building and Project free of all liens.

12.4 Property of Landlord. Unless their removal is required by Landlord as provided in Section 12.1, all additions, alterations and improvements made to the Premises shall become the property of Landlord and be surrendered with the Premises upon the expiration of the Term; provided, however, Tenant’s equipment, machinery and trade fixtures which can be removed without damage to the Premises shall remain the property of Tenant and may be removed, subject to the provisions of Section 13.2.

13. LEASEHOLD IMPROVEMENTS; TENANT’S PROPERTY.

13.1 Landlord’s Property. All fixtures, equipment, improvements and appurtenances attached to or built into the Premises at the commencement of or during the Term, including the initial Tenant Improvements (as defined in Section 2.1 of the Work Letter attached as Exhibit "C" hereto), whether or not by or at the expense of Tenant (“Leasehold Improvements”), shall be and remain a part of the Premises, shall be the property of Landlord and shall not be removed by Tenant, except as expressly provided in Section 13.2 or if required by Landlord.

13.2 Tenant’s Property. All movable partitions, cubicles, business and trade fixtures, machinery and equipment, liebert units, computer racks and other computer equipment, communications equipment and office equipment located in the Premises, and acquired by or for the account of Tenant, without expense to Landlord, which can be removed without structural damage to the Building, and all furniture, furnishings, and other articles of movable personal property owned by Tenant and located in the Premises (collectively “Tenant’s Property”) shall be and shall remain the property of Tenant and may be removed by Tenant at any time during the Term; provided that if any of Tenant’s Property is removed, Tenant shall promptly repair any damage to the Premises or to the Building resulting from such removal.

13.3 Generators and Supplemental HVAC.

     a. So long as this Lease is in full force and effect and Tenant is not in default under this Lease beyond applicable notice and cure periods, Landlord hereby grants to Tenant an exclusive license to use, at no cost to Tenant, the generator pad site (the “Generator Pad Site”) located in the area shown Exhibit "G" attached hereto and incorporated herein. Tenant shall have the right to install, maintain, operate, repair and replace, at Tenant’s sole cost and expense, up to two (2) generators and related required equipment on the Generator Pad Site, including above-ground fuel tanks, necessary cables and generator pads (collectively, the “Generators”). If Tenant exercises the Expansion Option pursuant to Section 41 below or the Right of First Offer pursuant to Section 42 below, Tenant shall have the right to install additional generators, subject to Landlord's reasonable approval, which approval shall not be unreasonably withheld, conditioned or delayed. Such additional generators will either be located on the Generator Pad Site or at a location to be reasonably designed by Landlord. Tenant shall also have the right to install, maintain, operate, repair and replace, at Tenant’s sole cost and expense, supplemental HVAC. The size, weight, and design and exact location (if any location is then available) of the Supplemental HVAC shall be subject to Landlord’s prior written approval, which shall not be unreasonably withheld or delayed. Additionally, the size, weight, and design of the Generators shall be subject to Landlord’s prior written approval, which shall not be unreasonably withheld or delayed. In connection with any such request for approval, Tenant shall deliver to Landlord plans and specifications setting forth with specificity the size, weight, design of the Generators and supplemental HVAC, and the proposed location of the supplemental HVAC. Tenant, at its sole cost and expense, shall place a screening fence around the perimeter of the Generators and supplemental HVAC, the design and location of which shall be subject to Landlord’s approval, which shall not be unreasonably withheld or delayed. The installation, maintenance, operation, repair and replacement of the Generators and supplemental HVAC shall be in accordance with the terms of this Lease, including, without limitation, the rules and regulations attached hereto and incorporated herein as Exhibit “D.” Tenant shall ensure that the Generators and supplemental HVAC are installed, maintained, operated, repaired and replaced in accordance with all Applicable Laws, including, without limitation, by obtaining all licenses, permits or approvals required to operate the Generators and supplemental HVAC, and Tenant shall promptly repair any damage to any portion of the

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Project caused in connection with the Generators and supplemental HVAC. The Generators and supplemental HVAC are and shall remain the property of Tenant, and Landlord and Tenant agree that the Generators and supplemental HVAC are not, and installation of the Generators and supplemental HVAC shall not cause the Generators and supplemental HVAC to become, a fixture pursuant to this Lease or by operation of applicable law, unless otherwise agreed to by the parties in writing; provided, however, that Landlord, at Landlord's sole option, may elect to have Tenant leave the Generators at the Generator Pad Site upon expiration of the Term of this Lease. Landlord shall provide Tenant with notice of such election at least nine (9) months but no more than twelve (12) months prior to the expiration of the Term. If Landlord does not provide Tenant with such notice, Tenant shall have the right to remove the Generators upon the expiration of the Term. The Generators and supplemental HVAC shall be used solely in connection with Tenant’s permitted business operations in the Premises.

     b. Tenant shall be responsible for the operation, repair, replacement and maintenance of the Generators and supplemental HVAC at Tenant’s sole cost and expense, and upon the expiration or earlier termination of this Lease, unless the parties otherwise agree to in writing, Tenant shall remove the Generators and supplemental HVAC, promptly repair any and all damage caused as a result of such removal, and restore all affected areas to their original condition existing immediately prior to the installation of the Generators and supplemental HVAC, reasonable wear and tear excepted. Tenant agrees to operate the Generators and supplemental HVAC in such a manner so as not to materially interfere with the operation of other equipment of Landlord or other tenants or occupants of the Project located upon or occupying the Project as of the date Tenant’s Generators and supplemental HVAC are installed within the Project. If Tenant operates the Generators or supplemental HVAC in such a manner that causes such material interference to such pre-existing equipment, tenants or occupants, Tenant shall, at its sole cost and expense, promptly eliminate such condition by relocating (subject to obtaining Landlord’s prior written approval in accordance with the terms hereof) the Generators or supplemental HVAC, as applicable.

     c. Tenant acknowledges and agrees that its installation, maintenance, operation, repair and replacement and removal of the Generators and the supplemental HVAC are at its sole risk, and, except to the extent of the active negligence or willful misconduct of Landlord, Tenant hereby absolves and fully releases Landlord from any and all cost, loss, damage, expense, liability, and causes of action, whether foreseeable or not, from any cause whatsoever that Tenant may suffer to the Generators and supplemental HVAC or that Tenant or any other party may suffer in connection with the Generators and supplemental HVAC. The Generators and supplemental HVAC shall be included within the coverage of all insurance policies required to be maintained by Tenant under this Lease. Except to the extent of the active negligence or willful misconduct of Landlord, Tenant shall protect, defend, indemnify and hold Landlord harmless from and against any and all claims, losses and liabilities in any way arising or resulting from or in connection with the Generators and supplemental HVAC.

     d. Without limiting the generality of Tenant’s obligations to indemnify Landlord contained in this Lease, including, without limitation, Section 22.1 below, and except to the extent of Landlord’s negligence or willful misconduct, Tenant shall indemnify and hold Landlord harmless from and against all claims, liabilities, costs and expenses (including reasonable attorneys’ fees), which may arise out of or may be directly or indirectly attributable to (i) the presence of the Generators and supplemental HVAC, including (A) the costs of any required or necessary repair, clean up, or detoxification of any affected portion of the Premises, (B) the preparation and implementation of any closure, remedial, or other required plans and (C) all reasonable and necessary costs and expenses incurred by Landlord in connection with subparagraphs (A) and (B) herein, including reasonable attorneys’ fees; (ii) Landlord’s investigation and handling, including the defense, of any and all (1) enforcement, clean up, removal, mitigation, remediation, or other governmental or regulatory actions instituted, contemplated, or threatened pursuant to applicable law affecting the Project and relating to or resulting from the Generators and supplemental HVAC, (2) all claims made or threatened by any third party against Tenant, Landlord or the Project relating to damage, contribution, cost recovery, compensation, loss, or injury resulting from the Generators and supplemental HVAC, whether or not any lawsuit or other formal legal proceeding shall have been commenced in respect thereof; and (3) Landlord’s enforcement of this

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Section 13.3, whether or not suit is brought therefor. The provisions of this Section shall expressly survive the termination of this Lease.

     e. If requested by Landlord due to Landlord’s good faith belief that Tenant has released any Hazardous Materials or has otherwise breached Tenant’s obligations under Article 34 of this Lease, at the end of the applicable Term or other termination of this Lease or upon removal of the Generators and supplemental HVAC, if applicable, Tenant, at it sole cost and expense, shall cause a Phase I Environmental Survey of any affected portion of the Project (as determined by Landlord) to be conducted by a competent and experienced environmental engineer or engineering firm and shall provide a copy of such survey to Landlord in order to confirm Tenant’s compliance with the covenants contained in this Section 13.3.

14. RULES AND REGULATIONS.

Tenant agrees to comply with (and cause its agents, contractors, employees and invitees to comply with) the rules and regulations attached hereto as Exhibit “D” and with such reasonable modifications thereof and additions thereto as Landlord may from time to time make. Landlord shall enforce all such rules and regulations in a non-discriminatory manner.

15. CERTAIN RIGHTS RESERVED BY LANDLORD.

Landlord reserves the following rights, exercisable without liability to Tenant for (a) damage or injury to property, person or business, (b) causing an actual or constructive eviction from the Premises, or (c) disturbing Tenant’s use or possession of the Premises:

     a. To name the Building and Project and to change the name or street address of the Building or Project;

     b. To install and maintain all signs on the exterior and interior of the Building and Project;

     c. To have pass keys to the Premises and all doors within the Premises, excluding Tenant’s vaults and safes;

     d. At any time during the Term, and on reasonable prior notice to Tenant (provided that twenty-four (24) hours will be deemed reasonable notice, except in the event of an emergency, when no notice shall be required), to inspect the Premises, and to show the Premises to any prospective purchaser or mortgagee of the Project, or to any assignee of any mortgage on the Project, or to others having an interest in the Project or Landlord, and during the last six (6) months of the Term, to show the Premises to prospective tenants thereof, provided that Landlord agrees that Landlord and its agents, contractors and representative shall use best efforts to minimize interference with Tenant's business in the Premises; and

     e. To enter the Premises for the purpose of making inspections, repairs, alterations, additions or improvements to the Premises or the Building (including, without limitation, checking, calibrating, adjusting or balancing controls and other parts of the HVAC system), and to take all steps as may be necessary or desirable for the safety, protection, maintenance or preservation of the Premises or the Building or Landlord’s interest therein, or as may be necessary or desirable for the operation or improvement of the Building or in order to comply with laws, orders or requirements of governmental or other authority. Landlord agrees that Landlord and Landlord's agents, contractors and representatives shall use best efforts (except in an emergency) to minimize interference with Tenant’s business in the Premises in the course of any such entry.

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16. ASSIGNMENT AND SUBLETTING.

No assignment of this Lease or sublease of all or any part of the Premises shall be permitted, except as provided in this Article 16.

     a. Tenant shall not, without the prior written consent of Landlord, assign, transfer or hypothecate this Lease or any interest herein or sublet the Premises or any part thereof, or permit the use of the Premises by any party other than Tenant. Any of the foregoing acts without such consent shall be void and shall, at the option of Landlord, terminate this Lease. This Lease shall not, nor shall any interest of Tenant herein, be assignable by operation of law without the written consent of Landlord. If Tenant is a corporation, unincorporated association, partnership, or limited liability company, the sale, assignment, transfer or hypothecation of any class of stock or other ownership interest in such corporation, association, partnership, or limited liability company in excess of thirty-five percent (35%) in the aggregate shall be deemed a “Transfer” within the meaning and provisions of this Article 16.

     b. If at any time or from time to time during the Term Tenant desires to assign this Lease or sublet all or any part of the Premises (“Transfer”), Tenant shall give notice to Landlord setting forth the terms and provisions of the proposed Transfer, and the identity of the proposed assignee or subtenant (the “Transfer Notice”). Tenant shall promptly supply Landlord with such information concerning the business background and financial condition of such proposed assignee or subtenant as Landlord may reasonably request. Any assignment or sublease shall be subject to the following conditions:

               (1) Landlord shall have the right to approve such proposed assignee or subtenant, which approval shall not be unreasonably withheld. Without limitation as to other reasonable grounds for withholding consent, the parties hereby agree that it shall be reasonable under this Lease and under any applicable law for Landlord to withhold consent to any proposed transfer where one or more of the following apply: (a) the proposed transferee intends to use the Premises for purposes which are not permitted under this Lease; (b) the proposed transferee is either a governmental agency or instrumentality thereof; (c) the proposed transferee is not a party of reasonable financial worth and/or financial stability in light of the responsibilities to be undertaken in connection with the transfer on the date consent is requested; (d) the proposed transfer would cause a violation of another lease for space in the Project, or would give an occupant of the Project a right to cancel its lease; or (e) the proposed subtenant or assignee is a tenant of other space in the Project or a party with whom Landlord is then (or has in the previous 6 months) negotiating with regarding the lease of space in the Building; provided, however, Tenant shall be entitled to lease space to a tenant (or a subsidiary, affiliate or parent of a tenant) of the Project if Landlord does not then have available space in the Project of a size sufficient to accommodate such tenant’s needs;

               (2) The assignment or sublease shall be on the same terms set forth in the notice given to Landlord;

               (3) No assignment or sublease shall be valid and no assignee or sublessee shall take possession of the Premises until an executed counterpart of such assignment or sublease has been delivered to Landlord; and

               (4) No assignee or sublessee shall have a further right to assign or sublet except on the terms herein contained.

     c. If Landlord consents to any transfer pursuant to the terms of this Section, Tenant may within six (6) months after Landlord’s consent, but not later than the expiration of said six (6)-month period, enter into such transfer of the Premises or portion thereof, upon substantially the same terms and conditions as are set forth in the Transfer Notice furnished by Tenant to Landlord, provided that if there are any changes in the terms and conditions from those specified in the Transfer Notice (i) such that Landlord would initially have been entitled to refuse its consent to such transfer under the terms of this Lease or (ii) which would cause the proposed transfer to be more favorable to the proposed transferee

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than the terms set forth in Tenant’s original Transfer Notice, Tenant shall again submit the transfer to Landlord for its approval and other action under this Article 16.

     d. If Landlord consents to a transfer, it shall be deemed a condition thereto (which the parties hereby agree is reasonable) that Tenant shall pay to Landlord, when received by Tenant, fifty percent (50%) of any “Transfer Premium,” as that term is defined in this Section, received by Tenant from such transferee. “Transfer Premium” shall mean all rent, additional rent or other consideration payable by such transferee in connection with the transfer in excess of the Base Rent and additional rent payable by Tenant under this Lease during the term of the transfer on a per rentable square foot basis if less than all of the Premises is transferred, minus any and all reasonable costs and expenses incurred by Tenant in consummating such assignment or sublease, including, but not limited to, brokerage commissions and attorneys’ fees. Notwithstanding anything to the contrary herein, no Transfer Premium shall be owed to Landlord in connection with an assignment or sublease that does not require Landlord’s consent. In the calculations of the rent (as it relates to the Transfer Premium calculated under this Section), and the transferee’s Rent, the Rent paid during each annual period for the Premises, and the transferee’s Rent, shall be computed after adjusting such rent to the actual effective rent to be paid, taking into consideration any and all leasehold concessions granted in connection therewith, including, but not limited to, any rent credit and tenant improvement allowance. For purposes of calculating any such effective rent all such concessions shall be amortized on a straight-line basis over the relevant term.

     e. Notwithstanding the provisions of paragraphs a and b above, Tenant may, upon written notice to Landlord, assign this Lease or sublet the Premises or any portion thereof (herein, a “Permitted Transfer”), without the necessity of obtaining Landlord’s consent, to any entity which controls, is controlled by or is under common control with Tenant, or to any entity resulting from a merger or consolidation with Tenant, or to any person or entity which acquires all or substantially all of the ownership interests or assets of Tenant’s business as a going concern (each, a “Permitted Transferee”), provided that (i) the Permitted Transferee assumes, in full, the obligations of Tenant under this Lease; (ii) Tenant remains fully liable under this Lease; (iii) Landlord shall have received an executed copy of all documentation effecting such transfer within thirty (30) days after its effective date; (iv) the Permitted Transfer is not subterfuge by Tenant to avoid its obligations under this Lease; and (v) subject to the terms of Article 7 above, the Permitted Transferee shall obtain a Replacement Letter of Credit.

     f. No subletting or assignment shall release Tenant of Tenant’s obligations under this Lease or alter the primary liability of Tenant to pay the Rent and to perform all other obligations to be performed by Tenant hereunder. The consent by Landlord to any assignment or sublease or the acceptance of Rent by Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision hereof. Consent to one assignment or subletting shall not be deemed consent to any subsequent assignment or subletting. In the event of default by an assignee or subtenant of Tenant or any successor of Tenant in the performance of any of the terms hereof, Landlord may proceed directly against Tenant or the guarantor without the necessity of exhausting remedies against such assignee, subtenant or successor. Landlord may consent to subsequent assignments of this Lease or sublettings or amendments or modifications to the Lease with assignees of Tenant, without notifying Tenant, or any successor of Tenant, and without obtaining its or their consent thereto and any such actions shall not relieve Tenant or its guarantor of liability under this Lease. Tenant shall deliver to Landlord, promptly after execution, an original executed copy of all documentation pertaining to any assignment or sublease in form reasonably acceptable to Landlord. Tenant shall furnish upon Landlord’s request a complete statement, certified by an independent certified public accountant, or Tenant’s chief financial officer, setting forth in detail the computation of any Transfer Premium Tenant has derived and shall derive from such transfer. Landlord or its authorized representatives shall have the right upon at least twenty four (24) hours advance notice to audit the books, records and papers of Tenant relating to any transfer, and shall have the right to make copies thereof. If the Transfer Premium respecting any transfer shall be found understated, Tenant shall, within thirty (30) days after demand, pay the deficiency, and if understated by more than five percent (5%), Tenant shall pay Landlord’s costs of such audit.

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     g. If Tenant assigns the Lease or sublets the Premises or requests the consent of Landlord to any assignment or subletting or if Tenant requests the consent of Landlord for any act that Tenant proposes to do, then Tenant shall, upon demand, pay Landlord the reasonable, actual attorneys’ fees reasonably incurred by Landlord in connection with such act or request.

17. ROOF RIGHTS.

Tenant shall have the right to install and maintain on the Building roof at Tenant’s sole cost and expense, one (1) satellite dish, antennae and related communications equipment as permitted by Landlord for Tenant’s communications and data transmission network, provided that Tenant shall, at its sole cost and expense, place screening around the perimeter of such satellite dish, antennae and related communications equipment, the design and location of which shall be subject to Landlord's approval, which approval shall not be unreasonably withheld, conditioned or delayed. Tenant shall also have the right to install and remove, at its sole cost and expense, the cabling and conduit reasonably necessary to connect the rooftop satellite dish and equipment to Tenant’s equipment on and within the Premises. Such equipment, dish, cabling and conduit shall be at locations designated by Landlord, provided that such locations will allow Tenant to transmit and receive reception without interference (“Interference Free Location”). If from time to time a location designated by Landlord, which initially is acceptable to Tenant as an Interference Free Location, subsequently becomes unacceptable because of conditions which create interference, Landlord shall, if reasonably possible, designate and make available to Tenant a new Interference Free Location. The installation and any costs relating thereto, and the maintenance, repair, insurance obligations and liability, with respect to such equipment and dish, shall be borne completely by Tenant, although such use of space on the roof and for the cabling and conduit shall be without any cost to Tenant. Upon expiration or earlier termination of this Lease, Tenant shall remove, at Tenant’s sole cost and expense, all equipment, cabling and conduit installed pursuant to this Article 17 and repair any damage caused by such removal. Landlord shall not install equipment, nor shall Landlord permit any tenant to install any equipment, which will interfere with any of Tenant’s then existing (as of the date of installation) communications equipment provided Tenant’s equipment is operating in accordance with all Laws and manufacturer specifications.

18. HOLDING OVER.

If after expiration of the Term, Tenant remains in possession of the Premises with Landlord’s permission (express or implied), Tenant shall become a tenant from month to month only, upon all the provisions of this Lease (except as to term and Base Rent), but the “Monthly Installments of Base Rent” payable by Tenant shall be increased to one hundred fifty percent (150%) of the Monthly Installments of Base Rent payable by Tenant at the expiration of the Term. Such monthly rent shall be payable in advance on or before the first day of each month. If either party desires to terminate such month to month tenancy, it shall give the other party not less than thirty (30) days’ advance written notice of the date of termination. Nothing contained in this Article 18 shall be construed as consent by Landlord to any holding over by Tenant, and Landlord expressly reserves the right to require Tenant to surrender possession of the Premises to Landlord as provided in this Lease upon the expiration or other termination of this Lease. The provisions of this Article 18 shall not be deemed to limit or constitute a waiver of any other rights or remedies of Landlord provided herein or at law. If Tenant fails to surrender the Premises upon the termination or expiration of this Lease, in addition to any other liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify, and hold Landlord harmless from all loss, costs (including reasonable attorneys’ fees) and liability resulting from any such failure, including, without limiting the generality of the foregoing, any claims made by any succeeding tenant founded upon such failure to surrender and any lost profits to Landlord resulting therefrom.

19. SURRENDER OF PREMISES.

19.1 Condition Upon Surrender. Tenant shall peaceably surrender the Premises to Landlord on the Expiration Date, in broom-clean condition and in as good condition as when Tenant took possession, except for (i) reasonable wear and tear, (ii) loss by fire or other casualty, and (iii) loss by condemnation. Tenant shall, on Landlord’s request, remove Tenant’s Property on or before the Expiration Date and

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promptly repair all damage to the Premises or Building caused by such removal. Subject to the terms of this Lease, Tenant shall remove the Existing FF&E upon the expiration or earlier termination of this Lease.

19.2 Tenant’s Property. If Tenant abandons or surrenders the Premises, or is dispossessed by process of law or otherwise, any of Tenant’s Property left on the Premises shall be deemed to be abandoned, and, at Landlord’s option, title shall pass to Landlord under this Lease as by a bill of sale. If Landlord elects to remove all or any part of such Tenant’s Property, the cost of removal, including repairing any damage to the Premises or Building caused by such removal, shall be paid by Tenant. On the Expiration Date Tenant shall surrender all keys to the Premises.

20. DESTRUCTION OR DAMAGE.

20.1 Duty to Restore. If the Premises or the Project are partially or totally damaged by fire or other casualty, and if such damage is insured against (including any applicable deductible) under any policy of fire or extended coverage insurance maintained by Landlord, the Lease shall not terminate and Landlord shall repair or reconstruct the Premises (to the same condition as required in Section 20.5) and the Project as soon as reasonably practicable at Landlord’s expense, unless Landlord elects to terminate the Lease as provided in Section 20.2 below.

20.2 Election to Terminate. If (i) the Premises or the Project are partially or totally damaged by fire or other casualty which is insured against (including any applicable deductible) under any policy of fire or extended coverage insurance maintained by Landlord, and the cost of repairing such damage exceeds twenty-five percent (25%) of the full replacement cost of the Premises or Project, as applicable; (ii) the repairs or restoration work is estimated to exceed one hundred eighty (180) days; (iii) at any time during the Term of this Lease, the Premises or the Project are partially or totally damaged by any casualty which is not insured against under any policy of fire or extended coverage insurance maintained by Landlord; or (iv) the damage occurs during the last year of the Term and the repairs or restoration work exceeds thirty (30) days, Landlord shall have the right to elect to either terminate the Lease or restore the Premises and such portion of the improvements in the balance of the Project as in Landlord’s sole discretion is necessary to create an economically feasible commercial project. Landlord shall give Tenant notice of Landlord’s election within sixty (60) days after the date of such damage. If Landlord elects to restore the Premises and the Project pursuant to this Section 20.2, (i) with respect to the Premises, Landlord and Tenant each shall restore the Premises as provided in Section 20.5 of this Lease; (ii) the damaged improvements in the balance of the Project shall be restored by Landlord; and (iii) the Lease shall remain in full force and effect. If Landlord elects to terminate the Lease pursuant to this Section 20.2, the Lease shall terminate effective thirty (30) days after the date of Landlord’s notice to Tenant of Landlord’s election to terminate the Lease.

20.3 Termination by Tenant. If Landlord is obligated or elects to repair or restore any damage to the Premises pursuant to this Article 20, Landlord shall give written notice (the “Repair Notice”) to Tenant of Landlord’s intention to perform such repair or restoration work within sixty (60) days after the date of such damage or destruction. Such notice shall include Landlord’s reasonable estimate of the period required to complete such repairs or restoration work (the “Repair Period”). If (i) the damage occurs other than during the last year of the Term of this Lease and the Repair Period exceeds one hundred eighty (180) days; or (ii) the damage occurs during the last year of the Term and the Repair Period exceeds thirty (30) days, Tenant, within five (5) days after the date of the Repair Notice, shall have the right to terminate this Lease by giving written notice of termination to Landlord, provided that Tenant is not then in default under the Lease. Tenant’s failure to give such notice within such five (5)-day period shall constitute Tenant’s irrevocable election not to terminate the Lease.

20.4 Abatement of Rent. If Landlord elects to restore the Premises and the Project pursuant to this Article 20, the Lease shall remain in full force and effect, and Rent shall be abated (unless the damage is the result of the negligence or willful misconduct of Tenant or Tenant’s agents, employees, contractors, licensees, or invitees, in which case any abatement shall be limited to insurance proceeds of Landlord covering any abatement of rent) to the extent Tenant’s use of the Premises for Tenant’s intended purpose

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is impaired, commencing with the date of damage and continuing until completion of the repairs required of Landlord under Section 20.5 of this Lease.

20.5 Reconstruction Responsibilities. If the Premises are to be repaired under this Article, Landlord shall repair at its cost any injury or damage to the Building and the Premises. Tenant shall be responsible at its sole cost and expense for the repair, restoration and replacement of the Leasehold Improvements, Tenant Improvements and Tenant’s Property. Landlord shall not be liable for any loss of business, inconvenience or annoyance arising from any repair or restoration of any portion of the Premises, Building or Project as a result of any damage from fire or other casualty.

20.6 Future Laws. This Lease shall be considered an express agreement governing any case of damage to or destruction of the Premises, Building or Project by fire or other casualty, and any present or future law which purports to govern the rights of Landlord and Tenant in such circumstances in the absence of express agreement, shall have no application.

21. EMINENT DOMAIN.

21.1 Takings Resulting in Termination. If the entire Premises is appropriated or taken (a “Taking”) under the power of eminent domain by any public of quasi-public authority (an “Authority”), this Lease shall terminate as of the date of such Taking. If twenty-five percent (25%) or more of the floor area of the Premises is taken under the power of eminent domain by any Authority, or if by reason of any Taking, regardless of the amount taken, the remainder of the Premises is not one undivided parcel of property, either Landlord or Tenant may terminate this Lease as of the date Tenant is required to vacate a portion of the Premises, upon giving notice in writing of such election within thirty (30) days after receipt by Tenant from Landlord of written notice that the Premises have been so taken. Landlord shall promptly give Tenant notice in writing of any Taking after learning of it. If more than twenty-five percent (25%) of the floor area of the Project or of the Common Areas is taken (whether or not the Premises are so taken) under the power of eminent domain by any Authority or if access to the Premises is materially impaired, Landlord shall have the right to terminate this Lease as of the date any such areas are to be initially vacated by giving Tenant written notice of such election within thirty (30) days of the day of such Taking. If more than twenty percent (20%) of the floor area of the Premises is taken under the power of eminent domain by any Authority or if access to the Premises is materially impaired, either party shall have the right to terminate this Lease as of the date any such areas are to be initially vacated by giving the other party written notice of such election within thirty (30) days of the day of such Taking. If this Lease is terminated as provided in this Section 21.1, Landlord and Tenant shall each be released from any further obligations to the other party under this Lease, except for any obligations which have previously accrued.

21.2 Takings Not Resulting in Termination. If both Landlord and Tenant elect not to exercise any right granted hereunder to terminate this Lease in connection with the Taking, or this Lease is not terminable in connection with the Taking, Tenant shall continue to occupy that portion of the Premises which was not taken and (i) at Landlord’s cost and expense and as soon as reasonably possible, Landlord shall restore the Premises on the land remaining to a complete unit of like quality and character as existed prior to such Taking; and (ii) the Base Rent provided for in Article 5 shall be reduced on an equitable basis, taking into account the relative value of the portion of the Premises taken as compared to the portion remaining. Tenant hereby waives any statutory rights of termination which may arise by reason of any partial Taking of the Premises under the power of eminent domain. Tenant shall be responsible for the repair, restoration and replacement of any other Leasehold Improvements and Tenant’s Property.

21.3 Award. If this Lease is terminated under Section 21.1 or modified under Section 21.2, Landlord shall be entitled to receive the entire condemnation award for the Taking of all real property interests in the Premises. The Rent and other charges for the last month of Tenant’s occupancy shall be prorated and Landlord shall refund to Tenant any Rent or any other charges paid in advance. Notwithstanding the foregoing and provided Tenant’s award does not reduce or affect Landlord’s award, Tenant’s right to receive a condemnation award for the Taking of its personal property, goodwill, relocation expenses

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and/or interest in other than the real property taken shall not be affected in any manner by the provisions of this Section 21.3.

21.4 Transfer Under Threat of Taking. For the purpose of this Article 21, a voluntary sale or conveyance under the threat of and in lieu of condemnation shall be deemed a Taking under the power of eminent domain.

22. INDEMNIFICATION.

22.1 Indemnification of Landlord. Except to the extent of Landlord’s active negligence or willful misconduct, Tenant shall indemnify and hold Landlord harmless against and from liability and claims of any kind for loss or damage to property of Tenant or any other person, or for any injury to or death of any person, arising out of or related to: (1) Tenant’s use and occupancy of the Premises, Building or Project, or any work, activity or other things allowed or suffered by Tenant to be done in, on or about the Premises, Building, or Project; (2) any breach or default by Tenant of any of Tenant’s obligations under this Lease; or (3) any negligent or otherwise tortious act or omission of Tenant, its agents, employees, invitees or contractors. Tenant shall at Tenant’s expense, and by counsel satisfactory to Landlord, defend Landlord in any action or proceeding arising from any such claim and shall indemnify Landlord against all costs, attorneys’ fees, expert witness fees and any other expenses incurred in such action or proceeding.

22.2 Exemption from Liability. Except in connection with damage or injury resulting from the negligence or willful misconduct of Landlord or any of Landlord's agents, employees or contractors, Landlord shall not be liable for injury or damage which may be sustained by the person or property of Tenant, its employees, invitees or customers, or any other person in or about the Premises, caused by or resulting from fire, steam, electricity, gas, water or rain which may leak or flow from or into any part of the Premises, or from the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, whether such damage or injury results from conditions arising upon the Premises or upon other portions of the Building or Project or from other sources. Landlord shall not be liable for any damages arising from any act or omission of any other tenant of the Building or Project.

22.3 Indemnification of Tenant. Except to the extent of Tenant’s negligence or willful misconduct, Landlord shall indemnify and hold Tenant harmless against and from liability and claims of any kind for loss or damage to property of Tenant or any other person, or for any injury to or death of any person, arising out of or related to (1) any breach or default by Landlord of any of Landlord's obligations under this Lease, or (2) the negligence or willful misconduct of Landlord, its agents, employees, invitees or contractors. Landlord shall at Landlord’s expense, and by counsel reasonably satisfactory to Tenant, defend Tenant in any action or proceeding arising from any such claim and shall indemnify Tenant against all costs, attorneys’ fees, expert witness fees and any other expenses incurred in such action or proceeding.

23. INSURANCE.

23.1 Tenant’s Insurance Obligations. All insurance required to be carried by Tenant hereunder shall be issued by responsible insurance companies acceptable to Landlord and Landlord’s lender and authorized and permitted to do business in the State. Each policy, excluding workers’ compensation and employer’s liability, shall include Landlord, and at Landlord’s request any mortgagee of Landlord, as an additional insured, as their respective interests may appear. Each policy shall contain (i) a cross-liability endorsement, (ii) a provision that such policy and the coverage evidenced thereby shall be primary and non-contributing with respect to any policies carried by Landlord and that any coverage carried by Landlord shall be excess insurance, and (iii) a waiver by the insurer of any right of subrogation against Landlord, its agents, employees and representatives, which arises or might arise by reason of any payment under such policy or by reason of any act or omission of Landlord, its agents, employees or representatives. A certificate of insurance evidencing the existence and amount of each insurance policy required hereunder shall be delivered to Landlord before the date Tenant is first given the right of

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possession of the Premises, and thereafter within thirty (30) days after any demand by Landlord therefor. Landlord may, at any time and from time to time, inspect and/or copy any insurance policies required to be maintained by Tenant hereunder. No such policy shall be cancelable except after twenty (20) days written notice to Landlord and Landlord’s lender. Tenant shall furnish Landlord with renewals or “binders” of any such policy at least ten (10) days prior to the expiration thereof. Tenant agrees that if Tenant does not take out and maintain such insurance, then if Tenant's failure to maintain such insurance continues for ten (10) days after Tenant receives notice from Landlord, Landlord may (but shall not be required to) procure said insurance on Tenant’s behalf and charge the Tenant the premiums together with a ten (10%) percent handling charge payable within thirty (30) days of demand. Tenant shall have the right to provide such insurance coverage pursuant to blanket policies obtained by the Tenant, provided such blanket policies expressly afford coverage to the Premises, Landlord, Landlord’s mortgagee and Tenant as required by this Lease.

23.2 Tenant’s Property Insurance. Beginning the date Tenant is given access to the Premises for any purpose and continuing until expiration of the Term, Tenant shall procure, pay for and maintain in effect policies of property insurance covering (i) all Leasehold Improvements (including any alterations, additions or improvements as may be made by Tenant pursuant to the provisions of Article 12 hereof), and (ii) trade fixtures, merchandise and the personal property from time to time in, on or about the Premises, in an amount not less than one hundred percent (100%) of their actual replacement cost from time to time, providing protection against any peril included within the classification “Fire and Extended Coverage” together with insurance against sprinkler damage, vandalism and malicious mischief. The proceeds of such insurance shall be used for the repair or replacement of the property so insured. Upon termination of this Lease following a loss as set forth herein, the proceeds under (i) shall be paid to Landlord, and the proceeds under (ii) above shall be paid to Tenant.

23.3 Tenant’s Liability Insurance. Beginning on the date Tenant is given access to the Premises for any purpose and continuing until expiration of the Term, Tenant shall procure, pay for and maintain in effect workers’ compensation insurance in compliance with the statutory requirements of the state(s) of operation and employer’s liability with a limit of $2,000,000 each accident/disease/policy limit as required by law and Commercial General Liability with a combined single limit of $5,000,000 per occurrence for bodily injury (including death) and property damage with respect to the construction of improvements on the Premises, the use, operation or condition of the Premises and the operations of Tenant in, on or about the Premises, including personal injury and property damage.

23.4 Landlord’s Insurance Obligations. Throughout the Term, Landlord shall maintain the following insurance, together with such other commercially reasonable insurance coverage as is generally maintained by comparable landlords for comparable buildings in the geographic area in which the Project is located, the premiums of which shall be included in Operating Expenses: (a) Commercial General Liability insurance applicable to the Project, Building and Common Areas providing, on an occurrence basis, a minimum combined single limit of at least $2,000,000.00; (b) All Risk Property Insurance on the Building at replacement cost value as reasonably estimated by Landlord; (c) Worker’s Compensation insurance to the extent required by Law; and (d) Employers Liability Coverage to the extent required by Law (collectively, “Landlord’s Insurance”).

24. WAIVER OF SUBROGATION.

Landlord and Tenant each hereby waive all rights of recovery against the other and against the officers, employees, agents and representatives of the other, on account of loss by or damage to the waiving party of its property or the property of others under its control, to the extent that such loss or damage is insured against (or required to be insured against by the terms hereof) under any fire and extended coverage insurance policy which either may have in force at the time of the loss or damage. Tenant shall, upon obtaining the policies of insurance required under this Lease, give notice to its insurance carrier or carriers that the foregoing mutual waiver of subrogation is contained in this Lease.

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25. SUBORDINATION AND ATTORNMENT.

Landlord and Tenant acknowledge and agree that there is currently no debt on the Project. Within twenty (20) days after written request from Landlord, or any first mortgagee or first deed of trust beneficiary of Landlord, or ground lessor of Landlord, Tenant shall, in writing and in a commercially reasonable form, subordinate its rights under this Lease to the lien of any first mortgage or first deed of trust, or to the interest of any lease in which Landlord is lessee, and to all advances made or hereafter to be made thereunder. The holder of any security interest may, upon written notice to Tenant, elect to have this Lease prior to its security interest regardless of the time of the granting or recording of such security interest.

Likewise, Landlord shall provide Tenant such a non-disturbance agreement as to any future mortgage, deed of trust, deed to secure debt or similar financing instrument. The subordination of the Lease to a future deed to secure debt, mortgage, deed of trust or similar financing instrument is contingent upon the receipt by Tenant of a commercially reasonable non-disturbance agreement.

In the event of any foreclosure sale, transfer in lieu of foreclosure or termination of the lease in which Landlord is lessee, Tenant shall attorn to the purchaser, transferee or lessor as the case may be, and recognize that party as Landlord under this Lease, provided that such purchaser, transferee or lessor agrees to recognize this Lease and Tenant's rights hereunder.

26. ESTOPPEL CERTIFICATES.

26.1 Tenant’s Estoppel Certificates. Within ten (10) business days after written request from Landlord, Tenant shall execute and deliver to Landlord or Landlord’s designee, a written statement certifying (a) that this Lease is unmodified and in full force and effect, or is in full force and effect as modified and stating the modifications; (b) the amount of Base Rent and the date to which Base Rent and Additional Rent have been paid in advance; (c) the amount of any security deposited with Landlord; (d) that, to Tenant’s knowledge, Landlord is not in default hereunder or, if Landlord is claimed to be in default, stating the nature of any claimed default; and (e) any other factual matters reasonably requested by Landlord. Any such statement may be relied upon by a purchaser, assignee or lender. Tenant’s failure to execute and deliver such statement within five (5) business days after Tenant's receipt of a second written request from Landlord to be sent after the expiration of the initial ten (10) business day period shall be conclusive upon Tenant that: (1) this Lease is in full force and effect and has not been modified except as represented by Landlord; (2) there are no uncured defaults in Landlord’s performance and that Tenant has no right of offset, counter-claim or deduction against Rent; and (3) not more than one month’s Rent has been paid in advance.

26.2 Landlord’s Estoppel Certificates. Within twenty (20) days after written request from Tenant, Landlord shall execute and deliver to Tenant or Tenant’s designee, a written statement certifying (a) that this Lease is unmodified and in full force and effect, or is in full force and effect as modified and stating the modifications; (b) the amount of Base Rent and the date to which Base Rent and Additional Rent have been paid in advance; (c) the amount of any security deposited with Landlord; (d) that Tenant, to Landlord’s knowledge, is not in default hereunder or, if Tenant is claimed to be in default, stating the nature of any claimed default; and (e) any other factual matters reasonably requested by Tenant. Any such statement may be relied upon by a purchaser, assignee or lender. Landlord's failure to execute and deliver such statement within five (5) business days after Landlord's receipt of a second written request from Tenant to be sent after the expiration of the initial twenty (20) day period shall be conclusive upon Landlord that: (1) this Lease is in full force and effect and has not been modified except as represented by Tenant; and (2) there are no uncured defaults in Tenant's performance.

27. TRANSFER OF LANDLORD’S INTEREST.

In the event of any sale or transfer by Landlord of the Premises, Building or Project, and assignment of this Lease by Landlord, the transferring Landlord shall be and is hereby entirely freed and relieved of any and all liability and obligations contained in or derived from this Lease arising out of any act, occurrence

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or omission relating to the Premises, Building, Project or Lease occurring after the consummation of such sale or transfer so long as the purchaser or transferee assumes in writing all of the obligations of “Landlord” hereunder. If any security deposit or prepaid Rent has been paid by Tenant, Landlord shall transfer the security deposit or prepaid Rent to Landlord’s successor and upon such transfer, Landlord shall be relieved of any and all further liability with respect thereto.

28. DEFAULT.

28.1 Tenant’s Default. The occurrence of any one or more of the following events shall constitute a default and breach of this Lease by Tenant:

     a. If Tenant fails to pay any Rent or any other charges required to be paid by Tenant under this Lease and such failure continues for ten (10) days after Tenant receives notice (but, with respect to payment of Base Rent and Direct Expenses, Landlord shall not be obligated to provide such written default notice on more than two (2) occasions in any one calendar year; thereafter for the remainder of such calendar year, an Event of Default shall occur if a payment of Base Rent or Direct Expenses is not made within five (5) days after the date due); or

     b. If Tenant fails to promptly and fully perform any other covenant, condition or agreement contained in this Lease (including a monetary default not covered by Section 28.1.a above) and such failure continues for thirty (30) days after written notice thereof from Landlord to Tenant; provided, however, that no default shall occur if the failure is not reasonably susceptible to cure within thirty (30) days so long as Tenant commences the cure within such thirty (30) day period and diligently pursues it to completion thereafter; or

     c. If Tenant makes a general assignment for the benefit of creditors, or provides for an arrangement, composition, extension or adjustment with its creditors; or

     d. If Tenant files a voluntary petition for relief or if a petition against Tenant in a proceeding under the federal bankruptcy laws or other insolvency laws is filed and not withdrawn or dismissed within sixty (60) days thereafter, or if under the provisions of any law providing for reorganization or winding up of corporations, any court of competent jurisdiction assumes jurisdiction, custody or control of Tenant or any substantial part of its property and such jurisdiction, custody or control remains in force unrelinquished, unstayed or unterminated for a period of sixty (60) days; or

     e. If in any proceeding or action in which Tenant is a party, a trustee, receiver, agent or custodian is appointed to take charge of the Premises or Tenant’s Property (or has the authority to do so) for the purpose of enforcing a lien against the Premises or Tenant’s Property.

Any written notice of default based upon Tenant’s failure to pay Rent or any other charges under the Lease which is given by Landlord pursuant to this Section 28.1 shall also constitute a notice to pay rent or quit pursuant to any applicable unlawful detainer statute, provided that such notice is served in accordance with the provisions of any such statute.

28.2 Remedies. In the event of Tenant’s default hereunder, then in addition to any other rights or remedies Landlord may have under any law, Landlord shall have the right, at Landlord’s option, without further notice or demand of any kind to do the following:

     a. Terminate this Lease and Tenant’s right to possession of the Premises and reenter the Premises and take possession thereof, and Tenant shall have no further claim to the Premises or under this Lease; or

     b. Continue this Lease in effect, reenter and occupy the Premises for the account of Tenant, and collect any unpaid Rent or other charges which have or thereafter become due and payable; or

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     c. Reenter the Premises under the provisions of subparagraph b, and thereafter elect to terminate this Lease and Tenant’s right to possession of the Premises.

If Landlord reenters the Premises under the provisions of subparagraphs b or c above, Landlord shall not be deemed to have terminated this Lease or the obligation of Tenant to pay any Rent or other charges thereafter accruing, unless Landlord notifies Tenant in writing of Landlord’s election to terminate this Lease. In the event of any reentry or retaking of possession by Landlord, Landlord shall have the right, but not the obligation, to remove all or any part of Tenant’s Property in the Premises and to place such property in storage at a public warehouse at the expense and risk of Tenant. If Landlord elects to relet the Premises for the account of Tenant, the rent received by Landlord from such reletting shall be applied as follows: first, to the payment of any indebtedness other than Rent due hereunder from Tenant to Landlord; second, to the payment of any costs of such reletting; third, to the payment of the cost of any reasonable alterations or repairs to the Premises; fourth to the payment of Rent due and unpaid hereunder; and the balance, if any, shall be held by Landlord and applied in payment of future Rent as it becomes due. If that portion of rent received from the reletting which is applied against the Rent due hereunder is less than the amount of the Rent due, Tenant shall also pay to Landlord, as soon as determined, any costs and expenses incurred by Landlord in connection with such reletting or in making alterations and repairs to the Premises, which are not covered by the rent received from the reletting.

Should Landlord elect to terminate this Lease under the provisions of subparagraph a or c above, Landlord may recover as damages from Tenant the following:

               (1) Past Rent. The worth at the time of the award of any unpaid Rent which had been earned at the time of termination; plus

               (2) Rent Prior to Award. The worth at the time of the award of the amount by which the unpaid Rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus

               (3) Rent After Award. The worth at the time of the award of the amount by which the unpaid Rent for the balance of the Term after the time of award exceeds the amount of the rental loss that Tenant proves could be reasonably avoided; plus

               (4) Proximately Caused Damages. Any other amount necessary to compensate Landlord for all detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, any costs or expenses (including attorneys’ fees), incurred by Landlord in (a) retaking possession of the Premises, (b) maintaining the Premises after Tenant’s default, (c) preparing the Premises for reletting to a new tenant, including any repairs or alterations, and (d) reletting the Premises, including broker’s commissions.

“The worth at the time of the award” as used in subparagraphs (1) and (2) above, is to be computed by allowing interest at the rate of ten percent (10%) per annum. “The worth at the time of the award” as used in subparagraph (3) above, is to be computed by discounting the amount at the discount rate of the Federal Reserve Bank situated nearest to the Premises at the time of the award plus one percent (1%).

The waiver by Landlord of any breach of any term, covenant or condition of this Lease shall not be deemed a waiver of such term, covenant or condition or of any subsequent breach of the same or any other term, covenant or condition. Acceptance of Rent by Landlord subsequent to any breach hereof shall not be deemed a waiver of any preceding breach other than the failure to pay the particular Rent so accepted, regardless of Landlord’s knowledge of any breach at the time of such acceptance of Rent. Landlord shall not be deemed to have waived any term, covenant or condition unless Landlord gives Tenant written notice of such waiver.

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Landlord agrees to use reasonable efforts to mitigate damages following a default by Tenant to the extent required by Applicable Laws.

28.3 Landlord’s Default. In the event Landlord shall default in the payment, when due, of any monetary obligations to be paid by Landlord hereunder (including any interest due hereunder) and fails to cure said default within thirty (30) days after written notice thereof from Tenant; or if Landlord shall default in performing any of the covenants, terms or provisions of this Lease (other than the payment, when due, of any of Landlord’s monetary obligations hereunder) and fails to cure such default within thirty (30) days after written notice thereof from Tenant (or such longer period as may be reasonably necessary to cure such default if such default is not reasonably susceptible of being cured within such thirty (30) day period and Landlord commences its efforts promptly to cure the same and thereafter diligently, continuously and in good faith pursues the curing of the same to completion); then, and in any of said events, Tenant, at its option may pursue any one or more of the following remedies without further notice of demand whatsoever:

                         (a) In the event such default arises because of the failure by Landlord to pay to Tenant any allowance provided to Tenant, Tenant shall be entitled to offset the amount owed by Landlord (including any interest due hereunder) against Rent next accruing hereunder; provided, however, that no such offset shall exceed twenty percent (20%) of the Rent then due.

                         (b) In the event such default relates to the failure to provide any service, maintenance or repair required of Landlord under this Lease, then Tenant shall have the right, but not the obligation, to remedy Landlord’s failure and send Landlord an invoice and reasonable supporting documentation for the reasonable cost of such remedy. Such invoice shall be subject to Landlord's reasonable approval. If Landlord approves the invoice within thirty (30) days after receipt thereof, Tenant shall have the right to deduct such costs (including any interest due hereunder) from Rent next accruing hereunder. If Landlord disapproves the invoice or fails to approve the invoice within such thirty (30) day review period, Tenant shall not have the right to deduct such costs from Rent, and Tenant's sole remedy will be to petition the court for relief.

     The remedies set forth above are in addition to and cumulative with the Tenant’s rental abatement rights set forth elsewhere in the Lease. Such rental abatement rights may be exercised independently of any rights or remedies set forth above. In no event shall the cure periods set forth above extend the time periods elsewhere set forth in the Lease with respect to Tenant’s rental abatement rights. Whenever this Lease makes reference to Landlord’s paying interest to Tenant, such interest shall accrue at the rate set forth in Article 6 of the Lease.

Notwithstanding anything to the contrary contained in this Section 28.3, it is expressly understood and agreed that if Tenant obtains a money judgment against Landlord resulting from any default or other claim arising under this Lease, that judgment shall be satisfied only out of the rents, issues, profits, and other income actually received on account of Landlord’s right, title and interest in the Premises, Building or Project, and no other real, personal or mixed property of Landlord (or of any of the partners which comprise Landlord, if any) wherever situated, shall be subject to levy to satisfy such judgment. Tenant shall not have the right to terminate this Lease or to withhold, reduce or offset any amount against any payments of Rent or any other charges due and payable under this Lease except as otherwise specifically provided herein. Notwithstanding anything to the contrary contained in this Lease, nothing in this Lease shall impose any obligations on Landlord to be responsible or liable for, and Tenant hereby releases Landlord from all liability for, consequential damages. This provision shall survive the expiration or sooner termination of this Lease with respect to any claims or liability occurring prior to such expiration or termination.

29. BROKERAGE FEES.

Tenant warrants and represents that it has not dealt with any real estate broker or agent in connection with this Lease or its negotiation except Tenant’s broker. Tenant shall indemnify and hold Landlord harmless from any cost, expense or liability (including costs of suit and reasonable attorneys’ fees) for

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any compensation, commission or fees claimed by any other real estate broker or agent in connection with this Lease or its negotiation by reason of any act of Tenant. The parties agree that all commissions and fees in connection with this Lease shall be paid by Landlord to Landlord’s broker pursuant to a separate written agreement between Landlord and Landlord’s broker. Additionally, Landlord’s broker and Tenant’s broker have entered into a separate agreement dated September 15, 2009 whereby Landlord’s broker will pay a portion of the commission to Tenant’s broker as provided in a separate agreement between Tenant’s broker and Landlord’s broker.

30. NOTICES.

All notices, approvals and demands permitted or required to be given under this Lease shall be in writing and deemed duly served or given if personally delivered or sent by certified or registered U.S. mail, postage prepaid, and addressed as follows: (a) if to Landlord, to Landlord’s Mailing Address and to the Building manager, and (b) if to Tenant, to Tenant’s Mailing Address. Landlord and Tenant may from time to time by notice to the other designate another place for receipt of future notices. All notices, demands and requests for consent under the Lease shall be effective only (i) when delivered in person to the recipient; or (ii) upon refusal of delivery.

31. GOVERNMENT ENERGY OR UTILITY CONTROLS.

In the event of imposition of federal, state or local government controls, rules, regulations, or restrictions on the use or consumption of energy or other utilities during the Term, both Landlord and Tenant shall be bound thereby.

32. QUIET ENJOYMENT.

Tenant, upon paying the Rent and performing all of its obligations under this Lease, shall peaceably and quietly enjoy the Premises, subject to the terms of this Lease and to any mortgage, lease, or other agreement to which this Lease may be subordinate.

33. OBSERVANCE OF LAW.

Tenant shall not do anything or suffer anything to be done in or about the Premises, Building or the Project which will in any way conflict with any law, statute, ordinance or other governmental rule, regulation or requirement now in force or which may hereafter be enacted or promulgated, including, without limitation, those relating to hazardous materials and hazardous substances and handicapped access (collectively, "Applicable Laws"). Tenant shall, at its sole cost and expense, promptly comply with any Applicable Laws which relate to (i) Tenant's specific use of the Premises, (ii) any Leasehold Improvements made by Tenant to the Premises, or (iii) the Building Systems and Building Structure, but as to the Building Systems and Building Structure, only to the extent such obligations are triggered by Leasehold Improvements made by Tenant to the Premises, or Tenant's use of the Premises for non-typical general office use. Should any standard or regulation now or hereafter be imposed on Tenant by virtue of its specific use, occupancy or improvement of the Premises by a state, federal or local governmental body charged with the establishment, regulation and enforcement of occupational, health or safety standards for employers, employees or tenants, then Tenant agrees, at its sole cost and expense, to comply promptly with such standards or regulations. The judgment of any court of competent jurisdiction or the admission of Tenant in any judicial action, regardless of whether Landlord is a party thereto, that Tenant has violated any of said Applicable Laws, shall be conclusive of that fact as between Landlord and Tenant. Landlord shall comply with all other Applicable Laws relating to the Premises, Building and Project (specifically excluding the Leasehold Improvements), provided that compliance with such Applicable Laws is not the responsibility of Tenant under this Lease, and provided further that Landlord's failure to comply therewith would prohibit Tenant from obtaining or maintaining a certificate of occupancy for the Premises, or would unreasonably and materially affect the safety of Tenant's employees or create a significant health hazard for Tenant's employees. Landlord shall be permitted to include in Operating Expenses any costs or expenses incurred by Landlord under this Article 33 to the extent consistent with the terms of Section 5.2 above.

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34. HAZARDOUS WASTE.

34.1 Presence on Premises. Tenant shall not cause or permit any “Hazardous Material” (as defined in Section 34.3 below) to be brought, kept or used in or about the Premises by Tenant or its agents, employees, contractors or invitees in violation of any local, state or federal law. Tenant agrees to indemnify, defend and hold Landlord harmless from and against any and all claims, judgments, damages, penalties, fines, costs, liabilities, losses (including, without limitation, diminution in value of the Premises or Project, and sums paid in settlement of claims, attorneys’ fees, consultant fees and experts’ fees) which arise during or after the term of this Lease as a result of Tenant’s breach of this Article 34. The foregoing indemnification includes, without limitation, costs incurred in connection with any investigation of site conditions or any clean-up, remedial, removal or restoration work required by any federal, state or local governmental agency or political subdivision because of Hazardous Material caused or permitted by Tenant to be released or discharged in the soil or groundwater on or under the Premises. Without limiting this Article 34, if Tenant causes or permits the presence of any Hazardous Material on the Premises and such presence results in any contamination of the Premises, Tenant shall promptly take such actions at its sole expense as are necessary to return the Premises to the condition existing prior to the introduction of any such Hazardous Material. Landlord’s written consent to the actions to be taken by Tenant and the contractors to be used by Tenant shall first be obtained, which approval shall not be unreasonably withheld so long as Landlord determines that such actions will not potentially have any adverse long-term or short-term effect on the Premises or the Project and so long as such actions do not materially interfere with the use and enjoyment of the Project by the other tenants thereof; provided, however, Landlord shall have the right, by written notice to Tenant, to directly undertake any such mitigation efforts with regard to Hazardous Materials in or about the Project due to Tenant’s breach of its obligations pursuant to this Section 34.1, and to charge Tenant, as Additional Rent, for the costs thereof.

34.2 INTENTIONALLY DELETED.

34.3 Definition of Hazardous Materials. As used herein, the term “Hazardous Material” means any hazardous or toxic substance, material, or waste which is or becomes regulated by any local governmental authority, the State of Colorado or the United States Government. The term “Hazardous Material” includes, without limitation, any material or substance which is (i) defined as a “hazardous waste,” “hazardous substance” or similar term under the Federal Water Pollution Control Act (33 U.S.C. §1317), (ii) defined as a “hazardous waste” pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq. (42 U.S.C. §6903), (iii) defined as a “hazardous substance” pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §9601 et seq. (42 U.S.C. §9601), (iv) petroleum, (v) asbestos or (vi) which requires investigation or remediation under any federal, state or local statute, regulation, ordinance, order, action, policy or common law.

34.4 As used in this Article 34, the term “law” means any applicable federal, state or local law, ordinance, or regulation relating to any Hazardous Material affecting the Project.

34.5 It shall not be unreasonable for Landlord to withhold its consent to any proposed Transfer if (i) the proposed transferee’s anticipated use of the Premises involves the generation, storage, use, treatment, or disposal of Hazardous Material; (ii) the proposed transferee has been required by any prior landlord, lender, or governmental authority to take remedial action in connection with Hazardous Material contaminating a property if the contamination resulted from such transferee’s actions or use of the property in question; or (iii) the proposed transferee is subject to an enforcement order issued by any governmental authority in connection with the use, disposal, or storage of a Hazardous Material.

34.6 As of the date of this Lease, to Landlord's actual knowledge without duty of investigation or inquiry, Landlord has not received any notice of non-compliance of any Applicable Laws relating to Hazardous Material from any governmental entity in connection with the Property. For purposes of this Section 34.6, "Landlord's actual knowledge without duty of investigation or inquiry" shall be the actual knowledge without duty of investigation or inquiry of Brett Laplante, property manager for the Building.

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35. FORCE MAJEURE.

Any prevention, delay or stoppage of work to be performed by Landlord or Tenant which is due to strikes, labor disputes, inability to obtain labor, materials, equipment or reasonable substitutes therefor, acts of God, governmental restrictions or regulations or controls, judicial orders, enemy or hostile government actions, civil commotion, terrorism, fire or other casualty, or other causes beyond the reasonable control of the party obligated to perform hereunder, shall excuse performance of the work by that party for a period equal to the duration of that prevention, delay or stoppage. Nothing in this Article 35 shall excuse or delay either party’s obligation to pay any sum due under this Lease.

36. INTERRUPTION OF USE.

Except as otherwise set forth herein, Tenant agrees that Landlord shall not be liable for damages, by abatement of Rent or otherwise, for failure to furnish or delay in furnishing any service (including without limitation telephone, telecommunication, condenser water, electrical and emergency power services) or for any diminution or interruption in the quality or quantity thereof, when such failure or delay or diminution is occasioned, in whole or in part, by repairs, replacements, or improvements, by any strike, lockout or other labor trouble, by inability to secure electricity, gas, water, or other fuel at the Building or Project after commercially reasonable effort to do so, by any accident or casualty whatsoever, by act or default of Tenant, any other tenant, or other third parties not within Landlord’s control, any Force Majeure event or by any other cause beyond Landlord’s reasonable control; and such failures or delays or diminution shall never be deemed to constitute an eviction or disturbance of Tenant’s use and possession of the Premises or relieve Tenant from paying Rent or performing any of its obligations under this Lease. Furthermore, except as otherwise provided herein, Landlord shall not be liable under any circumstances for a loss of, or injury to, property or for injury to, or interference with, Tenant’s business, including, without limitation, loss of profits, however occurring, through or in connection with or incidental to any delay or failure to furnish any of the services or utilities. Landlord may comply with voluntary controls or guidelines promulgated by any governmental entity relating to the use or conservation of energy, water, gas, light or electricity or the reduction of automobile or other emissions without creating any liability of Landlord to Tenant under this Lease, provided that the Premises are not thereby rendered untenantable.

37. CURING TENANT’S DEFAULTS.

If Tenant defaults (beyond any applicable notice and cure periods) in the performance of any of its obligations under this Lease, Landlord may (but shall not be obligated to) without waiving such default, perform the same for the account at the expense of Tenant. Tenant shall pay Landlord all costs of such performance promptly upon receipt of a bill therefor.

38. SIGN CONTROL.

Tenant shall not affix, erect or inscribe any sign, projection, awning, signal or advertisement of any kind to any part of the Premises, Building or Project, including without limitation, the inside or outside of windows or doors if the same is visible from the exterior of the Premises, without the written consent of Landlord. Landlord shall have the right to remove any such signs or other matter installed without Landlord’s required permission, without being liable to Tenant by reason of such removal, and to charge the cost of removal to Tenant as additional rent hereunder, payable within ten (10) days of written demand by Landlord. Subject to any city or local ordinances, and Landlord’s approval of the design, content and position, Tenant shall have the right to install a sign panel identifying its name on each of the two (2) existing monument signs. Tenant’s panels for the monument signs shall be at Tenant’s sole cost and expense, and Tenant shall pay for the cost of removing such signage at the end of the Term. Tenant shall have no such signage rights if Tenant reduces the Premises (as existing as of the Commencement Date) by more than twenty percent (20%) or if more than 25% of the Premises is sublet to any party other than any Permitted Transferee.

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39. MISCELLANEOUS.

39.1 Project or Building Name and Signage. Landlord shall have the right at any time to change the name of the Project or Building and to install, affix and maintain any and all signs on the exterior and on the interior of the Project or Building as Landlord may, in Landlord’s sole discretion, desire. Tenant shall not use the name of the Project or Building or use pictures or illustrations of the Project or Building in advertising or other publicity or for any purpose other than as the address of the business to be conducted by Tenant in the Premises, without the prior written consent of Landlord.

39.2 Confidentiality. Landlord and Tenant acknowledge that the content of this Lease and any related documents are confidential information. Landlord and Tenant shall keep such confidential information strictly confidential and shall not disclose such confidential information to any person or entity other than such party’s financial, legal, and space planning consultants and prospective sublessees, transferees, assignees, or purchasers of the Premises and except as otherwise required by law or legal process.

39.3 Transportation Management. Tenant shall fully comply with all government-mandated present or future programs intended to manage parking, transportation or traffic in and around the Building, and in connection therewith, Tenant shall take responsible action for the transportation planning and management of all employees located at the Premises by working directly with Landlord, any governmental transportation management organization or any other transportation-related committees or entities.

39.4 Accord and Satisfaction; Allocation of Payments. No payment by Tenant or receipt by Landlord of a lesser amount than the Rent provided for in this Lease shall be deemed to be other than on account of the earliest due Rent, nor shall any endorsement or statement on any check or letter accompanying any check or payment as Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of the Rent or pursue any other remedy provided for in this Lease. In connection with the foregoing, Landlord shall have the absolute right in its sole discretion to apply any payment received from Tenant to any account or other payment of Tenant then not current and due or delinquent.

39.5 Addenda. If any provision contained in an addendum to this Lease is inconsistent with any other provision herein, the provision contained in the addendum shall control, unless otherwise provided in the addendum.

39.6 Attorneys’ Fees. If any action or proceeding is brought by either party against the other pertaining to or arising out of this Lease, the finally prevailing party shall be entitled to recover all costs and expenses, including reasonable attorneys’ fees, incurred on account of such action or proceeding.

39.7 Captions, Articles and Section Numbers. The captions appearing within the body of this Lease have been inserted as a matter of convenience and for reference only and in no way define, limit or enlarge the scope or meaning of this Lease. All references to Article and Section numbers refer to Articles and Sections in this Lease.

39.8 Landlord Exculpation. The liability of Landlord to Tenant for any default by Landlord under this Lease or arising in connection herewith or with Landlord’s operation, management, leasing, repair, renovation, alteration or any other matter relating to the Project or the Premises shall be limited solely and exclusively to an amount which is equal to the interest of Landlord in the Project. Landlord’s interest in the Project shall include, without limitation, all rents, proceeds, insurance awards and profits derived from or relating to the Project. Landlord shall not have any personal liability therefor, and Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Tenant. The limitations of liability contained in this Section shall inure to the benefit of Landlord’s present and future partners, beneficiaries, officers, directors, trustees, shareholders, agents and employees, and their respective partners, heirs, successors and assigns. Under no circumstances shall any present or future partner of Landlord (if Landlord is a partnership), or trustee or beneficiary (if

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Landlord or any partner of Landlord is a trust), have any liability for the performance of Landlord’s obligations under this Lease. NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, NEITHER LANDLORD OR THE LANDLORD PARTIES SHALL BE LIABLE TO TENANT FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY KIND, INCLUDING, BUT NOT LIMITED TO, LOSS OF REVENUE, LOSS OF GOODWILL, LOSS OF BUSINESS OPPORTUNITY, LOSS OF DATA, AND/OR LOSS OF PROFITS (COLLECTIVELY, "CONSEQUENTIAL DAMAGES") ARISING IN ANY MANNER FROM THIS LEASE OR THE PERFORMANCE OR NONPERFORMANCE OF OBLIGATIONS HEREUNDER REGARDLESS OF THE FORSEEABILITY THEREOF. ADDITIONALLY, TENANT SHALL NOT BE LIABLE TO LANDLORD FOR ANY CONSEQUENTIAL DAMAGES ARISING IN ANY MANNER FROM THIS LEASE OR THE PERFORMANCE OR NONPERFORMANCE OF OBLIGATIONS HEREUNDER REGARDLESS OF THE FORSEEABILITY THEREOF, EXCEPT TO THE EXTENT SUCH CONSEQUENTIAL DAMAGES ARE CAUSED BY HAZARDOUS MATERIAL INTRODUCED ONTO THE PROJECT BY TENANT IN VIOLATION OF SECTION 34.1 ABOVE OR BY TENANT HOLDING OVER AFTER THE EXPIRATION OF THE TERM OF THIS LEASE IN VIOLATION OF SECTION 18 ABOVE.

39.9 Intentionally Deleted.

39.10 Changes Requested by Lender. Neither Landlord nor Tenant shall unreasonably withhold its consent to changes or amendments to this Lease requested by the lender on Landlord’s interest, so long as these changes do not alter the basic business terms of this Lease or otherwise materially diminish any rights or materially increase any obligations of the party from whom consent to such charge or amendment is requested.

39.11 GOVERNING LAW; WAIVER OF TRIAL BY JURY. THIS LEASE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO. IN ANY ACTION OR PROCEEDING ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO (I) THE JURISDICTION OF ANY COMPETENT COURT WITHIN THE STATE OF COLORADO, (II) SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY STATE LAW, AND (III) IN THE INTEREST OF SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY.

39.12 Conference Rooms. Tenant shall have the right to reserve and use any conference rooms located in Building D, at no charge to Tenant, subject to availability and reasonable rules and regulations prescribed by Tenant.

39.13 Corporate Authority. If Tenant is a corporation, each individual signing this Lease on behalf of Tenant represents and warrants that he is duly authorized to execute and deliver this Lease on behalf of the corporation, and that this Lease is binding on Tenant in accordance with its terms. Tenant shall, at Landlord’s request, deliver a certified copy of a resolution of its board of directors authorizing such execution.

39.14 Counterparts. This Lease may be executed in multiple counterparts, all of which shall constitute one and the same Lease.

39.15 Execution of Lease; No Option. The submission of this Lease to Tenant shall be for examination purposes only, and does not and shall not constitute a reservation of or option for Tenant to lease, or otherwise create any interest of Tenant in the Premises or any other premises within the Building or Project. Execution of this Lease by Tenant and its return to Landlord shall not be binding on Landlord notwithstanding any time interval, until Landlord has in fact signed and delivered this Lease to Tenant.

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39.16 Furnishing of Financial Statements; Tenant’s Representations. In order to induce Landlord to enter into this Lease Tenant agrees that it shall promptly furnish Landlord, from time to time, upon Landlord’s written request (but not more than twice a calendar year), with Tenant's parent company's most current, publicly-available, unconsolidated financial statements; provided, however, in the event such financial statements do not specifically identify the financials of Tenant, Tenant shall instead provide a letter from its Treasurer or Chief Financial Officer certifying the net worth of Tenant ending in the previous fiscal quarter. Tenant represents and warrants that all financial statements, records and information furnished by Tenant to Landlord in connection with this Lease are true, correct and complete in all respects.

39.17 Further Assurances. The parties agree to promptly sign all documents reasonably requested to give effect to the provisions of this Lease.

39.18 Mortgagee Protection. Tenant agrees to send by certified or registered mail to any first mortgagee or first deed of trust beneficiary of Landlord whose address has been furnished to Tenant and with whom Tenant has entered into a commercially reasonable non-disturbance agreement, a copy of any notice of default served by Tenant on Landlord. If Landlord fails to cure such default within the time provided for in this Lease, such mortgagee or beneficiary shall have, from the date such mortgagee's or beneficiary's receives such notice of default from Tenant, forty-five (45) days to cure the default (or such longer period as may be reasonably necessary to cure such default if such default is not reasonably susceptible of being cured within such forty-five (45) day period and the mortgagee or beneficiary commences its efforts promptly to cure the same and thereafter diligently, continuously and in good faith pursues the curing of the same to completion).

39.19 Prior Agreements; Amendments. This Lease contains all of the agreements of the parties with respect to any matter covered or mentioned in this Lease, and no prior agreement or understanding pertaining to any such matter shall be effective for any purpose. No provisions of this Lease may be amended or added to except by an agreement in writing signed by the parties or their respective successors in interest.

39.20 Recording. Tenant shall not record this Lease without the prior written consent of Landlord. Tenant, upon the request of Landlord, shall execute and acknowledge a “short form” memorandum of this Lease for recording purposes.

39.21 Severability. A final determination by a court of competent jurisdiction that any provision of this Lease is invalid shall not affect the validity of any other provision, and any provision so determined to be invalid shall, to the extent possible, be construed to accomplish its intended effect.

39.22 Successors or Assigns. This Lease shall apply to and bind the heirs, personal representatives, and permitted successors and assigns of the parties.

39.23 Time of the Essence. Time is of the essence of this Lease.

39.24 Waiver. No delay or omission in the exercise of any right or remedy of either party upon any default by the other shall impair such right or remedy or be construed as a waiver of such default.

The receipt and acceptance by Landlord of delinquent Rent shall not constitute a waiver of any other default; it shall constitute only a waiver of timely payment for the particular Rent payment involved.

No act or conduct of Landlord, including, without limitation, the acceptance of keys to the Premises, shall constitute an acceptance of the surrender of the Premises by Tenant before the expiration of the Term. Only a written notice from Landlord to Tenant shall constitute acceptance of the surrender of the Premises and accomplish a termination of the Lease.

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Landlord’s consent to or approval of any act by Tenant requiring Landlord’s consent or approval shall not be deemed to waive or render unnecessary Landlord’s consent to or approval of any subsequent act by Tenant.

Any waiver by either party of any default must be in writing and shall not be a waiver of any other default concerning the same or any other provision of the Lease.

40. OPTIONS TO EXTEND.

40.1 Option Right. Landlord hereby grants the Tenant named in this Lease (the “Original Tenant“) two (2) options (“Options“) to extend the Term for the entire Premises for a period of five (5) years each (“Option Terms“), which Options shall be exercisable only by written notice delivered by Tenant to Landlord as set forth below. The rights contained in this Article 41 shall be personal to the Original Tenant and may only be exercised by the Original Tenant or a Permitted Transferee (and not any other assignee, sublessee or other transferee of the Original Tenant’s interest in this Lease) if the Original Tenant occupies the entire Premises as of the date of the Interest Notice (as defined in Section 41.3 below). Notwithstanding anything to the contrary contained herein, Tenant’s exercise of the first Option shall not obligate Tenant to exercise the second Option.

40.2 Option Rent. The rent payable by Tenant during the Option Terms (“Option Rent“) shall be equal to the “Market Rent” (defined below). “Market Rent“ shall mean the applicable Monthly Base Rent, including all escalations, Direct Costs, additional rent and other charges at which tenants, as of the time of Landlord’s “Option Rent Notice” (as defined below), are entering into leases for non-sublease space which is comparable in size, location and quality to the Premises in renewal transactions for a term comparable to the Option Term which comparable space is located in office buildings comparable to the Project in the Colorado Springs, Colorado office market, taking into consideration only the following concessions: (a) rental abatement concessions, if any, being granted such tenants in connection with such comparable space, and (b) tenant improvements or allowances provided or to be provided for such comparable space, taking into account, and deducting the value of, the existing improvements in the Premises, such value to be based upon the age, quality and layout of the improvements and the extent to which the same could be utilized by a typical general office user.

40.3 Exercise of Option. Each Option shall be exercised by Tenant only in the following manner: (i) Tenant shall not be in default and shall not have been in default under this Lease more than once (beyond any applicable notice and cure periods) on the delivery date of the Interest Notice and Outside Agreement Date (as defined below); (ii) Tenant shall deliver written notice (“Interest Notice”) to Landlord not more than twelve (12) months nor less than nine (9) months prior to the expiration of the Term or the first Option Term, as applicable, stating that Tenant is interested in exercising the applicable Option, (iii) within sixty (60) days of Landlord’s receipt of the Interest Notice, Landlord shall deliver notice (“Option Rent Notice”) to Tenant setting forth Landlord’s determination of Market Rent; and (iv) Tenant shall have thirty (30) days (“Tenant’s Review Period”) after receipt of the Option Rent Notice within which to accept such rental or to reasonably object thereto in writing. In the event Tenant objects, Landlord and Tenant shall attempt to agree upon Market Rent using their best good faith efforts. If Landlord and Tenant fail to reach agreement within thirty (30) days following Tenant’s Review Period (“Outside Agreement Date”), then each party shall place in a separate sealed envelope their final proposal as to Market Rent and such determination shall be submitted to arbitration as provided below. Failure of Tenant to so elect in writing within Tenant’s Review Period shall conclusively be deemed its approval of the Market Rent determined by Landlord.

40.4 Arbitration. In the event that Landlord fails to timely generate the initial written notice of Landlord’s opinion of the Market Rent which triggers the negotiation period of this Section 40.4, then Tenant may commence such negotiations by providing the initial notice, in which event Landlord shall have thirty (30) days (“Landlord’s Review Period”) after receipt of Tenant’s notice of the new rental within which to accept such rental. In the event Landlord fails to accept in writing such rental proposed by Tenant, then such proposal shall be deemed rejected, and Landlord and Tenant shall attempt in good faith to agree upon such Market Rent using their best good faith efforts. If Landlord and Tenant fail to

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reach agreement within thirty (30) days following Landlord’s Review Period (which shall be, in such event, the “Outside Agreement Date” in lieu of the above definition of such date), then each party shall place in a separate sealed envelope their final proposal as to the Market Rent and such determination shall be submitted to arbitration as provided below.

                         (a) Landlord and Tenant shall meet with each other within five (5) business days of the Outside Agreement Date and exchange the sealed envelopes and then open such envelopes in each other’s presence. If Landlord and Tenant do not mutually agree upon the Market Rent within five (5) business days of the exchange and opening of envelopes, then, within ten (10) business days of the exchange and opening of envelopes, Landlord and Tenant shall agree upon and jointly appoint a single arbitrator who shall by profession be a broker who shall have been active over the five (5) year period ending on the date of such appointment in the leasing of commercial properties in the vicinity of the Project. Neither Landlord nor Tenant shall consult with such broker as to his or her opinion as to Market Rent prior to the appointment. The determination of the arbitrator shall be limited solely to the issue of whether Landlord’s or Tenant’s submitted Market Rent for the Premises is the closest to the actual Market Rent for the Premises as determined by the arbitrator, taking into account the requirements of this Article 40. Such arbitrator may hold such hearings and require such briefs as the arbitrator, in his or her sole discretion, determines is necessary. In addition, Landlord or Tenant may submit to the arbitrator, with a copy to the other party, within five (5) business days after the appointment of the arbitrator any market data and additional information that such party deems relevant to the determination of the Market Rent (“FMRR Data”) and the other party may submit a reply in writing within five (5) business days after receipt of such FMRR Data.

                         (b) The arbitrator shall, within thirty (30) days of his or her appointment, reach a decision as to whether the parties shall use Landlord’s or Tenant’s submitted Market Rent and shall notify Landlord and Tenant of such determination. The decision of the arbitrator shall be binding upon Landlord and Tenant. If Landlord and Tenant fail to agree upon and appoint an arbitrator, then the appointment of the arbitrator shall be made by the Presiding Judge of the El Paso County Superior Court, or, if he or she refuses to act, by any judge having jurisdiction over the parties. The cost of arbitration shall be paid by Landlord and Tenant equally.

41. EXPANSION OPTION.

41.1 Subject to the Pre-Existing Rights (as defined below), and provided that such space is available for lease, Tenant shall have, during the period commencing on the Commencement Date and ending on the Rent Commencement Date, the option to lease (the “Expansion Option”) any or all of the following, but only in the order set forth below: (a) the entirety of the remaining space on the second (2^nd) floor of the Building, and/or the full fourth (4^th) floor of the Building, (b) the full fourth (4^th) floor in Building D of the Project, and (c) the full fifth (5^th) floor of Building D of the Project (collectively, the “Additional Space”). The Additional Space leased must first be leased in the order set forth above (i.e. the Building D Additional Space cannot be leased until all of the Additional Space in the Building is first leased). Additionally, Tenant can only lease the entirety of all of the available space for lease on such floor. The leasing of the applicable Additional Space shall be at the same Rent and upon the same terms and conditions provided herein for the Premises, except that (i) the Term for any Additional Space shall end on the same day as the Term for the Premises; (ii) instead of the Tenant Improvement Allowance provided under Exhibit “C” hereto, Landlord shall provide a $10.00 per rentable square foot tenant improvement allowance for such Additional Space; (iii) Tenant’s obligation to pay Rent for the Additional Space shall commence upon Landlord’s delivery of the Additional Space to Tenant in its then-current “as is” condition, at the Annual Base Rent set forth in Section 2.a.; and (iv) Landlord and Tenant shall enter into a mutually acceptable amendment of this Lease memorializing Tenant’s exercise of its Expansion Option and setting forth the terms upon which Tenant will lease the Additional Space. As set forth in Section 2(i) above, the Rentable Area of the Additional Space shall be determined in accordance with BOMA Standards. Tenant shall give Landlord at least thirty (30) days prior notice of its exercise of the Expansion Option. The exercise of the Expansion Option shall create a binding agreement between Landlord and Tenant for the leasing of the Additional Space upon the same terms and conditions of this

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Lease, except as set forth above. In the event Tenant fails to exercise its Expansion Option by the Rent Commencement Date, Tenant’s Expansion Option shall terminate and not be of any further force or effect at any time.

41.2 Notwithstanding any language herein to the contrary, Tenant’s Expansion Option is a one time right which shall only be valid until the Additional Space is first leased by the Landlord or the Rent Commencement Date, whichever occurs first, at which time Tenant’s Expansion Option shall terminate and not be of any further force or effect thereafter. The parties acknowledge and agree that unless Tenant exercises its rights under Article 42 below, Landlord shall be free to lease the Additional Space to any party on any terms desirable by Landlord.

41.3 As used herein, the “Pre-Existing Rights” shall mean the following: EDS Information Services LLC has certain rights to expand on the 2^nd floor of the Building. Additionally, Landlord and Tenant acknowledge and agree that the Expansion Option is not intended to prohibit Landlord from marketing and leasing the Additional Space to prospective tenants. Until and unless Tenant provides notice of its exercise of the Expansion Option (at which time, subject to Section 42 below, Landlord shall only be prohibited from leasing to others the Additional Space Tenant has elected to include within the Premises pursuant to the Expansion Option), Landlord (subject to Section 42 below) may lease the Additional Space to other parties without notice and without the consent of Tenant.

42. RIGHT OF FIRST OFFER.

42.1 So long as there does not exist a default (beyond any applicable notice and cure periods) by Tenant hereunder at the time of the delivery to a prospective tenant by Landlord of a bona fide proposal to lease all or a portion of the Additional Space, Landlord shall provide, and hereby grants, to Tenant, a right of first offer (the "Right of First Offer") with respect to the Offered Space (as defined below) on the following terms and conditions:

     a. At such time as Landlord delivers to a prospective tenant a bona fide proposal for leasing any portion of the Additional Space (the “Offered Space”) for a term of more than one (1) year, Landlord shall provide Tenant a written notice (“Landlord’s Notice of Terms”) describing the financial terms and conditions (including length of lease term) of the proposed lease between Landlord and the prospective tenant.

     b. The deadline for Tenant to exercise its right to lease the Offered Space (the “Exercise Deadline”) shall be seven (7) business days from the receipt of Landlord’s Notice of Terms. If Tenant elects not to exercise the Right of First Offer, Tenant may provide Landlord with a written notice containing the financial terms and conditions Tenant would be willing to accept for the Offered Space ("Tenant's Notice of Terms") by the Exercise Deadline. If Tenant fails to provide written notice of its exercise of the Right of First Offer prior to the Exercise Deadline, Landlord shall have the right to lease the Offered Space on the terms contained in Landlord's Notice of Terms or on such other terms and conditions as Landlord may decide in its sole discretion (subject to the remaining provisions of this paragraph) at any time within one hundred eighty (180) days following the date of Landlord’s Notice of Terms to the prospective tenant who received the bona fide proposal from Landlord or an affiliate thereof. If Landlord does not enter into a new lease on the terms contained in the Landlord's Notice of Terms or on such other terms and conditions as Landlord may decide in its sole discretion (subject to the remaining provisions of this paragraph) with the prospective tenant or an affiliate thereof within such one hundred eighty (180) day period, Landlord shall again provide Tenant a Landlord’s Notice of Terms and Tenant shall have the Right of First Offer prior to Landlord being entitled to lease all or a portion of such Offered Space. Prior to Landlord delivering to a prospective tenant a proposal for leasing the Offered Space on financial terms and conditions (including length of lease term) equivalent to or less favorable for Landlord than those contained in Tenant's Notice of Terms (if originally provided as set forth above), or if Landlord (at its sole discretion) is willing to accept the terms and conditions contained in Tenant's Notice of Terms, Landlord shall again offer the Offered Space to Tenant on the terms and conditions set forth in Tenant's Notice of Terms, and Tenant shall have five (5) business days from Tenant's receipt of such offer to exercise the Right of First Offer. If Tenant fails to provide written notice of its exercise of its Right of First

H-39

Offer within such five (5) business day period, Landlord (subject to Landlord's obligation to re-offer the Offered Space to Tenant in the event the one hundred eighty (180) day period has expired as provided above) shall at any time thereafter have the right to lease the Offered Space on any terms and conditions in Landlord's sole discretion, including terms and conditions which may be more favorable to Landlord than those contained in Tenant's Notice of Terms.

     c. If Tenant timely exercises its Right of First Offer, Tenant shall lease the Offered Space on the terms and conditions set forth in Landlord’s Notice of Terms or Tenant's Notice of Terms, as applicable. Landlord and Tenant shall enter into a new lease or an amendment to this Lease with respect to the Offered Space containing terms and conditions identical to those specified in Landlord’s Notice of Terms or Tenant's Notice of Terms, as applicable.

     d. Tenant acknowledges and agrees that the Additional Space is encumbered by the Pre-Existing Rights, and that Tenant’s rights with respect to such space are subject and subordinate to such rights.

42.2 Notwithstanding any language herein to the contrary, Tenant’s Right of First Offer is a one-time right with respect to each portion of the Additional Space which shall only be valid until the applicable portion of the Additional Space is first leased by the Landlord, at which time Tenant’s Right of First Offer shall terminate and not be of any further force or effect thereafter as to such Additional Space.

[SIGNATURE PAGE FOLLOWS]

H-40

The parties hereto have executed this Lease as of the dates set forth below.

Date:	11/17/09	Date:	11/11/09
Landlord:		Tenant:
VERIZON BUSINESS NETWORK SERVICES, a Delaware corporation		AMERICAN TELECONFERENCING SERVICES, LTD., dba Premiere Global Services
By:	/s/ Christopher J. Kelly	By:	/s/ David E. Trine
Title:	Executive Director	Title:	David E. Trine, Chief Financial Officer
		By:
		Title:

H-41

EX-21.1

EXHIBIT 21.1

SUBSIDIARIES OF PREMIERE GLOBAL SERVICES, INC.

	JURISDICTION OF
SUBSIDIARY	ORGANIZATION
American Teleconferencing Services, Ltd.	Missouri
Budget Conferencing Inc.	Canada
Clarinet, Inc.	Georgia
Communications Network Enhancement Inc.	Delaware
Enterprise Care Teleconferencing (Asia) Pty Ltd.	Australia
iMeet, Inc.	Delaware
Intellivoice Communications, LLC	Delaware
NetConnect Conferencing Inc.	Canada
NetConnect Systems Ltd.	United Kingdom
NetConnect Systems GmbH	Germany
Netspoke, Inc.	Delaware
Premiere Communications, Inc.	Florida
PCI Network Services, Inc.	Georgia
Premiere Conferencing E.U.R.L.	France
Premiere Conferencing GmbH	Germany
Premiere Conferencing Limited	New Zealand
Premiere Conferencing Pte. Ltd.	Singapore
Premiere Conferencing Pty Limited	Australia
Premiere Conferencing (Canada) Limited	Canada
Premiere Conferencing (Hong Kong) Limited	Hong Kong
Premiere Conferencing (Ireland) Limited	Ireland
Premiere Conferencing (Japan), Inc.	Japan
Premiere Conferencing (UK) Limited	United Kingdom
Premiere Conferencing Networks, Inc.	Georgia
Premiere Global Services GmbH	Germany
Premiere Global Services Denmark ASP	Denmark
Premiere Global Services Finland OY	Finland
Premiere Global Services International S.a. r.l.	Luxembourg
Premiere Global Services Norway AS	Norway
Premiere Global Services Sweden AB	Sweden
Premiere Global Services (UK) Limited	United Kingdom
Ptek, Inc.	Georgia
Ptek Investors I LLC	Delaware
PTEK Services, Inc.	Delaware
Ptek Ventures I LLC	Delaware
RCI Acquisition Corp.	Georgia
Voice-Tel Enterprises, LLC	Delaware
Voice-Tel Pty Ltd.	Australia
Xpedite, Inc.	Japan
Xpedite, Ltd.	Korea
Xpedite Network Services, Inc.	Georgia
Xpedite Systems Limited	Hong Kong
Xpedite Systems Inc. (Malaysia) Sdn. Bhd.	Malaysia
Xpedite Systems AG	Switzerland
Xpedite Systems Holdings (UK) Limited	United Kingdom
Xpedite Systems, LLC	Delaware
Xpedite Systems Limited	New Zealand
Xpedite Systems Participation E.U.R.L.	France
Xpedite Systems Pte. Ltd.	Singapore
Xpedite Systems Pty Limited	Australia

	JURISDICTION OF
SUBSIDIARY	ORGANIZATION
Xpedite Systems S.r.l.	Italy
Xpedite Systems Spain, S.A.	Spain
Xpedite Systems, S.A.	France
Xpedite Systems Worldwide, Inc.	Delaware

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements of Premiere Global Services, Inc. and subsidiaries (the “Company”) Nos. 333-79599, 333-87635, 333-89891, 333-51380, 333-57698, 333-67292, 333-101262, 333-116506, and 333-151962 on Form S-8 of our reports dated February 26, 2010, with respect to the consolidated financial statements of the Company, and the effectiveness of the Company’s internal control over financial reporting included in this Annual Report on Form 10-K for the year ended December 31, 2009.

/s/ Ernst & Young LLP

Atlanta, Georgia
February 26, 2010

EX-23.2

EXHIBIT 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Premiere Global Services, Inc.

We consent to the incorporation by reference in the Registration Statements of Premiere Global Services, Inc. and subsidiaries (the “Company”) Nos. 333-79599, 333-87635, 333-89891, 333-51380, 333-57698, 333-67292, 333-101262, 333-116506 and 333-151962 on Form S-8 of our report dated February 27, 2009 (February 26, 2010 as to Note 5), relating to the consolidated financial statements of the Company (which report expresses an unqualified opinion and includes an explanatory paragraph regarding the retrospective adjustment of the 2008 and 2007 consolidated financial statements for discontinued operations), appearing in the Annual Report on Form 10-K of the Company for the year ended December 31, 2009.

/s/ Deloitte & Touche LLP

Atlanta, GA
February 26, 2010

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Boland T. Jones, certify that:

1.      I have reviewed this Annual Report on Form 10-K of Premiere Global Services, Inc;

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

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

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

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 26, 2010	/s/ Boland T. Jones
	Boland T. Jones
	Chief Executive Officer
	Premiere Global Services, Inc.

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, David E. Trine, certify that:

1.      I have reviewed this Annual Report on Form 10-K of Premiere Global Services, Inc;

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

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

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

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 26, 2010	/s/ David E. Trine
	David E. Trine
	Chief Financial Officer
	Premiere Global Services, Inc.

EX-32.1

EXHIBIT 32.1

STATEMENT OF CHIEF EXECUTIVE OFFICER
OF PREMIERE GLOBAL SERVICES, INC.
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
§ 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of Premiere Global Services, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Boland T. Jones, Chief Executive Officer of the Company, certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Boland T. Jones

Boland T. Jones

Chief Executive Officer

Premiere Global Services, Inc.

February 26, 2010

EX-32.2

EXHIBIT 32.2

STATEMENT OF CHIEF FINANCIAL OFFICER
OF PREMIERE GLOBAL SERVICES, INC.
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
§ 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of Premiere Global Services, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned David E. Trine, Chief Financial Officer of the Company, certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David E. Trine

David E. Trine

Chief Financial Officer

Premiere Global Services, Inc.

February 26, 2010