10-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITIONAL REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

xAnnual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2002.

Commission file number: 0-27778

PTEK HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

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

3399 Peachtree Road, N.E., The Lenox Building, Suite 700, Atlanta, Georgia 30326
(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:

None
(Title of each class)
None
(Name of each exchange on which registered)

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

Common Stock, Par Value $0.01 Per Share
(Title of class)

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 o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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. o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12-b-2) Yes x No o

The aggregate market value of voting stock held by non-affiliates of the registrant, based upon the closing sale price of common stock on March 25, 2003 as reported by The Nasdaq Stock Market’s National Market, was approximately $217,575,085.

As of March 25, 2002 there were 53,458,252 shares of the registrant’s common stock outstanding.

List hereunder the documents incorporated by reference and the part of the Form 10-K (e.g., Part I. Part II, etc.) into which the document is incorporated: Portions of the registrant’s Proxy Statement for its 2003 meeting of shareholders are incorporated by reference in Part III.

INDEX

		Page
Part I
Item 1.	Business	3
Item 2.	Properties	9
Item 3.	Legal Proceedings	9
Item 4.	Submission of Matters to a Vote of Security Holders	12
Part II
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters	13
Item 6.	Selected Financial Data	13
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 8.	Financial Statements and Supplementary Data	53
Item 9.	Changes and Disagreements with Accountants on Accounting and Financial Disclosure	96
Part III
Item 10.	Directors and Executive Officers of the Registrant	97
Item 11.	Executive Compensation	97
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	97
Item 13.	Certain Relationships and Related Transactions	98
Item 14.	Controls and Procedures	99
Part IV
Item 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	100

Signatures	108
Certifications	109
Exhibits	111

FORWARD LOOKING STATEMENTS

When used in this Form 10-K and elsewhere by management or PTEK Holdings, Inc. (“PTEK” or the “Company”) 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. These include, but are not limited to, forward-looking statements about our business strategy and means to implement the strategy, our objectives, the amount of future capital expenditures, the likelihood of our success in developing and introducing new products and services and expanding our business, and the timing of the introduction of new and modified products and services. 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 PTEK’s forward-looking statements, including the following factors:

•Competitive pressures among communications services providers, including pricing pressures, may increase significantly, particularly after the emergence of WorldCom and Global Crossing from protection under Chapter 11 of the United States Bankruptcy Code;

•Our ability to respond to rapid technological change, the development of alternatives to our products and services and the risk of obsolescence of our products, services and technology;

•Market acceptance of new products and services;

•Our ability to manage our growth;

•Costs or difficulties related to the integration of businesses and technologies, if any, acquired or that may be acquired by us may be greater than expected;

•Expected cost savings from past or future mergers and acquisitions may not be fully realized or realized within the expected time frame;

•Revenues following past or future mergers and acquisitions may be lower than expected;

•Operating costs or customer loss and business disruption following past or future mergers and acquisitions may be greater than expected;

•The success of our strategic relationships, including the amount of business generated and the viability of the strategic partners, may not meet expectations;

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

•Our ability to service, repay or refinance all or a portion of our convertible notes issued to the public, which mature on July 1, 2004;

•The failure of the purchaser to pay the liabilities assumed in, or incurred after, the sale of the Voicecom business unit;

•Our services may be interrupted due to failure of the platforms and network infrastructure utilized in providing our services;

•Our services may be interrupted and our costs may increase due to the filing by WorldCom and Global Crossing for protection under Chapter 11 of the United States Bankruptcy Code;

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•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;

•Risks associated with expansion of our international operations;

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

•Legislative or regulatory changes may adversely affect the businesses in which we are engaged;

•Changes in the securities markets may negatively impact us;

•Factors described under the caption “Factors Affecting Future Performance” in this Form 10-K; and

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

PTEK cautions that these factors are not exclusive. Consequently, all of the forward-looking statements made in this Form 10-K and in documents incorporated in this Form 10-K 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 Form 10-K. PTEK takes on 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 Form 10-K, or the date of the statement, if a different date.

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PART I

Item 1. Business

Overview

PTEK Holdings, Inc., a Georgia corporation (“PTEK” or the “Company”), is a global provider of business communications services, including conferencing (audio conferencing and Web-based collaboration) and multimedia messaging (high-volume actionable communications, including e-mail, wireless messaging, voice message delivery and fax). The Company’s services are directed primarily at the global enterprise marketplace and the Company has more than 80,000 corporate accounts, including 70% of the Fortune 500. PTEK believes that corporate customers will increasingly rely on outsource providers for these mission critical business communications services because these tasks are too complex and/or too costly to handle internally and do not represent a core competency.

The Company operates two separate business units — Premiere Conferencing, an industry leader for enhanced, automated and Web conferencing solutions, and Xpedite, the global leader in multimedia messaging solutions.

To better serve PTEK’s global corporate customer base, over the last few years the Company has funded new technology development in each of its business units to help position them in larger market categories. Premiere Conferencing has expanded into automated and Web conferencing services and Xpedite has developed a suite of e-mail, wireless and voice-based messaging services.

On March 26, 2002, the Company sold substantially all the assets of its Voicecom business unit in exchange for cash and the assumption of certain liabilities. As a result, the Company has exited in all material respects the IVR, network based voice messaging and unified personal communications businesses. The transaction was accounted for as discontinued operations in the first quarter of 2002. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Discontinued Operations”, and Note 9 to the Consolidated Financial Statements.

PTEK was incorporated in Florida in 1991 and reincorporated in Georgia in 1995. The corporate headquarters for PTEK are located at 3399 Peachtree Road, NE, The Lenox Building, Suite 700, Atlanta, GA 30326, and the telephone number is (404) 262- 8400.

Industry Background

Nearly everywhere in the world, the bulk of business communication is done through telephone and Web-based conferencing, e-mail, fax and voice mail messaging. This explosion of communications in various forms has forced more and more companies to outsource their managed group communications needs.

Conferencing and Web collaboration is projected to be an $11 billion market by 2005 (Source: Wainhouse Research). The multimedia messaging segment, which combines fax, e-mail and voice and video distribution, is projected to be a $10.5 billion market within three years (Source: IDC and Forrester). PTEK provides market leading solutions in both of these categories.

Today, PTEK’s services, combined with its global infrastructure, are the primary conduits for literally billions of business communications each year.

Service Offerings

PTEK’s business communications services solutions are provided through its two business units — Premiere Conferencing and Xpedite.

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Premiere Conferencing offers a full suite of enhanced, automated and Web conferencing services for all forms of group communications activities. Customers use Premiere Conferencing for a wide range of communications from very large events such as investor relations calls, press conferences and training seminars with hundreds or thousands of participants, to smaller four-to-six person daily/weekly meetings. Premiere Conferencing provides group communications services for leading companies in virtually every major industry. Premiere Conferencing hosted approximately three million calls comprising nearly one billion minutes in 2002.

Through its own proprietary software technology, Premiere Conferencing offers ReadyConference^®, its automated service that does not require hands-on involvement from an operator. These automated services, which are easily coupled with Premiere Conferencing’s Web conferencing products, allow users to begin and conduct their conference calls without the assistance of an operator, or the need of a reservation, via a dedicated dial-in number and passcode available for use anytime. ReadyConference can be used for a variety of group communications, including any meeting requiring instant access by a number of participants.

Premiere Conferencing has a complete product line of high-touch, operator-assisted conferences that can be easily integrated with Premiere Conferencing’s Web products. Premiere Conferencing’s PremiereCall services include assistance from an operator or operators to introduce the speakers and topics, give participants instructions, and monitor all facets of a conference. In addition, complete event management services, which include a dedicated team and professional announcer to work with any customization requests, are available. Typical PremiereCall applications include sales meetings, investor relations calls, press conferences, customer seminars, product rollouts, and continuing medical education, continuing legal education, and branded customer seminars. Premiere Conferencing’s semiautomated operator-assisted service, PremiereCall Auditorium^SM, experienced strong growth in 2002, as more customers leveraged their ability to start a high touch conference immediately, while still utilizing the resource of a dedicated operator during the entire call. Premiere Conferencing’s client services team understands the importance of professional, secure communications and works closely with its customers to ensure a successful conference.

Premiere Conferencing also offers Web conferencing services, VisionCast^® and ReadyCast^®, that efficiently combine the visual power of the Internet with its audio conferencing capabilities to provide real-time, multimedia presentation solutions. VisionCast gives customers the interactivity and collaborative nature of an in-person meeting while maintaining the cost and time savings of a traditional conference call. Customers use VisionCast to conduct distance learning, training, seminars, company meetings, focus groups and media conferences. VisionCast also includes features such as chat, Web tours, polling, whiteboarding functions, record and playback capabilities, roll call and live demo options. ReadyCast combines similar data collaboration capabilities with the cost efficiency and convenience of Premiere Conferencing’s ReadyConference automated conferencing service. As part of its Web-based services, Premiere Conferencing also offers SoundCast^®, an audio streaming technology that provides live Internet streaming to simulcast a live conference call or recorded presentation over the Web.

Premiere Conferencing services are available globally through its network of operations centers and international toll free numbers. Premiere Conferencing has bridging and sales infrastructure in the United States, Canada, Australia, New Zealand, Hong Kong, Singapore, Japan, France, Germany, Ireland and the United Kingdom.

Xpedite offers a comprehensive suite of business services that enable actionable two-way communications which allow companies to better acquire and retain customers as well as automate their core business processes. Xpedite provides tailored solutions to customers to help them manage the electronic delivery of critical time-sensitive information, such as inventory availability reports, updated mortgage rates and equity research reports/updates. In addition, the Xpedite solution set enables two-way communications for order and reservation confirmations, bank account statements and invoice and collection notices. By automating key business processes, Xpedite can also help global enterprise customers better manage their electronic order fulfillment and account payment settlement. Xpedite provides services to almost half of the global Fortune 500 companies across nearly every business sector, including financial services, professional associations, travel, hospitality, publishing, technology and manufacturing. Xpedite processed more than two billion messages in 2002 through its proprietary communications platform.

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In 2002, Xpedite added several significant service enhancements to messageREACH^®, its e-mail service that provides control, tracking, security, personalization and automated administration for high volume e-mail and e-commerce applications. These enhancements include improved HTML message support, transactional message support for applications such as trade and account balance confirmations, billing and invoicing, as well as campaign management capabilities for large scale e-marketing applications. Among the advanced features built into the service are support for the distribution and collection of forms, multiple layers of encryption and levels of password protection, anti-spam, “opt-out” protection, automated personalization of messages with text and graphical inserts, opt-in list building, viral marketing and the hosting of customer databases for campaign management.

messageREACH customers can access a proprietary software tool, intelliSEND^SM Wizard, to help with the creation of graphically rich HTML documents for e-mail, and for the insertion of trackable hyperlinks to documents or Web sites. The proprietary messageREACH delivery engine and infrastructure operate solely for the support of messageREACH customers and were custom designed by Xpedite’s technical team, incorporating leading Internet technology. Xpedite also provides Short Message Services (SMS) for wireless users which allows text messages to be delivered to GSM phones using existing Xpedite access methods.

Xpedite also provides voiceREACH^SM, an automated service that simultaneously delivers large volumes of prerecorded voice messages to any size list of phone numbers, voice mailboxes or other answering devices. Typical users of voiceREACH services include associations, political organizations, securities firms, trade show operators and collections companies.

Xpedite services support multiple protocols and can be accessed through a variety of methods including ftp, TCP/IP, PC-Xpedite software, or Simple Mail Transfer Protocol (SMTP). Xpedite services are available throughout the world with local sales and customer support available in 17 countries throughout Europe, Asia, Australia and North America.

Customer Base

PTEK customers represent nearly every major industry, serving almost 70% of the Fortune 500. Millions of business people worldwide depend on PTEK services everyday.

Premiere Conferencing has approximately 6,500 domestic and international corporate accounts, supporting approximately 71,000 moderators. The business unit has successfully penetrated key accounts in various industries including technology, healthcare, investor relations, financial services, public relations and market research.

Premiere Conferencing has historically relied on sales through a particular customer, IBM, for a significant portion of its revenues. Sales to that customer accounted for approximately 12% of consolidated revenues from continuing operations (29% of Premiere Conferencing’s revenues) in 2002, 10% of consolidated revenues from continuing operations (29% of Premiere Conferencing’s revenues) in 2001, and 5% of consolidated revenues from continuing operations (22% of Premiere Conferencing’s revenues) in 2000. Premiere Conferencing’s relationship with that customer may not continue at historical levels, and there is no long-term price protection for services provided to that customer. A loss in revenues from that customer or diminution in the relationship with that customer, or a decrease in average sales price without an offsetting increase in volume, could have a material adverse effect on the Company’s business, financial condition and results of operations.

Xpedite has more than 12,000 enterprise customers, representing over 175,000 users. This business unit has successfully targeted industries such as securities, banking, mortgage, publishing, healthcare, associations, investor relations, public relations, travel and hospitality.

Sales and Marketing

Each of PTEK’s business units markets its services through direct sales employing a regional reporting structure and a centrally managed national and global accounts program. The Company’s sales force targets large and mid-size enterprises. The centrally managed national and global accounts program focuses on multi-location businesses that are better served by dedicated representatives with responsibility across different geographic regions. The direct sales force is organized by services and by industry on a global scale. The company employs nearly 550

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sales professionals around the world.

As a service organization, PTEK’s customer service teams play a major role in managing customer relationships, as well as selling additional value-added services to existing accounts. PTEK employs more than 750 customer service professionals deployed in local markets.

Platforms and Network Infrastructure

The Company, through its two business units, operates global Internet and telecom-based networks that allow customers to access the Company’s various services through the Internet and through local and/or 800 telephone numbers.

Premiere Conferencing services are provided from full-service operations centers in Colorado Springs, Colorado; Lenexa, Kansas; Sydney, Australia; and Clonakilty, Ireland. Automated bridging nodes are maintained in the United States, Canada, Australia, New Zealand, Hong Kong, Singapore, Japan, France, Germany Ireland, and the United Kingdom. Complex, operator-assisted calls are supported on various commercially available bridging platforms. Internally developed conference bridges are used to support automated conferencing services. Customers access these conferencing platform through direct inward dialing, 800 numbers, the Internet and virtual network access.

Xpedite services are provided through its enhanced messaging network with more than 35,000 messaging ports that uses servers to perform all primary processing and switching functions. Xpedite’s proprietary platform supports multiple input methods including, but not limited to, priority PC-based software, e-mail gateways and high speed IP based interconnects. Outgoing communications are delivered through line group controllers, which are deployed in a decentralized fashion to exploit local delivery costs. The remote line group controllers are connected to servers over a wide area network via either private lines or Xpedite’s global TCP/IP based network. Mission critical information is transported from one location domain to another using MCP to MCP protocol. The current domains include Australia, Japan, Korea, Switzerland, the United Kingdom, the United States, Germany and France. Remote nodes on the network are located in Belgium, Canada, Denmark, Italy, Malaysia, the Netherlands, New Zealand, Taiwan, Hong Kong and Singapore.

Research and Development

PTEK’s ability to design, develop, test and support new software technology for product enhancements in a timely manner is an important ingredient to its future success. Next generation services such as VisionCast, Auditorium, SecureTouch^SM, messageREACH and voiceREACH are critical additions to the suite of communications and data services PTEK provides to its customers, not only to position the operating units in larger market segments, but more importantly to meet changing customer needs and respond to the overall technological changes in the marketplace.

Each PTEK operating unit includes research, development and engineering personnel who are responsible for designing, developing, testing and supporting proprietary software applications, as well as creating and improving enhanced system features and services. The Company’s research and development strategy is to focus its efforts on enhancing its proprietary software and integrating it with readily available industry standard software and hardware when feasible. Research, development and engineering personnel also engage in joint development efforts with the Company’s strategic partners and vendors.

PTEK employs 69 research and development professionals.

Competition

PTEK competes with major communications service providers around the world such as AT&T, WorldCom, Global Crossing, Sprint, and the international PTTs. The Company also competes with smaller companies in each of its service categories. For example, Premiere Conferencing competes with Intercall, Raindance, ACT Teleconferencing, WebEx and Genesys. As Xpedite evolves into more of a business services company, its solution set will be positioned to displace existing services provided by companies such as West,

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Teletech and others in the customer relationship management (CRM) category, and it will continue to compete with EasyLink, AVT, Critical Path, DoubleClick and J2 Global Communications in the multimedia messaging category. In all cases, PTEK’s strategy is to gain a competitive advantage in winning and keeping customers by enabling its business units to deliver leading technology-driven solutions to its customers and support them with superior customer service.

The markets for the Company’s services are intensely competitive, quickly evolving and subject to rapid technological change. The Company expects competition to increase in the future. Many of the Company’s current and potential competitors have longer operating histories, greater name recognition, larger customer bases and substantially greater financial, personnel, marketing, engineering, technical and other resources than the Company. The Company believes that existing competitors are likely to expand their product and service offerings and that new competitors are likely to enter the Company’s markets. Such competition could materially adversely affect the Company’s business, financial condition and results of operations.

Financial Information About Reportable Segments and Geographic Areas

For financial information about the Company’s reportable segments and geographic areas for the years ended December 31, 2002, 2001 and 2000, see Note 23— “Segment Reporting.”

Government Regulation

One of the Company’s subsidiaries, Premiere Communications, Inc. (“PCI”), provides long distance telecommunications services and is subject to federal, state and local telecommunications regulations in the United States. In addition, other PTEK subsidiaries may be affected by regulatory decisions, trends or policies issued or implemented by federal, state or local regulatory authorities. Various international authorities may also seek to regulate, or impose requirements with respect to, the services provided by PCI or such other PTEK subsidiaries.

The Federal Communications Commission (“FCC”) classifies PCI as a non-dominant common carrier for its domestic interstate and international telecommunications services. Generally, such common carriers must maintain and publicly disclose price lists, describing rates, terms and conditions of service, must comply with federal regulatory programs such as universal service, and must comply with decisions and policies adopted or enforced by the FCC. Most state public service or utility commissions (“PUCs”) also subject carriers such as PCI that provide intrastate, common carrier telecommunications services to various compliance and approval requirements, such as those in connection with entry certification, tariff filings, transfers of control, mergers or other acquisitions, issuance of debt instruments, periodic reporting and payment of regulatory fees, as well as others. FCC or state PUC authorizations can generally be conditioned, modified or revoked for failure to comply with applicable laws, rules, regulations or regulatory policies. Fines or other penalties also may be imposed for such violations. Management believes that the Company and its subsidiaries exercise reasonable efforts to comply with applicable FCC and state PUC decisions, policies and regulatory programs. However, there can be no assurance that the Company and its subsidiaries are currently in compliance with all applicable FCC or state PUC requirements, or that the FCC, state PUCs or third parties will not raise issues in the future with regard to the Company or its subsidiaries’ compliance with applicable laws or regulations.

Federal and state laws regulate telemarketing practices, and may adversely impact the Company’s business and that of its customers and potential customers. The FCC promulgated rules in 1992 to implement the Telephone Consumer Protection Act of 1991 (the “TCPA”). These rules, among others, regulate telemarketing methods and activities, including the use of prerecorded messages, the time of day when telemarketing calls may be made, maintenance of company-specific “do not call” databases, and restrictions on unsolicited facsimile advertising. The FCC is currently in the process of considering amendments to its rules under the TCPA. The FCC has also sought comment on the issue of a national “do not call” list and whether it should adopt such a list in conjunction with the Federal Trade Commission (the “FTC”).

Under the Federal Telemarketing Consumer Fraud and Abuse Act of 1994, the FTC has issued regulations designed to prevent deceptive and abusive telemarketing acts and practices. The FTC recently significantly amended its regulations, and these changes could impose additional costs on the Company and affect the industry adversely. As part of these rule amendments, the FTC has ordered that a national “do not call” registry be

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established, whereby telemarketers will be barred from calling consumers who register their telephone numbers in the national database. The “do not call” registry is expected to become effective approximately seven months after the FTC receives funding from Congress and awards the contract to create the registry. The Company will have to take the necessary steps to ensure compliance with the “do not call” registry and other FTC rule amendments.

In addition to the federal legislation and regulations, there are numerous state statutes and regulations governing telemarketing activities, including state “do not call” list requirements, and state registration and bonding requirements. The Company has compliance policies in place with regarding to telemarketing laws and regulations; however, there can be no assurance that the Company would not be subject to litigation alleging a violation of state or federal telemarketing laws or regulations.

A number of states have adopted laws restricting and/or governing the distribution of unsolicited e-mails, or spam. Other states are considering similar legislation. Congress has also considered such legislation, and could enact legislation governing spam at some future point. The Company monitors such legislation and regulatory developments to minimize the risk of its participation in activities that violate anti-spam legislation. In addition, a number of legislative and regulatory proposals are under consideration by federal and state lawmakers and regulatory bodies and may be adopted with respect to the Internet. Some of the issues that such laws or regulations may cover include user privacy, obscenity, fraud, pricing and characteristics and quality of products and services. The adoption of any such laws or regulations may decrease the growth of the Internet, which could in turn decrease the projected demand for the Company’s products and services or increase its cost of doing business. In addition, the sending of spam through the Company’s network could result in third parties asserting claims against the Company. Moreover, the applicability to the Internet of existing U.S. and international laws governing issues such as property ownership, copyright, trade secret, libel, taxation and personal privacy is uncertain and developing. Any new legislation or regulation, or application or interpretation of existing laws, could have a material adverse effect on the Company’s business, financial condition and results of operations.

In addition, the Company’s operations may be subject to state laws and regulations regulating the unsolicited transmission of facsimiles. The Company monitors such laws and regulations and its service agreements with customers state that customers are responsible for their compliance with all applicable laws and regulations. The Company could, nevertheless, be subject to litigation, fines, losses, and possible other relief under such laws and regulations.

In conducting its business, the Company is subject to various laws and regulations relating to commercial transactions generally, such as the Uniform Commercial Code and is also subject to the electronic funds transfer rules embodied in Regulation E promulgated by the Federal Reserve. It is possible that Congress, the states or various government agencies could impose new or additional requirements on the electronic commerce market or entities operating therein. If enacted, such laws, rules and regulations could be imposed on the Company’s business and industry and could have a material adverse effect on the Company’s business, financial condition or results of operations. The Company’s international activities also are subject to regulation by various international authorities and the inherent risk of unexpected changes in such regulation.

Proprietary Rights and Technology

The Company’s ability to compete is dependent in part upon its proprietary technology. The Company relies primarily on a combination of intellectual property laws and contractual provisions to protect its proprietary rights and technology. These laws and contractual provisions provide only limited protection of the Company’s proprietary rights and technology. The Company’s proprietary rights and technology include confidential information and trade secrets that the Company attempts to protect through confidentiality and nondisclosure provisions in its agreements. The Company typically attempts to protect its 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. PTEK currently has seven patents, five patent applications pending, numerous worldwide registrations of trademarks and service marks, and numerous worldwide trademark and service mark registrations pending. Despite the Company’s efforts to protect its proprietary rights and technology, there can be no assurance that others will not be able to copy or otherwise obtain and use the Company’s proprietary technology without authorization, or independently develop technologies that are similar or superior to the Company’s technology. However, the Company believes that, due to

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the rapid pace of technological change in communications and data services, factors such as the technological and creative skills of its personnel, new product developments, frequent product enhancements and the timeliness and quality of support services are of equal or greater importance to establishing and maintaining a competitive advantage in the industry.

Available Information

The Company’s corporate Internet address is www.ptek.com. We have made available free of charge through our Internet Web site (follow the Invest tab to Investor Relations to link to “SEC Filings”) our annual report on Form 10-K, quarterly report 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 Exchange Act as soon as practicable after such material was electronically filed with, or furnished to, the Securities and Exchange Commission (the “SEC”).

Employees

As of December 31, 2002, PTEK employed 1,927 people. PTEK employees are not represented by a labor union or covered by any collective bargaining agreements.

Item 2. Properties

PTEK’s corporate headquarters occupy approximately 19,600 square feet of office space in Atlanta, Georgia under a lease expiring August 31, 2007. Xpedite occupies approximately 90,000 square feet of office space in Tinton Falls, New Jersey under a 15-year lease expiring in May 2016. Premiere Conferencing occupies approximately 106,000 square feet of office space in Colorado Springs, Colorado under a lease expiring August 31, 2006, and approximately 46,000 square feet of office space in Lenexa, Kansas under a lease expiring August 31, 2004.

The Company also leases various data and switching centers and sales offices within and outside the United States. The Company believes that its current facilities and office space are sufficient to meet its present needs and does not anticipate any difficulty securing additional space, as needed, on terms acceptable to the Company.

Item 3. Legal Proceedings

The Company has several litigation matters pending, as described below, which it is defending vigorously. Due to the inherent uncertainties of the litigation process and the judicial system, the Company is unable to predict the outcome of such litigation matters. If the outcome of one or more of such matters is adverse to the Company, it could have a material adverse effect on the Company’s business, financial condition and results of operations.

A lawsuit was filed on November 4, 1998 against the Company and certain of its officers and directors in the Southern District of New York. Plaintiffs are shareholders of Xpedite Systems, Inc. (“Xpedite”) who acquired common stock of the Company as a result of the merger between the Company and Xpedite in February 1998. Plaintiffs’ allegations are based on the representations and warranties made by the Company in the prospectus and the registration statement related to the merger, the merger agreement and other documents incorporated by reference, regarding the Company’s acquisitions of Voice-Tel and VoiceCom Systems, the Company’s roll-out of Orchestrate, the Company’s relationship with customers Amway Corporation and DigiTEC, 2000, and the Company’s 800-based calling card service. Plaintiffs allege causes of action against the Company for breach of contract, against all defendants for negligent misrepresentation, violations of Sections 11 and 12(a)(2) of the Securities Act of 1933 and against the individual defendants for violation of Section 15 of the Securities Act. Plaintiffs seek undisclosed damages together with pre- and post-judgment interest, recission or recissory damages as to violation of Section 12(a)(2) of the Securities Act, punitive damages, costs and attorneys’ fees. The defendants’ motion to transfer venue to Georgia has been granted. The defendants’ motion to dismiss has been granted in part and denied in part. The defendants filed an answer on March 30, 2000. On January 22, 2002, the court ordered the parties to mediate. The parties did so on February 8, 2002. On October 17, 2002, the Defendants filed a Motion for Summary Judgment and a Motion in Limine to exclude the testimony of the Plaintiffs’ expert. Both motions are

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pending.

On February 23, 1998, Rudolf R. Nobis and Constance Nobis filed a complaint in the Superior Court of Union County, New Jersey against 15 named defendants including Xpedite and certain of its alleged current and former officers, directors, agents and representatives. The plaintiffs allege that the 15 named defendants and certain unidentified “John Doe defendants” engaged in wrongful activities in connection with the management of the plaintiffs’ investments with Equitable Life Assurance Society of the United States and/or Equico Securities, Inc. (collectively “Equitable”). The complaint asserts wrongdoing in connection with the plaintiffs’ investment in securities of Xpedite and in unrelated investments involving insurance-related products. The defendants include Equitable and certain of its current or former representatives. The allegations in the complaint against Xpedite are limited to plaintiffs’ investment in Xpedite. The plaintiffs have alleged that two of the named defendants, allegedly acting as officers, directors, agents or representatives of Xpedite, induced the plaintiffs to make certain investments in Xpedite but that the plaintiffs failed to receive the benefits that they were promised. Plaintiffs allege that Xpedite knew or should have known of alleged wrongdoing on the part of other defendants. Plaintiffs seek an accounting of the corporate stock in Xpedite, compensatory damages of approximately $4.9 million, plus $200,000 in “lost investments,” interest and/or dividends that have accrued and have not been paid, punitive damages in an unspecified amount, and for certain equitable relief, including a request for Xpedite to issue 139,430 shares of common stock in the plaintiffs’ names, attorneys’ fees and costs and such other and further relief as the court deems just and equitable. This case has been dismissed without prejudice and compelled to NASD arbitration, which has commenced. In August 2000, the plaintiffs filed a statement of claim with the NASD against 12 named respondents, including Xpedite (the “Nobis Respondents”). The claimants allege that the 12 named respondents engaged in wrongful activities in connection with the management of the claimants’ investments with Equitable. The statement of claim asserts wrongdoing in connection with the claimants’ investment in securities of Xpedite and in unrelated investments involving insurance-related products. The allegations in the statement of claim against Xpedite are limited to claimants’ investment in Xpedite. Claimants seek, among other things, an accounting of the corporate stock in Xpedite, compensatory damages of not less than $415,000, a fair conversion rate on stock options, losses on the investments, plus interest and all dividends, punitive damages, attorneys’ fees and costs. Hearings before the NASD panel were held on November 27-29, 2001, January 22-24, 2002, February 4-7, 2002, April 9-19, 2002, and May 30, 2002. On July 31, 2002, the NASD Panel issued its Award. The Award was subsequently amended on September 9, 2002. The Panel, among other things, held Xpedite, along with co-Respondents Angrisani, Erb, and CEA Financial, jointly and severally liable to Claimant Constance Nobis for $50,000, plus 9% simple interest from January 1, 1999 until September 9, 2002. The Panel also held Angrisani, Erb, and CEA Financial jointly and severally liable to Xpedite for $50,000, plus 9% simple interest from January 1, 1999 until September 9, 2002. Xpedite has filed a Notice of Petition, Verified Petition to Vacate Arbitration Award, and Request for Judicial Intervention in New York State. That proceeding is pending. At a hearing on January 10, 2003, the New Jersey Superior Court affirmed the NASD Award. No order or judgment, however, has been issued by the New Jersey Superior Court.

On September 3, 1999, Elizabeth Tendler filed a complaint in the Superior Court of New Jersey Law Division, Union County, against 17 named defendants including PTEK and Xpedite, and various alleged current and former officers, directors, agents and representatives of Xpedite. The plaintiff alleges that the defendants engaged in wrongful activities in connection with the management of the plaintiff’s investments, including investments in Xpedite. The allegations against Xpedite and PTEK are limited to plaintiff’s investment in Xpedite. Plaintiff’s claims against Xpedite and PTEK include breach of contract, breach of fiduciary duty, unjust enrichment, conversion, fraud, interference with economic advantage, liability for ultra vires acts, violation of the New Jersey Consumer Fraud Act and violation of New Jersey RICO. Plaintiff seeks an accounting of the corporate stock of Xpedite, compensatory damages of approximately $1.3 million, accrued interest and/or dividends, a constructive trust on the proceeds of the sale of any Xpedite or PTEK stock, shares of Xpedite and/or PTEK to satisfy defendants’ obligations to plaintiff, attorneys’ fees and costs, punitive and exemplary damages in an unspecified amount, and treble damages. On February 25, 2000, Xpedite filed its answer, as well as cross claims and third party claims. This case has been dismissed without prejudice and compelled to NASD arbitration, which has commenced. In August 2000, a statement of claim was also filed with the NASD against all but one of the Nobis Respondents making virtually the same allegations on behalf of claimant Elizabeth Tendler. Claimant seeks an accounting of the corporate stock in Xpedite, compensatory damages of not less than $265,000, a fair conversion rate on stock options, losses on other investments, interest and/or unpaid dividends, punitive damages, attorneys’ fees and costs. Hearings before the NASD panel were held on November 27-29, 2001, January 22-24, 2002, February 4-7, 2002, April 9-19, 2002, and May 30, 2002. On July 31, 2002, the NASD Panel issued its Award. The Award was subsequently amended on September 9, 2002. The Panel, among other things, held

10

Xpedite, along with co-respondents Angrisani, Erb, and CEA Financial, jointly and severally liable to claimant Elizabeth Tendler for $57,500, plus 9% simple interest from March 1, 1999 until September 9, 2002. The Panel also held Angrisani, Erb, and CEA Financial jointly and severally liable to Xpedite for $57,500, plus 9% simple interest form March 1, 1999 until September 9, 2002. Xpedite has filed a Notice of Petition, Verified Petition to Vacate Arbitration Award, and Request for Judicial Intervention in New York State. That proceeding is pending. At a hearing on January 10, 2003, the New Jersey Superior Court affirmed the NASD Award. No order or judgment, however, has been issued by the the New Jersey Superior Court.

On December 10, 2001, Voice-Tel filed a Complaint against Voice-Tel franchisees JOBA, Inc. (“JOBA”) and Digital Communication Services, Inc. (“Digital”) in the U.S. District Court for the Northern District of Georgia. The Complaint sought injunctive relief and a declaratory judgment with respect to Voice-Tel’s right to terminate the franchise agreements with JOBA and Digital. On January 7, 2002, JOBA and Digital answered Voice-Tel’s Complaint and asserted counterclaims against Voice-Tel for alleged breach of franchise agreements and other alleged franchise-related agreements. JOBA and Digital also asserted claims alleging tortious interference of contract against Premiere Communications, Inc. (“PCI”) and PTEK. On January 18, 2002, Voice-Tel, PCI and PTEK filed responses and answers to the counterclaims and filed additional breach of contract and tort claims against JOBA and Digital. In March 2002, Voice-Tel and JOBA and Digital sought leave of court to file amended complaints and answers, which the court granted as to JOBA and Digital and granted in part and denied in part as to Voice-Tel. The Digital Franchise Agreement contained a mandatory arbitration provision, which was not found in the JOBA Franchise Agreement. Therefore, on April 10, 2002, the federal court severed the Digital breach of franchise agreement claims and ordered them to be arbitrated. The Court ordered that all remaining claims, including but not limited to the breach of franchise agreement claims as to JOBA, would remain in federal court. The arbitration is currently scheduled for July 13, 2002 and will be held in Atlanta, Georgia. There is a proposal outstanding that all parties agree to submit all claims to arbitration including the Federal Court claims. At this time, this proposal has not been agreed to by any of the parties. Discovery with respect to the arbitration will end on June 25, 2003. On July 10, 2002, JOBA and Digital moved to amend their Complaint to add claims for constructive termination of their franchises, which was subsequently denied by the court on September 11, 2002. On July 16, 2002, Voicecom Telecommunications, LLC (“Voicecom”) was added as a party Plaintiff in the lawsuit against JOBA and Digital. With the exception of expert and damages testimony, discovery has now concluded and the parties are awaiting a trial date contingent on the parties agreeing to submit all claims to arbitration. The parties have filed motions and cross motions for partial summary judgment, including responses thereto. A mediation of all claims between all parties was held on March 24, 2003, which failed to resolve any of the issues in litigation.

On January 30, 2002, a complaint was filed by 15 Lake Bellevue, LLC in the Superior Court of King County, Washington. Plaintiff sought to enforce a Lease Guaranty Agreement entered into by the Company on behalf of Webforia, Inc. with respect to a lease for commercial real estate located in Bellevue, King County, Washington. The Company’s potential liability under the Guaranty was limited to the lesser of the lease obligations or $2,000,000, together with attorneys’ fees, interest and collection expenses. The Company filed an answer to the lawsuit, and on May 17, 2002, the plaintiff filed a motion for partial summary judgment. On June 18, 2002, the court entered an order finding unconditional liability on the part of the Company with respect to the guaranty but reserving the issue of the amount of the Company’s liability for trial. On December 31, 2002 the parties entered into a settlement agreement resolving in full all claims asserted by each party against the other.

On March 25, 2003, EasyLink Services Corporation (“EasyLink”) filed an amended complaint against the Company, Xpedite and AT&T Corp. (“AT&T”), in the Superior Court of New Jersey, Chancery Division: Middlesex County. EasyLink’s complaint alleges, among other things, that the Company entered into an agreement to purchase a secured promissory note in the original principal amount of $10 million and 1,423,980 shares of EasyLink’s Class A common stock for the purpose of obtaining EasyLink’s business by using the acquired securities to block a debt restructuring that EasyLink was allegedly pursuing with its creditors, including AT&T, and for other improper motives. EasyLink’s complaint alleges that it pursued such debt restructuring in reliance on its understanding that AT&T would participate in the restructuring on certain terms to which EasyLink and AT&T allegedly had agreed, and that AT&T misled EasyLink as to its intentions with respect to such restructuring. The complaint further alleges that AT&T disclosed confidential information of EasyLink to the Company in violation of AT&T’s agreements with EasyLink, and that such information was used by AT&T and the Company in furtherance of a joint scheme to force EasyLink out of the marketplace. EasyLink’s complaint also alleges that employees of the Company and Xpedite have knowingly made false statements to EasyLink’s customers, investors and creditors

11

regarding EasyLink and its financial stability. EasyLink claims that these various actions have impaired its ability to restructure its debt effectively and caused it to suffer various other commercial losses. EasyLink’s complaint seeks to (i) enjoin AT&T from selling the secured promissory note to the Company, improperly interfering with EasyLink’s business and contracts and disclosing EasyLink’s confidential information without EasyLink’s consent; (ii) compel AT&T to consummate EasyLink’s proposed restructuring; (iii) enjoin the Company and Xpedite from making false statements to EasyLink’s customers and creditors regarding EasyLink and its financial position; (iv) enjoin the Company from contacting EasyLink’s creditors and preventing the restructuring of EasyLink’s debt; and (v) enjoin the Company and Xpedite from using EasyLink’s confidential information and contacting EasyLink’s current and former employees to obtain such confidential information. EasyLink’s complaint also seeks unspecified damages from AT&T and the Company. The Company intends to answer and defend this lawsuit.

The Company is also involved in various other legal proceedings which the Company does not believe will have a material adverse effect upon the Company’s business, financial condition or results of operations, although no assurance can be given 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 the Company’s 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 and Related Stockholder Matters

The Company’s common stock, $.01 par value per share (the “Common Stock”), has traded on the Nasdaq National Market under the symbol “PTEK” since its initial public offering on March 5, 1996. The following table sets forth the high and low closing sales prices of the Common Stock as reported on the NASDAQ National Market for the periods indicated.

2002	High		Low
First Quarter	$	4.40	$	3.24
Second Quarter		5.73		4.07
Third Quarter		5.82		4.35
Fourth Quarter		4.69		2.74

2001	High		Low
First Quarter	$	3.13	$	1.31
Second Quarter		2.95		2.13
Third Quarter		3.70		1.77
Fourth Quarter		3.87		2.00

The closing price of the Common Stock as reported on the NASDAQ National Market on March 12, 2003 was $3.68. As of March 12, 2003 there were 487 record holders and approximately 11,600 beneficial holders of the Company’s Common Stock.

The Company has never paid cash dividends on its Common Stock, and the current policy of the Company’s Board of Directors is to retain any available earnings for use in the operation and expansion of the Company’s business. The payment of cash dividends on the common stock is unlikely in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will depend upon the Company’s earnings, capital requirements, financial condition and any other factors deemed relevant by the Board of Directors.

During the year ended December 31, 2002, certain current and former employees exercised options to purchase an aggregate of 47,080 shares of Common Stock at prices ranging from $0.71 per share to $1.61 per share in transactions exempt from registration pursuant to Section 4(2) and Rule 701 of the Securities Act. In the third quarter of 2002 the Company issued 601,997 shares of Common Stock of which 352,997 shares were returned in November 2002 pursuant to the terms of the class action settlement. The remaining 249,000 shares were exempt from registration pursuant to Section 3(a)(10) of the Securities Act.

Item 6. Selected Financial Data

The following selected consolidated statement of operations data, balance sheet data, and cash flow data as of and for the years ended December 31, 2002, 2001, 2000, 1999 and 1998 have been derived from the audited consolidated financial statements of the Company. The selected consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Company’s consolidated financial statements and the notes thereto.

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	Year Ended December 31,
	2002			2001			2000			1999			1998
	(in thousands, except per share data)
Statement of Operations Data:
Revenues	$	341,253		$	330,416		$	303,244		$	292,731		$	226,776
Gross profit	276,488			257,463			220,280			204,679			152,137
Operating income (loss)	24,905			(177,142		)	(58,206		)	(84,889		)	(65,381		)
Income (loss) from continuing operations attributable to common and common equivalent shares for shareholders for:
—basic and diluted net income (loss) per share	14,423			(209,658		)	(46,602		)	5,754			(47,508		)
Income (loss) from continuing operations per common and common equivalent shares for:
—basic (1)	$	0.27		$	(4.19	)	$	(0.97	)	$	0.12		$	(1.07	)
—diluted(1)	$	0.26		$	(4.19	)	$	(0.97	)	$	0.12		$	(1.07	)
Loss from discontinued operations	(12,532		)	(32,462		)	(12,264		)	(39,245		)	(36,746		)
Net income(loss) attributable to common and common equivalent shares for shareholders for:
—basic and diluted net income (loss) per share	1,891			(242,120		)	(58,866		)	(33,491		)	(84,254		)
Net income (loss) per common and common equivalent shares for:
—basic (1)	$	0.04		$	(4.84	)	$	(1.22	)	$	(0.72	)	$	(1.90	)
—diluted (1)	$	0.03		$	(4.84	)	$	(1.22	)	$	(0.72	)	$	(1.90	)
Shares used in computing income (loss) from continuing operations and net income (loss) per common and common equivalent shares for:
—basic	53,550			49,998			48,106			46,411			44,325
—diluted	56,262			49,998			48,106			46,411			44,325
Balance Sheet Data (at period end):
Cash, cash equivalents and marketable securities	$	69,418		$	49,500		$	29,716		$	101,981		$	40,609
Working capital	62,103			13,116			15,949			34,746			(92,628		)
Total assets	352,093			386,438			630,933			770,481			796,416
Total debt	180,227			187,176			178,762			179,625			299,673
Total shareholders’ equity	84,338			79,032			313,406			422,220			397,793
Statement of Cash Flow Data:
Cash provided by (used in) operating activities from:
Continuing operations	37,244			29,034			7,503			(11,240		)	29,108
Discontinued operations	(5,804		)	31,871			10,426			21,167			(6,860		)
Total	$	31,440		$	60,905		$	17,929		$	9,927		$	22,248
Cash (used in) provided by investing activities from:
Continuing operations	(6,175		)	(32,548		)	3,643			116,697			63,728
Discontinued operations	(155		)	(2,857		)	(10,109		)	(9,481		)	(42,436		)
Total	$	(6,330	)	$	(35,405	)	$	(6,466	)	$	107,216		$	21,292
Cash (used in) provided by financing activities from:
Continuing operations	(5,911		)	1,660			(615		)	(119,074		)	(26,287		)
Discontinued operations	(1,086		)	(1,964		)	(1,779		)	(1,850		)	(19,828		)
Total	$	(6,997	)	$	(304	)	$	(2,394	)	$	(120,924	)	$	(46,115	)

______________

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1)Basic net income (loss) per share is computed using the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed using the weighted average number of shares of common stock and dilutive common stock equivalents outstanding during the period from convertible preferred stock, convertible subordinated notes (using the if-converted method) and from stock options (using the treasury stock method).

On March 26, 2002 the Company sold substantially all of the assets of the Voicecom operating segment, exclusive of its Australian operations, to Gores Technology Group, for a total purchase price of approximately $22.4 million, comprised of cash and the assumption of certain liabilities. In accordance with Statement of Financial Accounting Standards (“SFAS”) 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the transaction was accounted for as a discontinued operation. See Discontinued Operations section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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

Overview

PTEK Holdings, Inc., a Georgia corporation, and its subsidiaries (collectively the “Company” or “PTEK”) is a global provider of business communications services, including conferencing (audio conferencing and Web-based collaboration) and multimedia messaging (high-volume actionable communications, including e-mail, wireless messaging, voice message delivery and fax). The Company’s reportable segments align the Company into two operating segments based on product offering. These segments are Premiere Conferencing and Xpedite. Premiere Conferencing offers a full suite of enhanced audio, automated audio and Web conferencing services for all forms of group communications activities. Xpedite offers a comprehensive suite of business services that enable actionable two-way communications which allow companies to better acquire and retain customers as well as automate their core business processes. In addition, the Company had one other reportable segment, Voicecom, which the Company exited through a sale, exclusive of its Australian operations, effective March 26, 2002. Voicecom offered a suite of integrated communications solutions, including voice messaging, interactive voice response services and unified communications. Retail Calling Card Services is a business segment that the Company exited through the sale of its revenue base effective August 1, 2000. The Company also exited the venture business in 2001,which was conducted through PtekVentures, the Company’s investment arm.

Revenues of the Company are recognized when persuasive evidence of an arrangement exists, services have been rendered, the price to the buyer is fixed or determinable, and collectibility is reasonably assured. Revenues consist of fixed monthly fees, usage fees generally based on per minute or transaction rates, and service initiation fees. Unbilled revenue consists of earned but unbilled revenue which results from the weekly billing cycle that was implemented at Premiere Conferencing during the third quarter of 2002. Deferred revenue consists of payments made by customers in advance of the time services are rendered. The Company’s revenue recognition policies are consistent with the guidance in Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition in Financial Statements,” as amended by SAB No. 101A and 101B.

“Telecommunications costs” consist primarily of the cost of metered and fixed telecommunications related costs incurred in providing the Company’s services.

“Direct operating costs” consist primarily of salaries and wages, travel, consulting fees and facility costs associated with maintaining and operating the Company’s various revenue generating platforms and telecommunications networks, regulatory fees and non-telecommunications costs directly associated with providing services and all costs associated with international hardware system sales.

“Selling and marketing” costs consist primarily of salaries and wages, travel and entertainment, advertising, commissions and facility costs associated with the functions of selling or marketing the Company’s services.

“General and administrative” costs consist primarily of salaries and wages associated with billing, customer service, order processing, executive management and administrative functions that support the Company’s operations. Bad debt expense associated with customer accounts is also included in this caption.

15

“Research and development” costs consist primarily of salaries and wages, travel, consulting fees and facilities costs associated with developing product enhancements and new product development.

“Depreciation” and “amortization” includes depreciation of computer and telecommunications equipment, furniture and fixtures, office equipment, leasehold improvements and amortization of intangible assets. The Company provides for depreciation using the straight-line method of depreciation over the estimated useful lives of property and equipment, generally two to ten years, with the exception of leasehold improvements which are depreciated on a straight-line basis over the shorter of the term of the lease or the useful life of the assets. Intangible assets being amortized include goodwill (prior to 2002), customer lists, developed technology and assembled work force (prior to 2002). Intangible assets are amortized over the useful life of the asset generally ranging from three to seven years.

“Restructuring costs”represent severance, exit costs and contractual obligation costs associated with the realignment of workforces and the exit of certain businesses.

“Asset impairments” represent the adjustment of the carrying value of long-lived assets to current fair value under Statement of Financial Accounting Standards (“SFAS”) No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” effective January 1, 2002 and SFAS 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” for all periods prior to the adoption of SFAS No. 144. Long-lived assets subject to this fair value assessment were goodwill, customer lists, developed technology and property, plant and equipment.

“Equity based compensation” relates primarily to restricted stock granted to employees in exchange for options, restricted stock granted to certain officers of PTEK and one of its operating units, and the cancellation of notes receivable from certain executive officers of the Company for the taxes owed by such officers with respect to certain restricted stock grants and the taxes related thereto. In addition, it includes the non-cash cost of stock options and restricted stock issued to consultants for services rendered.

“Net legal settlements and related expenses” represent the costs incurred or management’s estimate of costs that will more likely than not be incurred related to various legal contingencies and related matters.

“Interest expense” includes the interest costs associated with the Company’s convertible subordinated notes, term equipment loans and various capital lease obligations.

“Interest income” includes interest earned on highly liquid investments with a maturity at date of purchase of three months or less and interest on employee loans

“Gain on sale of marketable securities” includes proceeds less commissions in excess of original cost on the sale of marketable securities available for sale. These marketable securities are traded on a national exchange with a readily determinable market price.

“Asset impairment and obligations – investments” includes the adjustment of the carrying value of non-public investments accounted for under the cost or equity method to current fair value and obligations incurred by the Company as a result of these investments.

“Amortization of goodwill – equity investments” relates to the amortization of the excess of purchase price over the pro-rata net carrying value of investments accounted for under the equity method of accounting. The equity method of accounting for an investment is used when the Company exerts significant management influence over the investee.

“EBITDA” is defined by the Company as income (loss) from continuing operations before interest, taxes, depreciation and amortization.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates. See also the section entitled “Critical Accounting Policies.” The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of the Company’s consolidated results of operations and financial condition. This

16

discussion should be read in conjunction with the Company’s consolidated financial statements contained herein and notes hereto.

On January 1, 2001, management responsibility for international conferencing services was transferred from Xpedite to Premiere Conferencing. Prior to that date, these international revenues were reported in the Xpedite operating segment. The revenues of the Australian operations of Voicecom that were retained in conjunction with the sale of this operating segment are reported in the international results of Xpedite effective January 1, 2002. In order to report comparable operating segment financial results, certain financial information for years prior to 2001 has been reclassified in Management’s Discussion and Analysis. Overall, these reclassifications did not have a material impact on the financial results of the operating segments for the periods presented.

Results of Operations

The following table presents the percentage relationship of certain statements of operations items to total revenues for the Company’s consolidated operating results for the periods indicated:

	Year Ended December 31,
	2002		2001		2000
REVENUES	100.0	%	100.0	%	100.0	%
TELECOMMUNICATIONS COSTS	19.0		22.1		27.4
GROSS PROFIT	81.0		77.9		72.6
DIRECT OPERATING COSTS	15.5		15.8		14.2
CONTRIBUTION MARGIN	65.5		62.1		58.4
OPERATING EXPENSES
Selling and marketing	26.2		22.8		22.4
General and administrative	16.4		17.6		15.7
Research and development	2.1		3.4		2.8
Depreciation	6.3		6.3		6.5
Amortization	3.2		26.8		29.8
Restructuring costs	0.5		1.4		—
Asset impairments	0.9		30.5		0.2
Equity based compensation	0.5		6.2		0.6
Legal settlements, net	2.1		0.7		(0.5	)
Total operating expenses	58.2		115.7		77.5
OPERATING INCOME (LOSS)	7.3		(53.6	)	(19.1	)
OTHER (EXPENSE) INCOME
Interest expense	(3.4	)	(3.5	)	(3.7	)
Interest income	0.4		0.2		0.3
Gain on sale of marketable securities	0.3		0.9		19.6
Asset impairment – investments	—		(9.6	)	(4.9	)
Amortization of goodwill - equity investments	—		(0.5	)	(1.6	)
Other, net	—		(0.8	)	(0.0	)
Total other (expense) income	(2.7	)	(13.3	)	9.7
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	4.6		(66.9	)	(9.4	)
INCOME TAX EXPENSE (BENEFIT)	0.4		(3.4	)	5.9
INCOME (LOSS) FROM CONTINUING OPERATIONS	4.2	%	(63.5	)%	(15.3	)%
DISCONTINUED OPERATIONS:
Loss from operations of Voicecom	(4.7	)	(16.1	)	(6.3	)
Income tax benefit	(1.1	)	(6.3	)	(2.2	)
Loss on discontinued operations	(3.6	)	(9.8	)	(4.1	)
NET INCOME (LOSS)	0.6	%	(73.3	)%	(19.4	)%

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The following table presents certain financial information about the Company’s operating segments for the periods presented (amounts in millions), with amortization expense and asset impairments allocated to the appropriate operating segment:

	Year Ended December 31,
	2002			2001			2000
REVENUES:
Revenues from continuing operations:
Xpedite	$	202.9		$	215.7		$	230.1
Premiere Conferencing	138.5			115.1			73.4
Eliminations	(0.1		)	(0.4		)	(0.3		)
	$	341.3		$	330.4		$	303.2
Revenues from discontinued operations:
Retail Calling Card Services	—			—			13.8
Voicecom	15.8			92.5			119.9
	$	357.1		$	422.9		$	436.9
OPERATING PROFIT (LOSS):
Operating profit (loss) from continuing operations:
Xpedite	$	22.8		$	(147.1	)	$	(40.5	)
Premiere Conferencing	31.5			11.4			(0.5		)
Holding Company	(29.4		)	(41.4		)	(17.0		)
Eliminations	(0.0		)	—			(0.2		)
	$	24.9		$	(177.1	)	$	(58.2	)
Operating profit (loss) from discontinued operations:
Retail Calling Card Services	—			—			(1.1		)
Voicecom	(5.7		)	(53.6		)	(17.1		)
	$	19.2		$	(230.7	)	$	(76.4	)
NET INCOME (LOSS):
Income (loss) from continuing operations:
Xpedite	$	26.1		$	(123.7	)	$	(50.7	)
Premiere Conferencing	26.8			6.7			(3.4		)
Holding Company	(38.2		)	(92.7		)	6.1
Eliminations	(0.3		)	(0.0		)	1.4
	$	14.4		$	(209.7	)	$	(46.6	)
Income (loss) from discontinued operations:
Retail Calling Card Services	—			—			(1.3		)
Voicecom	(12.5		)	(32.4		)	(11.0		)
	$	1.9		$	(242.1	)	$	(58.9	)

Revenues

Consolidated revenues from continuing operations increased 3.3% to $341.3 million in 2002 from $330.4 million in 2001, and increased 9.0% in 2001 from $303.2 million in 2000. Revenues in the Company’s operating segments are as follows:

Xpedite revenues were 59.5%, 65.3% and 75.9% of consolidated revenues for 2002, 2001 and 2000, respectively. Xpedite revenues decreased 5.9% to $202.9 million in 2002 from $215.7 million in 2001 and decreased 6.3% from $230.1 million in 2001. The decline in revenues in 2002 is mainly attributable to price compression in Xpedite’s traditional or “legacy” store and forward fax business. The decline in revenues in 2001 is primarily attributable to the reduction in revenues from real-time fax and real-time telex as this business was exited in 2000, and which combined represented a decline of approximately $16.4 million. In addition, revenues from the legacy store and forward fax business declined 3.8% in 2001 due to price compression. In the fourth quarter of 2000 and the first quarter of 2001, Xpedite made three customer base acquisitions which generated approximately $12.0 million and $9.9 million in revenues in 2002 and 2001, respectively.

Premiere Conferencing revenues were 40.6%, 34.8% and 24.2% of consolidated revenue for 2002, 2001 and 2000, respectively. Premiere Conferencing revenues increased 20.2% to $138.5 million in 2002 from $115.1 million in 2001 and increased 57.0% from $73.4 million in 2001. The increases in 2002 and 2001 are primarily

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attributable to growth in Premiere Conferencing’s automated conferencing service, ReadyConference, which allows unscheduled and unattended conference calls 24 hours a day, 7 days a week, an expansion of these services into key foreign markets, and growth in Web conferencing services. Management expects revenue growth in this operating segment to continue, primarily driven by growth in minutes of use. However, the rate of growth is expected to decline as increased price compression is anticipated due to increased competition.

Gross margins

Consolidated gross profit margins from continuing operations were 81.0%, 77.9% and 72.6%in 2002, 2001 and 2000, respectively. Gross margins in the Company’s operating segments were as follows:

Xpedite gross profit margins were 79.4%, 74.7%, and 69.8%, in 2002, 2001 and 2000, respectively. In 2002 and 2001 gross margins increased due to decreases in per minute telecommunications rates for the Xpedite worldwide network, as well as increased sales of messageREACH and voiceREACH products, which carry higher gross margins. Lower telecommunications costs have become the general industry trend over the past several years. Xpedite utilizes several telecommunication service providers and, accordingly, can direct traffic to providers offering the lowest rates.

Premiere Conferencing gross profit margins were 83.4%, 84.0% and 81.3%, in 2002, 2001 and 2000, respectively. In 2002, gross margins declined slightly as the decline in the average price per minute for its services was greater than the decrease in telecommunications costs. Gross margins increased in 2001 primarily due to significant decreases in per minute telecommunications transport costs. The significant decreases in telecommunication costs are the result of the general industry price declines seen for long distance delivery. Premiere Conferencing utilizes several telecommunication service providers and, accordingly, can direct traffic to providers offering the lowest rates.

Direct operating costs

Consolidated direct operating costs from continuing operations as a percentage of consolidated revenues were 15.5%, 15.8% and 14.2% in 2002, 2001 and 2000, respectively. Direct operating costs remained relatively constant on a percentage basis in 2002 and in 2001. The increase from 2000 to 2001 resulted from the growth in Premiere Conferencing revenues as a percentage of total revenue during such period. Premiere Conferencing carries higher direct operating costs than Xpedite as a result of its call center operations. Direct operating costs in the Company’s operating segments were as follows:

Xpedite direct operating costs as a percentage of segment revenues were 9.7%, 8.7% and 7.8% in 2002, 2001 and 2000, respectively. Direct operating costs increased from 2001 to 2002 by approximately 1.0 percentage point as a result of the increase in Xpedite’s hardware sales in Japan, which carries a 70% direct cost, and an increase in message volume of 11.3% during such period. In 2001, direct operating costs increased 0.9 percentage points primarily due to increased message volume of 36.6%.

Premiere Conferencing direct operating costs as a percentage of segment revenues were 24.1%, 29.1% and 34.2% in 2002, 2001 and 2000, respectively. In 2002 and 2001, direct operating costs as a percentage of segment revenues decreased 5.0 and 5.1 percentage points, respectively, due to the growth in the automated ReadyConference product, which carries a low direct cost compared to the operator assisted product because it does not require an operator to facilitate the conference call. Revenues from this product grew to 69% of segment revenues in 2002 from 60% in 2001.

Selling and marketing

Consolidated selling and marketing costs from continuing operations as a percent of consolidated revenues were 26.2%, 22.8% and 22.4% in 2002, 2001 and 2000, respectively. Selling and marketing costs in the Company’s operating segments were as follows:

Xpedite selling and marketing costs as a percentage of segment revenues were 30.4%, 24.8% and 23.5% in 2002, 2001 and 2000, respectively. In 2002 the 5.6 percentage point increase was due primarily to a 29 employee increase in sales and marketing headcount. In 2001, the 1.3 percentage point increase was primarily due to the higher costs of launching messageREACH globally.

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Premiere Conferencing selling and marketing costs as a percentage of segment revenues were 19.8%, 18.5% and 17.7% in 2002, 2001 and 2000, respectively. In 2002 and 2001 the 1.3 and 0.8 percentage point increases were due primarily to increased sales and marketing headcount of 86 and 74 employees in 2002 and 2001, respectively.

General and administrative

Consolidated general and administrative costs from continuing operations as a percentage of consolidated revenues were 16.4%, 17.6% and 15.7% in 2002, 2001 and 2000, respectively. General and administrative costs in the Company’s operating segments were as follows:

Xpedite general and administrative costs as a percentage of segment revenues were 13.6%, 14.5% and 11.9% in 2002, 2001 and 2000 respectively. The decrease in general and administrative costs as a percentage of segment revenues from 2001 to 2002 of 0.9 percentage points is due primarily to reductions in headcount in administration and customer service during early 2002. The increase from 2000 to 2001 of 2.6 percentage points of segment revenues is primarily due to increased headcount in administration and customer service.

Premiere Conferencing general and administrative costs as a percentage of segment revenues were 9.1%, 9.6% and 8.1% in 2002, 2001 and 2000, respectively. In 2002 general and administrative costs as a percentage of segment revenues declined despite an overall dollar increase of approximately $1.4 million. This is primarily due to the growth in Premiere Conferencing automated revenues as a percentage of consolidated revenues. The ReadyConference product is highly scalable and does not require proportional increases in back office support. The increase from 2001 to 2000 is primarily due to infrastructure support increases related to the overall expansion of the Premiere Conferencing operating segment.

Holding Company general and administrative costs as a percentage of total revenues were 4.6%, 4.9% and 5.6% in 2002, 2001 and 2000, respectively. Holding Company general and administrative costs were $15.8 million, $16.3 million and $15.6 million in 2002, 2001 and 2000, respectively. The $0.5 million decrease from 2001 to 2002 is primarily due to salary reductions, which were offset in part by approximately $1.6 million in strategic deal costs. The $0.7 million increase from 2000 to 2001 is primarily the result of costs associated with the PtekVentures business.

Research and development

Consolidated research and development costs from continuing operations as a percentage of consolidated revenues were 2.1%, 3.4% and 2.8% in 2002, 2001 and 2000, respectively. Research and development costs in the Company’s operating segments were as follows:

Xpedite research and development costs as a percentage of segment revenues were 2.7%, 4.1% and 3.3% in 2002, 2001 and 2000, respectively. In 2002, research and development costs as a percentage of segment revenues decreased as a result of a reduction in headcount, increased capitalized development costs of approximately $1.6 million and management’s continued policy of initiating only those development projects with a high probability of economic benefit. The increase in 2001 was attributable to continued development of the messageREACH and voiceREACH products.

Premiere Conferencing research and development costs as a percentage of segment revenues were 1.3%, 1.9% and 1.5% in 2002, 2001 and 2000, respectively. In 2002 the slight decrease as a percentage of segment revenues is primarily due to management’s continued policy of initiating only those development projects with a high probability of economic benefit. The slight increase in 2001 was primarily attributable to increased headcount of 8 employees needed for the continued development of ReadyConference, ReadyCast and VisionCast.

Depreciation

Consolidated depreciation costs from continuing operations as a percentage of consolidated revenues were 6.3%, 6.3% and 6.5% in 2002, 2001 and 2000, respectively. Depreciation costs in the Company’s operating segments were as follows:

Xpedite depreciation costs were 6.5%, 6.3% and 5.1% of segment revenues in 2002, 2001 and 2000, respectively. This represents a $0.4 million decrease in costs from 2001 to 2002 and a $1.9 million increase from

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2000 to 2001. The $0.4 million decrease is attributable to the timing of depreciation for capital expenditures purchased in the later half of 2001. The $1.9 million increase in 2001 is primarily related to increased capital expenditures in the latter half of 2000 and first half of 2001 related to messageREACH and voiceREACH.

Premiere Conferencing depreciation costs were 5.4%, 6.0% and 8.2% of segment revenues in 2002, 2001 and 2000, respectively. This represents a $0.4 million increase from 2001 to 2002 and a $1.1 million increase from 2000 to 2001. The 2002 percentage decrease is primarily due to the significant segment revenue growth in 2002. In 2001 the increase in depreciation in terms of dollars is attributable to increased capital expenditures in 2000 and 2001 to provide additional capacity to accommodate the growth of the business.

Holding Company depreciation costs were $0.9 million, $0.8 million and $2.2 million in 2002, 2001 and 2000, respectively. This represents a $0.1 million increase from 2001 to 2002 and a $1.4 million decrease from 2000 to 2001. The decrease in depreciation from 2000 to 2001 was associated with the normal run out of depreciable assets not replaced.

Amortization

Consolidated amortization from continuing operations as a percentage of consolidated revenues was 3.2%, 26.8% and 29.8% in 2002, 2001 and 2000, respectively. Consolidated amortization from continuing operations was $10.9 million, $88.6 million and $90.2 million in 2002, 2001 and 2000, respectively. Goodwill amortization was $0.0 million, $65.1 million and $65.1 million in 2002, 2001 and 2000, respectively. Other intangibles amortization, which consist primarily of customer lists, developed technology and assembled workforce was $10.9 million, $23.5 million and $25.1 million in 2002, 2001 and 2000, respectively. With the adoption of SFAS No. 142, “Accounting for Goodwill and Other Intangible Assets,” which became effective January 1, 2002, the Company no longer records amortization expense associated with goodwill, but instead goodwill is subject to a periodic impairment assessment by applying a fair value based test. This analysis was completed for the year ended December 31, 2002 and no impairment was identified. Amortization as a percentage of revenues, exclusive of goodwill amortization, would have been 3.2%, 7.1% and 8.3%, for 2002, 2001 and 2000, respectively. The decline in amortization in 2001is primarily related to the impairment of certain other intangibles during the fourth quarter of 2001. Other intangibles amortization decreased in 2002 and 2001 due to customer list impairments associated with the Xpedite operating segment. See “Asset impairments” below for a further discussion related to these impairments.

Restructuring costs

Realignment of Workforce – Fourth Quarter 2002

In the fourth quarter of 2002, Xpedite and the Holding Company terminated employees pursuant to a plan to shrink headcount and reduce sales and administration costs. The plan called for the reduction of 54 and 5 employees at Xpedite and the Holding Company, respectively. The combined costs associated with the restructuring plan are $1.5 million, of which $0.3 million was paid in 2002. Of the remaining balance, $0.8 million, $0.3 million and $0.1 million will be paid in 2003, 2004 and 2005, respectively. Virtually all costs will be paid in cash. This restructuring plan will eliminate approximately $1.4 million and $0.6 million in annual costs at Xpedite and the Holding Company, respectively. Also, in the fourth quarter of 2002 Xpedite decided to exit the voice messaging business in Australia due to declining revenue and the need to make substantial capital investments. The costs associated with exiting this business of $0.3 million are primarily non-cash and represent the loss on disposal of the voice messaging assets.

Realignment of Workforce and Facilities – Fourth Quarter 2001

Due to continued revenue declines not anticipated by management in both the Voicecom and Xpedite operating segments in the second half of 2001, plans for additional workforce cost reductions were established and personnel were notified during the fourth quarter of 2001. The plan commitment reduces annual operating expenses by $7.6 million. The plan eliminated, through involuntary separation, approximately 120 non-sales force employees in both Voicecom and Xpedite and eliminated 143 network equipment sites in the Voicecom operating segment. The overall management plan allowed for reinvesting these cost savings into additional sales force employees in order to stabilize the decline in revenues in both operating segments. Accordingly, the Company accrued restructuring costs of approximately $4.1 million associated with this plan commitment. Cash payments in 2002 and 2001 associated with this plan were $2.1 million and $1.0 million, respectively. The Company expects to incur $0.4 million of additional cash payments in 2003 to satisfy this plan obligation. Of the $4.1 million of costs associated with this plan, approximately $0.7 million of non-cash charges

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were incurred for severance cost obligations paid through immediately vested stock options issued below market price on the date of grant. Accordingly, this portion of the restructuring costs was recorded as additional paid-in-capital. The remaining costs at December 31, 2002 and 2001 were $0.4 million and $2.4 million, respectively.

Realignment of Workforce and Facilities – Second Quarter 2001

During the second quarter of 2001, management committed to a plan to reduce annual operating expenses by approximately $13.7 million through the elimination of certain operating activities in its Voicecom and Xpedite operating segments, and at the Holding Company, and the corresponding reductions in personnel costs relating to the Company’s operations, sales and administration. The plan eliminated, through involuntary separation, approximately 168 non-sales force employees and allowed the Company to exit duplicative facilities in the Voicecom business segments. Accordingly, the Company accrued restructuring costs of approximately $6.7 million associated with this plan commitment. The Company expects to incur a total of approximately $5.0 million of cash payments related to severance, exit costs and contractual obligations associated with the $6.7 million plan costs. Approximately $0.8 million and $3.8 million of these cash payments were made by December 31, 2002 and 2001, respectively, and were primarily related to severance and exit cost activities. The remaining cash payments are associated with severance costs, exit costs and contractual obligations and are expected to be paid in 2003. Approximately $1.7 million of non-cash charges recorded in 2001 are related to certain executive management severance costs from employee stock option modifications and forgiveness of employee notes receivable. Accordingly, this portion of the restructuring costs was recorded as additional paid-in-capital. The remaining costs at December 31, 2002 and 2001 were approximately $40,000 and $1.2 million, respectively.

Exit from Asia Real-Time Fax and Telex Business

During the fourth quarter of 2000, the Company recorded a charge of $0.6 million for costs associated with Xpedite’s decision to exit its legacy real-time fax and telex business in Asia. This service depended on significant price disparities between regulated incumbent telecommunications carriers and Xpedite’s cost of delivery over its fixed-cost network. With the deregulation of most Asian telecommunications markets, Xpedite’s cost advantage dissipated, and the Company decided to exit this service and concentrate on higher value-added services such as transactional messaging and messageREACH. The $0.6 million charge included contractual and other obligations totaling $0.4 million and severance costs of $0.2 million. During 2001, the Company paid the remaining severance obligations planned for and does not expect any further payments.

Decentralization of Company

In the third quarter of 1999, the Company recorded restructuring, merger costs and other special charges of approximately $8.2 million in connection with its reorganization from the two EES (Emerging Enterprise Solutions) and CES (Corporate Enterprise Solutions) operating units into three operating business units, a retail calling card business, and a holding company. The $8.2 million charge is comprised of $7.3 million of severance and exit costs, $0.7 million of lease termination costs and $0.2 million of facility exit costs. The decentralization plan of the Company was completed and all payments were made during 2000.

Reorganization of Company into EES and CES Business Groups

In the fourth quarter of 1998, the Company recorded a charge of $11.4 million to reorganize the Company into two business segments that focused on specific groups of customers. The balance of severance and exit costs at December 31, 2002, 2001 and 2000 of $0.0 million, $0.1 million and $0.6 million, respectively, represents remaining severance reserve for a former executive manager. Cash severance payments in 2002 and 2001 were $0.1 and $0.5 million, respectively. The Company paid the remaining severance obligations during 2002 and does not expect any further payments.

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Asset impairments

The following table summarizes the asset impairments from continuing operations incurred by operating segment for the years ended December 31, 2002, 2001 and 2000 (in thousands):

	Xpedite		Conferencing		Holding Co.		Total
2002
Other intangibles	$	3,202	$	—	$	—	$	3,202
2001
Goodwill	$	91,571					$	91,571
Other intangibles	6,679						6,679
Property and equipment, net	777		984		785		2,546
	$	99,027	$	984	$	785	$	100,796
2000
Property and equipment, net	$	800	—		—		$	800

Effective January 1, 2002, the Company adopted SFAS No. 144, “Accounting for the Impairment of Disposal of Long Lived Assets.” During the fourth quarter of 2002 the Company assessed the carrying value of the customer lists at Xpedite pursuant to SFAS No. 144 as Xpedite experienced a decline in revenues in certain international markets during the later half of 2002. Using the best estimate approach, the fair value of certain customer lists associated with the markets experiencing the decline were determined to be less than the carrying value at December 31, 2002, resulting in a $3.2 million asset impairment. The remaining amortization of the other intangible assets will be approximately $3.9 million, $2.0 million and $1.9 million in 2003, 2004 and 2005, respectively.

During the second half of 2001, business conditions declined significantly in the Xpedite operating segment. The following is a comparison of revenue performance for the first six months of 2001 versus the second six months of 2001 (in thousands).

	First six months 2001		Second six months 2001		% Change
	Xpedite		Xpedite		Xpedite
Revenue	$	112,552	$	103,113		-8.4%

During the fourth quarter of 2001, the Company assessed the outlook of various service offering revenues and evaluated the potential impairment of various assets associated with the operating equipment, goodwill and other intangible assets of Xpedite pursuant to SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-lived Assets to be Disposed Of.” Management reviewed the identifiable undiscounted future cash flows, including the estimated residual value to be generated by the assets to be held and used by the business acquired in Xpedite at their asset grouping level. Based on the results of these assessments, the Company recorded the $100.8 million impairment in the fourth quarter of 2001 from continuing operations ($99.0 million of which was related to Xpedite, as discussed further below).

Xpedite impairment - 2001

In Xpedite, a decline in the legacy store and forward fax revenues and weakness in the European and Asia Pacific regions of the business began to occur in the latter part of the third quarter and the early part of the fourth quarter of 2001. Accordingly, management was concerned that a fair value assessment would potentially be lower than the carrying value on the balance sheet. A third party appraisal was performed using a discounted cash flow income approach to valuing the business, using a 15% discount rate. The valuation resulted in an asset impairment related to the Xpedite operating segment of $99.0 million to reflect the carrying value in excess of fair value at December 31, 2001. Of the $99.0 million, property and equipment impairments of $0.7 million at Xpedite related primarily to the abandonment of its Indonesian operations due to declining revenues and profits. Indonesia represented less than 1% of Xpedite’s revenues.

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Other impairments - 2001

Additionally, management recorded asset impairments totaling $1.8 million related to the carrying value of capitalized software associated with certain internal information systems at both Premiere Conferencing and the Holding Company that have been taken out of service.

Real-time fax impairment - 2000

With the deregulation of most Asian telecommunications markets, Xpedite’s cost advantage dissipated, and Xpedite decided to exit this service and concentrate on higher value-added services such as transactional messaging and messageREACH. The asset impairments of $0.8 million included the write-down of furniture and fixtures and real-time fax equipment including autodialers, faxpads and computers. The valuation was based on the fair value of the assets as of December 31, 2000. All equipment costs were incurred in conjunction with the closing of the real-time fax operations in Malaysia, Singapore, Hong Kong, Taiwan and Korea.

Equity based compensation charges

The following summarizes the components of equity-based compensation expense for the years ended December 31, 2002, 2001 and 2000 (in thousands, except share data):

	Earned				Unearned
	Shares		Dollars		Shares	Dollars
2002
Deferred compensation for the vesting of restricted shares issued in option exchange		401,950	$	1,335	185,112	$	615
Deferred compensation for the vesting of restricted shares issued to executive management	160,000		536		416,000	1,298
	561,950		$	1,871	601,112	$	1,913
2001
Options exchanged for restricted shares	1,765,969		$	5,807	638,592	$	2,120
Restricted shares issued to executive management	826,194		2,483		576,000	1,740
Note forgiveness related to restricted shares in former affiliates and related taxes			11,072
Compensation to management in association with restricted shares in former affiliates			497
Options and restricted shares issued for services rendered	15,000		570
	2,607,163		$	20,429	1,214,592	$	3,860
2000
Deferred compensation for restricted shares in former affiliates			$	2,102

Options exchanged for restricted shares

Due to declines in the Company’s share price over the course of the last several years, most of the employee and director option holders had options with exercise prices in excess of the market price of Company stock. In order to provide better performance incentives for employees and directors and to align the employees’ and directors’ interests with those of the shareholders, in the fourth quarter of 2001 the Company offered an exchange program in which it granted one restricted share of common stock in exchange for every 2.5 options tendered. Approximately 6.0 million employee and director stock options were exchanged for approximately 2.4 million shares of restricted stock on December 28, 2001, the date of the exchange. The restricted shares maintain the same vesting schedules as those of the original options exchanged, except that in the case of tendered options that were vested on the exchange date, the restricted shares received in exchange therefore vested on the day after the exchange date. To the extent options were vested at the exchange date, the Company recognized equity based compensation expense determined by using the closing price of the Company’s common stock at December 28, 2001, which was $3.32 a share. To the extent that restricted shares were received for unvested options exchanged, this cost was deferred on the balance sheet under the caption “Unearned restricted share compensation.” This value was also determined using the closing price of the Company’s common stock at the date of the exchange. The unearned restricted share compensation will be recognized as equity based compensation expense as these shares

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vest. In 2002 approximately 402,000 shares vested and equity based compensation expense of $1.3 million was recognized. Assuming all employees at December 31, 2002 will remain employed by the Company through their vesting period, the equity based compensation expense in future years resulting from the restricted shares issued in the option exchange will be $0.4 million in 2003 and $0.2 million in 2004. See further discussion in the “Restricted Stock Exchange Offer” section of Note 17—“Equity Based Compensation Plans.”

In addition, approximately 890,000 options that were eligible to be exchanged for restricted shares pursuant to the exchange offer were not tendered. At December 31, 2002, the option count was approximately 627,000 due to the sale of Voicecom and other cancellations of these options. These options will be subject to variable accounting until such options are exercised, are forfeited, or expire unexercised. These options have exercise prices ranging from $5.32 to $29.25. At December 31, 2002 and 2001, no charge was recorded because the exercise price of each of the options was greater than the market value of the Company’s common stock.

Restricted shares issued to management

Certain members of management of the Company were awarded discretionary bonuses in the form of restricted shares in November 2001. The purpose of these discretionary bonuses was to better align management’s performance with the interests of the shareholders. Certain of these restricted shares vested immediately in 2001 and were restricted from trading for a one-year period. The remaining restricted shares vest straight line through 2004 and the equity based compensation expense recorded in 2002 was $0.5 million. The anticipated remaining equity based compensation expense resulting therefrom will be approximately $0.6 million per year for 2003 and 2004.

Loans and note forgiveness associated with restricted shares in former affiliates and related taxes

During the second quarter of 1999, the Company awarded restricted share grants to the CEO, COO and certain other officers of Company-owned shares held in certain investments in affiliates made in connection with its PtekVentures activities. The vesting periods for these shares ranged from immediately upon grant to three years, contingent on the executive being employed by the Company. In connection with this action, the Company recorded a non-cash charge of $1.2 million in 2000 related to the vesting of these grants.

In 1999 and 2000, the Company loaned $6.3 million with recourse to the current CEO and COO to pay taxes in connection with these restricted share grants. These loans were due on December 31, 2006, accrued interest at 6.20% and were secured by the restricted shares granted. In March 2000, the Company agreed to forgive one-seventh of the principal plus accrued interest on such loans as of December 31, 2000, provided that the executives were employees of the Company on that date. Such amounts were forgiven as of December 31, 2000.

In 2001, the Company agreed to forgive the remaining balance of the recourse tax loans to the CEO and COO, effective as of December 31, 2001, provided that the executives were employees of the Company on that date. The principal and interest forgiven was $5.8 million and the employee tax liability assumed by the Company was $5.3 million. The tax liability was paid primarily in the first quarter of 2002.

Notes receivable – employees

During 2002, the Company loaned approximately $2.0 million with recourse to certain members of management to pay taxes in connection with the restricted shares issued in exchange for options in December 2001 and the discretionary restricted shares issued in November 2001. These loans are due in 2012, accrue interest at a weighted average rate of 5.5%, and are secured by the restricted shares granted. The total interest accrued on these loans as of December 31, 2002 was approximately $0.1 million. The Company is obligated to make additional loans to pay taxes associated with the future vesting of restricted shares, but the dollar amount of such loans cannot be determined at this time.

Compensation to management in association with restricted shares in former affiliates

In 2001, the Company approved discretionary bonuses in the aggregate amount of $0.5 million to two executive vice presidents of the Company who were awarded restricted share grants in affiliates during the second quarter of 1999, which shares had lost significant market value since the dates of grant.

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Options and restricted shares issued for services rendered

In 2001, the Company issued stock options and restricted shares of Company Common Stock to consultants for various consulting services performed for the Company.

Net legal settlements and related expenses

Net legal settlements and related expenses were $7.3 million, $2.3 million and $(1.5) million in 2002, 2001 and 2000, respectively. See Note 20—“Commitments and Contingencies” to the Consolidated Financial Statements and “Legal Proceedings” under Item 3 of Part I of this report. Net legal settlements and related expenses in 2002 consisted of approximately $3.3 million attributable to the settlement of the shareholder class action lawsuit and $4.0 million for the settlement of the Cowan lawsuit. Net legal settlements and related expenses in 2001 were primarily related to $1.6 million of costs incurred that relate to shareholder litigation matters. Net legal settlements and related expenses in 2000 related primarily to the favorable settlement of a contractual dispute with WorldCom.

Interest expense

Interest expense from continuing operations was $11.5 million, $11.5 million and $11.3 million in 2002, 2001 and 2000, respectively. Interest expense remained constant in 2002, and increased slightly in 2001 primarily due to long term financing for facility improvements to Xpedite’s new headquarters and Premiere Conferencing entering into a term equipment loan for $6.5 million in late 2001.

Interest income

Interest income was $1.5 million, $0.6 million and $0.9 million in 2002, 2001 and 2000, respectively. Interest income increased in 2002 primarily due to growth in cash and cash equivalents of approximately $19.9 million from 2001 to 2002 that was invested in interest bearing accounts, and from interest accrued for employee loans. Interest income remained primarily flat from 2000 to 2001 with minor fluctuations due to average outstanding balances of cash and cash equivalents and interest rate fluctuations.

Asset impairment and obligations – investments

The Company, through its PtekVentures investment arm, made investments in various companies engaged in emerging technologies related to internet commerce. These investments were classified initially as either cost or equity investments in accordance with APB Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock,” and evaluated based upon activity. The Company continually evaluated the carrying value of its ownership interests in non-public investments in the PtekVentures portfolio for impairment that was “other than temporary” based on achievement of business plan objectives and current market conditions. The business plan objectives the Company considered include, among others, those related to financial performance such as achievement of planned financial results, forecasted operating cash flows and completion of capital raising activities, and those that are not primarily financial in nature such as the development of technology or the hiring of key employees. The Company has previously taken impairment charges on certain of these investments when it has determined that an “other than temporary” decline in the carrying value of the investment has occurred. Many Internet based businesses experienced difficulty in raising additional capital necessary to fund operating losses and make continued investments that their management teams believed necessary to sustain operations. Valuations of public companies operating in the Internet sector declined significantly during 2000 and 2001. During 2001, market conditions declined for the nonpublic companies in the PtekVentures portfolio, with certain of these companies filing for bankruptcy and subsequently being liquidated. The remaining portfolio companies’ financial performance and updated financial forecasts for the near term led management to the conclusion that there was an “other than temporary” decline in the carrying value of these companies. Accordingly, the Company decided to exit the venture business and cease future funding in its portfolio companies. As a result, the Company recorded an impairment charge of approximately $29.2 million during the second quarter of 2001 for the remaining carrying value of its nonpublic company investment portfolio. During 2000, the Company made similar evaluations of the portfolio companies and recorded approximately $15.0 million in impairments.

Further, during the fourth quarter of 2001, one of the portfolio companies that was previously impaired defaulted on its credit facility and lease obligation. The Company had provided a standby letter of credit on this credit facility and is a guarantor of the lease obligation. Accordingly, an obligation expense for these guarantees in the entire amount of $2.5 million was recorded at December 31, 2001. During the first quarter of 2002, the Company paid its commitment on the standby letter of credit in the amount of $0.5 million. See “Legal

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Proceedings” under Item 3 of Part I of this report.

Additionally, during the fourth quarter of 2001, the Company sold a significant portion of its interest in PtekVentures for proceeds and a gain of $0.2 million, primarily in the form of two notes that accrue interest at 5.05% annually and are due in full on December 31, 2011. A third party appraisal was performed to value the portfolio companies owned by PtekVentures. The purchaser is primarily owned by two former executives of PtekVentures. The Company has received an income tax refund of approximately $9.2 million from the capital loss carryback associated with the sale of this interest.

Amortization of goodwill equity investments

During the first quarter of 2001 and the latter half of 2000, the Company amortized goodwill created by investments that were accounted for under the equity method of accounting. The amount by which the Company’s investment exceeds its share of the underlying net assets is considered to be goodwill, and is amortized over a three-year period. Amortization related to equity investments totaled $1.6 million and $4.9 million in 2001 and 2000, respectively, and is included in the Consolidated Statements of Operations as “Amortization of goodwill-equity investments.” The decline in amortization in 2001 is the result of full impairments to these investments during the second quarter of 2001.

Discontinued operations

Consistent with the Company’s increased focus on extending its market leadership in conferencing and multimedia messaging services for global enterprise customers, the Company retained a financial advisor to assist in evaluating strategic alternatives for portions of its business during 2001. As a result of that evaluation, the Company decided to pursue the separation of Voicecom from the rest of PTEK and on March 26, 2002 the Company sold substantially all the assets of its Voicecom business unit to an affiliate of Gores Technology Group for a total purchase price of approximately $22.4 million, comprised of cash and the assumption of certain Voicecom liabilities. In accordance with SFAS No. 144, the transaction was accounted for as a discontinued operation in the first quarter of 2002. The Voicecom discontinued operations included the loss from operations through the closing date and the loss on disposal. See Note 9 – “Acquisitions and Dispositions” to the Consolidated Financial Statements.

During the fourth quarter of 2002, the Company assessed the Voicecom liabilities that were retained at the time of the sale and determined, based upon the activity in these accounts and the passage of time, that certain of these liabilities were no longer required. Thus, in the fourth quarter of 2002 an adjustment was made to these estimates reducing the loss on discontinued operations of approximately $2.9 million, net of taxes.

Of the Voicecom liabilities, approximately $4.3 million represents capital leases guaranteed by the Company.

Effective income tax rate

In 2002, 2001 and 2000, the Company’s effective income tax rate varied from the statutory rate, primarily as a result of nondeductible goodwill amortization and asset impairments associated with the Company’s acquisitions that have been accounted for under the purchase method of accounting, and changes in calculating allowances and estimates. Changes in valuations allowances and estimates are required when facts and circumstances indicate that realization of tax benefits or the actual amount of taxes expected to be paid has changed. During the year ending December 31, 2002, the Company realized tax benefits of approximately $5.6 million of which approximately $1.0 million and $4.6 million were realized in the third and fourth quarters, respectively, due to changes in previous estimates. See Note 21—“Income Taxes” to the Notes to Consolidated Financial Statements for additional information.

The deferred tax assets and liabilities contain a significant accrual for certain tax events in 2003. If future facts and circumstances indicate this accrual is unnecessary, the elimination of this accrual will have a material impact on the Company’s financial statements in the future.

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Liquidity and capital resources

As of December 31, 2002, the Company had $68.8 million of cash and cash equivalents compared to $48.0 million at December 31, 2001. Cash balances residing outside of the United States at December 31, 2002 were $10.3 million compared to $14.5 million at December 31, 2001. Net working capital at December 31, 2002 was $62.1 million compared to $13.1 million at December 31, 2001.

Cash provided by operating activities

Consolidated operating cash flows from continuing operations were $37.2 million, $29.0 million and $7.5 million in 2002, 2001 and 2000, respectively. Consolidated operating cash flows from continuing operations increased $8.2 million from 2001 to 2002 to $37.2 million. In 2002, net income from continuing operations, adjusted for the non-cash items of depreciation, amortization and asset impairment, and gain on sale of marketable securities, generated cash of $49.1 million. Other significant generators of operating cash were non-cash expenses paid with equity, consisting of employee compensation of $1.9 million and a legal settlement of $1.3 million. Other significant areas in which cash was generated (consumed) in the balance sheet were through the increase in accounts receivable of $(2.4) million, payment of accrued expenses of $(17.7) million, a decrease in prepaid expenses and other assets of $3.6 million and a decrease in deferred income taxes of $2.5 million. Consolidated operating cash flows from continuing operations increased $21.5 million from 2000 to 2001 to $29.0 million. In 2001, net income from continuing operations, adjusted for the non-cash items of depreciation, amortization and asset impairment, and gain on sale of marketable securities, generated cash of $30.7 million. Other significant generators of operating cash were non-cash expenses consisting of employee compensation of $20.4 million and a legal settlement of $0.7 million. Other significant areas in which cash was generated (consumed) in 2001 in the balance sheet were through a decrease in accounts receivable of $6.4 million, an increase in accrued expenses of $0.6, a decrease in prepaid expenses and other assets of $2.9 million and an increase in deferred income taxes and taxes receivable of $(34.4) million. Consolidated operating cash flows from continuing operations 2000 were $7.5 million. In 2000 net income from continuing operations plus the non-cash items of depreciation, amortization, asset impairment and gain on sale of marketable securities generated cash of $24.4 million. Other significant generators of operating cash were the non cash expense of employee compensation of $2.1 million and positive net legal settlements of $10.5 million. Other significant areas in which cash was generated (consumed) in 2000 in the balance sheet were through an increase in accounts receivable of $(4.6) million, a decrease in accrued expenses and restructuring costs of $(20.3) million, a decrease in prepaid expenses and other assets of $4.5 million and an increase in deferred income taxes $(9.2) million.

Cash provided by (used in) investing activities

Consolidated investing activities from continuing operations (used) provided cash of approximately $(6.2) million, $(32.5) million and $3.6 million in 2002, 2001 and 2000, respectively. The decrease in cash used in investing activities from continuing operations of $26.3 million from 2001 to 2002 was the result of proceeds from sale of Voicecom of approximately $7.2 million and the decrease in capital expenditures of approximately $11.8 as part of the Company’s continued efforts to expend resources only on necessary expenditures or those with a high probability of economic benefit. The increase in cash used in investing activities of $(36.1) million from 2000 to 2001 is related to decreased proceeds from the sale of marketable securities of $(57.6) million, increased capital expenditures of $(2.8) million, reduced investments in PtekVentures’ portfolio companies of $30.0 million and increased acquisitions of business assets of $(3.3) million.

Cash provided by (used in) financing activities

Consolidated financing activities (used) or provided cash of approximately $(5.9) million, $1.7 million and $(0.6) million in 2002, 2001 and 2000, respectively. The increase in cash used of $(7.5) million from 2001 to 2002 is primarily the result of additional treasury stock purchases of $(3.5) million in 2002, increased payments under borrowing arrangements of $(2.6) million from the term loans at Premiere Conferencing and the decrease in the proceeds from long term borrowings of $(2.5) million as a result of a new $4.0 million loan in 2002 for Premiere Conferencing compared to $6.5 million of borrowings in 2001. The Company’s financing activities increased $2.2 million from 2000 to 2001 primarily due to proceeds from borrowing arrangements of $6.5 million, a decrease in the issuance of notes receivables to shareholders of $2.0 million and a decrease in proceeds from the exercise of stock options of $(6.9) million. Principal payments under borrowing arrangements were primarily attributable to capital lease obligations at Xpedite and an equipment term loan at Premiere Conferencing. Proceeds from borrowing arrangements of $6.5 million are associated with an equipment term loan at Premiere Conferencing. The

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shareholder notes receivable issued during 2001 were for prior years’ taxes on Company stock option exercises by the CEO. In the second quarter of 2000, the Company’s Board of Directors authorized a stock repurchase program under which PTEK may purchase up to 10% of the then outstanding shares of its Common Stock, or approximately 4.8 million shares. During 2002, the Company repurchased approximately 1.8 million shares of its Common Stock under this program for approximately $6.6 million. During 2001, the Company repurchased approximately 1.1 million shares of its Common Stock under this program for approximately $3.1 million. In January 2003, the Company’s Board of Directors approved an increase in its 2000 stock repurchase program by authorizing the repurchase of up to an additional 10% of the Company’s outstanding Common Stock, or approximately 5.3 million additional shares of Common Stock.

EBITDA TO OPERATING CASH FLOW

“EBITDA” is considered a measure of liquidity. Management uses this measure as an indicator of cash generated solely from operating activities and is an important measurement of each business unit’s contribution towards overall liquidity. Further, it provides management with a consistent measurement tool for evaluating the operating activities of a business unit before investing activities, interest and taxes. EBITDA is a non standard accounting term as defined by generally accepted accounting principles in the United States (“GAAP”). Management believes the most directly comparable GAAP financial measure is “net cash provided by operating activities from continuing operations” presented in the Consolidated Statement of Cash Flows. EBITDA is reconciled directly to net cash provided by operating activities from continuing operations below:

	2002			2001			2000
Net cash provided by operating activities from continuing operations	$	37,244		$	29,034		$	7,503
Add:
Gain on sale of marketable securities, available for sale	930			2,971			59,734
Deferred income taxes	(2,516		)	25,241			9,207
Federal income tax receivable	—			9,208			—
Net restructuring costs	1,074			(1,669		)	4,555
Less:
Equity based compensation	(1,871		)	(20,429		)	(2,102		)
Asset impairments	(3,202		)	(100,796		)	(800		)
Asset impairment and obligations – investments	—			(31,695		)	(14,984		)
Non-cash legal settlements and related expenses	(1,310		)	(718		)	(10,516		)
Changes in assets and liabilities:
Accounts receivable, net	2,365			(6,434		)	4,556
Prepaid expenses and other	(3,605		)	(2,879		)	(4,548		)
Accounts payable and accrued expenses	17,716			(620		)	15,741
Add: Interest expense, net	10,028			10,897			10,386
Add: Tax expense (benefit)	1,376			(11,343		)	17,966
EBITDA	$	58,229		$	(99,232	)	$	96,698

Commitments and contingencies

At December 31, 2002, the Company’s had the following contractual obligations. The Company is primarily obligated under capital leases for networking equipment, operating leases for network facilities and operating segment headquarters, convertible subordinated notes due on July 1, 2004, semiannual interest payments on the convertible subordinated notes, a lease guaranty in association with its investment in Webforia, remaining cash payments on prior year acquisitions and telecommunications contractual minimum purchase agreements.

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The following table displays contractual obligations as of December 31, 2002 (in thousands):

	Payments due by period
	Years ended December 31,
Contractual obligation	Total amounts committed		2003		2004		2005		2006		2007		There- after
Capital lease obligations	$	635	$	424	$	211		—		—		—		—
Operating leases	57,745		12,879		11,191		$	10,274	$	8,870	$	6,095	$	8,436
Convertible subordinated notes	172,500		—		172,500		—		—		—		—
Annual interest on convertible subordinated notes	14,878		9,919		4,959		—		—		—		—
Restructuring Costs	1,898		1,898		—		—		—		—		—
United Missouri Bank equipment term loan	3,748		2,811		937		—		—		—		—
Commercial Federal equipment term loan	3,756		1,449		1,449		858		—		—		—
Webforia obligations	2,000		2,000		—		—		—		—		—
Telecommunications supply agreements	25,062		13,657		9,477		1,400		528		—		—
Notes payable	75		75
Acquisitions	214		214
	$	282,511	$	45,326	$	200,724	$	12,532	$	9,398	$	6,095	$	8,436

In addition, subsequent to December 31, 2002 Xpedite acquired substantially all of the assets related to the U.S. based e-mail and facsimile messaging business of Cable & Wireless USA, Inc. (“C&W”), and assumed certain liabilities, for a total purchase price of $11.0 million. The Company paid $6.0 million in cash at closing, and will pay $5.0 million in 16 equal quarterly installments commencing March 31, 2003.

Capital resources

In June 2002, the Company entered into a term equipment loan with Commercial Federal Bank. The loan proceeds of $4.0 million were used for equipment purchases associated with the Premiere Conferencing operating segment. The term of the loan is thirty-six months and the annual interest rate is 5.5%. The loan is collateralized by certain fixed assets of the Company. The loan agreement contains certain covenants that are usual and customary. At December 31, 2002, the Company was in compliance with all covenants under the loan agreement. At December 31, 2002 amounts outstanding on this term loan were $3.5 million.

In September 2001, the Company entered into a term equipment loan with United Missouri Bank. The loan proceeds of $6.5 million were used for equipment purchases associated with the Premiere Conferencing operating segment. The term of the loan is thirty months and the annual interest rate is 6.0%. The loan is collateralized by certain fixed assets of the Company. The loan agreement contains certain covenants that are usual and customary. At December 31, 2002, the Company was in compliance with all covenants under the loan agreement. At December 31, 2002 and 2001, amounts outstanding on this term loan were $3.6 million and $6.1 million, respectively.

In June 2001 the Company entered into a capital lease obligation for headquarter expansion at Xpedite for approximately $1.1 million. The term of the lease is thirty-six months with a yield of 12.75%. At December 31, 2002 and 2001, amounts outstanding on this lease were approximately $0.6 million and $0.9 million, respectively.

In September 2000, the Company entered into a credit agreement (the “Agreement”) for a one-year revolving credit facility with ABN AMRO Bank N.V. (the “Bank” or “Agent”). The Agreement provides for borrowings of up to $20.0 million, and is subject to certain covenants that are usual and customary for credit agreements of this nature. The commitment to provide revolving credit loans under the Agreement terminates 364 days from September 29, 2000, subject to extension. The Company extended the agreement at September 30, 2001 for 364 days. The agreement was amended to provide for borrowings up to $13.5 million and is subject to certain covenants that management believes are usual and customary for credit agreements of this nature. Amounts

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outstanding under the Agreement on the expiration date may, at the option of the Company, either be paid in full or converted to a one-year term loan payable in four equal quarterly installments. Proceeds drawn under the Agreement may be used for capital expenditures, working capital, acquisitions, investments, refinancing of existing indebtedness, and other general corporate purposes. The annual interest rate applicable to borrowings under the Agreement is, at the Company’s option, (i) the Agent’s Base Rate plus 1.25 percent or (ii) the Euro Rate (LIBOR) plus 3.50 percent. Amounts committed but not drawn under the Agreement are subject to a commitment fee equal to 0.50 percent per annum. The Company terminated the Agreement on March 26, 2002 in connection with the sale of its Voicecom business unit.

In July 1997, the Company issued convertible subordinated notes (“Convertible Notes”) of $172.5 million that mature on July 1, 2004 and bear interest at 5-3/4%. The Convertible Notes are convertible at the option of the holder into common stock at a conversion price of $33 per share, through the date of maturity, subject to adjustment in certain events. Beginning in July 2000, the Convertible Notes were redeemable by the Company at a price equal to 103% of the conversion price, declining to 100% at maturity with accrued interest. The annual interest commitment associated with these notes is $9.9 million and is paid semiannually on July 1 and January 1 of each year.

Liquidity

As of December 31, 2002, the Company had $68.8 million of cash and cash equivalents, and $0.6 million of marketable securities available for sale. The Company generated positive operating cash flows from each of its operating segments for the year ended December 31, 2002. Each operating segment had sufficient cash flows from operations to fund capital expenditure requirements and to service existing debt obligations of the Company. Management believes that the Company will generate adequate operating cash flows for capital expenditure needs and contractual commitments for at least the next 12 months.

We cannot assure that we will generate sufficient cash flow from operations to enable us to repay our indebtedness or to fund our other liquidity needs. If we cannot generate sufficient cash flow from operations in the future, we may need to refinance all or a portion of our indebtedness on or before maturity. We will continue to evaluate the most efficient use of our capital, and will likely seek strategic alternatives for portions of our business or a refinancing arrangement to address the maturity of the convertible notes on July 1, 2004. Depending upon market conditions, these alternatives may include purchasing, refinancing or otherwise retiring a portion of the convertible notes in the open market. We cannot assure, however, that we will be able to timely refinance any of our indebtedness, including the convertible notes, on commercially reasonable terms or at all.

Restricted Stock Exchange Offer

Due to declines in the Company’s share price over the course of the last several years, most of the employee and director option holders had options with exercise prices in excess of the market price of Company stock. In order to provide better performance incentives for employees and directors and to align the employees’ and directors’ interests with those of the shareholders, in the fourth quarter of 2001 the Company offered an exchange program in which it granted one restricted share of common stock in exchange for every 2.5 options tendered. Approximately 6.0 million employee and director stock options were exchanged for approximately 2.4 million shares of restricted stock on December 28, 2001, the date of the exchange. The restricted shares maintain the same vesting schedules as those of the original options exchanged, except that in the case of tendered options that were vested on the exchange date, the restricted shares received in exchange therefore vested on the day after the exchange date. To the extent options were vested at the exchange date, the Company recognized equity based compensation expense determined by using the closing price of the Company’s common stock at December 28, 2001, which was $3.32 a share. To the extent that restricted shares were received for unvested options exchanged, this cost was deferred on the balance sheet under the caption “Unearned restricted share compensation.” This value was also determined using the closing price of the Company’s common stock at the date of the exchange. The unearned restricted share compensation will be recognized as equity based compensation expense as these shares vest. In 2002 approximately 402,000 shares vested and equity based compensation expense of $1.3 million was recognized. Assuming all employees at December 31, 2002 will remain employed by the Company through their vesting period, the equity based compensation expense in future years resulting from the restricted shares issued in the option exchange will be $0.4 million in 2003 and $0.2 million in 2004. See further discussion in “Restricted Stock Exchange Offer” section of Note 17—“Equity Based Compensation Plans.”

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In accordance with FASB Interpretation No. 44, “Accounting For Certain Transactions Involving Stock Compensation—An Interpretation of APB Opinion No. 25,” the Company recorded approximately $2.1 million as unearned compensation for the intrinsic value of the restricted stock on the effective date of the exchange offer, calculated using the closing price of the Company’s common stock on December 28, 2001. The unearned compensation will be amortized to “Equity based compensation” expense over the vesting period of the restricted stock, of which approximately $1.3 million vested in 2002.

In addition, approximately 890,000 options at December 31, 2001 that were eligible to be exchanged for restricted stock pursuant to the exchange offer were not tendered. At December 31, 2002 the option count was approximately 627,000 due to the sale of Voicecom and other cancellations of these options. These options will be subject to variable accounting until such options are exercised, are forfeited, or expire unexercised. These options have exercise prices ranging from $5.32 to $29.25. At December 31, 2002 and 2001, no charge was recorded because the exercise price of each of the options was greater than the market value of the Company’s common stock.

Related Party Transactions

The Company has in the past entered into agreements and arrangements with certain officers, directors and principal shareholders of the Company.

Notes receivable – shareholder

The Company has made loans to the CEO of the Company and a limited partnership in which he has an indirect interest. These loans were made pursuant to the CEO’s 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 between 2007 and 2010. These loans, including accrued interest, are recorded in the equity section of the balance sheet under the caption “Notes receivable, shareholder.” At December 31, 2002, the aggregate amount of these loans was $5.0 million.

Notes receivable – employees

During 2002, the Company loaned approximately $2.0 million with recourse to certain members of management to pay taxes in connection with the restricted shares issued in exchange for options in December 2001 and the discretionary restricted shares issued in November 2001. These loans are due in 2012, accrue interest at a weighted average rate of 5.5%, and are secured by the restricted shares granted. The total interest accrued on these loans as of December 31, 2002 was approximately $0.1 million. The Company is obligated to make additional loans to pay taxes associated with the future vesting of restricted shares, but the dollar amount of such loans cannot be determined at this time.

Use of airplane

During 2002, 2001 and 2000, the Company leased the use of an airplane from a limited liability company that is owned 99% by the Company’s CEO and 1% by the Company. In connection with this lease arrangement, the Company has incurred costs of $1.9 million, $2.2 million and $1.8 million in 2002, 2001 and 2000, respectively, to pay the expenses of maintaining and operating the airplane.

Loans associated with restricted shares in former affiliates

During the second quarter of 1999, the Company awarded restricted share grants to the CEO, COO and certain other officers of Company-owned shares held in certain investments in affiliates. For a full discussion of these loans see “Loans and note forgiveness associated with restricted shares in former affiliates and related taxes” under “Equity Based Compensation Charges” in Management’s Discussion and Analysis of Financial Condition and Results of Operations above.

Strategic co-marketing arrangement

The Company had a strategic co-marketing arrangement with WebMD, a former affiliate. The terms of the agreement provided for WebMD to make an annual minimum commitment of $2.5 million for four years to

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purchase the Company’s products. The Company in turn was obligated to purchase portal rights from WebMD for $4.0 million over four years to assist in marketing its products. Under this agreement, which expired on February 17, 2003, the Company recognized revenue of approximately $2.5 million in each of 2002, 2001 and 2000. WebMD also subleased floor space in the Company’s headquarters for approximately $0.7 million in each of the two years ended December 31, 2001 and 2000.

Critical Accounting Policies

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” are based upon the Company’s consolidated financial statements and the notes thereto, which have been prepared in accordance with generally accepted accounting principles in the United States. 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 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, investments, restructuring costs and legal contingencies.

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. There can be no assurance that actual results will not differ from those estimates.

The Company has identified the policies below as critical to its business operations and the understanding of its results of operations. For a detailed discussion on the application of these and other accounting policies, see Note 1 to the Consolidated Financial Statements.

Revenue recognition. The Company recognizes revenues when persuasive evidence of an arrangement exists, services have been rendered, the price to the buyer is fixed or determinable, and collectibility is reasonably assured. Revenues consist of fixed monthly fees and usage fees generally based on per minute or transaction rates. Unbilled revenue consists of earned but unbilled revenue which results from the weekly billing cycle that was implemented at the Premiere Conferencing operating segment during the third quarter of 2002. Deferred revenue consists of payments made by customers in advance of the time services are rendered. The Company’s revenue recognition policies are consistent with the guidance in Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition in Financial Statements,” as amended by SAB No. 101A and 101B.

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, the Company makes a decision that collectibility is reasonably assured. Over time, management analyzes accounts receivable balances, historical bad debts, customer concentrations, customer creditworthiness, current economic trends, and changes in the Company’s customer payment terms and 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 $51.9 million and $58.6 million, net of allowance for uncollectible accounts receivable of $7.1 million and $8.3 million, as of December 31, 2002 and 2001, respectively.

If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment to their ability to make payments, additional allowances may be required.

Goodwill and other intangible assets. Purchase accounting requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair market value of the assets and liabilities purchased. The Company evaluates acquired businesses 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;

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

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•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 the Company’s 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.

In 2002, Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” became effective and as a result, the Company ceased to amortize approximately $123.1 million of goodwill. The Company recorded approximately $67.4 million of goodwill amortization during 2001. In lieu of amortization, the Company is required to perform an initial impairment review of its goodwill in 2002 and an annual impairment review thereafter. A third party review was completed in the fourth quarter of 2002 and no impairment was identified. Other intangible assets with finite lives that do not meet the criteria of SFAS No. 142 continue to be amortized in accordance with the adoption of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This pronouncement became effective in 2002. The Company recognizes 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 estimated future cash flows compared to the carrying value of the long-lived asset.

Prior to 2002, when the Company determined that the carrying value of long-lived assets, intangibles and related goodwill may not have been recoverable in accordance with the indicators of impairment, as stated in SFAS No. 121 “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of” the Company recognized an impairment loss when the sum of undiscounted expected future cash flow was less than the carrying value of such assets. The impairment loss, if applicable, was calculated based on the fair value or sum of the discounted cash flows compared to the carrying value. The discounted cash flow method uses a discount rate determined by management to be commensurate with the risk inherent in the Company’s business model.

See the “Asset impairments” section of “Management’s Discussion and Analysis” above for a discussion of impairments recorded during 2002 and 2001. Net intangible assets, long-lived assets and goodwill amounted to $130.9 million and $144.9 million as of December 31, 2002 and 2001, respectively.

Future events could cause the Company to conclude that the current estimates used should be changed and that goodwill associated with acquired businesses is impaired. Any resulting impairment loss could have a material adverse impact on the Company’s financial condition and results of operations.

Income taxes. As part of the process of preparing the Company’s consolidated financial statements the Company is required to estimate its taxes in each of the jurisdictions of operation. This process involves management estimating the 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 within the consolidated balance sheets. The Company 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, the Company must establish a valuation allowance. To the extent the Company establishes a valuation allowance or increases this allowance in a period, an expense is recorded within the tax provision in the consolidated statement of operations.

Significant management judgment is required in determining the Company’s provision for income taxes, its deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. The net deferred tax asset as of December 31, 2002 and 2001 was $22.4 million and $20.7 million, net of a valuation allowance of $5.2 million and $28.2 million, respectively. The Company has recorded the valuation allowance due to uncertainties related to its ability to utilize some of the deferred tax assets, primarily consisting of certain net operating losses carried forward and foreign tax credits, before they expire. The valuation allowance is based on the Company’s estimates of taxable income by jurisdiction in which it operates and the period over which the deferred tax assets will be recoverable.

In the event that actual results differ from these estimates or the Company adjusts these estimates in future periods, the Company may need to establish an additional valuation allowance that could materially impact the Company’s financial condition and results of operations.

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The Company also records a provision for certain international, federal and state tax contingencies based on the likelihood of obligation, when needed. In the normal course of business, the Company is subject to challenges from U.S. and non-U.S. tax authorities regarding the amount of 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 changing facts and circumstances may impact the Company’s ability to utilize tax benefits as well as the estimated taxes to be paid in future periods. Management believes it has appropriately accrued for tax exposures. If the Company is required to pay an amount less than or exceeding its 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 from these estimates, the Company may need to adjust tax accounts which could materially impact its financial condition and results of operations.

Investments. The Company has historically made investments in various companies that are engaged in emerging technologies related to the Internet. Either the cost or equity method is used to account for these investments in accordance with Accounting Principles Board (“APB”) Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock.” In addition, the Company has investments in equity securities of companies with readily determinable fair values accounted for in accordance with FASB SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” SFAS No. 115 mandates that a determination be made of the appropriate classification for equity securities with a readily determinable fair value and all debt securities at the time of purchase and re-evaluation of such designation as of each balance sheet date.

The Company records an investment impairment charge when it believes an investment has experienced a decline in value that is other than temporary. See the “Asset impairments and obligations – investments” section of Management’s Discussion and Analysis” above for a discussion of investment impairments recorded during 2001 and 2000. Total investments, in the form of marketable securities available for sale, as of December 31, 2002 and 2001 were $0.6 million and $1.5 million, respectively.

Future adverse changes in market conditions could result in losses or an inability to recover the carrying value of the investments that may not be reflected in an investment’s current carrying value, thereby possibly requiring an impairment charge in the future.

Restructuring costs. The restructuring accruals are based on certain estimates and judgments related to contractual obligations and related costs. The restructuring accruals related to contractual lease obligations could be materially affected by factors such as the Company’s 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, the Company may need to establish additional restructuring accruals or reverse accrual amounts accordingly.

Legal contingencies. The Company is currently involved in certain legal proceedings as disclosed in Item 3, “Legal Proceedings,” of this report. Management has accrued an estimate of the probable costs for the resolution of these claims. This estimate has been developed in consultation with outside counsel handling these matters and is based upon an analysis of potential results, assuming a combination of litigation and settlement strategies.

The Company does not believe these proceedings will have a material adverse effect upon the Company’s business, financial condition or results of operations, although no assurance can be given as to the ultimate outcome of any such proceedings.

The above listing is not intended to be a comprehensive list of all of the Company’s estimates and judgments or accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles, with no need for management’s judgment in their application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. These estimates are subject to change and the Company adjusts the financial impact in the period in which they are resolved. See the audited consolidated financial statements and notes thereto which contain accounting policies and other disclosures required by generally accepted accounting principles.

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New Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities.” This interpretation of Accounting Research Bulletin 51, “Consolidated Financial Statements,” addresses consolidation by business enterprises of variable interest entities that possess certain characteristics. The interpretation requires that if a business enterprise has a controlling financial interest in a variable interest entity, the assets, liabilities, and results of the activities of the variable interest entity must be included in the consolidated financial statements with those of the business enterprise. This interpretation applies immediately to variable interest entities created after January 31, 2003 and to variable interest entities in which an enterprise obtains an interest after that date. We do not have any ownership in any variable interest entities as of December 31, 2002. We will apply the consolidation requirement of the interpretation in future periods if we should own any interest in any variable interest entity.

In November 2002, the FASB issued FASB Interpretation No. 45 (“FIN 45”), Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB interpretation No. 34. The disclosure provisions of the interpretation are effective for financial statements of interim or annual periods that end after December 15, 2002. However, the provisions for initial recognition and measurement are effective on a prospective basis for guarantees that are issued or modified after December 31, 2002, irrespective of a guarantor’s year-end.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (SFAS No. 146), which addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)” (EITF 94-3). The principal difference between SFAS No. 146 and EITF 94-3 relates to SFAS No. 146 requirements for recognition of a liability for a cost associated with an exit or disposal activity. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF 94-3, a liability for an exit cost as generally defined in EITF 94-3 was recognized at the date of an entity’s commitment to an exit plan. The Company will be required to adopt SFAS No. 146 for the fiscal year beginning January 1, 2003, and is currently evaluating this standard and the impact it will have on the consolidated financial statements.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock Based Compensation - Transition and Disclosure” (“SFAS No. 148”), which amends SFAS No. 123, “Accounting for Stock Based Compensation” (“SFAS No. 123”). SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock based employee compensation. SFAS No. 148 also requires that disclosures of the pro forma effect of using the fair value method of accounting for stock based employee compensation be displayed more prominently and in a tabular format. Additionally, SFAS No. 148 requires disclosure of the pro forma effect in interim financial statements. See “Equity Based Compensation Plans” section of Note 2—”Significant Accounting Policies” for the additional annual disclosures made to comply with SFAS No. 148. The interim disclosure provisions are effective for financial reports containing financial statements for interim periods beginning after December 15, 2002. As the Company does not intend to adopt the provisions of SFAS No. 123, the Company does not expect the transition provisions of SFAS No. 148 to have a material effect on its results of operations or financial condition.

In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements Nos. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (“SFAS No. 145”). Among other things, this statement rescinds SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt” (SFAS No. 4), which required all gains and losses from extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of the related income tax effect. As a result, the criteria in Accounting Principles Board Opinion No. 30, “Reporting the Results of Operations – Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions,” which requires gains and losses on extinguishments of debt to be classified as income or loss from continuing operations, will now be applied. The Company will be required to adopt SFAS No. 145 for the fiscal year beginning January 1, 2003, and is currently evaluating this standard and the impact it will have on the consolidated financial statements.

In October 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long- Lived Assets” (“SFAS No. 144”). SFAS No. 144 establishes accounting and reporting standards for the impairment and disposition of long- lived assets, and is effective for financial statements issued for fiscal years beginning after

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December 15, 2001. The Company adopted SFAS No. 144 for the fiscal year beginning January 1, 2002.

In August 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” It addresses accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The liability is accreted to its present value each period while the cost is depreciated over its useful life. SFAS No. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. The Company adopted SFAS No. 143 for the fiscal year beginning January 1, 2002.

In June 2001, the FASB issued SFAS No. 142, “Accounting for Goodwill and Other Intangible Assets” (“SFAS No. 142”). It requires that goodwill and certain intangible assets will no longer be subject to amortization, but instead will be subject to a periodic impairment assessment by applying a fair value based test. The Company’s required adoption date is January 1, 2002. Adoption of SFAS No. 142 will have a material effect on the Company’s results of operations due to the cessation of goodwill amortization on January 1, 2002. The balance of goodwill is $123.1 million as of December 31, 2002 and 2001. The Company adopted SFAS No. 142 for the fiscal year beginning January 1, 2002.

Subsequent Events

On January 16, 2003, Xpediteacquired substantially all of the assets related to the U.S. based e-mail and facsimile messaging business of Cable & Wireless USA, Inc. (“C&W”), and assumed certain liabilities, for a total purchase price of $11.0 million. The Company paid $6.0 million in cash at closing, and will pay $5.0 million in 16 equal quarterly installments commencing March 31, 2003. Currently, approximately $10.0 million of the aggregate purchase price has been allocated to identifiable customer lists with the remaining balance of $1.0 million allocated to goodwill. The Company is in the process of completing a third-party valuation of certain intangible assets which could result in changes to the preliminary allocation of the purchase price.

On February 27, 2003, the Company entered into a Share Purchase Agreement and Note Purchase Agreement with AT&T Corp. (“AT&T”) pursuant to which the Company has agreed to purchase from AT&T, and AT&T has agreed to sell to the Company, 1,423,980 shares of the Class A Common Stock (the “Shares”) and a Promissory Note of EasyLink Services Corporation (NASDAQ: EASY) (“EasyLink”) in the stated principal amount of $10.0 million (the “Note”). The obligation of each party to consummate the transactions contemplated by each such purchase agreement is conditioned upon, among other things, the satisfaction or waiver of the conditions to such party’s obligation to consummate the transactions contemplated by the other purchase agreement.

The Note is secured by assets representing the substantial portion of EasyLink’s operations. Principal and accrued interest on the Note, aggregating over $12.0 million, is payable in 13 quarterly installments beginning June 1, 2003. The principal and accrued interest obligations bear interest at a rate of 12% per annum until paid. The shares to be purchased represent approximately 8.9% of the outstanding Class A common shares and 8.4% of the total outstanding common shares of EasyLink.

As consideration for the sale of the Shares and the Note, the Company has agreed to pay AT&T $4.0 million in cash and to issue to AT&T a warrant to acquire 250,000 shares of the Common Stock of the Company. The warrant will be exercisable at any time during the seven years following the date of issuance, at an exercise price to be determined on the basis of trading prices of the Company’s Common Stock during the ten trading days prior to the issuance of the warrant. The aggregate purchase price for the Shares, as set forth in the Share Purchase Agreement, is $825,908, or $0.58 per share, which amount equals the average of the high and low selling price of the Class A Common Stock on the Nasdaq National Market during the five trading days immediately preceding the date of the Share Purchase Agreement. Despite the Share Purchase Agreement stating such separate purchase price for the Shares, the Company views its purchase of the Shares and the Note as a single transaction, for the total consideration set forth above. The cash consideration for the purchase of the Shares and the Note will be paid out of the working capital of PTEK.

On March 3, 2003, EasyLink demanded that the Company and AT&T terminate their agreements for the purchase and sale of the Note and the Shares. In connection with such demand, EasyLink has asserted that AT&T and PTEK may have violated commitments of AT&T and the Company to EasyLink and that the Company has engaged in certain improper activities with respect to EasyLink and in connection with the transaction. The

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Company considers these allegations to be groundless and has denied each of them. PTEK expects to consummate the purchase of the Note and Shares, subject to the conditions set forth in the respective purchase agreements.

On March 25, 2003, EasyLink filed a lawsuit against the Company, Xpedite and AT&T. See Item 3— “Legal Proceedings” for a detailed discussion of this litigation.

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RISK FACTORS AFFECTING FUTURE PERFORMANCE

YOU SHOULD CAREFULLY CONSIDER THE RISKS AND UNCERTAINTIES WE DESCRIBE BELOW BEFORE INVESTING IN PTEK. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY RISKS AND UNCERTAINTIES THAT COULD DEVELOP. OTHER RISKS AND UNCERTAINTIES THAT WE HAVE NOT PREDICTED OR EVALUATED COULD ALSO AFFECT OUR COMPANY. IF ANY OF THE FOLLOWING RISKS OCCUR, OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE MATERIALLY AFFECTED, AND THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, RESULTING IN THE LOSS OF ALL OR PART OF YOUR INVESTMENT.

Risks Related to Our Industry

The markets for our products and services are intensely competitive and we may not be able to compete successfully against existing and future competitors, which may make it difficult to maintain or increase our market share and revenue.

The markets for our products and services are intensely competitive and we expect competition to increase in the future. Many of our current and potential competitors have longer operating histories, greater name recognition, more robust product 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 product and service offerings and new competitors are likely to enter our markets. Acquisitions or strategic alliances, including those among existing and new competitors or their attempts to integrate their products and services may result in greater competition. 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 revenue.

The development of alternatives to our products and services may cause us to lose customers and market share and may hinder our ability to maintain or grow our revenue.

The market for our products and services is characterized by rapid technological change, frequent new product introductions and evolving industry standards. We expect new products and services, and enhancements to existing products and services, to be developed and introduced that will compete with our products and services. Technological advances may result in the development and commercial availability of alternatives to our products and services or new methods of delivering our products and services. Companies may develop and offer product features, service offerings or pricing options which are more attractive to customers than those currently offered by us. These new products or services, or methods of delivering these products or services, could among other things:

•cause our existing products and services to become obsolete;

•be more cost-effective, which could result in significant pricing pressure on our products and services; or

•allow our existing and potential customers to meet their own telecommunications needs without using our services.

Technological changes that make our products obsolete, or changes in technology that allow competitors to offer products and services that replace our existing products and services, could cause us to lose customers, market share and revenue.

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If new products and services that we develop and introduce are not accepted in the marketplace, we may lose market share and our revenue may decrease.

We must continually introduce new products and services in response to technological changes, evolving industry standards and customer demands for enhancements to our existing products and services. We will not be able to increase our revenue if we are unable to develop new products and services, we experience delays in the introduction of new products and services, or our new products and services do not achieve market acceptance. Our ability to successfully develop and market new products and services and enhancements that respond to technological changes, evolving industry standards or customer demands, is dependent on our ability to:

•anticipate changes in industry standards;

•anticipate and apply advances in technologies;

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

•attract and retain qualified and creative technical personnel;

•develop effective marketing, pricing and distribution strategies for new products and services; and

•avoid difficulties that could delay or prevent the successful development, introduction and marketing of new products and services or enhancements.

We are subject to pricing pressures for our products and services, which could cause us to lose market share and revenue.

We compete for consumers based on price. A decrease in the rates charged for communications services by our competitors could cause us to reduce the rates we charge for our products and services. 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 revenue could decrease.

Consolidation in the telecommunications industry could lead to pricing pressure on our products and services and could be disruptive to our licensing and strategic relationships.

The telecommunications industry has experienced, and we believe it will continue to experience, consolidation. Consolidation in the telecommunications industry, including consolidations involving our customers, competitors and strategic partners, could lead to pricing pressure on our products and services and could result in increased costs.

Continuing softness in the economy is having a disproportionate effect on the telecommunications industry.

The downturn in general economic conditions, particularly in the telecommunications services industry, has forced several of our customers and suppliers, including WorldCom and Global Crossing, to file for protection from creditors under the United States Bankruptcy Code or to reconfigure their capital structure. Some of these companies had significant debt servicing requirements and were unable to generate sufficient cash from operations to both service their debt and to maintain their business operations. We believe that we use reasonable measures to determine the financial condition of potential and existing customers and suppliers. However, there can be no assurance that our customers or suppliers will remain financially viable, or that the measures we follow will be effective. If general economic conditions in the United States remain at current levels for an extended period of time or worsen, our business could be adversely affected.

Risks Related to Our Company

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

Market acceptance of our new products and services often requires that individuals and enterprises accept new ways of communicating and exchanging information. A decline in the demand for, or the failure to achieve

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broad market acceptance of, our new products and services could hinder our ability to maintain and increase our revenue. We believe that broad market acceptance of our new products and services will depend on several factors, including:

•ease of use;

•price;

•reliability;

•access and quality of service;

•system security;

•product functionality; and

•the effectiveness of strategic marketing and distribution relationships.

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

Concerns regarding security of transactions and transmitting confidential information over the Internet may have an adverse impact on the market acceptance of our Web-enabled products and services.

The concern regarding the security of confidential information transmitted over the Internet may prevent many potential customers from using Internet related products and services. If our Web-enabled services, such as messageREACH, do not include sufficient security features, our Web-enabled products and services may not gain market acceptance, or there may be additional legal exposure. Despite the measures we have taken, our infrastructure is potentially vulnerable to physical or electronic break-ins, viruses or similar problems. If a person circumvents our security measures, he or she could misappropriate proprietary information or cause interruption in our operations. Security breaches that result in access to confidential information could damage our reputation and expose us to a risk of loss or liability. We may be required to make significant investments in efforts to protect against and remedy these types of security breaches. Additionally, as electronic commerce becomes more widespread, our customers will become more concerned about security. If we are unable to adequately address these concerns, we may be unable to sell our Web-enabled products and services.

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

Quarterly revenue is difficult to forecast because the market for our services is rapidly evolving. Our expense levels are based, in part, on our expectations as to future revenue. If revenue levels are below expectations, we may be unable or unwilling to reduce expenses proportionately and operating results would likely be adversely affected. 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. Due to all of the risk factors listed herein, it is likely that in some future quarter our operating results will be below the expectations of public market analysts and investors. In this event, the market price of our common stock will likely decline.

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:

•the unique nature of strategic relationships into which we may enter in the future;

•the financial performance of our strategic partners;

•changes in operating expenses;

•the reliability and performance of our products and services;

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•the timing of new product and service announcements;

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

•the success or failure of past or potential future acquisitions;

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

•general economic and seasonal factors.

Our debt could harm our liquidity and ability to obtain additional financing, and could make us more vulnerable to economic downturns and competitive pressures. To service our debt, we will require a significant amount of cash, and our ability to generate cash depends on many factors beyond our control.

In 1997, we incurred $172.5 million in indebtedness by issuing convertible notes to the public. We have significant interest payment obligations as a result of the convertible notes, and the convertible notes will mature on July 1, 2004, at which time the full amount of the principal will be due. In addition to the convertible notes, at December 31, 2002 the Company had $7.7 million outstanding under its various credit facilities.

Our debt could inhibit our ability to obtain additional financing for working capital, capital expenditures, interest payments, acquisitions or other purposes and could make us more vulnerable to economic downturns and competitive pressures. Our debt could also harm our liquidity, because a substantial portion of available cash from operations may have to be applied to meet debt service requirements. In the event of a cash shortfall, we could be forced to reduce other expenditures and forego potential acquisitions and investments to be able to meet these debt repayment requirements.

Our ability to make payments on and to refinance our indebtedness and other liquidity needs will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

Based upon current levels of operations and continued cost saving measures, we believe that cash flow from operations and other sources of liquidity will be adequate to meet our anticipated requirements for working capital, capital expenditures, interest payments, acquisitions and other purposes for at least the next 12 months. There can be no assurance, however, that our business will continue to generate cash flows from operations at or above current levels or that anticipated cost savings will be realized.

We cannot assure that we will generate sufficient cash flow from operations to enable us to repay our indebtedness or to fund our other liquidity needs. If we cannot generate sufficient cash flow from operations in the future, we may need to refinance all or a portion of our indebtedness on or before maturity. We will continue to evaluate the most efficient use of our capital, and we will likely seek strategic alternatives for portions of our business or a refinancing arrangement to address the maturity of the convertible notes on July 1, 2004. Depending upon market conditions, these alternatives may include purchasing, refinancing or otherwise retiring a portion of the convertible notes in the open market. We cannot assure, however, that we will be able to timely refinance any of our indebtedness, including the convertible notes, on commercially reasonable terms or at all.

We do not typically have long-term contractual agreements with our customers and our customers may not transact business with us in the future.

We expect that the information and telecommunications services markets will continue to attract new competitors and new technologies, possibly including alternative technologies that are more sophisticated and cost effective than our technologies. We do not typically have long-term contractual agreements with our customers, and our customers may not continue to transact business with us in the future if, among other things, any of the following occur:

•our products and services become obsolete;

•competitors develop products and services that are more sophisticated, efficient or cost-effective; or

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•technological advances allow our customers to satisfy their own telecommunications needs.

One of our customers accounts for a significant amount of revenues and any loss of business from that customer may hurt our financial performance and cause our stock price to decline.

Premiere Conferencing has historically relied on sales through a particular customer, IBM, for a significant portion of its revenues. Sales to that customer accounted for approximately 12% of consolidated revenues from continuing operations (29% of Premiere Conferencing’s revenues) in 2002, 10% of consolidated revenues from continuing operations (29% of Premiere Conferencing’s revenues) in 2001, and 5% of consolidated revenues from continuing operations (22% of Premiere Conferencing’s revenues) in 2000. Premiere Conferencing’s relationship with that customer may not continue at historical levels, and there is no long-term price protection for services provided to that customer. A loss in revenues from that customer or diminution in the relationship with that customer, or a decrease in average sales price without an offsetting increase in volume, could have a material adverse effect on the Company’s business, financial condition and results of operations.

If we do not attract and retain highly qualified and creative technical and support personnel we may not be able to sustain or grow our business.

We believe that to be successful we must hire and retain highly qualified and creative engineering, product development and customer support personnel. Competition in the recruitment of highly qualified and creative personnel in the information and telecommunications services industry is intense. We have in the past experienced, and we expect to continue to experience, difficulty in hiring and retaining highly skilled technical employees with appropriate qualifications. We may not be able to retain our key technical employees and we may not be able to attract qualified personnel in the future. If we are not able to locate, hire and retain qualified technical personnel, we may not be able to sustain or grow our business.

Our business may suffer if we do not retain the services of our chief executive officer.

We believe that our continued success will depend to a significant extent upon the efforts and abilities of Boland T. Jones, our Chairman and Chief Executive Officer. The familiarity of Mr. Jones with the markets in which we compete and emerging technologies, such as the Internet, makes him especially critical to our success. We maintain key man life insurance on Mr. Jones in the amount of $3.0 million.

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

We currently maintain facilities with telecommunications equipment that routes telephone calls and computer telephony equipment in locations throughout the world. The delivery of our products and services is dependent, in part, upon our ability to protect the equipment and data at our facilities with telecommunications equipment that routes telephone calls 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 and we may experience downtime in the future. These types of service interruptions could result in the loss of significant customers, which could cause us to lose revenue. 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 backup 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. We also maintain business interruption insurance providing for aggregate coverage of approximately $115 million per policy year. However, we may not be able to maintain this insurance in the future, it may not continue to be available at reasonable prices, and it may not be sufficient to compensate us for losses that we experience due to our inability to provide services to our customers.

If we fail to predict growth in our network usage and add needed capacity, the quality of our service offerings may suffer.

As network usage grows, we will need to add capacity to our hardware, software and facilities with telecommunications equipment that route telephone calls. This means that we continuously attempt to predict growth in our network usage and add capacity accordingly. If we do not accurately predict and efficiently manage

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growth in our network usage, the quality of our service offerings may suffer and we may lose customers.

Our inability to efficiently utilize or renegotiate minimum purchase requirements in our long-distance 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. Contracts with some of our telecommunications service providers contain minimum purchase requirements through 2006. In addition, certain circuits that we purchase are subject to term requirements, including penalties for early termination of such circuits. The total amount of the minimum purchase requirements in 2002 was approximately $9.1 million, and we incurred metered telecommunications costs in excess of these minimums. It is possible that other suppliers may provide similar services at lower prices and we may not be able to renegotiate our current supply agreements to achieve comparable lower rates. Further, we can give no assurance that we will be able to utilize the minimum amount of services that we are required to purchase under these agreements. 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 running 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.

Software failures or errors may result in failure of our platforms and/or networks, which could result in increased costs and lead to interruptions in our services and losses of significant customers and revenue.

The software that we have developed and utilize in providing our products and services may contain undetected errors. Although we generally engage in extensive testing of our software prior to introducing the software onto any of our networks and/or product equipment, errors may be found in the software after the software goes into use. Any of these errors may result in partial or total failure of our networks, additional and unexpected expenses to fund further product development or to add programming personnel to complete a development project, and loss of revenue because of the inability of customers to use our networks or the cancellation of services by significant customers. We maintain technology errors and omissions insurance coverage of $50.0 million per policy aggregate. However, we may not be able to maintain this insurance or it may not continue to be available at reasonable prices. Even if we maintain this insurance, it may not be sufficient to compensate us for losses we experience due to our inability to provide services to our customers.

Interruption in long distance telecommunications services could result in service interruptions and a loss of significant customers and revenue.

Our ability to maintain and expand our business depends, in part, on our ability to continue to obtain telecommunications services on favorable terms from long distance carriers. We do not own a transmission network. As a result, we depend on WorldCom, AT&T and other long distance carriers for transmission of our customers’ long distance calls. These long distance telecommunications services generally are procured under supply agreements with multiyear terms, some of which are subject to various early termination penalties and minimum purchase requirements. We have not experienced significant losses in the past due to interruptions of long-distance service, but we might experience these types of losses in the future.

The partial or total loss of our ability to receive or terminate telephone calls could result in service interruptions and a loss of significant customers and revenue.

We depend on local phone companies that provide local transmission services, known as local exchange carriers, for call origination and termination. The partial or total loss of the ability to receive or terminate calls could result in service interruptions and a loss of significant customers and revenue. We have not experienced significant losses in the past due to interruptions of service at terminating carriers, but we might experience these types of losses in the future.

If we have to change our network transmission provider, we could experience interruptions in our services and increased costs, which could cause us to lose customers.

We lease capacity on the WorldCom communications network to provide network connections and data transmission services. Our telecommunications agreement with WorldCom expires on December 31, 2004. Our ability to maintain network connections is dependent upon our access to transmission facilities provided by WorldCom or an alternative provider. We may not be able to continue our relationship with WorldCom beyond the

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terms of our current agreements and we may not be able to find an alternative provider on terms as favorable as those offered by WorldCom or on any other terms. If we have to change our network transmission provider, we could experience interruptions in our service and/or increased costs, which could adversely affect our customer relationships and customer retention.

Our inability to resolve pending billing disputes with WorldCom could result in significant costs or service disruptions.

We purchase telecommunications and other network services from WorldCom under numerous transmission agreements. Currently, we have several significant outstanding disputes with WorldCom regarding the charges billed by WorldCom under those agreements. On July 21, 2002, WorldCom and certain of its subsidiary corporations filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. The Bankruptcy Code entitles a debtor to accept or reject “executory” contracts, that is contracts where some future act remains to be done, as in the case of our agreements with WorldCom to purchase transmission and other network services. A party to a rejected contract may be entitled to damages from the debtor for breach of contract; however, such a claim would likely be an unsecured claim. No assurance can be given that we will be able to resolve our billing disputes with WorldCom, that WorldCom will accept, reject or request to renegotiate our existing agreements, or that we will be successful in asserting any rights of set-off against amounts due to us from WorldCom. If we are unable to resolve our billing dispute with WorldCom or if WorldCom rejects certain of our agreements, we could experience increased costs and/or interruptions in our service, which could adversely affect our business.

Any significant difficulty in obtaining equipment could lead to interruption in service and loss of customers and revenue, and technological obsolescence of our equipment could result in substantial capital expenditures.

We do not manufacture equipment used in providing our products and services, and this equipment is currently available from a limited number of sources. Although we have not historically experienced any significant difficulty in obtaining equipment required for our operations and believe that viable alternative suppliers exist, shortages may arise in the future or alternative suppliers may not be available. Our inability to obtain equipment in the future could result in delays or reduced delivery of messages, which could lead to a loss of customers and revenue. In addition, 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.

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

We adopted SFAS No. 142, “Accounting for Goodwill and Other Intangible Assets,” effective January 1, 2002. With the adoption of SFAS No. 142, we will cease to amortize approximately $123.1 million of goodwill. In lieu of amortization, we were required to perform an initial impairment review of our goodwill in 2002 and will be required to perform an annual impairment review thereafter. The review in 2002 resulted in an impairment of certain other intangible assets at Xpedite of approximately $3.2 million. Subsequent reviews could result in impairment write-downs to goodwill and/or other intangible assets. At December 31, 2002, the Company had $7.8 million of other intangible assets reflected on our financial statements for which amortization will continue.

We could be required to make payments in the future in connection with the sale of our Voicecom business unit.

In connection with the sale of our Voicecom business unit in March 2002, we agreed to retain certain liabilities relating to our operation of the unit prior to the closing of the transaction, including liabilities for certain taxes, contingent liabilities, litigation claims, and unknown liabilities (the “Excluded Liabilities”). As a result, we could incur a liability in the future related to the Excluded Liabilities. In addition, pursuant to the transaction, the buyer assumed or subleased substantially all of the real estate utilized in our Voicecom business. The buyer also committed to buy certain telecommunications and other services and to manage and utilize certain regulated and other assets held by our Voicecom operating subsidiaries. An affiliate of the buyer guaranteed the timely payment of a substantial portion of these Voicecom liabilities. Of the Voicecom liabilities, approximately $4.3 million represents capital leases guaranteed by us. Accordingly, in the event the buyer or buyer’s affiliate fails to make payments as required, we could be required to make significant payments in the future.

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Our Articles of Incorporation and Bylaws and Georgia corporate law may inhibit a takeover, which may not be in the interests of shareholders.

There are several provisions in our Articles of Incorporation and Bylaws and 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 PTEK by means of a tender offer, merger, proxy contest or otherwise. Our Articles of Incorporation also divide the Board of Directors into three classes, as nearly equal in size as possible, with staggered three-year terms. The classification of the Board of Directors could make it more difficult for a third party to acquire control of PTEK because only one-third of the Board is up for election each year. We are also subject to provisions of the Georgia Business Corporation Code 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 of Incorporation permit our Board of Directors and the committees and individual members of the Board to consider the interests of various constituencies, including employees, customers, suppliers, and 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 is believed to be our best interests.

Our rights plan may also inhibit a takeover, which may not be in the interests of shareholders.

In June 1998, our Board of Directors declared a dividend of one preferred stock purchase right for each outstanding share of common stock. Each right entitles the registered holder to purchase one one-thousandth of a share of Series C junior participating preferred stock at a price of sixty dollars per one-thousandth of a Series C preferred share, subject to adjustment. The rights may have anti-takeover effects because they will cause substantial dilution to a person or group that attempts to acquire us on terms not approved by our Board of Directors. However, the rights should not interfere with any merger, statutory share exchange or other business combination approved by the Board of Directors since the rights may be terminated by the board of directors at any time on or prior to the close of business ten business days after announcement by us that a person has become an acquiring person. The rights are intended to encourage persons who may seek to acquire control of us to initiate an acquisition through negotiations with the board of directors. However, the effect of the rights may be to discourage a third party from making a partial tender offer or otherwise attempting to obtain a substantial equity position in the equity securities of, or seeking to obtain control of, us.

Risks Related to Past Acquisitions

If we cannot successfully integrate and consolidate the operations of acquired businesses into our operations, we may not realize sufficient cost savings and economies-of-scale.

We are continuing to integrate the operations of acquired businesses by attempting to eliminate duplicative and unnecessary costs. The successful integration and consolidation of the operations of acquired businesses into our operations is critical to our future performance. If we cannot successfully integrate and consolidate the operations of acquired businesses with our operations on schedule or at all, these acquisitions may not result in sufficient cost savings or economies-of-scale and operational synergies may not develop. Potential challenges to the successful integration and consolidation of the operations of acquired businesses include:

•consolidation of service centers and work forces;

•elimination of unnecessary costs; and

•integration and retention of new personnel.

If we cannot successfully integrate technologies, products, services and systems from acquired businesses with ours, we may not generate sufficient revenue and operational synergies may not develop.

We are continuing to integrate previously acquired technologies, products, service offerings and systems. We have experienced and may continue to experience difficulty integrating incompatible systems of acquired

46

businesses into our networks. As a result, our integration plans may materially change in the future. If we cannot successfully integrate technologies, products, services and systems from acquired businesses with ours, we may not generate sufficient revenue and operational synergies may not develop. Challenges to the successful integration of acquired technologies, products, service offerings and systems include, among other things, the following:

•localization of our products and services;

•integration of technologies, telecommunications equipment and networks;

•cross-selling of products and services to our customer base and customer bases of acquired businesses; and

•compliance with regulatory requirements.

Risks Related to Possible Future Acquisitions

We may decide to pursue future acquisitions and we may face risks in acquiring and integrating other businesses, products and technologies.

We may decide to pursue future acquisitions of businesses, products and technologies that we believe will complement our business. As a result, we regularly evaluate acquisition opportunities, frequently engage in acquisition discussions, conduct due diligence activities in connection with possible acquisitions, and, where 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 the company and investors, including:

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

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

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

•potentially dilutive issuances of equity securities;

•the assumption of known and unknown liabilities; and

•adverse financial impact from the write-off of software development costs and the amortization of expenses related to goodwill and other intangible assets.

If we fail to assimilate and retain key employees of future businesses that we acquire, it could jeopardize the success of the acquisition.

Assimilation and retention of the key employees of an acquired company are generally important to the success of an acquisition. If we fail to assimilate and retain any key employees of any business we acquire, the acquisition may not result in revenue growth, operational synergies or product and service enhancements, which could jeopardize the success of the acquisition.

Future acquisitions may involve restructuring and other special charges, which may cause our financial performance to suffer during the period in which the charge is taken.

We have taken, and in the future may take, charges in connection with acquisitions, which may cause our financial performance to suffer during the period in which the charge is taken. In addition, the costs and expenses incurred may exceed the estimates upon which these charges are based.

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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 intellectual property laws and contractual provisions to protect our proprietary rights and technology, brand and marks. These laws and contractual provisions provide only limited protection of our proprietary rights and technology. If we are not able to protect our intellectual property and our proprietary rights and technology, we could lose those rights and incur substantial costs policing and defending those rights. Our proprietary rights and technology include confidential information and trade secrets that we attempt to protect through confidentiality and nondisclosure provisions in our licensing, services, reseller and other agreements. We typically attempt to protect our confidential information and trade secrets through these contractual provisions for the term of the applicable agreement and, to the extent permitted by applicable law, for some negotiated period of time following termination of the agreement, typically one to two years at a minimum. Our means of protecting our intellectual property, proprietary rights and technology may not be adequate and our competitors may independently develop similar technology. In addition, the laws of some foreign countries do not protect our proprietary rights to as great an extent as the laws of the U.S. Furthermore, some of our systems, such as those used in our document distribution business are not proprietary and, as a result, this information may be acquired or duplicated by existing and potential competitors.

If claims alleging patent, copyright or trademark infringement are brought against us and successfully prosecuted against us, it 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 been and expect to continue to be, subject to third party claims that our current or future products or services infringe the patent, copyright or trademark rights or other intellectual property rights of third parties. Claims alleging patent, copyright or trademark infringement may be brought against us with respect to current or future products or services. If these types of actions or claims are brought we may not ultimately prevail 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 products and services or enhancements,

•result in costly royalty or licensing agreements; or

•cause us to discontinue use of the challenged technology, tradename or service mark at potentially significant expense associated with the marketing of a new name or the development or purchase of replacement technology.

Examples of prior and current infringement claims include the following:

In February 1997, we entered into a long-term nonexclusive license agreement with AudioFAX IP LLC settling a patent infringement suit filed by AudioFAX in June 1996. Effective April 1, 1998, this initial license agreement was amended to include Xpedite within the coverage of the license. In September 1997, one of our subsidiaries also entered into a long-term nonexclusive license agreement with AudioFAX.

Prior to its acquisition by us, Xpedite received a letter from Cable & Wireless, Inc. informing Xpedite that Cable & Wireless had received a demand letter from AudioFAX claiming that some Cable & Wireless products and services infringed AudioFAX’s patent rights. Cable & Wireless initially sought indemnification from Xpedite for this claim. Subsequent to our acquisition of Xpedite, Cable & Wireless notified us of the AudioFAX claim and sought indemnification directly from us. In 1999, Xpedite received an additional letter from Cable & Wireless informing Xpedite of the existence of one of their patents and the potential applicability of that patent on Xpedite’s products and services. In December 2000, we entered into a settlement agreement with Cable & Wireless settling all disputes over the indemnification claim and potential applicability of their patent to our products and services.

48

We have received letters from Ronald A. Katz Technology Licensing, L.P. (“Katz”), Aerotel Limited/Aerotel USA, Inc. and Nortel Networks, Inc., informing us of the existence of their respective patents or patent portfolios and the potential applicability of those patents on our products and services. We are currently considering each of these matters. Due to the inherent uncertainties of litigation, however, we are unable to predict the outcome of any potential litigation, and any adverse outcome could have a material effect on our business, financial condition and results of operations. Even if we were to prevail in this type of challenge, our business could be adversely affected by the diversion of management attention and litigation costs.

Certain of our customers have alleged that we are obligated to indemnify them against patent infringement claims made by Katz against such customers. We do not believe that we have an obligation to indemnify such customers; however, due to the inherent uncertainties of litigation, we are unable to predict the outcome of any potential litigation, and any adverse outcome could have a material effect on our business, financial condition and results of operations. Even if we were to prevail in this type of challenge, our business could be adversely affected by the diversion of management attention and litigation costs.

In March 1999, Aspect Telecommunications, Inc. (“Aspect”), the purported owner of certain patents, filed suit against the Company and PCI alleging that they had violated claims in these patents and requesting damages and injunctive relief. In the fourth quarter of 1999, the Company and PCI entered into a settlement agreement with Aspect, which settled and disposed of Aspect’s claims in this litigation. This settlement did not and will not have a material adverse effect on the Company’s business, financial condition or results of operations.

Risks Related to Pending Litigation

Our pending litigation could be costly, time consuming and a diversion to management and, if adversely determined, could result in the loss of rights or substantial liabilities for damages.

In the ordinary course of our business, we are subject to a variety of claims and litigation from third parties, including allegations that our products and services infringe the patents, trademarks and copyrights of these third parties. We have several litigation matters pending, which we are defending vigorously. Due to the inherent uncertainties of the litigation process and the judicial system, we cannot predict the outcome of these litigation matters. Regardless of the outcome, these litigation matters could be costly, time consuming and a diversion of management and other resources. If the outcome of one or more of these matters is adverse to us, it could result in a loss of material rights or substantial liabilities for damages.

For detailed descriptions of our material pending litigation, see Item 3— “Legal Proceedings.”

Our pending shareholder litigation in the United States District Court for the Northern District of Georgia could be costly, time consuming and a diversion to management and, if adversely determined, could result in substantial liabilities.

A lawsuit was filed on November 4, 1998 against us, as well as individual defendants Boland T. Jones, Patrick G. Jones, George W. Baker, Sr., Eduard J. Mayer and Raymond H. Pirtle, Jr. in the Southern District of New York. Plaintiffs were shareholders of Xpedite who acquired our common stock as a result of the merger between Premiere and Xpedite in February 1998. Plaintiffs’ allegations are based on the representations and warranties made by us in the prospectus and the registration statement related to the merger, the merger agreement and other documents incorporated by reference, regarding our acquisitions of Voice-Tel and VoiceCom Systems, our roll-out of Orchestrate, our relationship with customers Amway Corporation and DigiTEC 2000, and our 800- based calling card service. Plaintiffs allege causes of action against us for breach of contract, against all defendants for negligent misrepresentation, violations of Sections 11 and 12(a)(2) of the Securities Act of 1933, and against the individual defendants for violation of Section 15 of the Securities Act of 1933. Plaintiffs seek undisclosed damages together with pre- and post- judgment interest, recission or recissory damages as to violation of Section 12(a)(2) of the Securities Act of 1933, punitive damages, costs and attorneys’ fees. The defendants’ motion to transfer venue to Georgia was granted. The defendants’ motion to dismiss was granted in part and denied in part. The defendants filed an answer on March 30, 2000. On January 22, 2002, the Court ordered the parties to mediate. The parties did so on February 8, 2002. On October 17, 2002, the Defendants filed a Motion for Summary Judgment and a Motion in Limine to exclude the testimony of the Plaintiffs’ expert. Both motions are pending. Due to the inherent uncertainties of the litigation process and the judicial system, we cannot predict the outcome of this litigation.

49

Regardless of the outcome, this matter could be costly, time consuming and a diversion to management and other resources. If the outcome of this matter is adverse to us, it could result in substantial damages.

Risks Related to Government Regulation

U.S. or other government regulations and legal uncertainties related to the Internet and electronic communications may place financial burdens on our business related to compliance.

Currently, there are few laws or regulations directed specifically at electronic commerce and the Internet. However, because of the Internet’s popularity and increasing use, new laws and regulations may be adopted. These laws and regulations may cover issues such as collection and use of data from Web site visitors, privacy,, e-mail, network and information security, “spamming,” pricing, content, copyrights and other intellectual property, changes in telecommunications regulations, online gambling, distribution and quality of goods and services. The enactment of any additional laws or regulations may impede the growth of the Internet, which could impede the growth of our Web-enabled products and services and place additional financial burdens on our business in order to comply with new laws and regulations.

Laws and regulations directly applicable to electronic commerce or Internet communications are becoming more prevalent. For example, the United States Congress has enacted laws regarding on-line copyright infringement and the protection of information collected on-line from children. Although these laws may not have a direct adverse effect on our business, they add to the legal and regulatory uncertainty regarding the Internet and possible future costs of regulatory compliance.

Our failure to comply with various government regulations related to traditional telephone service providers could impair our ability to deliver our products and services.

One of our subsidiaries, PCI, provides regulated long distance telecommunications services and is subject to regulation by the FCC and by various state public service and public utility commissions. PCI is, and our other subsidiaries may be, affected by regulatory decisions, trends and policies made by these agencies. In addition, various international authorities may also seek to regulate, or to impose requirements with respect to, the services provided by PCI or our other subsidiaries. If PCI fails to comply with these various government regulations, or if our other subsidiaries were required to submit to the jurisdiction of such government authorities, we could be prohibited from providing portions of our services or we could be subject to fines, forfeitures or other penalties for noncompliance.

We use reasonable efforts to ensure that PCI’s operations comply with regulatory requirements. PCI, however, may not be currently in compliance with all FCC and state regulatory requirements. Furthermore, PCI’s facilities do not prevent its customers from making long distance calls in any state, including states in which it currently is not authorized to provide intrastate telecommunications services. PCI’s provision of long distance telecommunications services in states where it is not in compliance with public utility commission requirements could result in prohibitions on providing long distance service and subject us to fines, forfeitures or other penalties for noncompliance.

We may become subject to new laws and regulations involving services and transactions in the areas of electronic commerce, which could increase costs of compliance.

In conducting our business, we are subject to various laws and regulations relating to commercial transactions generally, such as the Uniform Commercial Code, and we are also subject to the electronic funds transfer rules embodied in Regulation E promulgated by the Board of Governors of the Federal Reserve System. Congress has held hearings regarding, and various agencies are considering, whether to regulate providers of services and transactions in the electronic commerce market. It is possible that Congress, the states or various government agencies could impose new or additional requirements on the electronic commerce market or entities operating therein. If enacted, these laws, rules and regulations could be imposed on our business and industry and could result in substantial compliance costs.

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Recently enacted and proposed changes in securities laws and regulations are likely to increase our costs.

The Sarbanes-Oxley Act of 2002, which became law in July 2002, has resulted in changes in some of our corporate governance and securities disclosures and compliance practices. That Act also requires the SEC to promulgate new rules on a variety of subjects, in addition to final rules and rule proposals already made, and Nasdaq has proposed revisions to its requirements for companies whose securities are quoted on Nasdaq. We expect these developments to increase our legal compliance costs, and to make some activities more time-consuming. We are presently evaluating and monitoring regulatory developments and cannot estimate the timing or magnitude of the additional costs we may incur as a result.

Risks Related to International Operations and Expansion

Our future success depends on our expansion into international markets and revenue from international operations may not grow enough to offset the cost of expansion.

A component of our strategy is our planned expansion into international markets. Revenue from international operations may not grow enough to offset the cost of establishing and expanding these international operations. We currently deliver multimedia messaging and conferencing services worldwide. While we have significant international experience in the delivery of our multimedia messaging services, we have only limited experience in marketing and distributing our conferencing services. Accordingly, we may not be able to successfully market, sell and deliver our conferencing services in the new international markets.

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. There are difficulties and risks inherent in doing business on an international level that could prevent us from selling our products and 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;

•tariffs and other trade barriers;

•difficulties in staffing and managing international operations;

•longer payment cycles;

•problems in collecting accounts receivable;

•political and economic instability;

•fluctuations in currency exchange rates;

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

•potentially adverse tax consequences.

We could experience losses from fluctuations in currency exchange rates.

We conduct business outside the U.S. and some of our expenses and revenue are derived in foreign currencies. In particular, a significant portion of our multimedia messaging business is conducted outside the U.S. and a significant portion of our revenue and expenses from that business are derived in foreign currencies. Accordingly, we could experience material losses due to fluctuations in foreign currencies. We have not experienced any material losses from fluctuations in currency exchange rates, but we could in the future. We

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typically denominate foreign transactions in foreign currency and have not regularly engaged in hedging transactions, although we may engage in hedging transactions from time to time in the future.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk from changes in interest rates and foreign currency exchange rates. The Company manages its exposure to these market risks through its regular operating and financing activities. Derivative instruments are not currently used and, if utilized, are employed as risk management tools and not for trading purposes.

At December 31, 2002, no derivative financial instruments were outstanding to hedge interest rate risk. A hypothetical immediate 10% increase in interest rates would decrease the fair value of the Company’s fixed rate convertible subordinated notes outstanding at December 31, 2002 and 2001, by $17.7 million and $22.2 million, respectively.

Approximately 33.0% and 32.7% of the Company’s sales from continuing operations and 33.2% and 19.2% of its operating costs and expenses from continuing operations were transacted in foreign currencies in 2002 and 2001, respectively. As a result, fluctuations in exchange rates impact the amount of the Company’s reported sales and operating income. A hypothetical positive or negative change of 10% in foreign currency exchange rates would positively or negatively change revenue for 2002 and 2001 by approximately $11.2 million and $10.8 million and operating expenses for 2002 and 2001 by approximately $10.5 million and $9.8 million, respectively. Historically, the Company’s principal exposure has been related to local currency sales, operating costs and expenses in Europe and Asia (principally the United Kingdom, Germany and Japan). The Company has not used derivatives to manage foreign currency exchange risk and no foreign currency exchange derivatives were outstanding at December 31, 2002.

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Item 8. Financial Statements and Supplementary Data

PTEK Holdings, Inc. and Subsidiaries Index to Consolidated Financial Statements

	Page
Report of Independent Accountants	54
Consolidated Balance Sheets, December 31, 2002 and 2001	55
Consolidated Statements of Operations, Years Ended December 31, 2002, 2001 and 2000	56
Consolidated Statements of Shareholders’ Equity, Years Ended December 31, 2002, 2001 and 2000	57
Consolidated Statements of Cash Flows, Years Ended December 31, 2002, 2001 and 2000	58
Notes to Consolidated Financial Statements	59

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Report of Independent Accountants

To the Board of Directors and Shareholders of PTEK Holdings, Inc.:

In our opinion, the accompanying consolidated balance sheetand the related consolidated statements of operations, shareholders’ equity, and cash flows present fairly, in all material respects, the financial position of PTEK Holdings, Inc. and its subsidiariesat December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002in conformity with accounting principles generally accepted in the United States of America. 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 of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 2 to the consolidated financial statements, the Company adopted Financial Accounting Standards Board Statement No. 142 on January 1, 2002.

/s/ PricewaterhouseCoopers LLP

Atlanta, Georgia
March 27, 2003

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PTEK HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
December 31, 2002 and 2001
(in thousands, except share data)

	2002			2001
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	68,777		$	48,023
Marketable securities, available for sale	641			1,477
Accounts receivable (less allowances of $7,074 and $8,278, respectively)	51,909			58,613
Federal income tax receivable	—			9,208
Prepaid expenses and other current assets	8,872			7,982
Deferred income taxes, net	15,801			13,743
Total current assets	146,000			139,046
PROPERTY AND EQUIPMENT, NET	63,148			91,349
OTHER ASSETS
Goodwill, net of amortization	123,066			123,066
Intangibles, net of amortization	7,802			21,880
Deferred income taxes, net	6,648			6,923
Notes receivable-employees	2,083			—
Other assets	3,346			4,174
	$	352,093		$	386,438
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	37,110		$	56,862
Deferred revenue	—			452
Accrued taxes	8,250			16,031
Accrued expenses	32,319			42,733
Current maturities of long-term debt and capital lease obligations	4,320			6,124
Accrued restructuring costs	1,898			3,728
Total current liabilities	83,897			125,930
LONG-TERM LIABILITIES
Convertible subordinated notes	172,500			172,500
Long-term debt and capital lease obligations	3,407			8,552
Accrued expenses	7,951			424
Total long-term liabilities	183,858			181,476
COMMITMENTS AND CONTINGENCIES (Note 20)
SHAREHOLDERS’ EQUITY
Common stock, $.01 par value; 150,000,000 shares authorized, 58,733,628 and 56,984,575 shares issued in 2002 and 2001, respectively, and 53,540,828 and 53,584,639 shares outstanding in 2002 and 2001, respectively	587			569
Unrealized gain on marketable securities, available for sale	276			722
Additional paid-in capital	603,883			597,885
Unearned restricted share compensation	(1,913		)	(3,860		)
Treasury stock, at cost (5,192,800 and 3,399,936 shares for 2002 and 2001, respectively)	(22,112		)	(15,494		)
Notes receivable, shareholder	(5,042		)	(4,593		)
Cumulative translation adjustment	(2,810		)	(5,775		)
Accumulated deficit	(488,531		)	(490,422		)
Total shareholders’ equity	84,338			79,032
	$	352,093		$	386,438

Accompanying notes are integral to these consolidated financial statements

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PTEK HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2002, 2001 and 2000
(in thousands, except share and per share data)

	2002			2001			2000
Revenues	$	341,253		$	330,416		$	303,244
Telecommunications Costs	64,765			72,953			82,964
Gross Profit	276,488			257,463			220,280
Direct Operating Costs	52,898			52,323			43,079
Contribution Margin	223,590			205,140			177,201
Operating Expenses
Selling and marketing	88,970			75,494			67,889
General and administrative	55,845			58,291			47,545
Research and development	7,236			11,073			8,598
Depreciation	21,526			20,707			19,791
Amortization	10,876			88,553			90,227
Restructuring costs	1,834			4,608			(61		)
Asset impairments	3,202			100,796			800
Equity based compensation	1,871			20,429			2,102
Net legal settlements and related expenses	7,325			2,331			(1,484		)
Total operating expenses	198,685			382,282			235,407
Operating Income (Loss)	24,905			(177,142		)	(58,206		)
Other (Expense) Income
Interest expense	(11,510		)	(11,544		)	(11,324		)
Interest income	1,482			647			938
Gain on sale of marketable securities	930			2,971			59,734
Asset impairment and obligations - investments	—			(31,695		)	(14,984		)
Amortization of goodwill - equity investments	—			(1,612		)	(4,930		)
Other, net	(8		)	(2,626		)	136
Total other (expense) income	(9,106		)	(43,859		)	29,570
Income (Loss) From Continuing Operations Before Income Taxes	15,799			(221,001		)	(28,636		)
Income Tax Expense (Benefit)	1,376			(11,343		)	17,966
Income (Loss) from Continuing Operations	$	14,423		$	(209,658	)	$	(46,602	)
Discontinued Operation:
Loss from operations of Voicecom (including loss on disposal of $10,343 in 2002)	(16,172		)	(53,162		)	(18,993		)
Income tax benefit	(3,640		)	(20,700		)	(6,729		)
Loss on discontinued operations	(12,532		)	(32,462		)	(12,264		)
Net Income (Loss)	$	1,891		$	(242,120	)	$	(58,866	)
Basic Earnings (Loss) Per Share:
Continuing operations	$	0.27		$	(4.19	)	$	(0.97	)
Discontinued operations	(0.23		)	(0.65		)	(0.25		)
Net income (loss)	$	0.04		$	(4.84	)	$	(1.22	)
Diluted Earnings (Loss) Per Share:
Continuing operations	$	0.26		$	(4.19	)	$	(0.97	)
Discontinued operations	(0.23		)	(0.65		)	(0.25		)
Net income (loss)	$	0.03		$	(4.84	)	$	(1.22	)
Weighted Average Shares Outstanding:
Basic	53,550			49,998			48,106
Diluted		56,262			49,998			48,106

Accompanying notes are integral to these consolidated financial statements.

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PTEK HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Years Ended December 31, 2002, 2001 and 2000
(in thousands)

	Common Stock Issued			Additional Paid-In Capital			Note Receivable Shareholder			Treasury Stock			Accumulated Deficit			Unrealized Gain on Marketable Securities			Unearned Restricted Share Compensation			Cumulative Translation Adjustment			Total Shareholders’ Equity
BALANCE, December 31, 1999	$	481		$	570,054		$	(1,047	)	$	(9,133	)	$	(189,436	)	$	50,774		$	—		$	527		$	422,220
Comprehensive Loss:
Net loss	—			—			—			—			(58,866		)	—			—			—			(58,866		)
Translation adjustments	—			—			—			—			—			—			—			(6,890		)	(6,890		)
Change in unrealized net gain (loss) on marketable securities, net of tax	—			—			—			—			—			(48,458		)	—			—			(48,458		)
Comprehensive Loss																									(114,214		)
Issuance of common stock:
Exercise of stock options	24			6,869			—			—			—			—			—			—			6,893
Treasury stock purchase	—			—			—			(3,265		)	—			—			—			—			(3,265		)
401K plan match	3			1,605			—			—			—			—			—			—			1,608
Employee stock purchase plan	5			1,373			—			—			—			—			—			—			1,378
Income tax benefit from exercise of stock options	—			1,573			—			—			—			—			—			—			1,573
Issuance of shareholder note receivable	—			—			(2,787		)	—			—			—			—			—			(2,787		)
BALANCE, December 31, 2000	$	513		$	581,474		$	(3,834	)	$	(12,398	)	$	(248,302	)	$	2,316		$	—		$	(6,363	)	$	313,406
Comprehensive Loss:
Net loss	—			—			—			—			(242,120		)	—			—			—			(242,120		)
Translation adjustments	—			—			—			—			—			—			—			588			588
Change in unrealized net gain (loss) on marketable securities, net of tax	—			—			—			—			—			(1,594		)	—			—			(1,594		)
Comprehensive Loss																									(243,126		)
Issuance of common stock:
Exercise of stock options	1			10			—			—			—			—			—			—			11
Treasury stock purchase	—						—			(3,096		)	—			—			—			—			(3,096		)
401K plan match	11			1,584			—			—			—			—			—			—			1,595
Employee stock purchase plan	5			794			—			—			—			—			—			—			799
Restricted stock issued	38			11,316			—			—			—			—			(3,860		)	—			7,494
Stock options issued for severance	—			1,871			—			—			—			—			—			—			1,871
Stock options and warrants for service				568			—			—			—			—			—			—			568
Stock issued for accrued legal settlement	1			268			—			—			—			—			—			—			269
Issuance of shareholder note receivable	—			—			(759		)	—			—			—			—			—			(759		)
BALANCE, December 31, 2001	$	569		$	597,885		$	(4,593	)	$	(15,494	)	$	(490,422	)	$	722		$	(3,860	)	$	(5,775	)	$	79,032
Comprehensive Income:
Net income	—			—			—			—			1,891			—			—			—			1,891
Translation adjustments	—			—			—			—			—			—			—			2,965			2,965
Change in unrealized net gain (loss) on marketable securities, net of tax	—			—			—			—			—			(446		)	—			—			(446		)
Comprehensive Income																									4,410
Issuance of common stock:
Exercise of stock options	5			289			—			—			—			—			—			—			294
Treasury stock purchase	—			—			—			(6,618		)	—			—			—			—			(6,618		)
401K plan match	4			1,625			—			—			—			—			—			—			1,629
Employee stock purchase plan	4			904			—			—			—			—			—			—			908
Restricted stock issued	2			825			—			—			—			—			(95		)	—			732
Stock issued for legal settlement	3			1,307			—			—			—			—			—			—			1,310
Restricted stock cancelled	(0		)	(171		)	—			—			—			—			171			—			—
Stock compensation in exchange for services	—			10			—			—			—			—			—			—			10
Stock compensation expense	—			—			—			—			—			—			1,871			—			1,871
Income tax benefit from exercise of stock options	—			1,209			—			—			—			—			—			—			1,209
Interest related to shareholder note receivable	—			—			(449		)	—			—			—			—			—			(449		)
BALANCE, December 31, 2002	$	587		$	603,883		$	(5,042	)	$	(22,112	)	$	(488,531	)	$	276		$	(1,913	)	$	(2,810	)	$	84,338

Accompanying notes are integral to these consolidated financial statements.

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PTEK HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2002, 2001 and 2000
(in thousands)

	2002			2001			2000
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	1,891		$	(242,120	)	$	(58,866	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Loss on discontinued operation	12,532			32,462			12,264
Depreciation	21,526			20,707			19,791
Amortization	10,876			88,553			90,227
Gain on sale of marketable securities, available for sale	(930		)	(2,971		)	(59,734		)
Non-cash legal settlements and related expenses, net	1,310			718			10,516
Deferred income taxes	2,516			(25,241		)	(9,207		)
Restructuring costs, net	(1,074		)	1,669			(4,555		)
Equity based compensation	1,871			20,429			2,102
Asset impairments	3,202			100,796			800
Asset impairment and obligations – investments	—			31,695			14,984
Amortization of goodwill – investments	—			1,612			4,930
Federal income tax receivable	—			(9,208		)	—
Changes in assets and liabilities:
Accounts receivable, net	(2,365		)	6,434			(4,556		)
Prepaid expenses and other	3,605			2,879			4,548
Accounts payable and accrued expenses	(17,716		)	620			(15,741		)
Total adjustments	35,353			271,154			66,369
Net cash provided by operating activities from continuing operations	37,244			29,034			7,503
Net cash (used in) provided by operating activities from discontinued operations	(5,804		)	31,871			10,426
Net cash provided by operating activities	31,440			60,905			17,929
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(13,760		)	(25,628		)	(22,830		)
Proceeds from sale of discontinued operation	7,248			—			—
Sale of marketable securities	1,038			5,196			62,844
Acquisitions	(701		)	(5,828		)	(2,487		)
Investments	—			(3,791		)	(33,806		)
Other	—			(2,497		)	(78		)
Net cash (used in) provided by investing activities from continuing operations	(6,175		)	(32,548		)	3,643
Net cash used in investing activities from discontinued operations	(155		)	(2,857		)	(10,109		)
Net cash used in investing activities	(6,330		)	(35,405		)	(6,466		)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments under borrowing arrangements	(3,587		)	(996		)	(1,457		)
Proceeds from long term borrowing arrangements	4,000			6,500			—
Purchase of treasury stock, at cost	(6,618		)	(3,096		)	(3,265		)
Exercise of stock options	294			11			6,894
Issuance of shareholder note receivable	—			(759		)	(2,787		)
Net cash (used in) provided by financing activities from continuing operations	(5,911		)	1,660			(615		)
Net cash used in financing activities from discontinued operations	(1,086		)	(1,964		)	(1,779		)
Net cash used in financing activities	(6,997		)	(304		)	(2,394		)
Effect of exchange rate changes on cash and equivalents	2,641			(164		)	(1,444		)
NET INCREASE IN CASH AND EQUIVALENTS	20,754			25,032			7,625
CASH AND CASH EQUIVALENTS, beginning of period	48,023			22,991			15,366
CASH AND CASH EQUIVALENTS, end of period	$	68,777		$	48,023		$	22,991

Accompanying notes are integral to these consolidated financial statements.

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PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.THE COMPANY AND ITS BUSINESS

PTEK Holdings, Inc., a Georgia corporation, and its subsidiaries (collectively the “Company” or “PTEK”), is a global provider of business communications services, including conferencing (audio conferencing and Web-based collaboration) and multimedia messaging (high-volume actionable communications, including e-mail, wireless messaging, voice message delivery and fax). The Company’s reportable segments align the Company into two decentralized operating segments based on product offering. These segments are Premiere Conferencing and Xpedite. Through a series of acquisitions from April 1998 through September 1999, PTEK assembled a suite of communications and data services, an international private data network and points-of-presence in regions covering North America, Asia/Pacific and Europe. In addition, the Company had one other reportable segment, Voicecom, which the Company exited through a sale of substantially all its assets, effective March 26, 2002. Voicecom offered a suite of integrated communications solutions, including voice messaging, interactive voice response services and unified communications.

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 revenues and expenses during the reporting period. Financial statement line items that include significant estimates consist of goodwill, net; intangibles, net; restructuring costs; tax accounts 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

The financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and highly liquid investments with a maturity at date of purchase of three months or less.

Marketable Securities, Available for Sale

The Company follows Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” SFAS No. 115 mandates that a determination be made of the appropriate classification for equity securities with a readily determinable fair value and all debt securities at the time of purchase and a re-evaluation of such designation as of each balance sheet date. At December 31, 2002 and 2001, investments consisted primarily of common stock. Management considers all such investments as “available for sale.” Common stock investments are carried at fair value based on quoted market prices. Unrealized holding gains and losses, net of the related income tax effect are excluded from earnings and are reported as a separate component of shareholders’ equity until realized. Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of the securities sold.

Investments

The Company has made investments in various companies that were engaged in emerging technologies related to the Internet through its investment arm, PtekVentures. During 2001, market conditions declined for the

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PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

non-public companies in the PtekVentures portfolio, with certain of these companies filing for bankruptcy and subsequently being liquidated. Accordingly, the Company decided to exit the venture business and cease future funding in its portfolio companies. Either the cost or equity method was used to account for these investments in accordance with Accounting Principles Board (“APB”) Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock.” Based on the Company’s ownership interest, the consolidation method was not used for any investments.

Cost Method

The cost method of accounting was used for any investment in which the Company owned less than 20% and did not exercise significant influence. Significant influence is generally determined by, but not limited to, representation on the affiliate’s Board of Directors, voting rights associated with the Company’s holdings in common, preferred and other convertible instruments in the affiliate, and any legal obligations. As there was no quoted market price for these investments and the Company owned less than 20%, the investment was carried at cost unless circumstances suggest that an impairment should have been recognized.

Equity Method

Affiliated companies in which the Company owned 50% or less of the equity ownership, but over which significant influence was exercised, were accounted for using the equity method of accounting. The amount by which the Company’s investment exceeded its share of the underlying net assets was considered to be goodwill, and was amortized over a three-year period.

Accounts Receivable

Included in accounts receivable at December 31, 2002 was earned but unbilled revenue of approximately $1.9 million at Premiere Conferencing, which results from weekly cycle billing that was implemented during the third quarter of 2002. Earned but unbilled revenue is billed within thirty days. Bad debt expense was approximately $5.1 million, $6.1 million and $1.3 million in 2002, 2001 and 2000, respectively.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is provided 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 computer and telecommunications equipment. The cost of installed equipment includes expenditures for installation. 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

The Company incurs research and development costs primarily related to developing enhancements and new service features and are expensed as incurred.

Software Development Costs

Pursuant to the American Institute of Certified Public Accountants Statement of Position (“SOP”) 98-1, “Accounting for the Costs of Software Developed or Obtained for Internal Use,” costs incurred to develop significant enhancements to software features to be sold as part of services offerings at Xpedite and costs incurred to implement a new billing system at Premiere Conferencing are being capitalized. For the twelve months ended December 31, 2002 the Company capitalized approximately $2.9 million related to these projects. There were no costs capitalized for the comparable periods in 2001. These capitalized costs are being amortized on a straight line basis over the estimated life of the related software, not to exceed three years. Amortization expense recorded for phases completed for the twelve months ended December 31, 2002 was approximately $0.3 million.

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PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill

Goodwill represents the excess of the cost of businesses acquired over fair value of net identifiable assets at the date of acquisition and has historically been amortized using the straight-line method over various lives up to 7 years. With the adoption of SFAS No. 142, “Accounting for Goodwill and Other Intangible Assets,” which became effective January 1, 2002, the Company no longer records amortization expense associated with goodwill, but instead goodwill is subject to a periodic impairment assessment by applying a fair value based test. This analysis was completed for the year ended December 31, 2002 and no impairment was identified.

The Company amortized the goodwill of its non-public equity investments in its PtekVentures’ portfolio over a three-year useful life until the second quarter of 2001, at which time the Company wrote off the remaining carrying value of such investments. The amortization is included in “Amortization of goodwill equity investments” and the write off is included in “Asset impairment and obligation investments” in the accompanying consolidated statements of operations. See Note 6—“Investments.”

Valuation of Long-Lived Assets

Management evaluates the carrying values of long-lived assets when significant adverse changes in the economic value of these assets requires an analysis, including property and equipment and other intangible assets. Effective in January 2002, with the adoption of SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets,” (“FAS No. 144”) 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. Prior to adopting FAS No. 144, a long-lived asset was considered impaired when undiscounted cash flows or fair value, whichever was more readily determinable, to be realized from such asset was less than its carrying value. In that event, a loss was determined based on the amount the carrying value exceeded the discounted cash flows or fair value of such asset. Management believes that long-lived assets in the accompanying consolidated balance sheets are appropriately valued. See Note 12—“Asset Impairments.”

Equity Based Compensation Plans

The Company accounts for stock based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations. Accordingly, no compensation expense has been recognized for awards (other than restricted share awards) issued under the Company’s stock based compensation plans where the exercise price of such award is equal to the market price of the underlying common stock at the date of grant. The Company provides the additional disclosures required under SFAS No. 123, “Accounting for Stock Based Compensation” (“SFAS No. 123”), as amended by SFAS No. 148, “Accounting for Stock Based Compensation – Transition and Disclosure.”

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PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company has adopted the disclosure only provision of SFAS No. 123. Had compensation expense for the Company’s stock option grants described above been determined based on the fair value at the grant date for awards in 2002, 2001 and 2000, consistent with the provisions of SFAS No. 123, the Company’s net loss and loss per share would have been increased to the pro forma amounts indicated below for the years ended December 31 (in thousands, except per share data):

	2002			2001			2000
Net income (loss):
As reported	$	1,891		$	(242,120	)	$	(58,866	)
Deduct: total stock-based compensation expense determined under fair value based method for all awards, net of related tax effects	(4,642		)	(11,256		)	(18,122		)
Pro forma	$	(2,751	)	$	(253,376	)	$	(76,988	)
Basic net income (loss) per share:
As reported	$	0.27		$	(4.84	)	$	(1.22	)
Pro forma	$	(0.05	)	$	(5.07	)	$	(1.60	)
Diluted net income (loss) per share:
As reported	$	0.26		$	(4.84	)	$	(1.22	)
Pro forma	$	(0.05	)	$	(5.07	)	$	(1.60	)

Significant assumptions used in the Black-Scholes option pricing model computations are as follows:

	2002	2001	2000
Risk-free interest rate	3.95%	4.18%	5.13-5.61%
Dividend yield	0%	0%	0%
Volatility factor	76%	90%	99%
Weighted average expected life	3.95 years	3.79 years	3.75 years

The pro forma amounts reflect options granted since January 1, 1996. Pro forma compensation cost may not be representative of that expected in future years.

Revenue Recognition

The Company recognizes revenues when persuasive evidence of an arrangement exists, services have been rendered, the price to the buyer is fixed or determinable, and collectibility is reasonably assured. Revenues consist of fixed monthly fees, usage fees generally based on per minute or transaction rates, and service initiation fees. Unbilled revenue consists of earned but unbilled revenue which results from the weekly billing cycle that was implemented at the Premiere Conferencing operating segment during the third quarter of 2002. Deferred revenue consists of payments made by customers in advance of the time services are rendered. The Company’s revenue recognition policies are consistent with the guidance in Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition in Financial Statements,” as amended by SAB 101A and 101B.

Income Taxes

The provision for income taxes and corresponding balance sheet accounts are determined in accordance with SFAS No. 109, “Accounting for Income Taxes” (“FAS 109”). Under FAS 109, the deferred tax liabilities and assets are determined based on temporary differences between the basis of certain assets and liabilities for income tax and financial reporting purposes, in addition to net operating loss carryforwards which are reasonably assured of being utilized. These differences are primarily attributable to differences in the recognition of depreciation and amortization of property, equipment and intangible assets. 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.

62

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company also records a provision for certain international, federal and state tax contingencies based on the likelihood of obligation, when needed. In the normal course of business, the Company is subject to challenges from U.S. and non-U.S. tax authorities regarding the amount of 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 changing facts and circumstances may impact the Company’s ability to utilize tax benefits as well as the estimated taxes to be paid in future periods. Management believes it has appropriately accrued for tax exposures. If the Company is required to pay an amount less than or exceeding its 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 from these estimates, the Company may need to adjust tax accounts which could materially impact its financial condition and results of operations.

Basic and Diluted Income (Loss) Per Share

Basic earnings per share is computed by dividing net income (loss) 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, 2002 and 2001, are considered contingently returnable until the restrictions lapse and are not included in the basic net income (loss) per share calculation until the shares are vested. Diluted net income (loss) per share gives effect to all potentially dilutive securities. The Company’s convertible subordinated notes, unvested restricted shares and stock options are all potentially dilutive securities during 2002. For the twelve months ended December 31, 2002, the difference between basic and diluted weighted-average shares outstanding was the dilutive effect of stock options and the unvested restricted shares, computed as follows:

	December 31, 2002
Total weighted-average shares outstanding – Basic	53,550,029
Add common stock equivalents:
Stock options	1,633,347
Unvested restricted shares	1,078,909
Total weighted-average shares outstanding – Diluted	56,262,285

For the twelve months ended December 31, 2001, the Company’s convertible subordinated notes and stock options were potentially dilutive securities, but these securities were antidilutive due to the Company’s net loss and, therefore, are not included in the diluted per share calculation. Such potentially dilutive securities as of December 31, 2001 were 5.2 million, 1.2 million and 10.3 million shares related to convertible subordinated notes, unvested restricted shares and stock options outstanding, respectively.

Foreign Currency Translation

The assets and liabilities of subsidiaries domiciled outside the United States are translated at rates of exchange existing at the balance sheet date. Revenues and expenses are translated at average rates of exchange prevailing during the year. The resulting translation adjustments are recorded in the “Cumulative translation adjustment” component of shareholders’ equity.

Treasury Stock

Treasury stock transactions are recorded at cost.

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. Cumulative translation adjustments and unrealized gains on

63

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

available-for-sale marketable securities represent the Company’s components of other comprehensive income (loss) at December 31, 2002 and 2001. For the years ended December 31, 2002, 2001 and 2000, total comprehensive income (loss) was approximately $4.4 million, $(243.1) million and $(114.2) million, respectively.

New Accounting Pronouncements

In January 2003, the FASB issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities.” This interpretation of Accounting Research Bulletin 51, “Consolidated Financial Statements,” addresses consolidation by business enterprises of variable interest entities that possess certain characteristics. The interpretation requires that if a business enterprise has a controlling financial interest in a variable interest entity, the assets, liabilities, and results of the activities of the variable interest entity must be included in the consolidated financial statements with those of the business enterprise. This interpretation applies immediately to variable interest entities created after January 31, 2003 and to variable interest entities in which an enterprise obtains an interest after that date. We do not have any ownership in any variable interest entities as of December 31, 2002. We will apply the consolidation requirement of the interpretation in future periods if we should own any interest in any variable interest entity.

In November 2002, the FASB issued FASB Interpretation No. 45 (“FIN 45”), Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB interpretation No. 34. The disclosure provisions of the interpretation are effective for financial statements of interim or annual periods that end after December 15, 2002. However, the provisions for initial recognition and measurement are effective on a prospective basis for guarantees that are issued or modified after December 31, 2002, irrespective of a guarantor’s year-end. See Note 9—“Discounted Operations.”

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock Based Compensation - Transition and Disclosure” (“SFAS No. 148”) which amends SFAS No. 123. SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock based employee compensation. SFAS No. 148 also requires that disclosures of the pro forma effect of using the fair value method of accounting for stock based employee compensation be displayed more prominently and in a tabular format. Additionally, SFAS No. 148 requires disclosure of the pro forma effect in interim financial statements. See “Equity Based Compensation Plans” section of Note 2—”Significant Accounting Policies” for the additional annual disclosures made to comply with SFAS No. 148. The interim disclosure provisions are effective for financial reports containing financial statements for interim periods beginning after December 15, 2002. As the Company does not intend to adopt the provisions of SFAS No. 123, the Company does not expect the transition provisions of SFAS No. 148 to have a material effect on its results of operations or financial condition.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (SFAS No. 146), which addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)” (EITF 94-3). The principal difference between SFAS No. 146 and EITF 94-3 relates to SFAS No. 146 requirements for recognition of a liability for a cost associated with an exit or disposal activity. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF 94-3, a liability for an exit cost as generally defined in EITF 94-3 was recognized at the date of an entity’s commitment to an exit plan. The Company will be required to adopt SFAS No. 146 for the fiscal year beginning January 1, 2003, and is currently evaluating this standard and the impact it will have on the consolidated financial statements.

In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements Nos. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (“SFAS No. 145”). Among other things, this statement rescinds SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt” (SFAS No. 4), which required all gains and losses from extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of the related income tax effect. As a result, the criteria in Accounting Principles Board

64

PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Opinion No. 30, “Reporting the Results of Operations – Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions,” which requires gains and losses on extinguishments of debt to be classified as income or loss from continuing operations, will now be applied. The Company will be required to adopt SFAS No. 145 for the fiscal year beginning January 1, 2003, and is currently evaluating this standard and the impact it will have on the consolidated financial statements.

In October 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long- Lived Assets” (“SFAS No. 144”). SFAS No. 144 establishes accounting and reporting standards for the impairment and disposition of long- lived assets, and is effective for financial statements issued for fiscal years beginning after December 15, 2001. The Company adopted SFAS No. 144 for the fiscal year beginning January 1, 2002.

In August 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations” (“SFAS No. 142”). It addresses accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The liability is accreted to its present value each period while the cost is depreciated over its useful life. SFAS No. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. The Company adopted SFAS No. 143 for the fiscal year beginning January 1, 2002.

In June 2001, the FASB issued SFAS No. 142, “Accounting for Goodwill and Other Intangible Assets.” It requires that goodwill and certain intangible assets will no longer be subject to amortization, but instead will be subject to a periodic impairment assessment by applying a fair value based test. The Company’s required adoption date is January 1, 2002. Adoption of SFAS No. 142 will have a material effect on the Company’s results of operations due to the cessation of goodwill amortization on January 1, 2002. The balance of goodwill is $123.1 million as of December 31, 2002 and 2001. The Company adopted SFAS No. 142 for the fiscal year beginning January 1, 2002.

Reclassifications

Certain prior year amounts in the Company’s consolidated financial statements have been reclassified to conform to the 2002 presentation.

On January 1, 2001, management responsibility for international conferencing services was transferred from Xpedite to Premiere Conferencing. Prior to that date, these international revenues were reported in the Xpedite operating segment. The revenues of the Australian operations of Voicecom that were retained in conjunction with the sale of this operating segment are reported in the international results of Xpedite effective January 1, 2002. In order to report comparable operating segment financial results, certain financial information for years prior to 2001 has been reclassified. Overall these reclassifications did not have a material impact on the financial results of the operating segments for the periods presented.

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3.EXCLUSION OF SFAS NO. 142 AMORTIZATION

Effective January 1, 2002, the Company adopted SFAS No. 142 which requires that goodwill and certain intangible assets no longer be subject to amortization, but instead be subject to a periodic impairment by applying a fair value based test. The balance of goodwill was $123.1 million as of December 31, 2002 and 2001. During the fourth quarter of 2002, a third party valuation was obtained and the Company determined there was no impairment of these assets as of December 31, 2002. Exclusive of SFAS No. 142 amortization, basic and diluted net income (loss) per share for the twelve months ended December 31, 2002, 2001 and 2000 would have been (in thousands, except per share data):

	Twelve Months Ended
	December 31, 2002			December 31, 2001			December 31, 2000
Adjusted net income (loss):
Income (loss) from continuing operations	$	14,423		$	(209,658	)	$	(46,602	)
Add goodwill amortization for Xpedite	—			57,430			57,468
Add goodwill amortization for Premiere Conferencing	—			7,658			7,592
Adjusted income (loss) from continuing operations	$	14,423		$	(144,570	)	$	18,458
Add goodwill amortization for Voicecom	—			2,277			3,002
Loss from discontinued operations	(12,532		)	(32,462		)	(12,264		)
Adjusted net income (loss)	$	1,891		$	(174,755	)	$	9,196

	Twelve Months Ended
	December 31, 2002			December 31, 2001			December 31, 2000
Adjusted basic net income (loss) per share:
Income (loss) from continuing operations	$	0.27		$	(4.19	)	$	(0.97	)
Add goodwill amortization for Xpedite	—			1.15			1.19
Add goodwill amortization for Premiere Conferencing	—			0.15			0.16
Adjusted income (loss) from continuing operations	$	0.27		$	(2.89	)	$	0.38
Add goodwill amortization for Voicecom	—			0.05			0.06
Loss from discontinued operations	(0.23		)	(0.66		)	(0.25		)
Adjusted basic net income (loss) per share	$	0.04		$	(3.50	)	$	0.19
Adjusted diluted net income (loss) per share:
Income (loss) from continuing operations	$	0.26		$	(4.19	)	$	(0.97	)
Add goodwill amortization for Xpedite	—			1.15			1.19
Add goodwill amortization for Premiere Conferencing	—			0.15			0.16
Adjusted income (loss) from continuing operations	$	0.26		$	(2.89	)	$	0.38
Add goodwill amortization for Voicecom	—			0.05			0.06
Loss from discontinued operations	(0.23		)	(0.66		)	(0.25		)
Adjusted diluted net income (loss) per share	$	0.03		$	(3.50	)	$	0.19

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.RESTRUCTURING COSTS

Consolidated restructuring costs for the years ended December 31, 2002, 2001 and 2000 are as follows (in thousands):

Consolidated	Accrued Costs at December 31, 1999		2000 Charge To Continuing Operations			Payments Incurred			Reversal of Accrued Costs			Accrued Costs at December 31, 2000		2001 Charge To Continuing Operations			2001 Charges to Discontinued Operations
Accrued restructuring costs:
Severance and exit costs	$	5,616	$	197		$	(4,474	)	$	(641	)	$	698	$	4,426		$	4,417
Contractual obligations	—		290			—			—			290		241			1,515
Other	82		93			(82		)	—			93		125			97
Total Restructuring costs	$	5,698	580			$	(4,556	)	$	(641	)	$	1,081	$	4,792		$	6,029
Reversal of charge			$	(641	)									$	(184	)	—
Restructuring costs – statement of operations			$	(61	)									$	4,608		$	6,029

Consolidated	Payments Incurred			Non Cash Costs			Reversal of Accrued Costs			Accrued Costs at December 31, 2001		2002 Charge To Continuing Operations		Payments Incurred			Accrued Costs at December 31, 2002
Accrued restructuring costs:
Severance and exit costs.	$	(4,814	)	$	(2,059	)	$	—		$	2,668	$	1,561	$	(2,833	)	$	1,396
Contractual obligations	(663		)	(386		)	(109		)	888		—		(668		)	220
Other	(65		)	(3		)	(75		)	172		273		(163		)	282
Total Restructuring costs.	$	(5,542	)	$	(2,448	)	$	(184	)	$	3,728	$	1,834	$	(3,664	)	$	1,898

Realignment of Workforce – Fourth Quarter 2002

In the fourth quarter of 2002, Xpedite and the Holding Company terminated employees pursuant to a plan to shrink headcount and reduce sales and administration costs. The plan called for the reduction of 54 and 5 employees at Xpedite and the Holding Company, respectively. The combined costs associated with the restructuring plan are $1.5 million, of which $0.3 million was paid in 2002. Of the remaining balance, $0.8 million, $0.3 million and $0.1 million will be paid in 2003, 2004 and 2005, respectively. Virtually all costs will be paid in cash. Also, in the fourth quarter of 2002 Xpedite decided to exit the voice messaging business in Australia due to declining revenue and the need to make substantial capital investments. The costs associated with exiting this business of $0.3 million are primarily non-cash and represent the loss on disposal of the voice messaging assets.

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Realignment of Workforce and Facilities – Fourth Quarter 2001

Due to continued revenue declines not anticipated by management in both the Voicecom and Xpedite operating segments in the second half of 2001, plans for additional workforce cost reductions were established and personnel were notified during the fourth quarter of 2001. The plan eliminated, through involuntary separation, approximately 120 non-sales force employees in both Voicecom and Xpedite and eliminated 143 network equipment sites in the Voicecom operating segment. The overall management plan allowed for reinvesting these cost savings into additional sales force employees in order to stabilize the decline in revenues in both operation segments. Accordingly, the Company accrued restructuring costs of approximately $4.1 million associated with this plan commitment. Cash payments in 2002 and 2001 associated with this plan were $2.1 million and $1.0 million, respectively. The Company expects to incur $0.4 million of additional cash payments in 2003 to satisfy this plan obligation. Of the $4.1 million of costs associated with this plan, approximately $0.7 million of non-cash charges were incurred for severance cost obligations paid through immediately vested stock options issued below market price on the date of grant. Accordingly, this portion of the restructuring costs was recorded as additional paid-in-capital. The remaining costs at December 31, 2002 and 2001 were $0.4 million and $2.4 million, respectively.

Realignment of Workforce and Facilities – Second Quarter 2001

During the second quarter of 2001, management committed to a plan to reduce annual operating expenses through the elimination of certain operating activities in its Voicecom and Xpedite operating segments, and at the Holding Company, and the corresponding reductions in personnel costs relating to the Company’s operations, sales and administration. The plan eliminated, through involuntary separation, approximately 168 non-sales force employees and allowed the Company to exit duplicative facilities in the Voicecom business segment. Accordingly, the Company accrued restructuring costs of approximately $6.7 million associated with this plan commitment. The Company expects to incur a total of approximately $5.0 million of cash payments related to severance, exit costs and contractual obligations associated with the $6.7 million plan costs. Approximately $0.8 million and $3.8 million of these cash payments were made by December 31, 2002 and 2001, respectively, and were primarily related to severance and exit cost activities. The remaining cash payments are associated with severance costs, exit costs and contractual obligations are expected to be paid in 2003. Approximately $1.7 million of non-cash charges recorded in 2001 are related to certain executive management severance costs from employee stock option modifications and forgiveness of employee notes receivables. Accordingly, this portion of the restructuring costs was recorded as additional paid-in-capital. The remaining costs at December 31, 2002 and 2001 were approximately $40,000 and $1.2 million, respectively.

Exit from Asia Real-Time Fax and Telex Business

During the fourth quarter of 2000, the Company recorded a charge of $0.6 million for costs associated with Xpedite’s decision to exit its legacy real-time fax and telex business in Asia. This service depended on significant price disparities between regulated incumbent telecommunications carriers and Xpedite’s cost of delivery over its fixed-cost network. With the deregulation of most Asian telecommunications markets, Xpedite’s cost advantage dissipated, and the Company decided to exit this service and concentrate on higher value-added services such as transactional messaging and messageREACH. The $0.6 million charge included contractual and other obligations totaling $0.4 million and severance costs of $0.2 million. During 2001, the Company paid the remaining severance obligations planned for and does not expect any further payments.

Decentralization of Company

In the third quarter of 1999, the Company recorded restructuring, merger costs and other special charges of approximately $8.2 million in connection with its reorganization from the two EES (Emerging Enterprise Solutions) and CES (Corporate Enterprise Solutions) operating units into three operating business units, a retail calling card business, and a holding company. The $8.2 million charge was comprised of $7.3 million of severance and exit costs, $0.7 million of lease termination costs and $0.2 million of facility exit costs. The decentralization plan of the Company was completed and all payments were made during 2000.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reorganization of Company into EES and CES Business Groups

In the fourth quarter of 1998, the Company recorded a charge of $11.4 million to reorganize the Company into two business segments that focused on specific groups of customers. The balance of severance and exit costs at December 31, 2002, 2001 and 2000 of $0.0 million, $0.1 million and $0.6 million, respectively, represents remaining severance reserve for a former executive manager. Cash severance payments in 2002 and 2001 were $0.1 million and $0.5 million. The Company paid the remaining severance obligations during 2002 and does not expect any future payments.

5.MARKETABLE SECURITIES, AVAILABLE FOR SALE

Marketable securities, available for sale at December 31, 2002 and 2001 are principally common stock investments carried at fair value based on quoted market prices.

The cost, gross unrealized gains, fair value, proceeds from sale and realized gains and losses are as follows for the years ended December 31, 2002 and 2001 (in thousands):

	Cost		Gross Unrealized Gains		Fair Value		Proceeds From Sale		Gross Realized Gains/ (Losses)
2002
WebMD Corporation	$	192	$	449	$	641	$	1,038	$	930
2001
WebMD Corporation	$	300	$	1,174	$	1,474	$	1,777	$	1,496
S1 Corporation	—		—		—		1,191		751
WebEx, Inc.	—		—		—		2,228		724
Other equity securities	3		—		3		—		—
	$	303	$	1,174	$	1,477	$	5,196	$	2,971

During 2002, the Company sold 133,857 shares of its investment in WebMD for aggregate proceeds less commissions of approximately $0.9 million. At December 31, 2002, the Company held 75,000 shares of WebMD.

During 2001, the Company sold 200,000 shares of its investment in WebMD, 88,596 shares of its investment in S1 Corporation and 120,000 shares of its investment in WebEx, Inc. for aggregate proceeds less commissions of approximately $5.2 million. At December 31, 2001, the Company held 208,857 shares of WebMD.

6.INVESTMENTS

The following summarizes the principal components of investments at December 31, 2001 (in thousands):

	Equity			Cost			Total
Balance, December 31, 2000	$	14,681		$	12,385		$	27,066
Investments	3,186			1,505			4,691
Amortization	(1,612		)	—			(1,612		)
Impairment	(16,255		)	(12,941		)	(29,196		)
Sale	—			(949		)	(949		)
Balance, December 31, 2001	$	—		$	—		$	—

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company continually evaluated the carrying value of its ownership interests in non-public investments in the PtekVentures portfolio for possible impairment that was “other than temporary” based on achievement of business plan objectives and current market conditions. The business plan objectives the Company considered include, among others, those related to financial performance such as achievement of planned financial results, forecasted operating cash flows and completion of capital raising activities and those that are not primarily financial in nature such as the development of technology or the hiring of key employees. The Company has previously taken impairment charges on certain of these investments when it has determined that an “other than temporary” decline in the carrying value of the investment has occurred. Many Internet based businesses experienced difficulty in raising additional capital necessary to fund operating losses and make continued investments that their management teams believed were necessary to sustain operations. Valuations of public companies operating in the Internet sector declined significantly during 2000 and 2001. During 2001, market conditions declined for the non-public companies in the PtekVentures portfolio, with certain of these companies filing for bankruptcy and subsequently being liquidated. The remaining portfolio companies’ financial performance and updated financial forecasts for the near term led management to the conclusion that there was an “other than temporary” decline in the carrying value of these companies. Accordingly, the Company decided to exit the venture business and cease future funding in its portfolio companies. As a result, the Company recorded an impairment charge of approximately $29.2 million during the second quarter of 2001 for the remaining carrying value of its non-public company investment portfolio. During 2000, the Company made similar evaluations of the portfolio companies and recorded approximately $15.0 million in impairments.

During the first quarter of 2001 and the latter half of 2000, the Company amortized goodwill created by investments that were accounted for under the equity method of accounting. The amount by which the Company’s investment exceeds its share of the underlying net assets is considered to be goodwill, and is amortized over a three-year period. Amortization related to equity investments totaled $1.6 million and $4.9 million in 2001 and 2000, respectively, and is included in the Consolidated Statements of Operations as “Amortization of goodwill-equity investments.” The decline in amortization in 2001 is the result of full impairments to these investments during the second quarter of 2001.

Further, during the fourth quarter of 2001, one of the portfolio companies that was previously impaired defaulted on its credit facility and lease obligation. The Company had provided a standby letter of credit on this credit facility and is a guarantor of the lease obligation. Accordingly, an obligation expense for these guarantees in the entire amount of $2.5 million was recorded at December 31, 2001. During the first quarter of 2002, the Company paid its commitment on the standby letter of credit in the amount of $0.5 million. See Note 20, “Commitments and Contingencies.”

Additionally, during the fourth quarter of 2001, the Company sold a significant portion of its interest in PtekVentures for proceeds and a gain of $0.2 million, primarily in the form of two notes that accrue interest at 5.05% annually and are due in full on December 31, 2011. A third party appraisal was performed to value the portfolio companies owned by PtekVentures. The purchaser is primarily owned by two former executives of PtekVentures. The Company has received an income tax refund of approximately $9.2 million from the capital loss carryback associated with the sale of this interest.

7.SALE OF RETAIL CALLING CARD REVENUE BASE

Effective August 1, 2000, the Company sold its Retail Calling Card operating segment’s revenue base to Telecare, Inc. (“Telecare”). The sale was valued at approximately $6.5 million and was financed by the Company in

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the form of two promissory notes with recourse to Telecare. The Company had extended the due date of the notes during the second half of 2001 until Telecare could obtain third party financing.

Effective August 1, 2000, the Company entered into a management services agreement with Telecare. This agreement was undertaken to ensure an effective transition of the revenue base by both the Company and Telecare. Under the terms of this agreement, the Company continued to provide telecommunications transport services, operational support and administrative support for the revenue base. The telecommunications transport services are provided on a wholesale basis similar to other customers in the Voicecom operating segment. Accordingly, the Company recognized these services as revenue in the Voicecom operating segment. The Company maintained the management services agreement with Telecare throughout 2001 while Telecare sought financing to pay its obligations to the Company.

During the first quarter of 2002, Telecare sought protection under Chapter 11 of the United States Bankruptcy Code. As of December 31, 2001, the Company had written off the uncollectible note receivable of $6.5 million and eliminated the deferred gain of $6.5 million associated with the original sale.

8.STRATEGIC ALLIANCE CONTRACT

In November 1996, the Company entered into a strategic alliance agreement with WorldCom, the second largest long-distance carrier in the United States. Under the agreement, WorldCom was required, among other things, to provide the Company with the right of first opportunity to provide enhanced computer telephone products for a period of at least 25 years. In connection with this agreement, the Company issued to WorldCom 2,050,000 shares of common stock valued at approximately $25.2 million (based on the average closing price of the Company’s shares for the five days through the effective date of the transaction, adjusted in consideration of the restrictions placed upon the shares), and paid WorldCom approximately $4.7 million in cash.

In the fourth quarter of 1998, the Company recorded a non-cash charge of $13.9 million to write-down the value of its strategic alliance intangible asset with WorldCom. This charge was required based upon management’s evaluation of revenue levels expected from this alliance. The Company reevaluated the carrying value and remaining life of the WorldCom strategic alliance in light of the expiration of certain minimum revenue requirements under the strategic alliance agreement and the level of revenues expected to be achieved from the alliance following the merger of WorldCom and MCI in the third quarter of 1998. Accordingly, The Company recorded a write-down in the carrying value of this investment based on estimated future cash flows discounted at a rate of 12%. In addition, the Company accelerated amortization of this asset effective in the fourth quarter of 1998 by shortening its estimated useful life to 3 years as compared with a remaining life of 23 years prior to the write-down.

In the second quarter of 2000, the Company expensed the remaining balance of the strategic alliance intangible asset as a result of the Company’s favorable settlement of a contractual dispute with WorldCom. As part of the settlement, the Company received $12.0 million in cash for terminating the strategic alliance contract with WorldCom. Accordingly, the Company expensed the net book value of this contract of approximately $6.9 million against the settlement proceeds of $12.0 million. In addition, the Company expensed approximately $1.3 million in legal costs associated with this settlement.

9.ACQUISITIONS AND DISPOSITIONS

Discontinued Operations

On March 26, 2002, the Company sold substantially all the assets of the Voicecom operating segment, exclusive of its Australian operations, to an affiliate of Gores Technology Group, for a total purchase price of approximately $22.4 million, comprised of cash and the assumption of certain liabilities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the fourth quarter of 2002, the Company assessed the Voicecom liabilities that were retained at the time of the sale and determined, based upon the activity in these accounts and the passage of time, that certain of these liabilities were no longer required. Thus, in the fourth quarter of 2002 an adjustment was made to these estimates reducing the loss on discontinued operations of approximately $2.9 million, net of taxes.

Of the Voicecom liabilities, approximately $4.3 million represents capital leases guaranteed by the Company.

In accordance with SFAS No, 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the transaction was accounted for as a discontinued operation. The revenues and pre-tax loss for the Voicecom operating segment for the twelve months ended December 31, 2002, 2001 and 2000 were (in millions:)

	2002			2001			2000
Revenue	$	15.8		$	92.5		$	133.7
Pre-tax loss		(5.8	)		(53.2	)		(19.0	)

In connection with the sale, the Company terminated its credit agreement with ABN AMRO Bank in all material respects.

Customer base acquisitions - Xpedite – 2001

During the first quarter of 2001, the Company acquired the store and forward fax customer base of Western Union in North America and the store and forward fax customer base of GN Comtext. The aggregate cash purchase price for these customer base assets was $5.8 million in 2001 with residual payments for GN Comtext of approximately $0.6 million and $0.2 million in 2002 and 2003, respectively.

Customer base acquisitions - Xpedite– 2000

During 2000, the Company acquired various store and forward fax customer bases in both the United States and Switzerland. The aggregate cash purchase price for these customer base assets was $2.6 million.

10.PROPERTY AND EQUIPMENT

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

	2002		2001
Computer and telecommunications equipment	$	103,517	$	185,611
Furniture and fixtures	18,715		20,390
Office equipment	9,598		12,184
Leasehold improvements	14,859		26,728
Construction in progress	—		74
Building	—		190
	146,689		245,177
Less accumulated depreciation	83,541		153,828
Property and equipment, net	$	63,148	$	91,349

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	2002		2001
Computer and telecommunications equipment		—		10,381
Furniture and fixtures	1,055		1,384
Subtotal	1,055		11,765
Less accumulated depreciation	214		2,548
Property and equipment, net	$	841	$	9,217

In 2001, the Company made additions to assets under capital lease obligations of approximately $5.9 million primarily associated to continued network equipment acquisitions associated with Voicecom’s network upgrade and consolidation and Xpedite’s worldwide headquarters build-out. The capital leases associated with Voicecom were included in the 2002 sale of the operating unit to Gores Technology.

11.GOODWILL AND INTANGIBLE ASSETS

Goodwill and intangible assets consist of the following amounts for December 31, 2002 and 2001 (in thousands):

	2002		2001
Goodwill	$	377,961	$	377,961
Less accumulated amortization	254,895		254,895
	$	123,066	$	123,066
Customer lists	$	56,633	$	67,942
Developed technology	34,300		44,161
Assembled workforce	—		7,500
	90,933		119,603
Less accumulated amortization	83,131		97,723
	$	7,802	$	21,880

Intangible assets by reportable segment at December 31, 2002 and 2001 (in thousands):

	Conferencing		Xpedite		Total
Goodwill carrying value at December 31, 2001	$	25,523	$	97,543	$	123,066
Additions	—		—		—
Impairment	—		—		—
Amortization	—		—		—
Goodwill carrying value at December 31, 2002	$	25,523	$	97,543	$	123,066

	Conferencing			Xpedite			Total
Intangibles carrying value at December 31, 2001	$	2,561		$	19,319		$	21,880
Additions	—			—			—
Impairment	—			(3,202		)	(3,202		)
Amortization	(1,464		)	(9,412		)	(10,876		)
Intangibles carrying value at December 31, 2002	$	1,097		$	6,705		$	7,802

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amortization expense on existing intangible assets is expected to be approximately $3.9 million, $2.0 million and $1.9 million in 2003, 2004 and 2005, respectively. See Note 12—“Asset Impairments” for further discussion.

12.ASSET IMPAIRMENTS

The following table summarizes the asset impairments from continuing operations incurred by operating segment for the years ended December 31, 2002, 2001 and 2000 (in thousands):

	Xpedite		Conferencing		Holding Co.		Total
2002
Other intangibles	$	3,202	$	—	$	—	$	3,202
2001
Goodwill	$	91,571					$	91,571
Other intangibles	6,679						6,679
Property and equipment, net	777		984		785		2,546
	$	99,027	$	984	$	785	$	100,796
2000
Property and equipment, net	$	800		—		—	$	800

Effective January 1, 2002, the Company adopted SFAS No. 144, “Accounting for the Impairment of Disposal of Long Lived Assets.” During the fourth quarter of 2002 the Company assessed the carrying value of the customer lists at Xpedite pursuant to SFAS No. 144, as Xpedite experienced a decline in revenue in certain international markets during the later half of 2002. Using the best-estimate approach, the fair value of certain customer lists associated with the markets experiencing the declines were determined to be less than the carrying value at December 31, 2002, resulting in a $3.2 million asset impairment.

During the second half of 2001, the Company experienced declines in revenue at its Xpedite operating segment. During the fourth quarter of 2001, the Company assessed the outlook of various service offering revenues and evaluated the potential impairment of various assets associated with the operating equipment, goodwill and other intangible assets of Xpedite pursuant to SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-lived Assets to be Disposed Of.” Management reviewed the identifiable undiscounted future cash flows, including the estimated residual value to be generated by the assets to be held and used by the business acquired in Xpedite at their asset grouping level. Based on the results of these assessments, the Company recorded the $100.8 million impairment in the fourth quarter of 2001 from continuing operations ($99.0 million of which was related to Xpedite, as discussed further below).

Xpedite impairment - 2001

In Xpedite, a decline in the legacy store and forward fax revenues and weakness in the European and Asia Pacific regions of the business began to occur in the latter part of the third quarter and the early part of the fourth quarter of 2001. Accordingly, management was concerned that a fair value assessment would potentially be lower than the carrying value on the balance sheet. A third party appraisal was performed using a discounted cash flow income approach to valuing the business using a 15% discount rate. The valuation resulted in an asset impairment related to the Xpedite operating segment of $99.0 million to reflect the carrying value in excess of fair value at December 31, 2001. Of the $99.0 million, property and equipment impairments of $0.7 million at Xpedite related primarily to the abandonment of its Indonesian operations due to declining revenues and profits. Indonesia represented less than 1% of Xpedite’s revenues.

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Other impairments - 2001

Additionally, management recorded asset impairments totaling $1.8 million related to the carrying value of capitalized software associated with certain internal information systems at both Premiere Conferencing and the Holding Company that have been taken out of service.

Real-time fax impairment - 2000

With the deregulation of most Asian telecommunications markets, Xpedite’s cost advantage dissipated, and Xpedite decided to exit this service and concentrate on higher value-added services such as transactional messaging and messageREACH. The asset impairments of $0.8 million included the write-down of furniture and fixtures and real-time fax equipment including autodialers, faxpads and computers. The valuation was based on the fair value of the assets as of December 31, 2000. All equipment costs were incurred in conjunction with the closing of the real-time fax operations in Malaysia, Singapore, Hong Kong, Taiwan and Korea.

13.INDEBTEDNESS

Long term debt and capital lease obligations at December 31 is as follows (in thousands):

	2002		2001
Notes payable to banks	$	75	$	207
Equipment term loan	7,081		6,100
Capital lease obligations	571		8,369
Subtotal	$	7,727	$	14,676
Less current portion	4,320		6,124
	$	3,407	$	8,552

In June 2002, the Company entered into a term equipment loan with Commercial Federal Bank. The loan proceeds of $4.0 million were used for equipment purchases associated with the Premiere Conferencing operating segment. The term of the loan is thirty-six months and the annual interest rate is 5.5%. The loan is collateralized by certain fixed assets of the Company. The loan agreement contains certain covenants that are usual and customary. At December 31, 2002, the Company was in compliance with all covenants under the loan agreement. At December 31, 2002 amounts outstanding on this term loan were $3.5 million.

In September 2001, the Company entered into a term equipment loan with United Missouri Bank. The loan proceeds of $6.5 million were used for equipment purchases associated with the Premiere Conferencing operating segment. The term of the loan is thirty months and the annual interest rate is 6.0%. The loan is collateralized by certain fixed assets of the Company. The loan agreement contains certain covenants that are usual and customary. At December 31, 2002, the Company was in compliance with all covenants under the loan agreement. At December 31, 2002 and 2001, amounts outstanding on this term loan were $3.6 million and $6.1 million, respectively.

In June 2001, the Company entered into a capital lease obligation for headquarter expansion at Xpedite for approximately $1.1 million. The term of the lease is thirty-six months with a yield of 12.6%. At December 31, 2002 and 2001, amounts outstanding on this lease were approximately $0.6 million and 0.9 million, respectively.

During 2001, the Company also entered into four capital lease obligations in the aggregate amount of $4.8 million. The interest rates implied in these capital leases are both fixed and variable in nature and on average yield approximately 7.7% interest. The leases were to fund the network equipment used in consolidating and upgrading Voicecom’s voice messaging network. The terms of these capital leases range from 36 to 60 months. These leases were transferred with the sale of the Voicecom business unit. See Note 9—“Acquisitions and Dispositions.”

In September 2000, the Company entered into a credit agreement (the “Agreement”) for a one-year revolving credit facility with ABN AMRO Bank N.V. (the “Bank” or “Agent”). The Agreement provides for

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borrowings of up to $20.0 million, and is subject to certain covenants that are usual and customary for credit agreements of this nature. The commitment to provide revolving credit loans under the Agreement terminates 364 days from September 29, 2000, subject to extension. The Company extended the agreement at September 30, 2001 for 364 days. The agreement was amended to provide for borrowings up to $13.5 million and is subject to certain covenants that management believes are usual and customary for credit agreements of this nature. Amounts outstanding under the Agreement on the expiration date may, at the option of the Company, either be paid in full or converted to a one-year term loan payable in four equal quarterly installments. Proceeds drawn under the Agreement may be used for capital expenditures, working capital, acquisitions, investments, refinancing of existing indebtedness, and other general corporate purposes. The annual interest rate applicable to borrowings under the Agreement is, at the Company’s option, (i) the Agent’s Base Rate plus 1.25 percent or (ii) the Euro Rate (LIBOR) plus 3.50 percent. Amounts committed but not drawn under the Agreement are subject to a commitment fee equal to 0.50 percent per annum. The Company terminated the Agreement on March 26, 2002 in connection with the sale of its Voicecom business unit.

In July 1997, the Company issued convertible subordinated notes (“Convertible Notes”) of $172.5 million that mature on July 1, 2004 and bear interest at 5-3/4%. The Convertible Notes are convertible at the option of the holder into common stock at a conversion price of $33 per share, through the date of maturity, subject to adjustment in certain events. Beginning in July 2000, the Convertible Notes were redeemable by the Company at a price equal to 103% of the conversion price, declining to 100% at maturity with accrued interest. The annual interest commitment associated with these notes is $9.9 million and is paid semiannually on July 1 and January 1 of each year.

As of December 31, 2002, future minimum capital lease payments and principal maturities under indebtedness, excluding notes payable to banks, are as follows (in thousands):

Year	Capital Leases		Term Loan		Convertible Subordinated Notes		Total
2003	$	424	$	4,260	$	—	$	4,684
2004	211		2,386		172,500		175,097
2005	—		858				858
2006	—		—				—
2007	—		—		—		—
Thereafter	—		—		—		—
Net minimum payments	$	635	$	7,504	$	172,500	$	180,639
Less amount representing interest	64		423
Present value of net minimum payments	571		7,081
Less current portion	367		3,953
Obligations under capital lease and equipment term loan, net of current portion	$	204	$	3,128

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14.ACCRUED EXPENSES

Accrued expenses at December 31 are as follows: (in thousands):

	2002		2001
Accrued wages, wage related taxes and benefits	$	11,679	$	18,522
Interest payable	4,994		4,992
Accrued commissions	3,511		4,279
Accrued regulatory surcharges	—		2,720
Accrued obligations – investments	2,000		2,500
Accrued professional fees	2,050		—
Other	8,085		9,720
	$	32,319	$	42,733

15.FINANCIAL INSTRUMENTS

The estimated fair value of certain financial instruments at December 31, 2002 and 2001 is as follows (in thousands):

	2002				2001
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents	$	68,777	$	68,777	$	48,023	$	48,023
Marketable securities, available for sale.	641		641		1,477		1,477
Convertible subordinated notes (see Note 13)	172,500		150,075		172,500		125,063
Notes payable, long-term debt and capital leases (see Note 13)		7,727		7,727		14,676		14,676

The carrying amount of cash and cash equivalents, marketable securities, accounts receivable and payable, and accrued expenses approximates fair value due to their short maturities. The fair value of the Convertible Notes is estimated based on market quotes. The carrying value of notes payable, long-term debt and capital lease obligations does not vary materially from fair value at December 31, 2002 and 2001.

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16.EQUITY BASED COMPENSATION CHARGES AND SHAREHOLDERS’ EQUITY

Equity Based Compensation Charges

The following summarizes the components of equity-based compensation expense for the years ended December 31, 2002, 2001 and 2000 (in thousands, except share data):

	Earned			Unearned
2002	Shares	Dollars		Shares	Dollars
Deferred compensation for the vesting of restricted shares issued in option exchange	401,950	$	1,335	185,112	$	615
Deferred compensation for the vesting of restricted shares issued to executive management	160,000	536		416,000	1,298
	561,950	$	1,871	601,112	$	1,913
2001
Options exchanged for restricted shares	1,765,969	$	5,807	638,592	$	2,120
Restricted shares issued to executive management	826,194	2,483		576,000	1,740
Note forgiveness related to restricted shares in former affiliates and related taxes (see Note 19)		11,072
Compensation to management in association with restricted shares in former affiliates		497
Options and restricted shares issued for services rendered	15,000	570
	2,607,163	$	20,429	1,214,592	$	3,860
2000
Deferred compensation for restricted shares in former Affiliates (see Note 19)		$	2,102

Options exchanged for restricted shares

Due to declines in the Company’s share price over the course of the last several years, most of the employee and director option holders had options with exercise prices in excess of the market price of Company stock. In order to provide better performance incentives for employees and directors and to align the employees’ and directors’ interests with those of the shareholders, in the fourth quarter of 2001 the Company offered an exchange program in which it granted one restricted share of common stock in exchange for every 2.5 options tendered. Approximately 6.0 million employee and director stock options were exchanged for approximately 2.4 million shares of restricted stock on December 28, 2001, the date of the exchange. The restricted shares maintain the same vesting schedules as those of the original options exchanged, except that in the case of tendered options that were vested on the exchange date, the restricted shares received in exchange therefore vested on the day after the exchange date. To the extent options were vested at the exchange date, the Company recognized equity based compensation expense determined by using the closing price of the Company’s common stock at December 28, 2001, which was $3.32 a share. To the extent that restricted shares were received for unvested options exchanged, this cost was deferred on the balance sheet under the caption “Unearned restricted share compensation.” This value was also determined using the closing price of the Company’s common stock at the date of the exchange. The unearned restricted share compensation will be recognized as equity based compensation expense as these shares vest. In 2002 approximately 402,000 shares vested and equity based compensation expense of $1.3 million was recognized. Assuming all employees at December 31, 2002 will remain employed by the Company through their vesting period, the equity based compensation expense in future years resulting from the restricted shares issued in the option exchange will be $0.4 million in 2003 and $0.2 million in 2004. See further discussion in “Restricted Stock Exchange Offer” section of Note 17—“Equity Based Compensation Plans.”

In addition, approximately 890,000 options that were eligible to be exchanged for restricted shares pursuant to the exchange offer were not tendered. At December 31, 2002 the option count was approximately 627,000 due to

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the sale of Voicecom and other cancellations of these options. These options will be subject to variable accounting until such options are exercised, are forfeited, or expire unexercised. These options have exercise prices ranging from $5.32 to $29.25. At December 31, 2002 and 2001, no charge was recorded because the exercise price of each of the options was greater than the market value of the Company’s common stock.

Restricted shares issued to management

Certain members of management of the Company were awarded discretionary bonuses in the form of restricted shares in November 2001. The purpose of these discretionary bonuses was to better align executive management’s performance with the interests of the shareholders. Certain of these restricted shares vested immediately in 2001 and were restricted from trading for a one-year period. The remaining restricted shares vest straight line through 2004 and the equity based compensation expense recorded in 2002 was $0.5 million. The anticipated remaining equity based compensation expense resulting therefrom will be approximately $0.6 million per year for 2003 and 2004.

Loans and note forgiveness associated with restricted shares in former affiliates and related taxes

During the second quarter of 1999, the Company awarded restricted share grants to the CEO, COO and certain other officers of Company-owned shares held in certain investments in affiliates made in connection with its PtekVentures activities. The vesting periods for these shares ranged from immediately upon grant to three years, contingent on the executive being employed by the Company. In connection with this action, the Company recorded a non-cash charge of $1.2 million in 2000 related to the vesting of these grants.

In 1999 and 2000, the Company loaned $6.3 million with recourse to the current CEO and COO to pay taxes in connection with these restricted share grants. These loans were due on December 31, 2006, accrued interest at 6.20% and were secured by the restricted shares granted. In March 2000, the Company agreed to forgive one-seventh of the principal plus accrued interest on such loans as of December 31, 2000, provided that the executives were employees of the Company on that date. Such amounts were forgiven as of December 31, 2000.

In 2001, the Company agreed to forgive the remaining balance of the recourse tax loans to the CEO and COO, effective as of December 31, 2001, provided that the executives were employees of the Company on that date. The principal and interest forgiven was $5.8 million and the employee tax liability assumed by the Company was $5.3 million. The tax liability was paid primarily in the first quarter of 2002.

Compensation to management in association with restricted shares in former affiliates

In 2001, the Company approved discretionary bonuses in the aggregate amount of $0.5 million to two executive vice presidents of the Company who were awarded restricted share grants in affiliates during the second quarter of 1999, which shares had lost significant market value since the dates of grant.

Options and restricted shares issued for services rendered

In 2001, the Company issued stock options and restricted shares to consultants for various consulting services performed for the Company.

Shareholders’ Equity Components

Stock option exercises

During 2002, 2001 and 2000, stock options were exercised under the Company’s stock option plans. None of the options exercised qualified as incentive stock options, as defined in Section 422 of the Internal Revenue Code (the “Code”). Approximately $1.2 million, $0.0 million and $1.6 million was recorded as increases in additional paid-in capital reflecting tax benefits to be realized by the Company as a result of the exercise of such options during

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the years ended December 31, 2002, 2001 and 2000, respectively.

Stock repurchase program

In the second quarter of 2000, the Company’s Board of Directors authorized a stock repurchase program under which PTEK may purchase up to 10% of the then outstanding shares of its Common Stock, or approximately 4.8 million shares. During 2002, the Company repurchased approximately 1.8 million shares of its Common Stock under the program for approximately $6.6 million. During 2001, the Company repurchased approximately 1.1 million shares of its Common Stock under this program for approximately $3.1 million. In January 2003 the Board of Directors of the Company approved an increase in its 2000 stock repurchase program by authorizing the repurchase of up to an additional 10% of the Company’s outstanding Common Stock, or approximately 5.4 million shares.

401(k) plan

The Company issued 405,241 and 1,108,109 shares of its common stock during 2002 and 2001 respectively at a value of $1.6 million in each year to fund its discretionary employee contribution match under the Company’s 401(k) plan.

Associate stock purchase plan

The Company offers an Associate Stock Purchase Plan to provide eligible employees an opportunity to purchase shares of its common stock through payroll deductions. See Note 17—“Equity Based Compensation Plans” for plan details. Approximately 378,002, 480,965 and 479,000 shares of common stock valued at approximately $0.9 million, $0.8 million and $1.4 million were issued under this plan in 2002, 2001 and 2000, respectively. The ASPP was terminated effective January 14, 2003.

Options exchanged for restricted shares

See description of activity included in “Equity Based Compensation Charges” section above.

Options and restricted shares issued for services rendered

See description of activity included in “Equity Based Compensation Charges” section above.

Shares issued for legal settlement

During 2002, the Company issued approximately 249,000 shares and $1.8 million in cash as payment of the class action lawsuit, net of legal expenses. The aggregate value of the shares was approximately $1.3 million and is included in common stock and additional paid in capital. During 2001, the Company issued 100,000 shares as part of a legal settlement with a former executive of the Company. This legal settlement was accrued for in prior years. The aggregate value of the shares issued on the date of the settlement was approximately $0.3 million and appears as an increase in common stock and additional paid in capital.

Shareholder notes receivable

The shareholder notes receivable relates to transactions where the Company made loans to the CEO of the Company and to a limited partnership in which the CEO has an indirect interest in association with exercises of options to purchase the Company’s common stock. Loan advances totaled $0.8 million and $2.8 million during 2001 and 2000, respectively. See Note 19—“Related Party Transactions.”

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17.EQUITY BASED COMPENSATION PLANS

The Company has four equity based compensation plans, the 1994 Stock Option Plan, the 1995 Stock Plan (the “1995 Plan”), the 1998 Stock Plan (the “1998 Plan”) and the 2000 Directors Stock Plan (the “Directors Plan”), which provide for the issuance of restricted stock, stock options, warrants or stock appreciation rights to employees, directors, non-employee consultants and advisors of the Company. These plans are administered by committees consisting of members of the board of directors of the Company.

Options for all 960,000 shares of common stock available under the 1994 Stock Option Plan have been granted. All such options are non-qualified, provide for an exercise price equal to fair market value at date of grant, vest ratably over three years and expire eight years from date of grant.

The 1995 Plan provides for the issuance of stock options, stock appreciation rights (“SARs”) and restricted stock to employees. A total of 9,650,000 shares of common stock has been reserved in connection with the 1995 Plan. Options issued under the 1995 Plan may be either incentive stock options, which permit income tax deferral upon exercise of options, or nonqualified options not entitled to such deferral.

Sharp declines in the market price of the Company’s common stock resulted in many outstanding employee stock options being exercisable at prices that exceeded the current market price of the Company’s common stock, thereby substantially impairing the effectiveness of such options as performance incentives. Consistent with the Company’s philosophy of using equity incentives to motivate and retain management and employees, the Board of Directors determined it to be in the best interests of the Company and its shareholders to restore the performance incentives intended to be provided by employee stock options by repricing such options. Consequently, on July 22, 1998 the Board of Directors of the Company determined to reprice or regrant all employee stock options which had exercise prices in excess of the closing price on such date (other than those of Chief Executive Officer Boland T. Jones) to $10.25, which was the closing price of the Company’s common stock on such date. While the vesting schedules remained unchanged, the repriced and regranted options were generally subject to a twelve-month black-out period, during which the options could not be exercised. If an optionee’s employment was terminated during the black-out period, he or she would forfeit any repriced or regranted options that first vested during the twelve-month period preceding his or her termination of employment. On December 14, 1998, the Board of Directors determined to reprice or regrant at an exercise price of $5.50, all employee stock options which had an exercise price in excess of $5.50, which was above the closing price of the Company’s common stock on such date. Again, the vesting schedules remained the same and the repriced or regranted options were generally subject to a twelve-month black-out period during which the options could not be exercised. If the optionee’s employment was terminated during the black-out period, he or she would forfeit any repriced or regranted options that first vested during the twelve month period preceding his or her termination of employment. By imposing the black-out and forfeiture provisions on the repriced and regranted options, the Board of Directors intended to provide added incentive for the optionees to continue service.

On July 22, 1998, the Board of Directors approved the 1998 Plan, which essentially mirrors the terms of the 1995 Plan except that it is not intended to be used for executive officers or directors. In addition, the 1998 Plan, because the shareholders did not approve it, does not provide for the grant of incentive stock options. Under the 1998 Plan, 8,000,000 shares of common stock are reserved for the grant of nonqualified stock options and other incentive awards to employees and consultants of the Company.

The Company has adopted the Associate Stock Purchase Plan (“ASPP”) to encourage associates of PTEK to acquire a proprietary interest, or to increase their existing interest in the Company. The company has reserved 1,750,000 shares of common stock for purchase by associates under the plan. All employees who have worked a minimum of 20 hours per week for at least five months of each calendar year and who have completed two months of consecutive service are eligible to participate and purchase stock through payroll deductions. The purchase price of the stock is equal to 85% of the fair market value of the common stock on either the purchase date or the offering date of each six month subscription period, whichever is lower. Purchases under the ASPP are limited to 20% of an associate’s compensation for any pay period and a maximum fair market value of $25,000 for a calendar year. Approximately 378,000, 481,000 and 479,000 shares of common stock valued at approximately $0.9 million, $0.8

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PTEK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

million and $1.4 million were issued under the ASPP in 2002, 2001 and 2000 respectively. The ASPP was terminated effective January 14, 2003.

On April 26, 2000 the Board of Directors approved the Directors Plan which was subsequently approved by the shareholders on June 7, 2000. On June, 5, 2002, the shareholders approved an increase in the shares available for awards by 1.0 million. The class of persons to participate in this plan consists solely of persons who, at the date of grant of Options, are Directors of the Company and are not employed by the Company or any of its subsidiaries or affiliates. Under the Directors Plan, the maximum number of shares that may be issued is 2.0 million, of which no more than 10% shall be granted in the form of restricted stock, subject to antidilution adjustments as defined by the Plan.

Restricted Stock Exchange Offer

Due to declines in the Company’s share price over the course of the last several years, most of the employee and director option holders had options with exercise prices in excess of the market price of Company stock. In order to provide better performance incentives for employees and directors and to align the employees’ and directors’ interests with those of the shareholders, in the fourth quarter of 2001 the Company offered an exchange program in which it granted one restricted share of common stock in exchange for every 2.5 options tendered. Approximately 6.0 million employee and director stock options were exchanged for approximately 2.4 million shares of restricted stock on December 28, 2001, the date of the exchange. The restricted shares maintain the same vesting schedules as those of the original options exchanged, except that in the case of tendered options that were vested on the exchange date, the restricted shares received in exchange therefore vested on the day after the exchange date. To the extent options were vested at the exchange date, the Company recognized equity based compensation expense determined by using the closing price of the Company’s common stock at December 28, 2001, which was $3.32 a share. To the extent that restricted shares were received for unvested options exchanged, this cost was deferred on the balance sheet under the caption “Unearned restricted share compensation.” This value was also determined using the closing price of the Company’s common stock at the date of the exchange. The unearned restricted share compensation will be recognized as equity based compensation expense as these shares vest. In 2002 approximately 402,000 shares vested and equity based compensation expense of $1.3 million was recognized. Assuming all employees at December 31, 2002 will remain employed by the Company through their vesting period, the equity based compensation expense in future years resulting from the restricted shares issued in the option exchange will be $0.4 million in 2003 and $0.2 million in 2004. See further discussion in “Restricted Stock Exchange Offer” section of Note 17—“Equity Based Compensation Plans.”

In accordance with FASB Interpretation No. 44, “Accounting For Certain Transactions Involving Stock Compensation—An Interpretation of APB Opinion No. 25,” the Company recorded approximately $2.1 million as unearned compensation for the intrinsic value of the restricted stock on the effective date of the exchange offer, calculated using the closing price of the Company’s common stock on December 28, 2001. The unearned compensation will be amortized to “Equity based compensation” expense over the vesting period of the restricted stock of which approximately $1.3 million vested in 2002.

In addition, approximately 890,000 options at December 31, 2001 that were eligible to be exchanged for restricted stock pursuant to the exchange offer were not tendered. At December 31, 2002 the option count was approximately 627,000 due to the sale of Voicecom and other cancellations of these options. These options will be subject to variable accounting until such options are exercised, are forfeited, or expire unexercised. These options have exercise prices ranging from $5.32 to $29.25. At December 31, 2002 and 2001, no charge was recorded because the exercise price of each of the options was greater than the market value of the Company’s common stock.

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A summary of the status of the Company’s stock plans is as follows:

Fixed Options	Shares		Weighted Average Exercise Price
Options outstanding at December 31, 1999	14,370,676		$	6.13
Granted	3,906,375		5.90
Exercised	(2,374,778	)	2.55
Forfeited	(1,410,991	)	6.04
Options outstanding at December 31, 2000	14,491,282		$	6.67
Granted	3,589,584		2.65
Exercised	(158,551	)	0.07
Exchanged for restricted shares	(6,008,327	)	6.23
Forfeited	(1,649,555	)	6.34
Options outstanding at December 31, 2001	10,264,433		$	5.49
Granted	933,710		3.44
Exercised	(548,117	)	0.54
Forfeited	(1,677,173	)	6.59
Options outstanding at December 31, 2002	8,972,853		$	5.36

The following table summarizes information about stock options outstanding at December 31, 2002:

Range of Exercise Prices	Options Outstanding	Weighted Average Exercise Remaining Life	Weighted Average Exercise Price of Options Outstanding		Options Exercisable	Weighted Average ExercisePrice of Options Exercisable
$0 - $4.99	4,225,148	5.92	$	2.75	2,088,378	$	2.27
$5.00 - $9.99	3,927,262	3.40	5.96		3,762,744	5.98
$10.00 - $14.99	438,656	2.40	10.38		438,656	10.38
$15.00 - $30.00	381,787	1.69	22.32		381,787	22.32
	8,972,853	4.46	$	5.36	6,671,565	$	6.04

For options granted during 2001 whose exercise price was less than the market price of the stock on the date of the grant, the weighted average exercise price is $0.21 per share and the weighted average fair market value is $2.74. Options exercisable at December 31, 2001 and 2000 were 7,174,254 and 9,221,971, respectively.

18.EMPLOYEE BENEFIT PLANS

The Company sponsors a defined contribution retirement plan covering substantially all full-time employees. This plan allows employees to defer a portion of their compensation and associated income taxes pursuant to Section 401(k) of the Internal Revenue Code. The Company may make discretionary contributions for the benefit of employees under this plan. The Company made contributions of $1.6 million in 2002, 2001 and 2000, respectively.

19.RELATED-PARTY TRANSACTIONS

The Company has in the past entered into agreements and arrangements with certain officers, directors and principal shareholders of the Company.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Loans and note forgiveness associated with restricted shares in former affiliates and related taxes

During the second quarter of 1999, the Company awarded restricted share grants to the CEO, COO and certain other officers of Company-owned shares held in certain investments in affiliates made in connection with its PtekVentures activities. The vesting periods for these shares ranged from immediately upon grant to three years, contingent on the executive being employed by the Company. In connection with this action, the Company recorded a non-cash charge of $1.2 million in 2000 related to the vesting of these grants.

In 1999 and 2000, the Company loaned $6.3 million with recourse to the current CEO and COO to pay taxes in connection with these restricted share grants. These loans were due on December 31, 2006, accrued interest at 6.20% and were secured by the restricted shares granted. In March 2000, the Company agreed to forgive one-seventh of the principal plus accrued interest on such loans as of December 31, 2000, provided that the executives were employees of the Company on that date. Such amounts were forgiven as of December 31, 2000.

In 2001, the Company agreed to forgive the remaining balance of the recourse tax loans to the CEO and COO, effective as of December 31, 2001, provided that the executives were employees of the Company on that date. The principal and interest forgiven was $5.8 million and the employee tax liability assumed by the Company was $5.3 million. The tax liability was paid primarily in the first quarter of 2002.

Notes receivable – shareholder

The Company has made loans to the CEO of the Company and a limited partnership in which he has an indirect interest. These loans were made pursuant to the CEO’s 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 between 2007 and 2010. These loans, including accrued interest, are recorded in the equity section of the balance sheet under the caption “Notes receivable, shareholder.” At December 31, 2002, the aggregate amount of these loans was $5.0 million.

Notesreceivable – employees

During 2002, the Company loaned approximately $2.0 million with recourse to certain members of management to pay taxes in connection with the restricted shares issued in exchange for options in December 2001 and the discretionary restricted shares issued in November 2001. These loans are due in 2012, accrue interest at a weighted average rate of 5.5%, and are secured by the restricted shares granted. The total interest accrued on these loans as of December 31, 2002 was approximately $0.1 million. The Company is obligated to make additional loans to pay taxes associated with the future vesting of restricted shares, but the dollar amount of such loans cannot be determined at this time.

Use of airplane

During 2002, 2001 and 2000, the Company leased the use of an airplane from a limited liability company that is owned 99% by the Company’s CEO and 1% by the Company. In connection with this lease arrangement, the Company has incurred costs of $1.9 million, $2.2 million and $1.8 million in 2002, 2001 and 2000, respectively, to pay the expenses of maintaining and operating the airplane.

Strategic co-marketing arrangement

The Company had a strategic co-marketing arrangement with WebMD, a former affiliate. The terms of the agreement provided for WebMD to make an annual minimum commitment of $2.5 million for four years to purchase the Company’s products. The Company in turn was obligated to purchase portal rights from WebMD for $4 million over four years to assist in marketing its products. Under this agreement, which expires on February 17, 2003, the Company recognized revenue of approximately $2.5 million in each of 2002, 2001 and 2000. WebMD

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also subleased floor space in the Company’s headquarters for approximately $0.7 million in each of the two years ended December 31, 2001 and 2000.

20.COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments

The Company leases computer and telecommunications equipment, office space and other equipment under noncancelable lease agreements. The leases generally provide that the Company pay the taxes, insurance and maintenance expenses related to the leased assets. Future minimum lease payments for noncancelable operating leases as of December 31, 2002 are as follows (in thousands):

2003	$	12,879
2004	11,191
2005	10,274
2006	8,870
2007	6,095
Thereafter	8,436
Net minimum lease payments	$	57,745

Rent expense under operating leases was approximately $10.2 million, $8.0 million and $7.6 million for the years ended December 31, 2002, 2001 and 2000, respectively. Facilities rent is reduced by sublease income of approximately $0.0 million, $0.7 million and $0.6 million for the years ended December 31, 2002, 2001 and 2000, respectively.

Supply Agreements

The Company obtains telecommunications services pursuant to supply agreements with telecommunications service providers. These contracts generally provide fixed transmission prices for terms of three to five years, but are subject to early termination in certain events. No assurance can be given that the Company will be able to obtain telecommunications services in the future at favorable prices or at all, and the unavailability of telecommunications services, or a material increase in the price at which the Company is able to obtain telecommunications services, would have a material adverse effect on the Company’s business, financial condition and results of operations. The Company is currently a party to telecommunications service contracts with certain service providers that require the Company to purchase a minimum amount of services through 2006. These costs are approximately $13.7 million, $9.5 million, $1.4 million and $0.5 million in 2003, 2004, 2005 and 2006, respectively. The total amount of the minimum purchase requirements in 2002 was approximately $9.1 million, of which the Company incurred costs in excess of these minimums.

Litigation and Claims

The Company has several litigation matters pending, as described below, which it is defending vigorously. Due to the inherent uncertainties of the litigation process and the judicial system, the Company is unable to predict the outcome of such litigation matters. If the outcome of one or more of such matters is adverse to the Company, it could have a material adverse effect on the Company’s business, financial condition and results of operations.

A lawsuit was filed on November 4, 1998 against the Company and certain of its officers and directors in the Southern District of New York. Plaintiffs are shareholders of Xpedite who acquired common stock of the Company as a result of the merger between the Company and Xpedite in February 1998. Plaintiffs’ allegations are based on the representations and warranties made by the Company in the prospectus and the registration statement related to the merger, the merger agreement and other documents incorporated by reference, regarding the Company’s acquisitions of Voice-Tel and VoiceCom Systems, the Company’s roll-out of Orchestrate, the Company’s relationship with customers Amway Corporation and DigiTEC, 2000, and the Company’s 800-based

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calling card service. Plaintiffs allege causes of action against the Company for breach of contract, against all defendants for negligent misrepresentation, violations of Sections 11 and 12(a)(2) of the Securities Act of 1933 and against the individual defendants for violation of Section 15 of the Securities Act. Plaintiffs seek undisclosed damages together with pre- and post-judgment interest, recission or recissory damages as to violation of Section 12(a)(2) of the Securities Act, punitive damages, costs and attorneys’ fees. The defendants’ motion to transfer venue to Georgia has been granted. The defendants’ motion to dismiss has been granted in part and denied in part. The defendants filed an answer on March 30, 2000. On January 22, 2002, the court ordered the parties to mediate. The parties did so on February 8, 2002. On October 17, 2002, the Defendants filed a Motion for Summary Judgment and a Motion in Limine to exclude the testimony of the Plaintiffs’ expert. Both motions are pending.

On February 23, 1998, Rudolf R. Nobis and Constance Nobis filed a complaint in the Superior Court of Union County, New Jersey against 15 named defendants including Xpedite and certain of its alleged current and former officers, directors, agents and representatives. The plaintiffs allege that the 15 named defendants and certain unidentified “John Doe defendants” engaged in wrongful activities in connection with the management of the plaintiffs’ investments with Equitable Life Assurance Society of the United States and/or Equico Securities, Inc. (collectively “Equitable”). The complaint asserts wrongdoing in connection with the plaintiffs’ investment in securities of Xpedite and in unrelated investments involving insurance-related products. The defendants include Equitable and certain of its current or former representatives. The allegations in the complaint against Xpedite are limited to plaintiffs’ investment in Xpedite. The plaintiffs have alleged that two of the named defendants, allegedly acting as officers, directors, agents or representatives of Xpedite, induced the plaintiffs to make certain investments in Xpedite but that the plaintiffs failed to receive the benefits that they were promised. Plaintiffs allege that Xpedite knew or should have known of alleged wrongdoing on the part of other defendants. Plaintiffs seek an accounting of the corporate stock in Xpedite, compensatory damages of approximately $4.9 million, plus $200,000 in “lost investments,” interest and/or dividends that have accrued and have not been paid, punitive damages in an unspecified amount, and for certain equitable relief, including a request for Xpedite to issue 139,430 shares of common stock in the plaintiffs’ names, attorneys’ fees and costs and such other and further relief as the court deems just and equitable. This case has been dismissed without prejudice and compelled to NASD arbitration, which has commenced. In August 2000, the plaintiffs filed a statement of claim with the NASD against 12 named respondents, including Xpedite (the “Nobis Respondents”). The claimants allege that the 12 named respondents engaged in wrongful activities in connection with the management of the claimants’ investments with Equitable. The statement of claim asserts wrongdoing in connection with the claimants’ investment in securities of Xpedite and in unrelated investments involving insurance-related products. The allegations in the statement of claim against Xpedite are limited to claimants’ investment in Xpedite. Claimants seek, among other things, an accounting of the corporate stock in Xpedite, compensatory damages of not less than $415,000, a fair conversion rate on stock options, losses on the investments, plus interest and all dividends, punitive damages, attorneys’ fees and costs. Hearings before the NASD panel were held on November 27-29, 2001, January 22-24, 2002, February 4-7, 2002, April 9-19, 2002, and May 30, 2002. On July 31, 2002, the NASD Panel issued its Award. The Award was subsequently amended on September 9, 2002. The Panel, among other things, held Xpedite, along with co-Respondents Angrisani, Erb, and CEA Financial, jointly and severally liable to Claimant Constance Nobis for $50,000, plus 9% simple interest from January 1, 1999 until September 9, 2002. The Panel also held Angrisani, Erb, and CEA Financial jointly and severally liable to Xpedite for $50,000, plus 9% simple interest from January 1, 1999 until September 9, 2002. Xpedite has filed a Notice of Petition, Verified Petition to Vacate Arbitration Award, and Request for Judicial Intervention in New York State. That proceeding is pending. At a hearing on January 10, 2003, the New Jersey Superior Court affirmed the NASD Award. No order or judgment, however, has been issued by the New Jersey Superior Court.

On September 3, 1999, Elizabeth Tendler filed a complaint in the Superior Court of New Jersey Law Division, Union County, against 17 named defendants including PTEK and Xpedite, and various alleged current and former officers, directors, agents and representatives of Xpedite. The plaintiff alleges that the defendants engaged in wrongful activities in connection with the management of the plaintiff’s investments, including investments in Xpedite. The allegations against Xpedite and PTEK are limited to plaintiff’s investment in Xpedite. Plaintiff’s claims against Xpedite and PTEK include breach of contract, breach of fiduciary duty, unjust enrichment, conversion, fraud, interference with economic advantage, liability for ultra vires acts, violation of the New Jersey Consumer Fraud Act and violation of New Jersey RICO. Plaintiff seeks an accounting of the corporate stock of Xpedite, compensatory damages of approximately $1.3 million, accrued interest and/or dividends, a constructive

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trust on the proceeds of the sale of any Xpedite or PTEK stock, shares of Xpedite and/or PTEK to satisfy defendants’ obligations to plaintiff, attorneys’ fees and costs, punitive and exemplary damages in an unspecified amount, and treble damages. On February 25, 2000, Xpedite filed its answer, as well as cross claims and third party claims. This case has been dismissed without prejudice and compelled to NASD arbitration, which has commenced. In August 2000, a statement of claim was also filed with the NASD against all but one of the Nobis Respondents making virtually the same allegations on behalf of claimant Elizabeth Tendler. Claimant seeks an accounting of the corporate stock in Xpedite, compensatory damages of not less than $265,000, a fair conversion rate on stock options, losses on other investments, interest and/or unpaid dividends, punitive damages, attorneys’ fees and costs. Hearings before the NASD panel were held on November 27-29, 2001, January 22-24, 2002, February 4-7, 2002, April 9-19, 2002, and May 30, 2002. On July 31, 2002, the NASD Panel issued its Award. The Award was subsequently amended on September 9, 2002. The Panel, among other things, held Xpedite, along with co-respondents Angrisani, Erb, and CEA Financial, jointly and severally liable to claimant Elizabeth Tendler for $57,500, plus 9% simple interest from March 1, 1999 until September 9, 2002. The Panel also held Angrisani, Erb, and CEA Financial jointly and severally liable to Xpedite for $57,500, plus 9% simple interest form March 1, 1999 until September 9, 2002. Xpedite has filed a Notice of Petition, Verified Petition to Vacate Arbitration Award, and Request for Judicial Intervention in New York State. That proceeding is pending. At a hearing on January 10, 2003, the New Jersey Superior Court affirmed the NASD Award. No order or judgment, however, has been issued by the the New Jersey Superior Court.

On December 10, 2001, Voice-Tel filed a Complaint against Voice-Tel franchisees JOBA, Inc. (“JOBA”) and Digital Communication Services, Inc. (“Digital”) in the U.S. District Court for the Northern District of Georgia. The Complaint sought injunctive relief and a declaratory judgment with respect to Voice-Tel’s right to terminate the franchise agreements with JOBA and Digital. On January 7, 2002, JOBA and Digital answered Voice-Tel’s Complaint and asserted counterclaims against Voice-Tel for alleged breach of franchise agreements and other alleged franchise-related agreements. JOBA and Digital also asserted claims alleging tortious interference of contract against Premiere Communications, Inc. (“PCI”) and PTEK. On January 18, 2002, Voice-Tel, PCI and PTEK filed responses and answers to the counterclaims and filed additional breach of contract and tort claims against JOBA and Digital. In March 2002, Voice-Tel and JOBA and Digital sought leave of court to file amended complaints and answers, which the court granted as to JOBA and Digital and granted in part and denied in part as to Voice-Tel. The Digital Franchise Agreement contained a mandatory arbitration provision, which was not found in the JOBA Franchise Agreement. Therefore, on April 10, 2002, the federal court severed the Digital breach of franchise agreement claims and ordered them to be arbitrated. The Court ordered that all remaining claims, including but not limited to the breach of franchise agreement claims as to JOBA, would remain in federal court. The arbitration is currently scheduled for July 13, 2003 and will be held in Atlanta, Georgia. There is a proposal outstanding that all parties agree to submit all claims to arbitration including the Federal Court claims. At this time, this proposal has not been agreed to by any of the parties. Discovery with respect to the arbitration will end on June 25, 2003. On July 10, 2002, JOBA and Digital moved to amend their Complaint to add claims for constructive termination of their franchises, which was subsequently denied by the court on September 11, 2002. On July 16, 2002, Voicecom Telecommunications, LLC (“Voicecom”) was added as a party Plaintiff in the lawsuit against JOBA and Digital. With the exception of expert and damages testimony, discovery has now concluded and the parties are awaiting a trial date contingent on the parties agreeing to submit all claims to arbitration. The parties have filed motions and cross motions for partial summary judgment, including responses thereto. A mediation of all claims between all parties was held on March 24, 2003, which failed to resolve any of the issues in litigation.

On January 30, 2002, a complaint was filed by 15 Lake Bellevue, LLC in the Superior Court of King County, Washington. Plaintiff sought to enforce a Lease Guaranty Agreement entered into by the Company on behalf of Webforia, Inc. with respect to a lease for commercial real estate located in Bellevue, King County, Washington. The Company’s potential liability under the Guaranty was limited to the lesser of the lease obligations or $2,000,000, together with attorneys’ fees, interest and collection expenses. The Company filed an answer to the lawsuit, and on May 17, 2002, the plaintiff filed a motion for partial summary judgment. On June 18, 2002, the court entered an order finding unconditional liability on the part of the Company with respect to the guaranty but reserving the issue of the amount of the Company’s liability for trial. On December 31, 2002 the parties entered into a settlement agreement resolving in full all claims asserted by each party against the other.

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On March 25, 2003, EasyLink Services Corporation (“EasyLink”) filed an amended complaint against the Company, Xpedite and AT&T Corp. (“AT&T”), in the Superior Court of New Jersey, Chancery Division: Middlesex County. EasyLink’s complaint alleges, among other things, that the Company entered into an agreement to purchase a secured promissory note in the original principal amount of $10 million and 1,423,980 shares of EasyLink’s Class A common stock for the purpose of obtaining EasyLink’s business by using the acquired securities to block a debt restructuring that EasyLink was allegedly pursuing with its creditors, including AT&T, and for other improper motives. EasyLink’s complaint alleges that it pursued such debt restructuring in reliance on its understanding that AT&T would participate in the restructuring on certain terms to which EasyLink and AT&T allegedly had agreed, and that AT&T misled EasyLink as to its intentions with respect to such restructuring. The complaint further alleges that AT&T disclosed confidential information of EasyLink to the Company in violation of AT&T’s agreements with EasyLink, and that such information was used by AT&T and the Company in furtherance of a joint scheme to force EasyLink out of the marketplace. EasyLink’s complaint also alleges that employees of the Company and Xpedite have knowingly made false statements to EasyLink’s customers, investors and creditors regarding EasyLink and its financial stability. EasyLink claims that these various actions have impaired its ability to restructure its debt effectively and caused it to suffer various other commercial losses. EasyLink’s complaint seeks to (i) enjoin AT&T from selling the secured promissory note to the Company, improperly interfering with EasyLink’s business and contracts and disclosing EasyLink’s confidential information without EasyLink’s consent; (ii) compel AT&T to consummate EasyLink’s proposed restructuring; (iii) enjoin the Company and Xpedite from making false statements to EasyLink’s customers and creditors regarding EasyLink and its financial position; (iv) enjoin the Company from contacting EasyLink’s creditors and preventing the restructuring of EasyLink’s debt; and (v) enjoin the Company and Xpedite from using EasyLink’s confidential information and contacting EasyLink’s current and former employees to obtain such confidential information. EasyLink’s complaint also seeks unspecified damages from AT&T and the Company. The Company intends to answer and defend this lawsuit.

The Company is also involved in various other legal proceedings which the Company does not believe will have a material adverse effect upon the Company’s business, financial condition or results of operations, although no assurance can be given as to the ultimate outcome of any such proceedings.

The Company and certain of its officers and directors were named as defendants in multiple shareholder class action lawsuits filed in the United States District Court for the Northern District of Georgia. Plaintiffs represented a class of individuals (including a subclass of former Voice-Tel Enterprises, Inc. (“Voice-Tel”) franchisees and a subclass of former Xpedite Systems, Inc. (“Xpedite”) shareholders) who purchased or otherwise acquired the Company’s common stock from as early as February 11, 1997 through June 10, 1998. Plaintiffs alleged, among other things, violation of Sections 10(b), 14(a) and 20(a) of the Securities Exchange Act of 1934 and Sections 11, 12 and 15 of the Securities Act of 1933. Following a court ordered mediation, the parties reached a proposed settlement of all claims. A final fairness hearing on the proposed settlement before the court was held on July 8, 2002, and the Order and Final Judgment finally approving the settlement was entered on July 15, 2002. Under the terms of the settlement, the Company contributed 249,000 shares of the Company’s Common Stock plus approximately $1.8 million in cash, and the insurance carriers contributed approximately $17.7 million in cash, for a total settlement amount of $20.75 million.

In May 2000, the Company was served with a Complaint filed by Robert Cowan in the Circuit Court of Jackson County, Missouri, alleging claims for breach of contract, fraudulent misrepresentation, negligent misrepresentation, breach of duty of good faith and fair dealings, unjust enrichment, and violation of Georgia and Missouri blue sky laws. Plaintiff’s claims arise out of the Company’s acquisition of American Teleconferencing Services, Ltd. (“ATS”) in April 1998. Plaintiff was a shareholder of ATS who received shares of PTEK stock in the transaction. Three other similarly situated plaintiffs later joined the suit. On August 28, 2002, the parties entered into a Confidential Settlement Agreement and Mutual General Release pursuant to which, among other things, the Company paid the Plaintiffs $3.6 million and all claims were dismissed with prejudice.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

21.INCOME TAXES

Income tax (benefit) provision from continuing operations for 2002, 2001 and 2000 is as follows (in thousands):

	2002			2001			2000
Current:
Federal	$	—		$	(9,125	)	$	4,884
State	997			241			1,221
International	(1,216		)	2,373			2,551
	(219		)	(6,511		)	8,656
Deferred:
Federal	2,192			2,739			7,827
State	(597		)	(1,321		)	1,279
International	—			(6,250		)	204
	1,595			(4,832		)	9,310
	$	1,376		$	(11,343	)	$	17,966

The difference between the statutory federal income tax rate and the Company’s effective income tax rate applied to income before income taxes from continuing operations for 2002, 2001 and 2000 is as follows (in thousands):

	2002			2001			2000
Income taxes at federal statutory rate	$	5,530		$	(77,351	)	$	(10,022	)
State taxes, net of federal benefit	997			(1,164		)	165
Foreign taxes	(2,150		)	(3,689		)	778
Change in valuation allowance	(5,992		)	21,743			783
Other permanent differences	2,991			49,118			26,262
Income taxes at the Company’s effective rate	$	1,376		$	(11,343	)	$	17,966

During the year ending December 31, 2002 the Company realized tax benefits of approximately $5.6 million of which approximately $1.0 million and $4.6 million were realized in the third and fourth quarters of 2002, respectively, due to changes in previous estimates. This $5.6 million tax benefit consisted of approximately $3.4 million related to foreign taxes and approximately $2.2 million related to revised estimates of deferred tax asset and liability values.

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

	2002		2001
Deferred tax assets:
Net operating loss carryforwards	$	29,828	$	35,587
Intangible assets	3,418		9,096
Restructuring costs	2,809		1,471
Accrued expenses	8,264		12,911
Other tax credits	1,820		3,500
Capitalized software	619		—
Investments	—		49
Property and equipment	—		6,484
	$	46,758	$	69,098

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred tax liabilities:
Property and equipment	$	(3,176	)	$	—
Intangible assets	(427		)	(3,410		)
Unrealized gain on marketable equity securities	(175		)	(457		)
Other liabilities	(15,300		)	(16,332		)
	(19,078		)	(20,199		)
Valuation allowance	(5,231		)	(28,233		)
Deferred income taxes, net	$	22,449		$	20,666

The Company is required to estimate its taxes in each jurisdiction of operation. 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, 2002, the Company had federal income tax net operating loss carryforwards of approximately $73.9 million expiring in 2005 through 2022. The utilization of some of the net operating losses are subject to Internal Revenue Code Section 382 limitations due to prior ownership changes. Tax benefits of approximately $1.2 million, $0.0 million and $1.6 million in 2002, 2001 and 2000, respectively, are associated with nonqualified stock option exercises, the benefit of which was credited directly to additional paid-in capital.

The Company was able to carryback capital losses generated in 2001 against prior years capital gains for approximately $9.2 million in federal income tax refunds. This refund due was recorded as “federal income tax receivable” on the balance sheet at December 31, 2001.

During the year ended December 31, 2002, the valuation allowance changed by $23.0 million. The change was the result of several factors including a transmutation of $3.0 million of capital loss carryforwards into realizable net operating loss carryforwards. In addition, $3.4 million and $1.3 million for federal and foreign net operating loss carryforwards were deemed likely to be utilized and $8.3 million and $7.0 million relating to expiring state and foreign net operating loss carryforwards were written off, for which the correlating assets were also written off.

22.STATEMENT OF CASH FLOW INFORMATION

Supplemental disclosure of cash flow information (in thousands):

	2002			2001			2000
Cash paid (received) during the year for:
Interest	$	10,403		$	11,283		$	11,324
Income taxes, net	$	(8,217	)	$	(4,505	)	$	17,100
Cash paid for acquisitions accounted for as purchases are as follows:
Fair value of assets acquired	$	—		$	5,828		$	2,623
Less liabilities assumed	—			—			—
Less common stock issued to sellers	—			—			—
Cash paid for transaction costs and liabilities assumed	701			—			—
Net cash paid	$	701		$	5,828		$	2,623

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Non-cash investing and financing activities:

During 2002 and 2001 the Company made a discretionary contribution of $1.6 million for the benefit of employees in Company stock. Additionally during 2001, the Company acquired $5.9 million of equipment though capital leases and the Company exchanged options for restricted stock.

23.SEGMENT REPORTING

PTEK Holdings, Inc., a Georgia corporation, and its subsidiaries (collectively the “Company” or “PTEK”), is a global provider of business communications services, including conferencing (audio conferencing and Web-based collaboration) and multimedia messaging (high-volume actionable communications, e-mail, wireless messaging, voice message delivery and fax). The Company’s reportable segments align the Company into two operating segments based on product offering. These segments are Premiere Conferencing and Xpedite. Premiere Conferencing offers a full suite of enhanced audio, automated audio and Web conferencing services for all forms of group communications activities. Xpedite offers a comprehensive suite of business services that enable actionable two-way communications which allow corporations to better acquire and retain customers as well as automate their core business processes. In addition, the Company had one other reportable segment, Voicecom, which the Company exited through the sale of that segment effective March 26, 2002. Voicecom offered a suite of integrated communications solutions including voice messaging, interactive voice response services and unified communications. Retail Calling Card Services is a business segment that the Company exited through the sale of its revenue base effective August 1, 2000. It primarily consisted of the Premiere WorldLink calling card product, which was marketed primarily through direct response advertising and co-branding relationships to individual retail users.

On January 1, 2001, management responsibility for international conferencing services was transferred from Xpedite to Premiere Conferencing. Prior to that date, these international revenues were reported in the Xpedite operating segment. The revenues of the Australian operations of Voicecom that were retained in conjunction with the sale of this operating segment are reported in the international results of Xpedite effective January 1, 2002. In order to report comparable operating segment financial results, certain financial information for years prior to 2001 has been reclassified. Overall these reclassifications did not have a material impact on the financial results of the operating segments for the periods presented.

Premiere Conferencing has historically relied on sales through a particular customer for a significant portion of its revenues. Sales to that customer accounted for approximately 12% of consolidated revenues from continuing operations (29% of Premiere Conferencing’s revenues) in 2002, 10% of consolidated revenues from continuing operations (29% of Premiere Conferencing’s revenues) in 2001, and 5% of consolidated revenues from continuing operations (22% of Premiere Conferencing’s revenues) in 2000.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Information concerning the operations in these reportable segments is as follows (in millions):

	Year Ended December 31,
	2002			2001			2000
REVENUES:
Revenues from continuing operations:
Xpedite	$	202.9		$	215.7		$	230.1
Premiere Conferencing	138.5			115.1			73.4
Eliminations	(0.1		)	(0.4		)	(0.3		)
	$	341.3		$	330.4		$	303.2
Revenues from discontinued operations:
Retail Calling Card Services	—			—			13.8
Voicecom	15.8			92.5			119.9
	$	357.1		$	422.9		$	436.9
OPERATING PROFIT (LOSS):
Operating profit (loss) from continuing operations:
Xpedite	$	22.8		$	(147.1	)	$	(40.5	)
Premiere Conferencing	31.5			11.4			(0.5		)
Holding Company	(29.4		)	(41.4		)	(17.0		)
Eliminations	(0.0		)	—			(0.2		)
	$	24.9		$	(177.1	)	$	(58.2	)
Operating profit (loss) from discontinued operations:
Retail Calling Card Services	—			—			(1.1		)
Voicecom	(5.7		)	(53.6		)	(17.1		)
	$	19.2		$	(230.7	)	$	(76.4	)
NET INCOME (LOSS):
Income (loss) from continuing operations:
Xpedite	$	26.1		$	(123.7	)	$	(50.7	)
Premiere Conferencing	26.8			6.7			(3.4		)
Holding Company	(38.2		)	(92.7		)	6.1
Eliminations	(0.3		)	(0.0		)	1.4
	$	14.4		$	(209.7	)	$	(46.6	)
Income (loss) from discontinued operations:
Retail Calling Card Services	—			—			(1.3		)
Voicecom	(12.5		)	(32.4		)	(11.0		)
	$	1.9		$	(242.1	)	$	(58.9	)

	As of December 31,
	2002		2001		2000
IDENTIFIABLE ASSETS:
Xpedite	$	190.5	$	214.5	$	391.6
Voicecom	—		40.2		90.2
Premiere Conferencing	75.5		69.0		75.0
Retail Calling Card Services	—		—		—
Holding Company	86.1		62.7		74.1
Total	$	352.1	$	386.4	$	630.9

(1)Eliminations are primarily comprised of revenue eliminations from business transacted between Xpedite and Premiere Conferencing.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Information concerning revenues from groups of similar products and services are as follows (in millions):

	2002			2001			2000
E-mail, fax and messaging	$	202.9		$	215.7		$	230.1
Conferencing	138.5			115.1			73.4
Eliminations	(0.1		)	(0.4		)	(0.3		)
Total revenue from continuing operations	$	341.3		$	330.4		$	303.2
Voice and unified messaging	15.8			70.7			101.5
Wholesale calling card services	—			9.6			6.2
Retail calling card services	—			—			13.8
Interactive voice response	—			12.2			12.2
Total revenue from discontinued operations	$	15.8		$	92.5		$	133.7

Information concerning depreciation expense for each reportable segment is as follows (in millions):

	2002		2001		2000
Xpedite	$	13.1	$	12.8	$	11.7
Premiere Conferencing	7.5		7.1		6.0
Holding Company	0.9		0.8		2.1
Total depreciation expense from continuing operations	$	21.5	$	20.7	$	19.8

Information concerning capital expenditures for each reportable segment is as follows (in millions):

	2002		2001		2000
Xpedite	$	7.1	$	15.8	$	15.4
Premiere Conferencing	6.7		9.8		7.1
Holding Company	—		—		0.3
Total capital expenditures from continuing operations	$	13.8	$	25.6	$	22.8

The following table presents financial information based on the Company’s continuing geographic segments for the years ended December 31, 2002, 2001 and 2000 (in millions):

	Net Revenues	Operating Income (Loss)		Identifiable Assets
2002
North America	$228.8	20.5		285.3
Asia Pacific	55.9	2.6		25.8
Europe	56.6	1.8		41.0
Total	$341.3	$24.9		$352.1
2001
North America	$223.8	(157.8	)	$321.9
Asia Pacific	56.2	(6.1	)	27.1
Europe	50.4	(13.2	)	37.4
Total	$330.4	$(177.1	)	$386.4
2000
North America	$187.6	$(63.4	)	$565.0
Asia Pacific	64.8	(1.6	)	30.8
Europe	50.8	6.8		35.1
Total	$303.2	$(58.2	)	$630.9

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

24.SUBSEQUENT EVENTS (UNAUDITED)

On January 16, 2003, Xpediteacquired substantially all of the assets related to the U.S. based e-mail and facsimile messaging business of Cable & Wireless USA, Inc. (“C&W”), and assumed certain liabilities, for a total purchase price of $11.0 million. The Company paid $6.0 million in cash at closing, and will pay $5.0 million in 16 equal quarterly installments commencing March 31, 2003. Currently, approximately $10.0 million of the aggregate purchase price has been allocated to identifiable customer lists with the remaining balance of $1.0 million allocated to goodwill. The Company is in the process of completing a third-party valuation of certain intangible assets which could result in changes to the preliminary allocation of the purchase price.

On February 27, 2003, the Company entered into a Share Purchase Agreement and Note Purchase Agreement with AT&T Corp. (“AT&T”) pursuant to which the Company has agreed to purchase from AT&T, and AT&T has agreed to sell to the Company, 1,423,980 shares of the Class A Common Stock (the “Shares”) and a Promissory Note of EasyLink Services Corporation (NASDAQ: EASY) (“EasyLink”) in the stated principal amount of $10.0 million (the “Note”). The obligation of each party to consummate the transactions contemplated by each such purchase agreement is conditioned upon, among other things, the satisfaction or waiver of the conditions to such party’s obligation to consummate the transactions contemplated by the other purchase agreement.

The Note is secured by assets representing the substantial portion of EasyLink’s operations. Principal and accrued interest on the note, aggregating over $12.0 million, is payable in 13 quarterly installments beginning June 1, 2003. The principal and accrued interest obligations bear interest at a rate of 12% per annum until paid. The Shares to be purchased represent approximately 8.9% of the outstanding Class A common shares and 8.4% of the total outstanding common shares of EasyLink.

As consideration for the sale of the Shares and the Note, the Company has agreed to pay AT&T $4.0 million in cash and to issue to AT&T a warrant to acquire 250,000 shares of the Common Stock of the Company. The warrant will be exercisable at any time during the seven years following the date of issuance, at an exercise price to be determined on the basis of trading prices of the Company’s Common Stock during the ten trading days prior to the issuance of the warrant. The aggregate purchase price for the Shares, as set forth in the Share Purchase Agreement, is $825,908, or $0.58 per share, which amount equals the average of the high and low selling price of the Class A Common Stock on the Nasdaq National Market during the five trading days immediately preceding the date of the Share Purchase Agreement. Despite the Share Purchase Agreement stating such separate purchase price for the Shares, the Company views its purchase of the Shares and the Note as a single transaction, for the total consideration set forth above. The cash consideration for the purchase of the Shares and the Note will be paid out of the working capital of PTEK.

On March 3, 2003, EasyLink demanded that the Company and AT&T terminate their agreements for the purchase and sale of the Note and the Shares. In connection with such demand, EasyLink has asserted that AT&T and PTEK may have violated commitments of AT&T and the Company to EasyLink and that the Company has engaged in certain improper activities with respect to EasyLink and in connection with the transaction. The Company considers these allegations to be groundless and has denied each of them. PTEK expects to consummate the purchase of the Note and Shares, subject to the conditions set forth in the respective purchase agreements.

On March 25, 2003, EasyLink filed a lawsuit against the Company, Xpedite and AT&T. See Note 20— “Commitments and Contingencies” for a detailed discussion of this litigation.

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SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

The following table presents certain unaudited quarterly consolidated statement of operations data for each of the eight quarters in the period ended December 31, 2002. Certain prior quarter results have been reclassified to conform with current period presentation. The information has been derived from the Company’s unaudited financial statements, which have been prepared on substantially the same basis as the audited consolidated financial statements contained in this Form 10-K. 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
Year ended December 31, 2002
Revenues	$	83,321		$	87,408		$	86,012		$	84,512		$	341,253
Gross profit	66,520			70,331			69,622			70,015			276,488
Operating income	5,944			7,868			6,723			4,370			24,905
Net income from continuing operations	2,080			2,899			2,760			6,684			14,423
Net income from continuing operations per share – basic	$	0.04		$	0.05		$	0.05		$	0.12		$	0.27
Net income from continuing operations per share – diluted	$	0.04		$	0.05		$	0.05		$	0.12		$	0.26
Net income (loss)	(9,915		)	2,079			2,760			6,967			1,891
Net income (loss) per share - basic	$	(0.19	)	$	0.04		$	0.05		$	0.13		$	0.04
Net income (loss) per share - diluted	$	(0.19	)	$	0.04		$	0.05		$	0.12		$	0.03
Year ended December 31, 2001
Revenues	$	82,334		$	84,053		$	81,062		$	82,967		$	330,416
Gross profit	62,078			65,005			63,647			66,733			257,463
Operating loss	(12,809		)	(15,887		)	(13,136		)	(135,310		)	(177,142		)
Net loss from continuing operations	(19,035		)	(35,277		)	(13,571		)	(141,775		)	(209,658		)
Net loss from continuing operations per share – basic and diluted	$	(0.38	)	$	(0.71	)	$	(0.27	)	$	(2.80	)	$	(4.19	)
Net loss	(23,551		)	(42,931		)	(17,625		)	(158,013		)	(242,120		)
Net loss per share - basic and diluted	$	(0.48	)	$	(0.86	)	$	(0.35	)	$	(3.12	)	$	(4.84	)

The results of operations for the fourth quarter of 2002 include an adjustment made to the VoiceCom liabilities that were retained at the time of sale based upon the determination that certain of these liabilities were no longer required of approximately $2.9 million, net of taxes. In addition, the Company realized tax benefits of approximately $1.0 million and $4.6 million in the third and fourth quarters of 2002, respectively, due to changes in previous estimates.

The results of operations in all the quarters in 2002 and the 2001 second and fourth quarters include charges associated with some or all of the following; asset impairments, equity based compensation, restructuring costs, net legal settlements and related expenses and asset impairments and obligations – investments. For a further discussion of these charges and gains see Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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

On October 2, 2001, PTEK dismissed Arthur Andersen, LLP as its independent accountants and engaged PricewaterhouseCoopers, LLP as its new independent accountants. The decision to change accountants was recommended by the Audit Committee of the Company’s Board of Directors and approved by the Company’s Board of Directors. The change in certifying accountants was reported in PTEK's Current Report on Form 8-K, dated October 2, 2001 and filed with the SEC on October 9, 2001. Due to the discontinued operations in 2002 resulting from the sale of the Company’s Voicecom operations, PricewaterhouseCoopers was engaged to re-audit the Company for 2000. Thus, this Annual Report does not include any reports of Arthur Andersen, LLP.

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PART III

Certain information required by Part III is omitted from this report in that the Registrant will file a Definitive Proxy Statement pursuant to Regulation 14A (“Proxy Statement”) not later than 120 days after the end of the fiscal year covered by this report.

Item 10.Directors and Executive Officers of the Registrant

The information required by this item is incorporated herein by reference to the Company’s Proxy Statement.

Item 11. Executive Compensation

The information required by this item is incorporated herein by reference to the Company’s Proxy Statement.

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

Other than the Equity Compensation Plan Information below, the information required by this item is incorporated herein by reference to the Company’s Proxy Statement.

Equity Compensation Plan Information

The following table gives information as of December 31, 2002 about the Common Stock that may be issued under all of the Company’s existing equity compensation plans. The table does not include information with respect to shares subject to outstanding options granted under equity compensation plans assumed by the Company in connection with mergers and acquisitions of the companies that originally granted those options. Footnote (3) to the table sets forth the total number of shares of the Company’s Common Stock issuable upon the exercise of those assumed options as of December 31, 2002, and the weighted average exercise price of those options. No additional options may be granted under those assumed plans.

Plan Category	(a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights	(b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights	(c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)
Equity Compensation Plans approved by shareholders (1)	4,174,448	$5.002	5,086,472
Equity Compensation Plans not approved by shareholders (2)	4,575,776	5.420	2,655,015
Total	8,750,224	5.220	7,741,487

______________

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(1)Includes options issued and shares available for issuance under the Company’s 1995 Stock Plan, the 2000 Directors Stock Plan and the Associate Stock Purchase Plan. The Associate Stock Purchase Plan was terminated on January 14, 2003 and no additional shares will be issued under that Plan.

(2)Includes options issued and shares available for issuance under the Company’s 1994 Stock Option Plan and the 1998 Stock Plan. Also includes individual stock option awards granted to (i) certain former employees upon hire, (ii) certain former employees in connection with the Company’s acquisition of Voice-Tel Enterprises, Inc., and (iii) a non-employee contractor for services performed.

(3)This table does not include information for the following equity compensation plans assumed by the Company in connection with mergers and acquisitions of the companies that originally established those plans: Xpedite Systems, Inc. 1992 Incentive Stock Option Plan, Xpedite Systems, Inc. 1993 Incentive Stock Option Plan, Xpedite System, Inc. 1996 Incentive Stock Plan, Xpedite Systems, Inc. Non-Employee Directors’ Warrant Plan, certain individual Stock Purchase Warrants issued to former directors and non-employees of Xpedite, Intellivoice Communications, Inc. 1995 Incentive Stock Option Plan, VoiceCom Holdings, Inc. 1995 Stock Option Plan and VoiceCom Holdings, Inc. Amended and Restated 1985 Stock Option Plan. As of December 31, 2002, a total of 222,629 shares of the Company’s common stock were issuable upon exercise of outstanding options under those assumed plans. The weighted average exercise price of those outstanding options is $11.027 per share. No additional options may be granted under those assumed plans.

Description of Plans and Individual Awards Not Approved by Shareholders

The Company’s 1998 Stock Plan (the “1998 Plan”) provides for the issuance of nonqualified stock options, restricted stock and stock appreciation rights to employees and consultants of the Company. A total of 8,000,000 shares of stock have been reserved for awards under the 1998 Plan. The terms of options granted under the 1998 Plan are established by the 1998 Stock Plan Committee, which is made up of at least two outside non-employee directors appointed from time to time by the Board of Directors. See further discussion in Note 17—”Equity Based Compensation Plans.”

The Company’s 1994 Stock Option Plan (the “1994 Plan”) provides for the grant of nonqualified stock options to employees. A total of 960,000 shares of common stock have been reserved for awards under the 1994 Plan. The terms of options granted under the 1994 Plan are established by the 1994 Stock Option Plan Committee, which is made up of at least two directors appointed from time to time by the Board of Directors. No additional options will be granted under this plan. See further discussion in Note 17—”Equity Based Compensation Plans.”

Individual stock option awards granted to former employees in connection with the acquisition of Voice-Tel Enterprises, Inc. consist of the following outstanding options: 100,000 shares with an exercise price of $5.50 that terminates on April 30, 2005; 125,000 shares with an exercise price of $5.50 that terminates on April 30, 2005; 15,000 options with an exercise price of $25.875 that terminates on May 2, 2005; 25,000 shares with an exercise price of $23.875 that terminates on April 30, 2003; 125,000 shares with an exercise price of $5.50 that terminates on April 30, 2005; 95,000 shares with an exercise price of $5.50 that terminates on April 30, 2005; and 200,000 shares with an exercise price of $10.25 that terminates on April 30, 2005.

Individual stock option awards granted to three former employees upon hire consist of the following outstanding options: 300,000 shares with an exercise price of $8.00 per share that was repriced to $.35 per share, which terminates on July 1, 2006 and 50,000 shares with an exercise price of $5.50 that terminates on June 8, 2006.

The individual stock option award granted to a non-employee contractor consists of 125,000 shares at an exercise price of $30.00 that terminates on April 22, 2003.

Item 13. Certain Relationships and Related Transactions

The information required by this item is incorporated herein by reference to the Company’s Proxy Statement.

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Item 14. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.Within 90 days prior to the filing of this Annual Report on Form 10-K (the “Evaluation Date”), the Company’s Chief Executive Officer and its Chief Financial Officer evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities and Exchange Act of 1934 (the “Exchange Act”)). Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures provide reasonable assurance that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported in the time periods specified in the SEC’s rules and forms.

Changes in Internal Controls.Since the Evaluation Date, there have been no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the Evaluation Date.

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PART IV

Item 15.Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)1.Financial Statements

The financial statements listed in the index set forth in Item 8 of this report are filed as part of this report.

2.Financial Statement Schedules

Financial statement schedules required to be included in this report are either shown in the financial statements and notes thereto, included in Item 8 of this report, or have been omitted because they are not applicable.

3.Exhibits

EXHIBIT INDEX

Exhibit Number	Description
2.1	Agreement and Plan of Merger, together with exhibits, dated April 2, 1997 by and among Premiere Technologies, Inc., PTEK Merger Corporation and Voice-Tel Enterprises, Inc. and the Stockholders of Voice-Tel Enterprises, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K dated April 2, 1997 and filed on April 4, 1997).
2.2	Agreement and Plan of Merger, together with exhibits, dated April 2, 1997 by and among Premiere Technologies, Inc., PTEK Merger Corporation II, VTN, Inc. and the Stockholders of VTN, Inc. (incorporated by reference to Exhibit 2.2 to the Registrant’s Current Report on Form 8-K dated April 2, 1997 and filed on April 4, 1997).
2.3	Transfer Agreement dated March 31, 1997 by and among Premiere Technologies, Inc. and Owners of the VTEC Franchisee: 1086236 Ontario, Inc. (incorporated by reference to Exhibit 2.13 to the Registrant’s Current Report on Form 8-K dated April 30, 1997 and filed on May 14, 1997).
2.4	Transfer Agreement dated March 31, 1997 by and among Premiere Technologies, Inc. and Owners of the Eastern Franchisees: 1139133 Ontario Inc., 1116827 Ontario Inc., 1006089 Ontario Inc., and 1063940 Ontario Inc. (incorporated by reference to Exhibit 2.14 to the Registrant’s Current Report on Form 8-K dated April 30, 1997 and filed on May 14, 1997).
2.5	Stock Purchase Agreement, together with exhibits, dated September 12, 1997 by and among Premiere Technologies, Inc., VoiceCom Holdings, Inc. and the Shareholders of VoiceCom Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1997).
2.6	Agreement and Plan of Merger, together with exhibits, dated November 13, 1997 by and among Premiere Technologies, Inc., 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).
2.7	Agreement and Plan of Merger dated April 22, 1998 by and among the Company, 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).

100

Exhibit Number	Description
2.8	Membership Interests Purchase Agreement as of March 25, 2002 by and among Voicecom Telecommunications, LLC, the Registrant, Premiere Communications, Inc., Voice-Tel of Canada Ltd., Intellivoice Communications, LLC, Voice-Tel Enterprises, LLC and Voicecom Telecommunications, Inc. (incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K dated March 26, 2002 and filed on April 10, 2002).
2.9	Bill of Sale and Assignment as of March 25, 2002 by and between Voicecom Telecommunications, LLC and Premiere Communications, Inc. (incorporated by reference to Exhibit 2.2 of the Registrant’s Current Report on Form 8-K dated March 26, 2002 and filed on April 10, 2002).
2.10	Assignment and Assumption Agreement as of March 25, 2002 by and between Voicecom Telecommunications, LLC and Premiere Communications, Inc. (incorporated by reference to Exhibit 2.3 of the Registrant’s Current Report on Form 8-K dated March 26, 2002 and filed on April 10, 2002).
3.1	Articles of Incorporation of Premiere Technologies, Inc., as amended, (incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998).
3.2	Articles of Amendment of Articles of Incorporation of Premiere Technologies, Inc. (changing the name of the Registrant to PTEK Holdings, Inc.) (incorporated by reference to Exhibit 3.2 to the Registrant’s Yearly Report on Form 10-K for the year ended December 31, 1999 and filed on March 30, 2001).
3.3	Amended and Restated Bylaws of Premiere Technologies, Inc., as amended (incorporated by reference to Exhibit 3.1 to the Registrant’s Amended Quarterly Report on Form 10-Q/A for the quarter ended June 30, 2001).
3.4	Amendment No. 6 to Amended and Restated Bylaws of PTEK Holdings, Inc. (incorporated by reference to Exhibit 3.3(a) to the Registrant’s Yearly Report on Form 10-K for the year ended December 31, 2001).
3.5	Amendment No. 7 to Amended and Restated Bylaws of PTEK Holdings, Inc. (incorporated by reference to Exhibit 3.3(b) to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, as filed on May 15, 2002).
3.6	Amendment No. 8 to Amended and Restated Bylaws of PTEK Holdings, Inc. (incorporated by reference to Exhibit 3.3(c) to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002).
4.1	See Exhibits 3.1-3.3 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 Registration Statement on Form S-1 (No. 33-80547)).
4.3	Indenture dated June 15, 1997 between Premiere Technologies, Inc. and IBJ Schroder Bank & Trust Company, as Trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated July 25, 1997 and filed on August 5, 1997).
4.4	Form of Global Convertible Subordinated Note due 2004 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K dated July 25, 1997 and filed on August 5, 1997).

101

Exhibit Number	Description
4.5	Registration Rights Agreement dated June 15, 1997 by and among the Registrant, Robertson, Stephens & Company LLC, Alex. Brown & Sons Incorporated and Donaldson, Lufkin & Jenrette Securities Corporation (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K dated July 25, 1997 and filed on August 5, 1997).
4.6	Shareholder Protection Rights Agreement dated June 23, 1998 between the Company and SunTrust Bank, Atlanta, as Rights Agent (incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K dated June 23, 1998 and filed on June 26, 1998).
10.1	Shareholder Agreement dated January 18, 1994 among the Registrant, NationsBanc Capital Corporation, Boland T. Jones, D. Gregory Smith, Leonard A. DeNittis and Andrea L. Jones (incorporated by reference to Exhibit 10.12 to the Registrant’s Registration Statement on Form S-1 (No. 33-80547)).
10.2	Mutual Release dated December 5, 1997 by and among the Registrant, Premiere Communications, Inc. and David Gregory Smith (incorporated by reference to Exhibit 10.6 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1997).
10.3	Executive Employment and Incentive Option Agreement dated November 1, 1995 between the Registrant and Patrick G. Jones (incorporated by reference to Exhibit 10.19 to the Registrant’s Registration Statement on Form S-1 (No. 33-80547)).**
10.4	Executive Employment Agreement dated November 1, 1995 between Premiere Communications, Inc. and Patrick G. Jones (incorporated by reference to Exhibit 10.20 to the Registrant’s Registration Statement on Form S-1 (No. 33-80547)).**
10.5	Restricted Stock Award Agreement dated May 5, 1999 between the Registrant and Boland T. Jones (incorporated by reference to Exhibit 10.12 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999).**
10.6	Restricted Stock Award Agreement dated May 5, 1999 between the Registrant and Jeffrey A. Allred (incorporated by reference to Exhibit 10.13 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999).**
10.7	Restricted Stock Award Agreement dated May 5, 1999 between the Registrant and Patrick G. Jones (incorporated by reference to Exhibit 10.14 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999).**
10.8	Recourse Promissory Note dated December 20, 1999 payable to the Registrant by Boland T. Jones (incorporated by reference to Exhibit 10.15 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999).**
10.9	Recourse Promissory Note dated December 20, 1999 payable to the Registrant by Jeffrey A. Allred (incorporated by reference to Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999).**
10.10	Premiere Communications, Inc. 401(k) Profit Sharing Plan (incorporated by reference to Exhibit 10.30 to the Registrant’s Registration Statement on Form S-1 (No. 33-80547)).**
10.11	Form of Director Indemnification Agreement between the Registrant and Non-employee Directors (incorporated by reference to Exhibit 10.31 to the Registrant’s Registration Statement on Form S-1 (No. 33- 80547)).**

102

Exhibit Number	Description
10.12	Agreement of Lease between Corporate Property Investors and Premiere Communications, Inc. dated as of March 3, 1997, as amended by Modification of Lease dated August 4, 1997, as amended by Second Modification of Lease dated October 30, 1997 (incorporated by reference to Exhibit 10.19 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1997).
10.13	Form of Officer Indemnification Agreement between the Registrant and each of the executive officers (incorporated by reference to Exhibit 10.36 to the Registrant’s Registration Statement on Form S-1 (No. 33- 80547)).**
10.14	Form of Stock Purchase Warrant Agreement (incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-8 (No. 333-11281)).**
10.15	Form of Warrant Transaction Statement (incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form S-8 (No. 333-11281)).
10.16	Form of Director Stock Purchase Warrant (incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-8 (No. 333-17593)).**
10.17	Purchase Agreement, dated June 25, 1997, by and among Premiere Technologies, Inc., Robertson, Stephens & Company LLC, Alex. Brown & Sons Incorporated and Donaldson, Lufkin & Jenrette Securities Corporation (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated July 25, 1997 and filed on August 5, 1997).
10.18	1991 Non-Qualified and Incentive Stock Option Plan of Voice-Tel Enterprises, Inc. (assumed by the Registrant) (incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-8 (No. 333-29787)).
10.19	1991 Non-Qualified and Incentive Stock Option Plan of VTN, Inc. (assumed by the Registrant) (incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-8 (No. 333-29787)).
10.20	Form of Stock Option Agreement by and between the Registrant and certain current or former employees of Voice-Tel Enterprises, Inc. (incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form S-8 (No. 333-29787)).
10.21	Premiere Technologies, Inc. Second Amended and Restated 1995 Stock Plan (incorporated by reference to Exhibit A to the Registrant’s Definitive Proxy Statement distributed in connection with the Registrant’s June 11, 1997 annual meeting of shareholders, filed April 30, 1997).**
10.22	First Amendment to Premiere Technologies, Inc. Second Amended and Restated 1995 Stock Plan (incorporated by reference to Exhibit 10.43 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1997).**
10.23	VoiceCom Holdings, Inc. 1995 Stock Option Plan (assumed by the Registrant) (incorporated by reference to Exhibit 10.44 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1997).
10.24	VoiceCom Holdings, Inc. Amended and Restated 1985 Stock Option Plan (assumed by the Registrant) (incorporated by reference to Exhibit 10.45 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1997).

103

Exhibit Number	Description
10.26	Amendment No. 1 to the Premiere Technologies, Inc. Amended and Restated 1998 Stock Plan (incorporated by reference to Exhibit 10.45 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999).
10.25	Premiere Technologies, Inc., Amended and Restated 1998 Stock Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999).
10.27	Xpedite Systems, Inc. 1992 Incentive Stock Option Plan (assumed by the Registrant) (incorporated by, reference to Xpedite’s Registration Statement on Form S-1 (No. 33-73258)).
10.28	Xpedite Systems, Inc. 1993 Incentive Stock Option Plan (assumed by the Registrant) (incorporated by reference to Xpedite’s Registration Statement on Form S-I (No. 33-73258)).
10.29	Xpedite Systems, Inc. 1996 Incentive Stock Option Plan (assumed by the Registrant) (incorporated by reference to Xpedite’s Annual Report on Form 10-K for the year ended December 31, 1995).
10.30	Xpedite Systems, Inc. Non-Employee Directors’ Warrant Plan (assumed by the Registrant) (incorporated by reference to Exhibit 10.31 to Xpedite’s Annual Report on Form 10-K for the year ended December 31, 1996).
10.31	Xpedite Systems, Inc. Officer’s Contingent Stock Option Plan (assumed by the Registrant) (incorporated by reference to Exhibit 10.30 to Xpedite’s Annual Report on Form 10-K for the year ended December 31, 1996).**
10.32	Associate Stock Purchase Plan (incorporated by reference to Appendix A to the Registrant’s Definitive Proxy Statement distributed in connection with the Registrant’s June 22, 1999 Annual Meeting of Shareholders, filed on May 19, 1999).
10.33	Intellivoice Communications, Inc. 1955 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).
10.34	Employment Agreement dated January 1, 2000 by and between American Teleconferencing Services, Ltd. And Theordore P. Schrafft (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000).**
10.35	PTEK Holdings, Inc. 2000 Directors Stock Plan (incorporated by reference to Exhibit A to the Registrant’s Definitive Proxy Statement distributed in connection with the Registrant’s June 7, 2000 Annual Meeting of Shareholders, filed April 28, 2000).**
10.36	Settlement Agreement dated April 7, 2000 by and between PTEK Holdings, Inc. and MCI WorldCom, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).*
10.37	Amendment No. 1 dated January 1, 2000 to Telecommunications Service Agreement dated October 29, 1999 by and between Premiere Technologies, Inc. and MCI WorldCom, Inc. (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).
10.38	Addendum A dated January 1, 2000 to Carrier Services Agreement dated as of October 29, 1999 by and between PTEK Holdings, Inc. and MCI WorldCom, Inc. (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).

104

Exhibit Number	Description
10.39	Credit Agreement dated September 29, 2000 by and among Xpedite Systems, Inc., PTEK Holdings, Inc. and ABN Amro Bank, N.V. (incorporated by reference to Exhibit 10.1 to the Registrants Quarterly Report on Form 10-Q for the quarter ended September 30, 2000).
10.40	Asset Sale Agreement, together with exhibits, dated August 25, 2000 by and between Telecare, Inc. and Premiere Communications, Inc. (incorporated by reference to Exhibit 10.2 to the Registrants Quarterly Report on Form 10-Q for the quarter ended September 30, 2000).
10.41	PTEK Holdings, Inc. Associate Stock Purchase Plan (incorporated by reference to Appendix B to the Registrant’s Definitive Proxy Statement distributed in connection with the Registrant’s June 5, 2001 Annual Meeting of Shareholders, filed April 30, 2001).
10.42	PTEK Holdings, Inc. 1995 Stock Plan, as amended (incorporated by reference to Appendix C to the Registrant’s Definitive Proxy Statement distributed in connection with the Registrant’s June 5, 2001 Annual Meeting of Shareholders, filed April 30, 2001).
10.43	Letter to shareholders, employees and friends of PTEK (incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K dated February 21, 2001 and filed on February 21, 2001).
10.44	Letter to shareholders, employees and friends of PTEK (incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K dated July 11, 2001 and filed on July 11, 2001).
10.45	PTEK Holdings, Inc. Associate Stock Purchase Plan, as amended (incorporated by reference to Appendix B 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).
10.46	PTEK Holdings, Inc. 2000 Directors Stock Plan, as amended (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).
10.47	Premiere Technologies, Inc. 1994 Stock Option Plan.
10.48	PTEK Holdings, Inc. 1995 Stock Plan (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).
10.49	Share Purchase Agreement dated February 27, 2003 by and between the Registrant and AT&T Corp. (incorporated by reference to Exhibit 1 to Amendment No. 1 to Schedule 13D of AT&T Corp., filed with respect to the Issuer on March 6, 2003).
10.50	Note Purchase Agreement dated February 27, 2003 by and between the Registrant and AT&T Corp. (incorporated by reference to Exhibit 2 to Amendment No. 1 to Schedule 13D of AT&T Corp., filed with respect to the Issuer on March 6, 2003).
10.51	Third Modification of Lease dated July 15, 1998 by and between The Retail Property Trust and Premiere Communications, Inc. to the Agreement of Lease between Corporate Property Investors and Premiere Communications, Inc. dated October 30, 1997, as amended by Fourth Modification of Lease dated August 27, 1998, as amended by Fifth Modification of Lease dated April 1, 1999, as amended by Sixth Modification of Lease dated 1999.

105

Exhibit Number	Description
10.52	Seventh Amendment to Lease dated February 28, 2001 by and between Property Georgia OBJLW Two Corporation and Premiere Communications, Inc. to the Agreement of Lease between Corporate Property Investors and Premiere Communications, Inc. dated October 30, 1997, as amended by Eighth Amendment to Lease dated June 24, 2001.
10.53	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.
10.54	Second Amended and Restated Executive Employment Agreement effective as of January 1, 2002 by and among the Registrant, Premiere Communications, Inc. and Boland T. Jones.**
10.55	Second Amended and Restated Executive Employment Agreement effective as of January 1, 2002 by and among the Registrant and Jeffrey A. Allred.**
10.56	Employment Offer Letter dated August 6, 2001 by the Registrant to Richard J. Buyens.**
10.57	Stock Pledge Agreement dated January 3, 2002 by and between Boland T. Jones and the Registrant.**
10.58	Stock Pledge Agreement dated January 3, 2002 by and between Jeffrey A. Allred and the Registrant.**
10.59	Stock Pledge Agreement dated January 3, 2002 by and between Patrick G. Jones and the Registrant.**
10.60	Stock Pledge Agreement dated January 3, 2002 by and between Richard J. Buyens and the Registrant.**
10.61	Stock Pledge Agreement dated January 3, 2002 by and between Theodore P. Schrafft and the Registrant.**
10.62	Promissory Note dated January 3, 2002 payable to the Registrant by Boland T. Jones.**
10.63	Promissory Note dated January 3, 2002 payable to the Registrant by Jeffrey A. Allred.**
10.64	Promissory Note dated January 3, 2002 payable to the Registrant by Patrick G. Jones.**
10.65	Promissory Note dated January 3, 2002 payable to the Registrant by Richard J. Buyens.**
10.66	Promissory Note dated January 3, 2002 payable to the Registrant by Theodore P. Schrafft.**
10.67	Agreement dated March 5, 2002 by and among the Registrant and Jeffrey M. Cunningham.**
10.68	Lease Agreement from Townsend XPD, LLC to Xpedite Systems, Inc. dated June 15, 2000.
10.69	Pine Ridge Business Park Standard Office Lease dated January 29, 1999 by and between Perg Buildings, LLC and American Teleconferencing Services, Ltd., as amended by First Amendment to Lease dated May 4, 1999.
21.1	Subsidiaries of the Registrant.
23.1	Consent of PricewaterhouseCoopers LLP.
99.1	Statement of Chief Executive Officer and Chief Financial Officer of PTEK Holdings, Inc.

*Confidential treatment has been granted. The copy on file as an exhibit omits the information subject to the confidentiality request. Such omitted information has been filed separately with the Commission.

106

**Management contracts and compensatory plans and arrangements required to be filed as exhibits pursuant to Item 14(c) of this report.

(b)Reports on Form 8-K.

The Registrant did not file any Current Reports on Form 8-K during the fourth quarter of 2002.

107

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.

PTEK Holdings, Inc.
By:	/s/ BOLAND T. JONES
	Boland T. Jones, Chairman of the Board and Chief Executive Officer
	Date:March 31, 2003

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this 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 Executive Officer (principal executive officer) and Director	March 31, 2003
Boland T. Jones
/s/ WILLIAM E. FRANKLIN	Executive Vice President and Chief Financial Officer (principal financial and accounting officer)	March 31, 2003
William E. Franklin
/s/ GEORGE W. BAKER, SR.	Director	March 27, 2003
George W. Baker, Sr.
/s/ RAYMOND H. PIRTLE, JR.	Director	March 31, 2003
Raymond H. Pirtle, Jr.
/s/ JEFFREY A. ALLRED	President and Chief Operating Officer and Director	March 31, 2003
Jeffrey A. Allred
/s/ JEFFREY T. ARNOLD	Director	March 31, 2003
Jeffrey T. Arnold
/s/ JEFFREY M. CUNNINGHAM	Director and Vice Chairman	March 27, 2003
Jeffrey M. Cunningham
/s/ HERMANN BUERGER	Director	March 31, 2003
Hermann Buerger
/s/ J.WALKER SMITH,JR.	Director	March 31, 2003
J. Walker Smith, Jr.
/s/ RANDOLPH L. BOOTH	Director	March 31, 2003
Randolph L. Booth

108

CERTIFICATION

I, Boland T. Jones, certify that:

1.I have reviewed this Annual Report on Form 10-K of PTEK Holdings, Inc.;

2.Based on my knowledge, this Annual 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 Annual Report;

3.Based on my knowledge, the financial statements, and other financial information included in this Annual 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 Annual Report;

4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

(a)designed such disclosure controls and procedures 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 Annual Report is being prepared;

(b)evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this Annual Report (the “Evaluation Date”); and

(c)presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

(a)all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.The registrant’s other certifying officers and I have indicated in this Annual Report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:  March 31, 2003

/s/ BOLAND T. JONES

Boland T. Jones
Chief Executive Officer
PTEK Holdings, Inc.

A signed original of this written statement required by Section 302 of the Sarbanes-Oxley Act of 2002 has been provided to PTEK Holdings, Inc. and will be retained by PTEK Holdings, Inc. and furnished to the Securities and Exchange Commission upon request.

109

CERTIFICATION

I, William E. Franklin, certify that:

1.I have reviewed this Annual Report on Form 10-K of PTEK Holdings, Inc.;

2.Based on my knowledge, this Annual 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 Annual Report;

3.Based on my knowledge, the financial statements, and other financial information included in this Annual 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 Annual Report;

4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

(a)designed such disclosure controls and procedures 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 Annual Report is being prepared;

(b)evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this Annual Report (the “Evaluation Date”); and

(c)presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

(a)all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.The registrant’s other certifying officers and I have indicated in this Annual Report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:  March 31, 2003
	/s/ WILLIAM E. FRANKLIN
	William E. Franklin Executive Vice President and Chief Financial Officer PTEK Holdings, Inc

A signed original of this written statement required by Section 302 of the Sarbanes-Oxley Act of 2002 has been provided to PTEK Holdings, Inc. and will be retained by PTEK Holdings, Inc. and furnished to the Securities and Exchange Commission upon request.

110

EXHIBIT INDEX

Exhibit Number	Description
2.1	Agreement and Plan of Merger, together with exhibits, dated April 2, 1997 by and among Premiere Technologies, Inc., PTEK Merger Corporation and Voice-Tel Enterprises, Inc. and the Stockholders of Voice-Tel Enterprises, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K dated April 2, 1997 and filed on April 4, 1997).
2.2	Agreement and Plan of Merger, together with exhibits, dated April 2, 1997 by and among Premiere Technologies, Inc., PTEK Merger Corporation II, VTN, Inc. and the Stockholders of VTN, Inc. (incorporated by reference to Exhibit 2.2 to the Registrant’s Current Report on Form 8-K dated April 2, 1997 and filed on April 4, 1997).
2.3	Transfer Agreement dated March 31, 1997 by and among Premiere Technologies, Inc. and Owners of the VTEC Franchisee: 1086236 Ontario, Inc. (incorporated by reference to Exhibit 2.13 to the Registrant’s Current Report on Form 8-K dated April 30, 1997 and filed on May 14, 1997).
2.4	Transfer Agreement dated March 31, 1997 by and among Premiere Technologies, Inc. and Owners of the Eastern Franchisees: 1139133 Ontario Inc., 1116827 Ontario Inc., 1006089 Ontario Inc., and 1063940 Ontario Inc. (incorporated by reference to Exhibit 2.14 to the Registrant’s Current Report on Form 8-K dated April 30, 1997 and filed on May 14, 1997).
2.5	Stock Purchase Agreement, together with exhibits, dated September 12, 1997 by and among Premiere Technologies, Inc., VoiceCom Holdings, Inc. and the Shareholders of VoiceCom Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1997).
2.6	Agreement and Plan of Merger, together with exhibits, dated November 13, 1997 by and among Premiere Technologies, Inc., 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).
2.7	Agreement and Plan of Merger dated April 22, 1998 by and among the Company, 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).
2.8	Membership Interests Purchase Agreement as of March 25, 2002 by and among Voicecom Telecommunications, LLC, the Registrant, Premiere Communications, Inc., Voice-Tel of Canada Ltd., Intellivoice Communications, LLC, Voice-Tel Enterprises, LLC and Voicecom Telecommunications, Inc. (incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K dated March 26, 2002 and filed on April 10, 2002).
2.9	Bill of Sale and Assignment as of March 25, 2002 by and between Voicecom Telecommunications, LLC and Premiere Communications, Inc. (incorporated by reference to Exhibit 2.2 of the Registrant’s Current Report on Form 8-K dated March 26, 2002 and filed on April 10, 2002).
2.10	Assignment and Assumption Agreement as of March 25, 2002 by and between Voicecom Telecommunications, LLC and Premiere Communications, Inc. (incorporated by reference to Exhibit 2.3 of the Registrant’s Current Report on Form 8-K dated March 26, 2002 and filed on April 10, 2002).
3.1	Articles of Incorporation of Premiere Technologies, Inc., as amended, (incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998).

111

Exhibit Number	Description
3.2	Articles of Amendment of Articles of Incorporation of Premiere Technologies, Inc. (changing the name of the Registrant to PTEK Holdings, Inc.) (incorporated by reference to Exhibit 3.2 to the Registrant’s Yearly Report on Form 10-K for the year ended December 31, 1999 and filed on March 30, 2001).
3.3	Amended and Restated Bylaws of Premiere Technologies, Inc., as amended (incorporated by reference to Exhibit 3.1 to the Registrant’s Amended Quarterly Report on Form 10-Q/A for the quarter ended June 30, 2001).
3.4	Amendment No. 6 to Amended and Restated Bylaws of PTEK Holdings, Inc. (incorporated by reference to Exhibit 3.3(a) to the Registrant’s Yearly Report on Form 10-K for the year ended December 31, 2001).
3.5	Amendment No. 7 to Amended and Restated Bylaws of PTEK Holdings, Inc. (incorporated by reference to Exhibit 3.3(b) to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, as filed on May 15, 2002).
3.6	Amendment No. 8 to Amended and Restated Bylaws of PTEK Holdings, Inc. (incorporated by reference to Exhibit 3.3(c) to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002).
4.1	See Exhibits 3.1-3.3 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 Registration Statement on Form S-1 (No. 33-80547)).
4.3	Indenture dated June 15, 1997 between Premiere Technologies, Inc. and IBJ Schroder Bank & Trust Company, as Trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated July 25, 1997 and filed on August 5, 1997).
4.4	Form of Global Convertible Subordinated Note due 2004 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K dated July 25, 1997 and filed on August 5, 1997).
4.5	Registration Rights Agreement dated June 15, 1997 by and among the Registrant, Robertson, Stephens & Company LLC, Alex. Brown & Sons Incorporated and Donaldson, Lufkin & Jenrette Securities Corporation (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K dated July 25, 1997 and filed on August 5, 1997).
4.6	Shareholder Protection Rights Agreement dated June 23, 1998 between the Company and SunTrust Bank, Atlanta, as Rights Agent (incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K dated June 23, 1998 and filed on June 26, 1998).
10.1	Shareholder Agreement dated January 18, 1994 among the Registrant, NationsBanc Capital Corporation, Boland T. Jones, D. Gregory Smith, Leonard A. DeNittis and Andrea L. Jones (incorporated by reference to Exhibit 10.12 to the Registrant’s Registration Statement on Form S-1 (No. 33-80547)).
10.2	Mutual Release dated December 5, 1997 by and among the Registrant, Premiere Communications, Inc. and David Gregory Smith (incorporated by reference to Exhibit 10.6 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1997).
10.3	Executive Employment and Incentive Option Agreement dated November 1, 1995 between the Registrant and Patrick G. Jones (incorporated by reference to Exhibit 10.19 to the Registrant’s Registration Statement on Form S-1 (No. 33-80547)).**

112

Exhibit Number	Description
10.4	Executive Employment Agreement dated November 1, 1995 between Premiere Communications, Inc. and Patrick G. Jones (incorporated by reference to Exhibit 10.20 to the Registrant’s Registration Statement on Form S-1 (No. 33-80547)).**
10.5	Restricted Stock Award Agreement dated May 5, 1999 between the Registrant and Boland T. Jones (incorporated by reference to Exhibit 10.12 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999).**
10.6	Restricted Stock Award Agreement dated May 5, 1999 between the Registrant and Jeffrey A. Allred (incorporated by reference to Exhibit 10.13 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999).**
10.7	Restricted Stock Award Agreement dated May 5, 1999 between the Registrant and Patrick G. Jones (incorporated by reference to Exhibit 10.14 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999).**
10.8	Recourse Promissory Note dated December 20, 1999 payable to the Registrant by Boland T. Jones (incorporated by reference to Exhibit 10.15 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999).**
10.9	Recourse Promissory Note dated December 20, 1999 payable to the Registrant by Jeffrey A. Allred (incorporated by reference to Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999).**
10.10	Premiere Communications, Inc. 401(k) Profit Sharing Plan (incorporated by reference to Exhibit 10.30 to the Registrant’s Registration Statement on Form S-1 (No. 33-80547)).**
10.11	Form of Director Indemnification Agreement between the Registrant and Non-employee Directors (incorporated by reference to Exhibit 10.31 to the Registrant’s Registration Statement on Form S-1 (No. 33- 80547)).**
10.12	Agreement of Lease between Corporate Property Investors and Premiere Communications, Inc. dated March 3, 1997, as amended by Modification of Lease dated August 4, 1997, as amended, by Second Modification of Lease, dated October 30, 1997 (incorporated by reference to Exhibit 10.19 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1997).
10.13	Form of Officer Indemnification Agreement between the Registrant and each of the executive officers (incorporated by reference to Exhibit 10.36 to the Registrant’s Registration Statement on Form S-1 (No. 33- 80547)).**
10.14	Form of Stock Purchase Warrant Agreement (incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-8 (No. 333-11281)).**
10.15	Form of Warrant Transaction Statement (incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form S-8 (No. 333-11281)).
10.16	Form of Director Stock Purchase Warrant (incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-8 (No. 333-17593)).**
10.17	Purchase Agreement, dated June 25, 1997, by and among Premiere Technologies, Inc., Robertson, Stephens & Company LLC, Alex. Brown & Sons Incorporated and Donaldson, Lufkin & Jenrette Securities Corporation (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated July 25, 1997 and filed on August 5, 1997).

113

Exhibit Number	Description
10.18	1991 Non-Qualified and Incentive Stock Option Plan of Voice-Tel Enterprises, Inc. (assumed by the Registrant) (incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-8 (No. 333-29787)).
10.19	1991 Non-Qualified and Incentive Stock Option Plan of VTN, Inc. (assumed by the Registrant) (incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-8 (No. 333-29787)).
10.20	Form of Stock Option Agreement by and between the Registrant and certain current or former employees of Voice-Tel Enterprises, Inc. (incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form S-8 (No. 333-29787)).
10.21	Premiere Technologies, Inc. Second Amended and Restated 1995 Stock Plan (incorporated by reference to Exhibit A to the Registrant’s Definitive Proxy Statement distributed in connection with the Registrant’s June 11, 1997 annual meeting of shareholders, filed April 30, 1997).**
10.22	First Amendment to Premiere Technologies, Inc. Second Amended and Restated 1995 Stock Plan (incorporated by reference to Exhibit 10.43 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1997).**
10.23	VoiceCom Holdings, Inc. 1995 Stock Option Plan (assumed by the Registrant) (incorporated by reference to Exhibit 10.44 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1997).
10.24	VoiceCom Holdings, Inc. Amended and Restated 1985 Stock Option Plan (assumed by the Registrant) (incorporated by reference to Exhibit 10.45 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1997).
10.25	Premiere Technologies, Inc., Amended and Restated 1998 Stock Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999).
10.26	Amendment No. 1 to the Premiere Technologies, Inc. Amended and Restated 1998 Stock Plan (incorporated by reference to Exhibit 10.45 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999).
10.27	Xpedite Systems, Inc. 1992 Incentive Stock Option Plan (assumed by the Registrant) (incorporated by, reference to Xpedite’s Registration Statement on Form S-I (No. 33-73258)).
10.28	Xpedite Systems, Inc. 1993 Incentive Stock Option Plan (assumed by the Registrant) (incorporated by reference to Xpedite’s Registration Statement on Form S-I (No. 33-73258)).
10.29	Xpedite Systems, Inc. 1996 Incentive Stock Option Plan (assumed by the Registrant) (incorporated by reference to Xpedite’s Annual Report on Form 10-K for the year ended December 31, 1995).
10.30	Xpedite Systems, Inc. Non-Employee Directors’ Warrant Plan (assumed by the Registrant) (incorporated by reference to Exhibit 10.31 to Xpedite’s Annual Report on Form 10-K for the year ended December 31, 1996).
10.31	Xpedite Systems, Inc. Officer’s Contingent Stock Option Plan (assumed by the Registrant) (incorporated by reference to Exhibit 10.30 to Xpedite’s Annual Report on Form 10-K for the year ended December 31, 1996).**

114

Exhibit Number	Description
10.32	Associate Stock Purchase Plan (incorporated by reference to Appendix A to the Registrant’s Definitive Proxy Statement distributed in connection with the Registrant’s June 22, 1999 Annual Meeting of Shareholders, filed on May 19, 1999).
10.33	Intellivoice Communications, Inc. 1955 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).
10.34	Employment Agreement dated January 1, 2000 by and between American Teleconferencing Services, Ltd. And Theordore P. Schrafft (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000).**
10.35	PTEK Holdings, Inc. 2000 Directors Stock Plan (incorporated by reference to Exhibit A to the Registrant’s Definitive Proxy Statement distributed in connection with the Registrant’s June 7, 2000 Annual Meeting of Shareholders, filed April 28, 2000).**
10.36	Settlement Agreement dated April 7, 2000 by and between PTEK Holdings, Inc. and MCI WorldCom, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).*
10.37	Amendment No. 1 dated January 1, 2000 to Telecommunications Service Agreement dated October 29, 1999 by and between Premiere Technologies, Inc. and MCI WorldCom, Inc. (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).
10.38	Addendum A dated January 1, 2000 to Carrier Services Agreement dated as of October 29, 1999 by and between PTEK Holdings, Inc. and MCI WorldCom, Inc. (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).
10.39	Credit Agreement dated September 29, 2000 by and among Xpedite Systems, Inc., PTEK Holdings, Inc. and ABN Amro Bank, N.V. (incorporated by reference to Exhibit 10.1 to the Registrants Quarterly Report on Form 10-Q for the quarter ended September 30, 2000).
10.40	Asset Sale Agreement, together with exhibits, dated August 25, 2000 by and between Telecare, Inc. and Premiere Communications, Inc. (incorporated by reference to Exhibit 10.2 to the Registrants Quarterly Report on Form 10-Q for the quarter ended September 30, 2000).
10.41	PTEK Holdings, Inc. Associate Stock Purchase Plan (incorporated by reference to Appendix B to the Registrant’s Definitive Proxy Statement distributed in connection with the Registrant’s June 5, 2001 Annual Meeting of Shareholders, filed April 30, 2001).
10.42	PTEK Holdings, Inc. 1995 Stock Plan, as amended (incorporated by reference to Appendix C to the Registrant’s Definitive Proxy Statement distributed in connection with the Registrant’s June 5, 2001 Annual Meeting of Shareholders, filed April 30, 2001).
10.43	Letter to shareholders, employees and friends of PTEK (incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K dated February 21, 2001 and filed on February 21, 2001).
10.44	Letter to shareholders, employees and friends of PTEK (incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K dated July 11, 2001 and filed on July 11, 2001).
10.45	PTEK Holdings, Inc. Associate Stock Purchase Plan, as amended (incorporated by reference to Appendix B 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).

115

Exhibit Number	Description
10.46	PTEK Holdings, Inc. 2000 Directors Stock Plan, as amended (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).
10.47	Premiere Technologies, Inc. 1994 Stock Option Plan.
10.48	PTEK Holdings, Inc. 1995 Stock Plan (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).
10.49	Share Purchase Agreement dated February 27, 2003 by and between the Registrant and AT&T Corp. (incorporated by reference to Exhibit 1 to Amendment No. 1 to Schedule 13D of AT&T Corp., filed with respect to the Issuer on March 6, 2003).
10.50	Note Purchase Agreement dated February 27, 2003 by and between the Registrant and AT&T Corp. (incorporated by reference to Exhibit 2 to Amendment No. 1 to Schedule 13D of AT&T Corp., filed with respect to the Issuer on March 6, 2003).
10.51	Third Modification of Lease dated July 15, 1998 by and between The Retail Property Trust and Premiere Communications, Inc. to the Agreement of Lease between Corporate Property Investors and Premiere Communications, Inc. dated October 30, 1997, as amended by Fourth Modification of Lease dated August 27, 1998, as amended by Fifth Modification of Lease dated April 1, 1999, as amended by Sixth Modification of Lease dated 1999.
10.52	Seventh Amendment to Lease dated February 28, 2001 by and between Property Georgia OBJLW Two Corporation and Premiere Communications, Inc. to the Agreement of Lease between Corporate Property Investors and Premiere Communications, Inc. dated October 30, 1997, as amended by Eighth Amendment to Lease dated June 24, 2001.
10.53	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, Ltd., as amended by Second Amendment to Standard Office Lease dated May 1998, as amended by Third Amendment to Standard Office Lease dated September 1999.
10.54	Second Amended and Restated Executive Employment Agreement effective as of January 1, 2002 by and among the Registrant, Premiere Communications, Inc. and Boland T. Jones.**
10.55	Second Amended and Restated Executive Employment Agreement effective as of January 1, 2002 by and among the Registrant and Jeffrey A. Allred.**
10.56	Employment Offer Letter dated August 6, 2001 by the Registrant to Richard J. Buyens.**
10.57	Stock Pledge Agreement dated January 3, 2002 by and between Boland T. Jones and the Registrant.**
10.58	Stock Pledge Agreement dated January 3, 2002 by and between Jeffrey A. Allred and the Registrant.**
10.59	Stock Pledge Agreement dated January 3, 2002 by and between Patrick G. Jones and the Registrant.**
10.60	Stock Pledge Agreement dated January 3, 2002 by and between Richard J. Buyens and the Registrant.**

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Exhibit Number	Description
10.61	Stock Pledge Agreement dated January 3, 2002 by and between Theodore P. Schrafft and the Registrant.**
10.62	Promissory Note dated January 3, 2002 payable to the Registrant by Boland T. Jones.**
10.63	Promissory Note dated January 3, 2002 payable to the Registrant by Jeffrey A. Allred.**
10.64	Promissory Note dated January 3, 2002 payable to the Registrant by Patrick G. Jones.**
10.65	Promissory Note dated January 3, 2002 payable to the Registrant by Richard J. Buyens.**
10.66	Promissory Note dated January 3, 2002 payable to the Registrant by Theodore P. Schrafft.**
10.67	Agreement dated March 5, 2002 by and among the Registrant and Jeffrey M. Cunningham.**
10.68	Lease Agreement from Townsend XPD, LLC to Xpedite Systems, Inc. dated June 15, 2000.
10.69	Pine Ridge Business Park Standard Office Lease dated January 29, 1999 by and between Perg Buildings, LLC and American Teleconferencing Services, Ltd., as amended by First Amendment to Lease dated May 4, 1999.
21.1	Subsidiaries of the Registrant.
23.1	Consent of PricewaterhouseCoopers LLP.
99.1	Statement of Chief Executive Officer and Chief Financial Officer of PTEK Holdings, Inc.

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*Confidential treatment has been granted. The copy on file as an exhibit omits the information subject to the confidentiality request. Such omitted information has been filed separately with the Commission.

**Management contracts and compensatory plans and arrangements required to be filed as exhibits pursuant to Item 14(c) of this report.

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EX-10.47

EXHIBIT 10.47

1994 STOCK PLAN

PREMIERE TECHNOLOGIES, INC.

STOCK OPTION PLAN

1.Purposes. The purposes of this Stock Option Plan (the “Plan”) are to encourage stock ownership by key employees, consultants and others rendering services to Premiere Technologies, Inc. (the “Corporation”) and its subsidiaries; to provide an incentive for such employees, consultants and others to expand and improve the profitability of the Corporation and its subsidiaries; and to assist the Corporation and its subsidiaries in attracting and retaining key personnel through the grant of options (“Options”) to purchase shares of the no par value common stock (the “Stock”) of the Corporation.

2.Definitions. For purposes of the Plan:

(a)“Board” shall mean the Board of Directors of the Corporation.

(b)“Committee” shall mean the Stock Option Plan Committee, which shall be comprised of the President of the Corporation and two (2) other members of the Board selected by the President.

(c)“Optionee” shall mean a Potential Participant to whom an Option is granted under the Plan.

(d)“Potential Participant” shall mean an employee of, or consultant to, the Corporation or any of its subsidiaries, and any other person who renders services to the Corporation or any of its subsidiaries.

(e)“Stock Option Agreement” shall mean a Stock Option Agreement in substantially the form attached hereto as Appendix I.

3.Shares Subject to the Plan. The initial maximum number of shares of Stock for which Options may be granted under the Plan shall be 40,000 shares; provided, however, this number shall be increased by (a) any shares of Stock with respect to which options or warrants have been granted prior to the effective date hereof (“Prior Options”), to the extent such Prior Options terminate or expire prior to the exercise thereof in full, and (b) any shares of Stock which are issued pursuant to a Prior Option and which are repurchased by the Corporation. In addition, shares of Stock subject to, but not issued under, any Option terminating or expiring prior to the exercise thereof in full, and shares of Stock repurchased by the Corporation pursuant to Section 4(b) (iii) of the Stock Option Agreement, shall be deemed available for Options hereafter granted under the Plan.

4.Administration. The Plan shall be administered by the Committee. A majority of the members of the Committee shall constitute a quorum for the transaction of business, and action approved in writing by a majority of the members of the Committee then serving shall be fully effective as if the action had been taken by unanimous vote at a meeting duly called and held. The Committee shall be responsible to the Board for the administration and operation of the Plan, and shall make all decisions with respect to participation in the Plan and the granting of Options hereunder. The interpretation and construction of any provision of the Plan by the Committee shall be final, unless otherwise determined by the Board. The President of the Corporation or the Board may remove a member of the Committee for any reason;

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provided, that the President may not be removed as a member of the Committee unless he ceases to be President of the Corporation, in which event he shall be automatically removed. If the President is so removed, he may thereafter serve as a member of the Committee if selected by the President of the Corporation then in office. The Corporation shall indemnify, defend and hold harmless each member of the Committee to the fullest extent allowed by the Bylaws of the Corporation.

5.Eligibility. The Committee may grant Options in its discretion to any Potential Participant. Options may be granted by the Committee at any time and from time to time to new Potential Participants, or to then Optionees, and may include or exclude previous Optionees, as the Committee shall determine.

6.Exercise Price. The purchase price per share for Stock under each Option shall be determined by the Committee.

7.Terms and Conditions of Options. Options granted pursuant to the Plan shall be evidenced by a Stock Option Agreement which shall be signed by each Optionee and the President or a Vice President of the Corporation. If a Potential Participant fails or declines to sign a Stock Option Agreement, he will be deemed to have declined the Option.

8.Amendment and Termination. The Board, by resolution, may terminate, amend, or revise the Plan or the Stock Option Agreement; provided, however, that neither the Board nor the Committee may, without the consent of the holder of an Option, alter or impair any Option previously granted under the Plan. Termination of the Plan shall not affect any option previously granted.

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9.Effective Date of Plan. The Plan shall be effective from March 18, 1994, which is the date that the Plan was adopted and approved by the Board.

EX-10.51

EXHIBIT 10.51

THIRD MODIFICATION OF LEASE

LANDLORD NAME AND ADDRESS:	The Retail Property Trust 115 West Washington, Indianapolis, IN 46204
TENANT NAME AND ADDRESS:	PREMIERE COMMUNICATIONS, INC. 3399 Peachtree Road, NE The Lenox Building, Suite 600 Atlanta, Georgia 30326
DATE OF LEASE:	Executed March 3, 1997, modified August 4, 1997 and October 30, 1997
PREMISES:	The Lenox Building, Suites 300, 400, 500 600 and 700 Atlanta, Georgia
DATE OF AGREEMENT:	July 15, 1998

RECITAL

          Landlord and Tenant have agreed to amend the Lease in accordance with the terms of this Agreement.

          NOW, THEREFORE, in consideration of the mutual covenants herein contained, it is hereby agreed as follows:

          1.          Subject to the terms and conditions set forth below, Tenant shall have the right to install a diesel powered generator with a generating capacity of up to 750 KVA (the “Generator”) in the location marked on Exhibit A annexed hereto and made a part hereof, together with batteries, a diesel fuel tank of up to 2,000 gallon capacity, an output panel and all feeders, battery charger,

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remote annunciators, rigging and terminations in support thereof (collectively, the “Generator System”).

          2.          In connection with its installation of the Generator System, Tenant shall erect an eight (8’’) foot chain-link security fence around the Generator; shall provide Landlord with emergency access keys; and shall replace or replant any landscaping disturbed by installation of the Generator or the fence.

          3.          Tenant shall be solely responsible for the installation, maintenance and repair of the Generator System, and for all costs incurred in connection therewith. Tenant, at its own cost, shall enter into maintenance agreements for the Generator System with a company reasonably satisfactory to Landlord.

          4.          During the installation of the Generator System and any subsequent non-emergency repairs or alterations thereto, Tenant shall notify Landlord at least two (2) weeks in advance of any need to interrupt normal electrical service to the Lenox Building.

          5.          Prior to installing the Generator System, Tenant shall submit to Landlord for Landlord’s approval which shall not be unreasonably withheld, conditioned or delayed, Tenant’s proposed procedures for fuel storage, refueling, and periodic testing of the Generator.

          6.          Tenant shall not permit the testing or non-emergency operation of the Generator during Standard Business Hours without the prior written approval of Landlord, which shall not be unreasonably withheld, conditioned or delayed.

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          7.          Upon the expiration or earlier termination of the Lease, Tenant may remove the Generator System, or any portion thereof, and return all affected areas of the Building to their pre-installation conditions, all at Tenant’s sole cost and expense.  In the event Tenant elects not to remove the Generator System, then it shall notify Landlord and Landlord shall have ten (10) days to notify Tenant to remove any part, or all, of the Generator System, otherwise, any part of the Generator System not so removed shall become the property of Landlord.

          8.          Except as provided herein, all of the terms, conditions and covenants of the Lease shall remain the same and in full force and effect.

          9.          Any capitalized term used herein shall have the meaning ascribed to it in the Lease.

          IN WITNESS WHEREOF, Landlord and Tenant have executed this Agreement as of the day and year first above written.

Tenant:
PREMIERE COMMUNICATIONS, INC.
By:	/s/ PATRICK G. JONES
	Sr.V.P.
Landlord:
THE RETAIL PROPERTY TRUST
By:	/s/ DAVID SIMON
	David Simon, CEO

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FOURTH MODIFICATION OF LEASE

THIS FOURTH MODIFICATION OF LEASE  (this “Modification”) is entered into this 27^th day of August, 1998 by and between The Retail Property Trust a Massachusetts business trust (“Landlord”) and Premiere Communications, Inc., a Georgia corporation (“Tenant”)

LANDLORD NAME AND ADDRESS:	The Retail Property Trust 115 West Washington Indianapolis, IN 4620
TENANT NAME AND ADDRESS:	Premiere Communications, Inc. 3399 Peachtree Road, N.E. The Lenox Building Suite 600 Atlanta, Georgia 30326
DATE OF LEASE:	Executed March 3, 1997, modified by Modification of Lease dated August 4, 1997, modified by Second Modification of Lease dated October 30, 1997, and modified by Third Modification of Lease dated July 5, 1998
LEASED PREMISES:	Suite #300 and 400 on the 3rd and 4th Floors, and Suite 500 and Suite 600 on the 5th and 6th Floor by Modification of Lease, and Suite 700 on the 7th Floor by Second Modification of Lease
OFFICE BUILDING:	The Lenox Building
EFFECTIVE DATE OF MODIFICATION	The later of the date of delivery of a fully executed Modification from Landlord to Tenant or the date on which Landlord delivers possession of Additional Space III to Tenant
TERM COMMENCEMENT OF ADDITIONAL SPACE III:	Two months from Effective Date to begin construction
TERM EXPIRATION OF ADDITIONAL SPACE III:	August 31, 2006
DATE OF AGREEMENT:	August 27, 1998

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RECITALS

          WHEREAS, Landlord and Tenant entered into that certain Agreement of Lease dated March 3, 1997 (the “Original Lease”), Modification of Lease dated August 4, 1997, Second Modification of Lease dated October 30, 1997, and Third Modification of Lease dated July 5, 1998 (the Original Lease, as so amended, the “Lease”);

          WHEREAS, Landlord and Tenant desire to amend the Lease to provide for the expansion of the Premises (as defined in the Lease) to include Suite No. 800 on the Eighth (8th) floor of The Lenox Building (the “Additional Space III”).

          Landlord and Tenant have agreed to amend the Lease in accordance with the terms of this Agreement,

AGREEMENT

          NOW, THEREFORE, in consideration of the mutual covenants herein contained it is hereby agreed as follows:

          1.          The Effective Date of the Modification shall be the later of the date of delivery of a fully executed Modification from Landlord to Tenant or the date on which Landlord delivers possession of Additional Space III to Tenant (“Effective Date”).

          2.           As of the Effective Date, Article 1 of the Lease, “Premises” section, Lines 1 and 2 are hereby amended by replacing the phrase “Nos. 300, 400, 500, 600, and 700, Third (3rd) and Fourth (4th), Fifth (5th), Sixth (6th) and Seventh (7th)” with the phrase “Nos. 300, 400, 500, 600, 700 and 800, Third (3rd), Fourth (4th), Fifth (5th), Sixth (6th), Seventh (7th), and Eighth (8th)”.

          3.          As of the Effective Date, Article 1 of the Lease, “Size of Premises” section, Line 1 is hereby amended by replacing the number “103,400” with the number “114,154” to reflect the increase of the Size of the Premises by 10,754 rentable square feet.

          4.          As of the Effective Date, Rider 1(B) of the Lease is hereby amended by replacing the number “89,913”, pertaining to useable square footage, with the number “99,269” and by replacing the number “103,400”, pertaining to rentable square footage, with the number “114,154”.

          5.          As of the Effective Date, Article 1 of the Lease, “Tenant’s Pro Rata Share” section is hereby amended by replacing the number “29.70” with the number “32.79” to reflect the increase of the Size of the Premises.

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          6.          As of the Term Commencement of Additional Space III, Article 1 of the Lease, “Fixed Rent” section is hereby deleted and replaced in its entirety with the following:

	Fixed Rent. $2,171,400.00 per year through March 31, 2001; $2,274,800.00 per year from April 1, 2001 through August 31, 2004; and $2,378,200.00 per year from September 1, 2004 through August 31, 2007.
together with the following Fixed Rent for Additional Space III:
	$258,096.00 (Two Hundred Fifty Eight Thousand Ninety Six and 00/100 Dollars) per year from the Term Commencement of Additional Space III to August 31, 2002; $279,604.00 (Two Hundred Seventy Nine Thousand Six Hundred Four and 00/100 Dollars) per year from September 1, 2002 through August 31, 2006.

          7.          As of the Effective Date, Exhibit B, annexed hereto, which describes Additional Space III, also known as Suite 800 of the Premises, shall be added to the Exhibit B annexed to the Lease.

          8.          As of the Effective Date, Rider 3(B) of the Lease is hereby deleted and replaced in its entirety with the following:

                       Rider 3(B):

                       Tenant is familiar with Additional Space III and accepts the same in an “as is”, “where is” condition, and Landlord shall not be obligated to do any further construction or make any additional improvements in Additional Space III, except as may otherwise be expressly provided herein. Landlord shall deliver Additional Space III to Tenant on or before the Effective Date of the Modification, in broom-clean condition and free of all existing tenants.

                       Landlord acknowledges and agrees that Tenant shall be allowed to make tenant improvements (“Tenant Improvements”) to the Premises at any time during the Term. Tenant shall be granted an allowance of $5.00 (Five Dollars) per square foot for Tenant Improvements made in Additional Space III which shall be paid within thirty (30) days of the Effective Date. Tenant shall provide Landlord with Tenant’s drawings, plans and specifications regarding the proposed Tenant Improvements to the Premises. Landlord shall notify Tenant within Fifteen (15) days after its receipt of such drawings, plans and specifications of its approval thereof, which shall not be unreasonably withheld, or its objection to anything contained therein.

          9.          As of the Effective Date, Article 2 and Rider 3(D) to the Lease are hereby amended by inserting the phrase and “and eighth (8th) floors” after the word “floors” on Line 4.

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          10.          As of the Effective Date, Rider 4(A) to the Lease is hereby amended by replacing the phrase “Sixth (6th) floor and Seventh (7th) floors” in line 3 with the phrase “Sixth (6th), Seventh (7th), and Eighth (8th) floors”.

          11.          As of the Effective Date, Section 7.1C and Rider 25 to the Lease are amended such that Landlord represents and warrants that no conditions exist in Additional Space III as of the Effective Date which are not in compliance with Government Authority in effect on the Effective Date and agrees to remedy an such conditions in the same manner as provided for Suites 300 and 400 as of the Commencement Date.

          12.          All additional rents and other charges attributable to Additional Space III shall be prorated beginning as of the Term Commencement Date of Additional Space III.

          13.          Except as provided herein, all of the terms, conditions and covenants of the Lease, including all items of additional tent, termination date and rights of renewal shall remain the same and in full force and effect.

          14.          Any capitalized term used herein shall have the meaning ascribed to it in the Lease.

          15.          Additional Provisions: On the Effective Date, Tenant will be entitled to one (1) additional reserved parking space, which shall bring Tenant’s total number of reserved parking spaces to eleven (11).  Such reserved parking space shall be located on the second level of the parking deck between the stairwell and the elevator lobby.

          IN WITNESS WHEREOF, Landlord and Tenant have executed this Fourth Modification of Lease as of the day and year first above written.

TENANT:
PREMIERE COMMUNICATIONS, INC.
By:	/s/ PATRICK G. JONES
Print Name:	Patrick G. Jones
Title:	Sr. V.P

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LANDLORD:
THE RETAIL PROPERTYTRUST, MASS, BUS TRUST
By	/s/ DAVID SIMON
Print Name :	David Simon
Title:	CEO

5

FIFTH MODIFICATION OF LEASE

THIS FIFTH MODIFICATION OF LEASE (this “Fifth Modification”) is entered into as of the 1^st day of April, 1999 by and between The Retail Property Trust, a Massachusetts business trust, successor in interest to Corporate Property Investors, (“Landlord”) and Premiere Communications, Inc., a Georgia corporation (“Tenant”).

LANDLORD NAME AND ADDRESS:	THE RETAIL PROPERTY TRUST c/o Simon Debartolo Group, L.P. 115 West Washington Street Indianapolis, Indiana 46204
TENANT NAME AND ADDRESS:	PREMIERE COMMUNICATIONS, INC. 3399 Peachtree Road, N.E. The Lenox Building Suite 600 Atlanta, Georgia 30326
DATE OF LEASE:	Executed, March 3, 1997, modified by Modification of Lease dated August 4, 1997, modified by Second Modification of Lease dated October 30, 1997 modified by Third Modification of Lease dated July 15, 1998, and modified by Fourth Modification of Lease dated August 17, 1998
LEASED PREMISES:	Suites 300 and 400 on the 3rd and 4th Floors; Suites 500 and 600 on the 5th and 6th Floor by Modification of Lease; Suite 700 on the 7th Floor by Second Modification of Lease; and Suite 800 on the 8th Floor by Fourth Modification to Lease.
OFFICE BUILDING:	The Lenox Building
EFFECTIVE DATE OF FIFTH MODIFICATION:	August 4, 1997

RECITALS

          WHEREAS, Landlord and Tenant entered into that certain Agreement of Lease dated March 3, 1997 (the “Original Lease”), Modification of Lease dated August 4, 1997, Second Modification of Lease dated October 30, 1997, Third Modification of Lease dated

July 15, 1998 and Fourth Modification of Lease dated August 17, 1998 (the Original Lease, as so amended, together the “Lease”);

          WHEREAS, Landlord and Tenant desire to amend the Lease to clarify their mutual understanding with respect to the termination dates for the respective portions of the various premises occupied by Tenant, and have agreed to amend the Lease for such purpose in accordance with the terms of this Fifth Modification.

AGREEMENT

          NOW, THEREFORE, in consideration of the mutual covenants herein contained it is hereby agreed as follows:

1.	At Article I of the Lease, “Term” is hereby deleted in its entirety and replaced with the following:
	Term.	As to Suites 300 and 400 (the Premises as defined in the Original Lease), that period of time commencing on the Commencement Date (as stipulated in said Original Lease) and expiring on August 31, 2007.
		As to Suites 500 and 600 (the Additional Space as defined in the Modification of Lease), that period of time commencing on the Effective Date (as defined in said Modification of Lease) and expiring on August 31, 2007.
		As to Suite 700 (the Additional Space II as defined in the Second Modification of Lease), that period of time commencing on the Effective Date (as defined in said Second Modification of Lease) and expiring on August 31, 2007.
		As to Tenant’s right to install and maintain the Generator System (as defined in the Third Modification to Lease), that period of time commencing upon the Date of Agreement (as stipulated in said Third Modification to Lease) and expiring on August 31, 2007.
		As to Suite 800 (the Additional Space III as defined in the Fourth Modification to Lease), that period of time commencing on the Effective Date (as defined in said Fourth Modification to Lease) and expiring on August 31, 2006.
2.	Except as provided herein, all of the terms, conditions and covenants of the Lease, including all items of additional rent, termination date and rights to renewal shall remain the same and in full force and effect.
3.	Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Lease.

4. Landlord and Tenant acknowledge that this Fifth Modification does not extend the Term, and in the event any brokerage commissions are due pursuant to this Fifth Modification, such shall be the sole obligation of Tenant and, as such, Tenant shall fully indemnify Landlord from and against any claims which might arise thereby.

          IN WITNESS WHEREOF, Landlord and Tenant have executed this Fifth Modification as of the day and year first above written.

TENANT:
PREMIERE COMMUNICATIONS, INC., a Georgia corporation
By:	/s/ PATRICK G. JONES
Print Name:	Patrick G. Jones
Title:	Sr VP
LANDLORD:
THE RETAIL PROPERTY TRUST, a Massachusetts business trust
By:	/s/ DAVID SIMON
Print Name:	David Simon
Title:	President & CEO

SIXTH MODIFICATION OF LEASE

	THIS SIXTH MODIFICATION OF LEASE (this “Sixth Modification”) is entered into as of the ___ day of ______, 1999 by and between The Retail Property Trust, a Massachusetts business trust, successor in interest to Corporate Property Investors, (“Landlord”) and Premiere Communications, Inc., a Florida corporation (“Tenant”).
LANDLORD NAME AND ADDRESS:		THE RETAIL PROPERTY TRUST 115 West Washington Street Indianapolis, Indiana 46204
TENANT NAME AND ADDRESS:		PREMIERE COMMUNICATIONS, INC. 3399 Peachtree Road, N.E. The Lenox Building Suite 600 Atlanta, Georgia 30326
DATE OF LEASE:		Executed March 3, 1997, modified by Modification of Lease dated August 4, 1997, modified by Second Modification of Lease dated October 30, 1997, modified by Third Modification of Lease dated July 15, 1998, modified by Fourth Modification of Lease dated August 27, 1998, and modified by Fifth Modification of Lease dated April 1, 1999.
LEASED PREMISES:		Suites 300 and 400 on the 3rd and 4th Floors; Suites 500 and 600 on the 5th and 6th Floor by Modification of Lease; Suite 700 on the Floor by 7th Floor by Second Modification of Lease; and Suite 800 on the 8th Floor by Fourth Modification to Lease.
OFFICE BUILDING:		The Lenox Building
EFFECTIVE DATE OF SIXTH MODIFICATION:		____________________________________

RECITALS

          WHEREAS, Landlord and Tenant entered into that certain Agreement of Lease dated March 3, 1997 (the “Original Lease”), Modification of Lease dated August 4, 1997, Second Modification of Lease dated October 30, 1997, Third Modification of Lease dated July 15, 1998, Fourth Modification of Lease dated August 27, 1998, and Fifth Modification of Lease dated April 1, 1999 (the Original Lease, as so amended, together the “Lease”);

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          WHEREAS, Landlord and Tenant desire to amend the Lease to set forth and clarify their mutual understanding with respect to the Leased Premises and the additional premises on the tenth (10^th) floor. Landlord and Tenant have agreed to amend the Lease for such purposes in accordance with the terms of this Sixth Modification.

AGREEMENT

          NOW, THEREFORE, in consideration of the mutual covenants herein contained it is hereby agreed as follows:

	1.	At Article I of the Lease, “Term” is hereby amended to include Suite 1000 of approximately 7,396 square feet on the tenth floor, as designated on Exhibit A attached hereto.  Such Suite 1000 shall be leased by Tenant, commencing May 15, 1999 and expiring on May 31, 2001, at the Fixed Rent rate of Twenty-five and no/100 Dollars ($25.00) per square foot, such Fixed Rent rate to be $184,900.00 per year, payable in advance in equal monthly installments of $15,408.33.
	2.	Provided Tenant is not then in default of its obligations hereunder, Tenant shall have the right to extend the Term for this Suite 1000 for two (2) consecutive terms of one (1) year each, such option term(s) to be exercised, if at all, not later than nine (9) months prior to the conclusion of the then existing Term (including the first option, if exercised), provided, however, in no event may either option be exercised sooner than twelve (12) months prior to the then existing Term. In the event Tenant exercises its option(s), Landlord shall, within thirty (30) days after receipt of Tenant’s election notify Tenant as to the then current fair market value of Suite 1000 and such shall be deemed to be the Fixed Rent rate. Landlord and Tenant acknowledge that Tenant will pay its proportionate share of all increases in rent as otherwise set forth in Section 3.2 of the Lease, utilizing a base year of 1999, Tenant’s Pro Rata Share for Suite 1000 to be Two and 2/100 percent (2.02%).
	3.	Except as provided herein, all of the terms, conditions and covenants of the Lease, including all items of additional rent, termination date and rights to renewal shall remain the same and in full force and effect, and shall apply to Suite 1000 as otherwise set forth in the Lease.
	4.	Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Lease.
	5.	Landlord and Tenant acknowledge that this Sixth Modification does not extend the Term. Brokerage commissions are due pursuant to this Sixth Modification, to Cushman & Wakefield in the amount of Two percent (2%) per a separate Commission Agreement.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Sixth Modification as of the day and year first above written.

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TENANT:
PREMIERE COMMUNICATIONS, INC., a Florida corporation
By:		/s/ JEFFREY A. ALLRED
Print Name:		JEFFREY A. ALLRED
Title:		Pres &COO
LANDLORD:
THE RETAIL PROPERTY TRUST, a Massachusetts business trust
By:		/s/ DAVID SIMON
Print Name:		David Simon
Title:	President & CEO

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EX-10.52

EXHIBIT 10.52

SEVENTH AMENDMENT TO LEASE

          THIS SEVENTH AMENDMENT TO LEASE (“Seventh Amendment”) dated as of February 28, 2001 is entered into by and between PROPERTY GEORGIA OBJLW TWO CORPORATION, an Oregon corporation (as successor-in-interest to Corporate Property Investors) (“Landlord”) and PREMIERE COMMUNICATIONS, INC., a Florida corporation (“Tenant”).

RECITALS

          A.          Landlord and Tenant are parties to an Agreement of Lease dated March 3, 1997, as modified by a Modification of Lease dated August 4, 1997, a Second Modification of Lease dated October 30,  1997, a Third Modification of Lease dated July 15,  1998, a Fourth Modification of Lease dated August 27, 1998, and a Fifth Modification of Lease dated April 1, 1999 (as modified, the “Lease”). Pursuant to the Lease, Landlord leases to Tenant and Tenant leases from Landlord certain premises, among others, known as Suite 1000 located on the tenth (10^th) floor of the Building, as more particularly described in the Lease (the “Tenth Floor Premises”).

          B.          Landlord and Tenant desire to amend the Lease in accordance with the terms set forth herein. Landlord and Tenant have expressed their mutual desire to confirm the square footage of the Tenth Floor Premises and to adjust Tenant’s Pro Rata Share, Fixed Rent and other terms for the Tenth Floor Premises as set forth below.

          NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:

          1.          The Tenth Floor Premises shall be deemed to contain a total of Seven Thousand Two Hundred Eighty One (7,281) rentable square feet.

          2.          The Fixed Rent for the Tenth Floor Premises is hereby revised to be $182,025.00 per year, payable in advance in equal monthly installments of $15,168.75. After full execution of this Seventh Amendment, Tenant shall receive a credit against their next payment of Fixed Rent due in the amount of ($239.58 per month for       months). (5/15/99- 9/30/00; 16.5 months) Three thousand nine hundred fifty three and 07/100ths ($3,953.07)

          3.          Tenant’s Pro Rata Share for the Tenth Floor Premises is hereby revised to be Two and 9/100ths percent (2.09%).

          4.          Tenant acknowledges that it is currently in possession of the Tenth Floor Premises and accepts same in an “AS IS” condition. Landlord and Landlord’s agents have made no representations to Tenant concerning the Tenth Floor Premises except those specified herein. By remaining in occupancy of any part of the Tenth Floor Premises, Tenant shall be deemed to have agreed that Landlord, up to the time of such occupancy, had performed all of its obligations

hereunder with respect to such part and that such part was in satisfactory condition as of the date of such occupancy.

          5.          Notices to Landlord shall be delivered as follows: Property Georgia OBJLW Two Corporation, c/o Clarion Partners LLC, 335 Madison, Avenue, New York, New York 10017, Attention: Portfolio Manager – Lenox Building with a copy to Property Georgia OBJLW Two Corporation, 3399 Peachtree Road, NE, Suite 920, Atlanta, Georgia 30326, Attention: Property Manager. All rent shall be paid to Landlord at Property Georgia OBJLW Two Corporation, Unit #212, Post Office Box 5037, Portland, Oregon 97208

          6.          This Seventh Amendment shall be binding upon and inure to the benefit of Landlord and Tenant and their respective successors and assigns.  Except as expressly amended hereby, the Lease remains in full force and effect and is hereby ratified and confirmed. All capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the Lease. This Seventh Amendment may be executed in any number of counterparts, each of which shall be deemed an original instrument and all of which together shall constitute a single agreement.

          IN WITNESS WHEREOF, Landlord and Tenant  have executed this Seventh Amendment under seal as of the day and year first above written.

LANDLORD:
PROPERTY GEORGIA OBJLW TWO CORPORATION, an Oregon corporation
By:	Clarion Partners, LLC, a New York limited liability company, its duly authorized agent
By:	/s/ MICHAEL O’BRIEN
Name:	Michael O’Brien
	Authorized Person
TENANT:
PREMIERE COMMUNICATIONS, INC., a Florida corporation
By:	/s/ PATRICK G. JONES
Name:	Patrick G. Jones
Title:	E.V.P.

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EIGHTH AMENDMENT TO LEASE

          THIS EIGHTH AMENDMENT TO LEASE (“Eighth Amendment”)dated as of June 24, 2001, is entered into by and between PROPERTY GEORGIA OBJLW TWO CORPORATION, an Oregon corporation (successor-in-interest to Corporate Property Investors) (“Landlord”)and PREMIERE COMMUNICATIONS, INC., a Florida corporation (“Tenant”).

RECITALS

A.

Landlord and Tenant are parties to an Agreement of Lease dated March 3, 1997, as modified by a Modification of Lease dated August 4, 1997, a Second Modification of Lease dated October 30, 1997, a Third Modification of Lease dated July 15, 1998, a Fourth Modification of Lease dated August 27, 1998, a Fifth Modification of Lease dated April 1, 1999, a Sixth Modification of Lease dated May 15, 1999 and a Seventh Amendment to Lease dated February 28, 2001 (as modified and amended, the “Lease”). Pursuant to the Lease, Landlord leases to Tenant and Tenant leases from Landlord certain premises, among others, known as Suite 1000 located on the tenth (10th) floor of the Building, as more particularly described in the Lease (the “Tenth Floor Premises”).

B.

The term of the lease has expired with respect to the Tenth Floor Premises. Landlord and Tenant have expressed their mutual desire to allow the Lease to continue on a month-to-month basis for a portion of the Tenth Floor premises containing approximately 1,250 rentable square feet, and more particularly described on Exhibit “A” hereto (the “Eighth Amendment Premises”).

          NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:

          1.          The Eighth Amendment Premises shall be deemed to contain a total of One Thousand Two Hundred Fifty (1,250) rentable square feet and be located as shown on Exhibit A hereto.

          2.          The Fixed Rent for the Eighth Amendment Premises shall be $2,916.67 per month, payable in advance in equal monthly installments on the first day of each month. Upon execution of this Eighth Amendment by Tenant, Tenant shall pay to Landlord $2,916.67 as Fixed Rent for the month of June 2001.

          3.           The Term of the Lease for the Eighth Amendment Premises shall be month-to-month, terminable by either Landlord or Tenant upon thirty (30) days advance written notice to the other party, provided that in the absence of default by Tenant, which default is not cured within the applicable notice and cure period, if any, such Term shall not terminate prior to August 31, 2001.

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          4.          As of June 1, 2001, Tenant shall have no further obligation to pay Tenant’s Pro Rata Share for the Eighth Amendment Premises.

          5.          Tenant acknowledges that it is currently in possession of the Eighth Amendment Premises and accepts same in an “AS IS” condition. Landlord and Landlord’s agents have made no representations to Tenant concerning the Eighth Amendment Premises except those specified herein. By remaining in occupancy of any part of the Eighth Amendment Premises, Tenant shall be deemed to have agreed that Landlord, up to the time of such occupancy, had performed all of its obligations hereunder with respect to such part and that such part was in satisfactory condition as of the date of such occupancy.

          6.          Notices to Landlord shall be delivered as follows: Property Georgia OBJLW Two Corporation, c/o Clarion Partners LLC, One Federal St., 28th Floor, Boston, MA   02110, Attention: Portfolio Manager – Lenox Building with a copy to Property Georgia OBJLW Two Corporation, 3399 Peachtree Road, NE, Suite 920, Atlanta, Georgia 30326, Attention: Property Manager. All rent shall be paid to Landlord at Property Georgia OBJLW Two Corporation, Unit #212, Post Office Box 5037, Portland, Oregon 97208

          7.          This Eighth Amendment shall be binding upon and inure to the benefit of Landlord and Tenant and their respective successors and assigns. Except as expressly amended hereby, the Lease remains in full force and effect and is hereby ratified and confirmed.   All capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the Lease.   This Eighth Amendment may be executed in any number of counterparts, each of which shall be deemed an original instrument and all of which together shall constitute a single agreement.

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          IN WITNESS WHEREOF, Landlord and Tenant have executed this Eighth Amendment under seal as of the day and year first above written.

LANDLORD:
PROPERTY GEORGIA OBJLW TWO CORPORATION,
an Oregon corporation
By:	CLARION  PARTNERS , LLC, a New York limited liability company, its duly authorized agent
By:	/s/ BRUCE G. MORRISON
Name:	Bruce G. Morrison Authorized Person
TENANT:
PREMIERE COMMUNICATIONS, INC., a Florida corporation
By:	/s/ PATRICK G. JONES
Name:	Patrick G. Jones
Title:	EVP

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EX-10.53

EXHIBIT 10.53

STANDARD OFFICE LEASE

ARTICLE 1.00 BASIC LEASE TERMS

1.01Parties. This lease agreement (“Lease”) is entered into by and between the following Lessor and Lessee:

2221 Bijou Limited Liability Company (“Lessor”)
a Colorado Limited Liability Company

American Teleconferencing Service Ltd. (“Lessee”)

1.02Leased Premises. In consideration of the rents, terms, provisions and covenants of this Lease, Lessor hereby leases, lets and demises to Lessee the following described premises (“leased premises”):

50,000	Square Feet (Approximate sq. ft. “phased-in as per Rent Schedule - Addendum A)
The Chidlaw Building	(Name of building or project)
2221 East Bijou Street	(Street address/suite number)
Colo Spgs, CO 80909	(City, State, and Zip code)

1.03Leased Premises. Subject to and upon the conditions set forth herein, including Article 11.05, the term of this lease shall commence on 120 days after Lessee’s acceptance of plans and specifications or Lessor’s notice as set forth in Article 6.01 and shall terminate 120 months thereafter.

1.04Base Rent and Security Deposit. Base rent is shown on Addendum A. Security deposit is $12,500.00.

1.05Addresses.

Lessor’s	Lessee’s
2221 Bijou Limited Liability Co.	American Teleconferencing Services, Ltd.
c/o Fieldhill Properties	2221 East Bijou Street
P.O. Box 158	Colorado Springs, CO 80909
Chaska, MN 55318

1.06Permitted Use. Office and related uses. Tenant shall have access and use availability on a 24-hour per day basis during the Lease term.

ARTICLE 2.00 RENT

2.01Base Rent. Lessee agrees to pay monthly as base rent during the term of this Lease the sum of money set forth in Section 1.04 of this Lease, which amount shall be payable to Lessor at the address shown above. One monthly installment of rent shall be due and payable on the date of occupancy by Lessee for the first month’s rent and a like monthly installment shall be due and payable on or before the first day of each calendar month succeeding the commencement date or completion date during the term of this Lease; provided, if the commencement date or the completion date should be a date other than the first day of a calendar month, the monthly rental set forth above shall be prorated to the end of that calender month, and all succeeding installments of rent shall be payable on or before the first day of each succeeding calendar month during the term of this Lease. Lessee shall pay, as additional rent, all other sums due under this Lease.

2.02Operating Expenses. In the event, Lessor’s operating expenses for the building and/or project of which the leased premises are a part shall, in any calendar year during the term of this Lease, exceed the sum of $1.18 per square foot, Lessee agrees to pay as additional rent Lessee’s pro rata share of such excess operating expenses. Lessor may invoice Lessee monthly for Lessee’s pro rata share of the estimated operating expenses for each calendar year, which amount shall be adjusted each year based upon anticipated operating expenses. Within ninety days following the close of each calendar year, Lessor shall provide Lessee an accounting showing in reasonable detail all computations

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of additional rent due under this section. In the event the accounting shows that the total of the monthly payments made by Lessee exceeds the amount of additional rent due by Lessee under this section, the accounting shall be accompanied by a refund. In the event the accounting shows that the total of the monthly payments made by Lessee is less than the amount of additional rent due by Lessee under this section, the accounting shall be accompanied by an invoice for the additional rent. Notwithstanding any other provision in this Lease, during the year in which the Lease terminates, Lessor, prior to the termination date, shall have the option to invoice Lessee for Lessee’s pro rata share of the excess operating expenses based upon the previous year’s accounting expenses. If this Lease shall terminate on a day other than the last day of a calendar year, the amount of any additional rent payable by Lessee applicable to the year in which such termination shall occur shall be pro rated on the ratio that the number of days from the commencement of the calendar year to and including the termination date bears to 365. Lessee shall have the right, at its own expenses and within a reasonable time, to audit Lessor’s books relevant to the additional rent payable under this section. Lessee agrees to pay any additional rent due under this section within twenty (20) days following receipt of the invoice or accounting showing additional rent due.

2.03Definition of Operating Expenses. The term “operating expenses” includes all expenses incurred by Lessor with respect to the maintenance and operation of the building of which the leased premises are a part, including, but not limited to, the following: maintenance, repair and replacement costs: electricity, fuel water, sewer, gas and common area utility charges; window washing; trash removal; landscaping and pest control; management fees, wages and benefits payable to employees of Lessor whose duties are directly connected with the operation and maintenance of the building; all services, supplies, repairs, replacements, or other expenses for maintaining and operating the building or project including parking and common areas; the cost, including interest, amortized over its useful life, of any capital improvement made to the building by Lessor after the date of this Lease which is required under any governmental law or regulation that was not applicable to the building at the time it was constructed; the cost, including interest, amortized over its useful life, of installation of any device or other equipment which improves the operating efficiency of any system within the leased premises and thereby reduces operating expenses; all other expenses which would generally be regarded as operating and maintenance expenses which would reasonably be amortized over a period not to exceed five years; all real property taxes and installments of special assessments, including dues and assessments by means of deed restrictions and/or owners’ associations which accrue against the building of which the leased premises are a part during the term of this Lease and all insurance premiums Lessor is required to, pay or deems necessary to pay, including public liability insurance, with respect to the building. The term operating expenses does not include the following: repairs, restoration or other work occasioned by fire, wind, the elements or other casualty; income and franchise taxes of Lessor; expenses incurred in leased to or procuring of lessees, leasing commissions, advertising expenses and expenses for the renovating of space for new lessees; interest or principal payments on any mortgage of other indebtedness of Lessor; compensation paid to any employee of Lessor above the grade of property manager; any depreciation allowance or expense; or operating expenses which are the responsibility of Lessee.

2.04Late Payment Charge. Other remedies for nonpayment of rent notwithstanding, if the monthly rental payment is not received by Lessor on or before the fifteenth (15th) day of the month for which the rent is due, of if any other payment due Lessor by Lessee is not received by Lessor on or before the tenth day of the month next following the month in which Lessee was invoiced, a late payment charge of five percent of such past due amount shall become due and payable in addition to such amounts owed under this lease.

2.05Increase in Insurance Premiums. If an increase in any insurance premiums paid by Lessor for the building is caused by Lessee’s use of the leased premises in a manner other than as set forth in Section 1.06, or if Lessee vacates the leased premises and causes an increase in such premiums, then Lessee shall pay as additional rent the amount of such increase to Lessor.

2.06Security Deposit. The security deposit set forth above shall be held by Lessor for the performance of Lessee’s covenants and obligations under this Lease, it being expressly understood that the security deposit shall not be considered an advance payment of rental or a measure of Lessor’s damage in case of default by Lessee. Upon the occurrence of any event of default by Lessee, Lessor may, from time to time, and after the giving of notice as provided herein and should Lessee fail to cure, without prejudice to any other remedy, use the security deposit to the extent necessary to make good any arrears of rent, or to repair any damage or injury, or pay any expense or liability incurred by Lessor as a result of the event of default or breach of covenant, and any remaining balance of the security deposit shall be returned by Lessor to Lessee upon termination of this Lease. If any portion of the security deposit is so used or applied, Lessee shall upon twenty days written notice from Lessor, deposit with Lessor by cash or cashier’s check an amount sufficient to restore the security deposit to its original amount.

2.07Holding Over. In the event that Lessee does not vacate the leased premises upon the expiration or termination of this Lease, Lessee shall be a tenant at will for the holdover period of all of the terms and provisions of this Lease shall be applicable during that period, except that Lessee shall

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pay lessor as base rental for the period of such holdover, an amount equal to two times the base rent which would have been payable by Lessee had the holdover period been a part of the original term of this Lease. In the event of holdover, Lessee agrees to vacate and deliver the leased premises to Lessor upon Lessee’s receipt of notice from Lessor to vacate. The rental payable during the holdover period shall be payable to Lessor on demand. No holding over by Lessee, whether with or without the consent of Lessor, shall operate to extend the term of this Lease.

ARTICLE 3.00 OCCUPANCY AND USE

3.01Use. Lessee warrants and represents to Lessor that the leased premises shall be used and occupied only for the purpose as set forth in Section 1.06. Lessee shall occupy the leased premises, conduct its business and use reasonable efforts to control its agents, employees, invitees and visitors in such a manner as is lawful, reputable and will not create a nuisance. Lessee shall use reasonable efforts to not permit any operation which emits any odor or matter which intrudes into other portions of the building, use any apparatus or machine which makes undue noise or causes vibration in any portion of the building or otherwise interfere with, annoy or disturb any other lessee in its normal business operations or Lessor in its management of the building. Lessee shall neither permit any waste on the leased premises nor allow the leased premises to be used in any way which would, in the reasonable opinion of Lessor, be extra hazardous on account of fire or which would in any way increase or render void the fire insurance on the building. It is expressly agreed that the leased premises do not include land beneath nor any space above the finished ceiling level of the premises, provided that Lessee shall have the non-exclusive right to use a portion of such space for the location of Lessee’s construction and equipment serving the leased premises subject to reasonable approval of Lessor as to location and installation.

3.02Signs. No sign of any type or description shall be erected, placed or painted in or about the leased premises or project except those signs submitted to Lessor in writing and reasonably approved by Lessor in writing, and which signs are in conformance with Lessor’s reasonable sign criteria established for the project. All interior and exterior signs for tenant’s use shall be at tenant’s sole cost and expense but shall be included in the tenant improvement allowance provided by Landlord as set forth in Addendum B.

3.03Compliance with Laws, Rules and Regulations. Lessee, at Lessee’s sole cost and expense, shall comply with all laws, ordinances, orders, rules and regulations or state, federal, municipal or other agencies or bodies having jurisdiction over the use, condition or occupancy of the leased premises. Lessee will comply with the rules and regulations of the building adopted by Lessor which are set forth on a schedule attached to this Lease. Lessor shall have the right at all times to change and amend the rules and regulations in any reasonable manner as may be deemed advisable for the safety, care, cleanliness, preservation of good order and operation or use of the building or the leased premises. All changes and amendments to the rules and regulations of the building will be sent by Lessor to Lessee in writing and shall thereafter be carried out and observed by Lessee.

3.04Warranty of Possession. Lessor warrants that it has the right and authority to execute this Lease, and Lessee, upon payment of the required rents and subject to the terms, conditions, covenants and agreements contained in this Lease, shall have possession of the leased premises during the full term of this Lease as well as any extension or renewal thereof. Lessor shall not be responsible for the accts or omissions of any other lessee orthird party that may interfere with Lessee’s use and enjoyment of the leased premises.

3.05Inspection. Lessor or its authorized agents shall at any and all reasonable times and upon reasonable notice to Lessee have the right to enter the leased premises to inspect the same, to supply janitorial service or any other service to be provided by Lessor, to show the leased premises to prospective purchasers or lessees, and to alter, improve or repair the leased premises or any other portion of the building at reasonable times and upon reasonable notice. Lessee hereby waives any claim for damages for injury or inconvenience to or interference with Lessee’s business, any loss or occupancy or use of the leased premises, and any other loss occasioned thereby. Lessor shall at all times have and retain a key with which to unlock all doors in upon and about the leased premises at reasonable times and upon reasonable notice. Lessee shall not change Lessor’s lock system or in any other manner prohibit Lessor from entering the leased premises at reasonable times and upon reasonable notice. Lessor shall have the right to use any and all reasonable means which Lessor may deem proper to open any door in an emergency without liability therefor.

ARTICLE 4.00 UTILITIES AND SERVICE

4.01Building Services. Lessor shall provide water and electricity for Lessee during the term of this Lease. Lessee shall pay all telephone charges. Lessor shall furnish Lessee hot and cold water at those points of supply provided for general use of other lessees in the building, central heating and air conditioning in season (at times Lessor normally provides these services to other lessees in the building, and at temperatures an in amounts as are considered by Lessor to be standard or in compliance with

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governmental regulations). Electric service shall be separately metered to the leased premises to assist in billing Lessee for its electrical consumption. Lessor shall also provide routine maintenance, painting and electric lighting service for all public areas and special service areas of the building in the manner and to the extent deemed by Lessor to be reasonably standard. Should any of the equipment or machinery break down, or for any cause cease to function properly, Lessor shall use reasonable diligence to repair the same promptly, but Lessee shall have no claim for rebate of rent on account of any interruption in service occasioned from the repairs. Lessor reserves the right from time to time to make changes in the utilities and services provided by Lessor to the building.

4.02Theft or Burglary. Lessor shall not be liable to Lessee for losses to Lessee’s property or personal injury caused by criminal acts or entry by unauthorized persons into the leased premises or the building.

4.03Janitorial Service. Lessor shall furnish janitorial services to the public areas of the building three to five times per week during the term of this Lease, excluding holidays. Lessee shall contract and pay for janitorial services to its leased premises.

4.04Excessive Utility Consumption. Lessee shall pay all utility costs occasioned by high electrical consumption electrodata processing machines, telephone equipment, computers and other equipment of high electrical consumption, including without limitation, the cost of installing, servicing and maintaining any special or additional inside or outside wiring or lines, meters or submeters, transformers, poles, air conditioning costs, or the cost of any other equipment necessary to increase the amount or type of electricity or power available to the leased premises. Notwithstanding the foregoing, standard P.C., telephone equipment and other similar standard office equipment shall not be deemed high electrical consumption equipment.

4.05Window Covering. Lessor shall furnish and install window coverings on all exterior windows to maintain a uniform exterior appearance. Lessee shall not remove or replace these window coverings or install any other window covering which would affect the exterior appearance of the building. Lessee may install lined or unlined over draperies in the interior sides of he Lessor furnished window coverings for interior appearance or to reduce light transmission, provided such over draperies do not affect the exterior appearance of the building or affect the operation of the building’s heating, ventilating and air conditioning systems.

4.06Charge for Service. All costs of Lessor for providing the services set forth in Article 4.00 (except those charges paid by Lessee pursuant to Section 4.04) shall be subject to the additional rent provisions in Section 2.02.

ARTICLE 5.00 REPAIRS AND MAINTENANCE

5.01Lessor Repairs. Lessor shall not be required to make any improvements (except the initial Lessor’s improvements required in Article 6.01 and Addendum B), replacements or repairs of any kind or character to the leased premises or the project during the term of this Lease except as are set forth in this section. Lessor shall maintain only the roof, foundation, parking and common areas, the structural soundness of the exterior walls, doors, corridors, windows and other structures or equipment serving the leased premises. Lessor’s cost of maintaining and repairing the items set forth in this section are subject to the additional rent provisions in Section 2.02. Lessor shall not be liable to Lessee, except as expressly provided in this Lease, for any damage or inconvenience, and Lessee shall not be entitled to any abatement or reduction of rent by reason of any repairs, alterations or additions made by Lessor under this Lease.

5.02Lessee Repairs. Lessee shall, at its own cost and expense, repair and replace any damage to injury to all or any part of the eased premises caused by any act or omission of Lessee or Lessee’s agents, employees, invitees, licensees or visitors; provided, however, if Lessee fails to make the repairs or replacements promptly, Lessor may, at its option, after giving notice to Lessee, and after Lessee having failed to make such repairs or replacements within twenty (20) days of the date of such notice, make reasonable repairs or replacements, and the cost of such repairs or replacements shall be charged to Lessee as additional rent and shall become payable by Lessee with the payment of the rent next due hereunder. Lessor may make emergency repairs without prior notice to Lessee.

5.03Request for Repairs. All request for repairs or maintenance to the leased premises that are the responsibility of Lessor pursuant to any provision of this Lease must be made in writing to Lessor at the address in Section 1.05.

5.04 Lessee Damages.Lessee shall not damage any portion of the leased premises or building, and at the termination of this Lease, by lapse of time or otherwise, Lessee shall deliver the leased premises to Lessor in as good condition as existed at the commencement date of this Lease, ordinary wear and tear excepted. The cost and expense of any repairs necessary to restore the condition of the leased premises shall be borne by Lessee.

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ARTICLE 6.00 ALTERATIONS AND IMPROVEMENTS

6.01Lessor Improvements. Lessor will complete the construction of the improvements to the leased premises in accordance with plans and specifications agreed to by Lessor and Lessee, which plans and specifications are made a part of this Lease by reference. Any changes or modifications to the approved plans and specifications shall be made and accepted by written change order or agreement signed by Lessor and Lessee and shall constitute an amendment to this Lease. Either party may declare this Lease null and void if the plans and specifications are not mutually approved, despite the best efforts of the parties on or before forty-five (45) days after the execution date of this Lease. Lessor shall bear the expense of its architect for the Lessor improvements and Lessee shall bear the expenses of its space planning consultant.

6.02Lessee Improvements. Lessee shall not make or allow to be made any alterations or physical additions in or to the leased premises without first obtaining the written consent of Lessor, which consent shall not be unreasonably withheld. Any alterations, physical additions or improvements to the leased premises made by Lessee shall at once become the property of Lessor and shall be surrendered to Lessor upon the termination of this Lease provided that Lessee shall be entitled to retain the property listed on Exhibit A attached hereto, and provided further that, Lessor, at its option, may require Lessee to remove any physical additions and/or repair any alterations in order to restore the leased premises to the condition existing at the time Lessee took possession, reasonable wear and tear excepted, all costs of removal and/or alterations to be borne by Lessee. This clause shall not apply to moveable equipment of furniture owned by Lessee, which may be removed by Lessee at the end of the term of this Lease if Lessee is not then in default and if such equipment and furniture are not then subject to any other rights, liens and interests of Lessor.

ARTICLE 7.00 CASUALTY AND INSURANCE

7.01Substantial Destruction. If the leased premises should be totally destroyed by fire or other casualty, or if the leased premises should be damaged so that rebuilding cannot reasonably be completed within ninety working days after the date for written notification by Lessee to Lessor of the destruction, this Lease shall terminate and the rent shall be abated for the unexpired portion of the Lease, effective as of the date of the written notification.

7.02Partial Destruction. If the leased premises should be partially damaged by fire or other casualty, and rebuilding or repairs can reasonably be completed within ninety working days from the date of written notification by Lessee to Lessor of the destruction, this Lease shall not terminate, and Lessor shall at its sole risk and expense proceed with reasonable diligence to rebuild or repair the building or other improvements substantially the same condition in which they existed prior to the damage. If the leased premises are to be rebuilt or repaired and are untenantable in whole or in part following the damage, and the damage or destruction was not caused or contributed to by act or negligence of Lessee, its agents, employees, invitees or those for whom Lessee is responsible, the rent payable under this Lease during the period for which the leased premises are untenantable shall be adjusted to such an extent as may be fair and reasonable under the circumstances. In the event that Lessor fails to complete the necessary repairs or rebuilding within ninety working days from the date of written notification by Lessee to Lessor of the destruction, Lessee may at its option terminate this Lease by delivering written notice of termination to Lessor, whereupon all rights and obligations under this Lease shall cease to exist.

7.03Lessee’s Insurance. Lessee shall, at its sole expense, maintain in effect at all times during the Term insurance coverage with limits not less than those set forth below with insurers licensed to do business in the State of Colorado: a) Workers Compensation Insurance - minimum limit as defined by Statute and as same may be amended from time to time; b) Employer’s Liability Insurance - minimum limit $100,000; c) and Commercial General, Liability and Bodily Injury/Property Damage Insurance, on a combined single limit basis, with limits of not less than $500,000 per occurrence and with annual aggregate limits of not less than $1,000,000. These policies shall be on a form acceptable to Lessor, endorsed to include Lessor as an additional insured, state that the insurance is primary over any insurance carried by Lessor, and the commercial general liability policy shall include the following coverages: a) premises/operations; b) independent contractors; c) broad form contractual in support of the indemnity section of this lease; and, d) personal injury liability.

If Lessee does not procure insurance as required, Lessor may, upon reasonable advance written notice to Lessee, cause this insurance to be issued, and Lessee shall pay to Lessor the premium for this insurance within twenty (20) days of Lessor’s demand, plus interest at the highest lawful rate for a loan of like amount from the date of payment by Lessor until repaid by Lessee.

7.03.01Lessor’s Insurance. Lessor shall maintain at all times during the term of this Lease form and after substantial completion: a) standard all-risk fire and casualty insurance, covering the building in amounts at lease equal to the full replacement cost of the building at the time in question, but in no event less than such coverage as is required to avoid co-insurance provisions; b) comprehensive public liability insurance; c) employer’s liability insurance; d) excess liability insurance over the insurance

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referred by subsection C of this section; e) worker’s compensation insurance in statutory limits; and, f) seen other insurance coverage as is customarily carried in respect of comparable buildings. The limits shall be increased by Landlord from time to time during the term of this lease to at least such minimum limits as shall than be customary in respect of comparable buildings.

7.03.02General Requirements. All policies of insurance required under this article shall provide that they will not be canceled upon less than thirty (30) days prior written notice to Lessor and Lessee. Each party shall furnish to the other a certificate or certificates of insurance certifying that the insurance coverage required is in force, if requested by the other party. The coverage shall be issued by companies licensed to do business it the State of Colorado and otherwise reasonably satisfactory to the parties. Not less than thirty (30) days prior to expiration of the coverage, renewal policies or certificates of insurance evidencing renewal shall be provided. Any insurance required by the terms of this Lease may be under a blanket policy (or policies) covering other properties of Lessor or Lessee and/or their related or affiliated corporations. If such insurance is maintained under a blanket policy, the respective party shall procure and deliver to the other party a statement from the insurer or general agent of the insurer setting forth the coverage maintained and the amount thereof allocated to the risk intended to be insured here under.

7.04Waiver of Subrogation. Anything in this Lease to the contrary notwithstanding, Lessor and Lessee hereby waive and release each other of and from any and all right of recover, claim, action or cause of action, against each other, their agents, offices and employees, for any loss or damage that may occur to the leased premises, improvements to the building which the leased premises are a part, or personal property within the building, by reason of fire or the elements, regardless of cause or origin, including negligence of Lessor or Lessee end their agents, officers and employees. Lessor and Lessee agree immediately to give their respective insurance companies which have issued policies of insurance covering all risk of direct physical loss, written notice of the terms of the mutual waivers contained it this section, and to have the insurance policies properly endorsed, if necessary, to prevent the invalidation of the insurance coverages by reason of the mutual waivers.

7.05Hold Harmless. Lessor shall not be liable to Lessee’s employees, agents, invitees, licensees or visitors, or to any other person, for an injury to person or damage to property on or about the leased premises caused by any act of omission of Lessee, its agents, servants or employees, or of any other person entering upon the lease premises under express or implied invitation by Lessee, or caused by the improvements located on the leased premises becoming out of repair, the failure or cessation of any service provided by Lessor (including security service and devices), or caused by leakage of gas, oil, water or steam or by electricity emanating from the leased premises. Lessee agrees to indemnify and hold harmless Lessor of and from any loss, attorney’s fees, expenses or claims arising out of any such damage or injury.

Lessee shall not be liable to Lessor’s employees, agents, invitees, licensees or visitors, or to any other person, for any injury to person or damage to property on or about the leased premises and caused solely by an act or omission of Lessor, its agents, servants or employees. Lessor agrees to indemnify and hold harmless Lessee of and from any loss, attorney’s fees, expenses or claims arising out of any such damage or injury.

ARTICLE 8.00 CONDEMNATION

8.01Substantial Taking. If all or a substantial part of the leased premises are taken for any public or quasi-public use under any government law, ordinance or regulation, or by right of eminent domain or by purchase in lieu thereof, and the taking would prevent or materially interfere with the use of the leased premises for the purpose for which it was then being used, this Lease shall terminate and the rent shall be abated during the unexpired portion of this Lease effective on the date physical possession is taken by the condemning authority. Lessee shall have no claim to the condemnation award or proceeds in lieu thereof.

8.02Partial Taking. If a portion of the leased premises shall be taken for any public or quasi-public use under any governmental law, ordinance or regulation, or by right of eminent domain or by purchase in lieu thereof, and the Lease is not terminated as provided in Section 8.01 above, Lessor shall at Lessor’s sole risk and expense, restore and reconstruct the building and other improvements on the leased premises to the extent necessary to make it reasonably tenantable. The rent payable under this Lease during the unexpired portion of the term shall be adjusted to such an extent as may be fair and reasonable under the circumstances. Lessee shall have no claim to the condemnation award or proceeds in lieu thereof.

ARTICLE 9.00 ASSIGNMENT OR SUBLEASE

9.01Lessor Assignment. Lessor shall have the right to sell, transfer or assign, in whole or in part, its rights and obligations under this Lease and in the building. Any such sale transfer or assignment shall operate to release Lessor from any and all liabilities under this Lease arising after the date of such

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said assignment or transfer.

9.02Lessee Assignment. Lessee shall not assign, in whole or in part, this Lease, or allow it to be assigned, in whole or in part, by operation of law or otherwise (including without limitation by transfer of a majority interest of stock, merger or dissolution, which transfer of majority interest of stock, merger or dissolution shall be deemed an assignment) or mortgage or pledge the same, or sublet the leased premises, in whole or in part, without the prior written consent of Lessor, which consent shall not be unreasonable withheld or delayed, and in no event shall any such assignment or sublease ever release Lessee or arty guarantor from any obligation or liability hereunder. No assignee or sublessee of the leased premises or any portion thereof may assign or sublet the leased premises or any portion thereof without the written consent of Lessor, which consent shall not be unreasonably withheld.

9.03Conditions of Assignment. If Lessee desires to assign or sublet all or any part of the leased premises, it shall so notify Lessor at least thirty days in advance of the date on which Lessee desires to make such assignment or sublease. Lessee shall provide Lessor with a copy of the proposed assignment or sublease and such information as Lessor might reasonably request concerning the proposed sublessee or assignee to allow Lessor to make informed judgements as to the financial condition, reputation, operations and general desirability of the proposed sublessee or assignee. Within fifteen days after Lessor’s receipt of Lessee’s proposed assignment or sublease and all required information concerning the proposed sublessee or assignee, Lessor shall have the following options: (1) consent to the proposed assignment of sublease, or (2) refuse, in its reasonable determination to consent to the proposed assignment or sublease, which refusal shall be deemed to have been exercised unless Lessor gives Lessee written notice providing otherwise. Upon the occurrence of an event of default, if all or any party of the leased premises are then assigned or sublet, Lessor, in addition to any other remedies provided by this lease or provided by law may, at its option, collect directly from the assignee or sublessee all rents becoming clue to Lessee by reason of the assignment of sublease, and Lessor shall have a security interest in all properties on the leased premises to secure payment of such sums. Any collection directly by Lessor from the assignee or sublessee shall not be construed to constitute a novation or a release of Lessee or any guarantor from the further performance of its obligations under this Lease.

9.04Rights of Mortgagee. If the interests of Lessor under this Lease shall be transferred by reason of foreclosure of other proceedings for enforcement of any first mortgage or deed of trust on the leased premises, Lessee shall be bound to the transferee (sometimes called the “Purchaser”) under the terms, covenants and conditions of this Lease for the balance of the term remaining, including any extensions or renewals, with the same force and effect as were Lessor under this Lease, and Lessee agrees to attorn to the Purchaser, including the first mortgagee under any such mortgage if it be the Purchaser, as its Lessor. The Lease shall remain in effect upon any foreclosure of, or purchase of, the building, so long as the Lessee is not then in default thereunder. Lessor shall use its best efforts to obtain an Attornment and Subordination Agreement, in a form acceptable to Lessee, between the parties and the existing mortgagee within ten (10) days after the execution hereof. Should the Agreement not be timely obtained, either party may declare this Lease null and void upon written notice to the other party posted within ten (10) days after the expiration of the ten (10) day period to provide the Agreement.

9.05Estoppel Certificates. Lessee agrees to furnish, at reasonable times, within twenty days after receipt of a request from Lessor or Lessor’s mortgage, a statement certifying, if applicable, the following: Lessee is in possession of the leased premises; the leased premises are acceptable; the Lease is in full force and effect; he Lease is unmodified; Lessee claims no present charge, lien, or claim of offset against rent; the rent is paid for the current month, but is not prepaid for more than one month and will not be prepaid for more than one month in advance; there is no known existing default by reason of some act of omission by Lessor; and such other matters as may be reasonably required by Lessor or Lessor’s mortgagee. Lessee’s failure to deliver such statement, in addition to being a default under this Lease, shall be deemed to establish conclusively that this Lease is in full force and effect except as declared by Lessor, that Lesssor is not in default of any of its obligations under this Lease, and that Lessor has not received more than one month’s rent in advance.

ARTICLE 10.00 DEFAULT AND REMEDIES

10.01Default by Lessee. The following shall be deemed to be events of default by Lessee under this Lease: (1) Lessee shall fail to pay when due any installment of rent or any other payment required pursuant to this Lease. Lessee shall be in default if rent is not paid by the first day of each month. However, Lessee shall have the right to cure laid default until any eviction order be issued by a court of competent jurisdiction; (2) Lessee shall abandon any substantial portion of the leased premise; (3) Lessee shall fail to comply with any term, provision or covenant of this Lease, other than the payment of rent, and the failure is not cured within twenty days after written notice to Lessee unless the ability to timely cure is not within the control of Lessee; (4) Lessee shall file a petition or be adjudged bankrupt or insolvent under any applicable federal or state bankruptcy or insolvency law or admit that

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it does not meet its financial obligations as they become due, or a receiver or trustee shall be appointed for ___ or substantially all of the assets of Lessee; or Lessee shall make transfer in fraud of creditors or shall make an assignment for the benefit of creditors; or (5) Lessee shall do or permit to be done any act which results in a lien being filed against the leased premises or the building and/or project of which the leased premises are a part unless Lessee provides reasonable protection therefor.

10.02Remedies for Lessee’s Default. Upon the occurrence of any event of default set forth in this Lease, Lessor shall have the option to pursue any one or more of the remedies set forth herein without any notice or demand. (1) Lessor may enter upon and take possession of the leased premises, by picking or changing locks if necessary, and lock out, expel or remove Lessee and any other person who may be occupying or any part of the leased premises without being liable for any claim for damages, and relet the leased premises on behalf of Lessee and receive the rent directly by reason of the reletting. Lessee agrees to pay Lessor on demand any deficiency that may arise by reason of any reletting of the leased premises; further, Lessee agrees to reimburse Lessor for any expenditures made by it in order to relet the leased premises, including, but not limited to, remodeling and repair costs. (2) Lessor may enter upon the leased premises, by picking or changing locks if necessary, without being liable for any claim to^- damages, and, acting reasonable, do whatever Lessee is obligated to do under the terms of this Lease. Lessee agrees to reimburse Lessor on demand for any expenses which Lessor may incur in effecting compliance with Lessee’s obligations under this Lease, (3) Lessee may terminate this Lease in which event Lessee shall immediately surrender the leased premises to Lessor, and if Lessee fails to surrender the leased premises, Lessor may, without prejudice to any other remedy which it may have for possession or arrearages in rent, enter upon and take possession of the leased premises by picking or changing locks if necessary and lock out, expel or remove Lessee and any other person who may be occupying all or any part of the leased premises without being liable for any claim for damages. Lessee agrees to pay on demand the amount of all loss and damage which Lessor may suffer by reason of the termination of this Lease under this section, whether through inability to relet the leased premises on satisfactory terms or otherwise. A rent concession or waiver of the base rent shall not relieve Lessee of any obligation to pay any other charge due and payable under this Lease including without limitation any sum due under Section 2.02. Notwithstanding anything contained in this Lease to the contrary, this Lease may be terminated by Lessor only by mailing or delivering written notice of such termination to Lessee, as provided herein and no other act or omission of Lessor shall be construed as a termination of this Lease.

ARTICLE 11.00 DEFINITIONS

11.01Abandon. “Abandon” means the vacating of all or a substantial portion of the leased premises by Lessee, whether or not Lessee is in default of the rental payments due under this Lease.

11.02Act of God or ForceMajeure. An “act of God” or “force majeure” is defined for purposes of this Lease as strikes, lockouts, sitdowns, material or labor restrictions by any governmental authority, unusual transportation delays, riots, floods, washouts, explosions, earthquakes, fire storms, weather (including wet grounds or inclement weather which prevents construction), acts of the public enemy, wars, insurrections and any other cause not reasonably within the control of Lessor and which by the exercise of due diligence Lessor is unable, wholly or in part, to prevent or overcome.

11.03Building or Project. “Building” or “project” as used in this Lease means the building and/or project described in Section 1.02, including the leased premises and the land upon which the building or project is situated.

11.04Commencement Date. “Commencement date” shall be the date set forth in Section 1.03. The commencement date shall constitute the commencement of the term of this Lease for all purposes, whether or not Lessee has actually taken possession.

11.05Completion Date. “Completion date” shall be the date on which improvements erected and to be erected upon the leased premises shall have been completed in accordance with the plans and specifications described in Article 6.00. The completion date shall constitute the commencement of the term of this Lease for all purposes, whether or not Lessee has actually taken possession. Lessor shall use its best efforts to establish the completion date as the date set forth in Section 1.03. In the event that the improvements have not in fact been completed as of that date, Lessee shall notify Lessor in writing of its objections. Lessor shall have a reasonable time after delivery of the notice in which to take such corrective action as may be necessary and shall notify Lessee in writing as soon as it deems such corrective action has been completed and the improvements are ready for occupancy. Upon completion of construction, Lessee shall deliver to Lessor a letter accepting the leased premises as suitable for the purposes for which they are let and the date of such letter shall constitute the commencement of the term of this Lease. Whether or not Lessee has executed such letter of acceptance, taking possession of the leased premises by Lessee shall be deemed to establish conclusively that the improvements have been completed in accordance with the plans and specifications, are suitable for the purposes for which the leased premises are let, and that the leased premises are in good and satisfactory condition as of the date possession was so taken by Lessee,

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except for latent defects, if any. The reasonable time to complete after notice shall not exceed 60 days unless the delays are caused by Lessee.

11.06Square Feet. “Square feet” or “square foot” as used in this Lease includes the area contained within the leased premises together with a common area percentage factor of the leased premises proportionate to toe total rentable building area. Lessee’s actual percentage for computation of its share of operating expenses shall be agreed upon by the parties at the same time as agreement on the plans and specifications as required in Article 6.02.

ARTICLE 12.00 MISCELLANEOUS

12.01Waiver. Failure of Lessor to declare an event of default immediately upon its occurrence, or delay in taking any action in connection with an event of default, shall not constitute a waiver of the default, but Lessor shall have the right to declare the default at any time and take such action as is lawful or authorized under this Lease so long as the event of default continues. Pursuit of any one or more of the remedies set forth in Article 10.00 above shall not preclude pursuit of any one or more of the other remedies provided elsewhere in this Lease or provided by law, nor shall pursuit of any remedy constitute forfeiture or waiver of any rent or damages accruing to Lessor by reason of the violation of any of the terms provisions or covenants of this Lease. Failure by Lessor to enforce one or more of the remedies provided upon an event of default shall not be deemed or construed to constitute a waiver of the default or of any other violation or breach of any of the terms, provisions and covenants contained in this Lease.

12.02Act of God. Lessor shall not be required to perform any covenant or obligation in this Lease, or be liable in damages to Lessee, so long as the performance or non-performance of the covenant or obligation is delayed, caused or prevented by an act of God, force Majeure or by Lessee.

12.03Attorney’s Fees. In the event either party defaults in the performance of any of the terms, covenants, agreements or conditions contained in this Lease and the non-defaulting party places in the hands of an attorney the enforcement of all or any part of this Lease, including an action for recovery of the possession of the leased premises, the defaulting party agrees to pay the non-defaulting party’s costs of collection, including reasonable attorney’s fees for the services of the attorney whether suit is actually filed or not.

12.04Successors. This Lease shall be binding upon and inure to the benefit of Lessor and Lessee and their respective heirs, personal representatives, successors and assigns. It is hereby covenanted and agreed that should Lessor’s interest in the leased premises cease to exist for any reason during the term of this Lease, then notwithstanding the happening of such event this Lease nevertheless shall remain unimpaired and in full force and effect, and Lessee hereunder agrees to attorn to the then owner of the leased premises.

12.05Rent Tax. If applicable in the jurisdiction where the leased premises are situated, Lessee shall pay and be liable for all rental, sales and use taxes or other similar taxes, if any levied or imposed by any city, state, county or other governmental body having authority, such payments to be in addition to all other payments required to be paid to Lessor by Lessee under the terms of this Lease. Any such payment shall be paid concurrently with the payment of the rent, additional rent, operating expenses or other charge upon which the tax is based as set forth above.

12.06Captions. The captions appearing in this Lease are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or intent of any section.

12.07Notice. All rent arid other payments required to be made by Lessee shall be payable to Lessor at the address set forth in section 1.05. All payments required to be made by Lessor to Lessee shall be payable to Lessee at the address set forth in Section 1.05, or at any other address within the United States as Lessee may specify from time to time by written notice. Any notice or document required or permitted to be delivered by the terms of this Lease shall be deemed to be delivered (whether or not actually received) when deposited in the United States Mail, postage prepaid, certified mail, return receipt requested, addressed to the parties at the respective addresses set forth in Section 1.05.

12.08Submission of Lease. Submission of this Lease to Lessee for signature does not constitute a reservation of space or an option to lease. This Lease is not effective until execution by and delivery to both Lessor and Lessee.

12.09Corporate Authority. If Lessee executes this Lease as a corporation, each of the persons executing this Lease on behalf of Lessee does hereby personally represent and warrant that Lessee is a duly authorized and existing corporation, that Lessee is qualified to do business in the state in which the leased premises are located, that the corporation has full right and authority to enter into this Lese,

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and that each person signing on behalf of the corporation , is authorized to do so. In the event any representation or warranty is false, all persons who execute this Lease shall be liable, individually, as Lessee.

If Lessor executes this Lease as a limited liability company, each of the persons executing this Lease on behalf of Lessor does hereby personally represent and warrant that Lessor is a duly authorized and existing limited liability company, that Lessor is qualified to do business in the state in which the leased premises are located that the limited liability company has full right and authority to enter into this Lease, and that each person signing on behalf of the limited liability company is authorized to do so. In the event any representation or warranty is false, all persons who execute this Lease shall be liable, individually, as Lessor.

12.10Severability. If any provision of this Lease or the application thereof to any person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Lease and the application for such provisions to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law.

12.11Lessor’s Liability. If Lessor shall be in default under this Lease and, if as a consequence of such default, Lessee shall recover a money judgment against Lessor, such judgment shall be satisfied only out of the assets of Lessor as a Limited Liability Company.

12.12Indemnity. Lessor agrees to indemnify and hold harmless Lessee from and against any liability or claim, whether meritorious or not, arising with respect to any broker whose claim arises by through or on behalf of Lessor. Lessee agrees to indemnify and hold harmless Lessor from and against any liability or claim, whether meritorious or not, arising with respect to any broker whose claim arises by, through or on behalf of Lessee.

12.13Governing Law. Any interpretation of this Lease or any other determination of the rights or liabilities of the parties hereto, shall be governed by the laws of the State of Colorado.

12.14Brokers. See attached Addendum C(5) for Broker’s Commission Provisions.

12.15Time of Essence. Time is of the essence for all provisions of this Lease.

12.16Rules and Regulations. The attached Rules and Regulations do hereby become a part of this Lease and Agreement.

ARTICLE 13.00 OTHER PROVISIONS

Addendum. Incorporated into this lease by reference.

Addendum A - Rent Schedule
Addendum B - Lessee’s improvements and Space Plan
Addendum C - Additional Provisions

ARTICLE 14.00 AMENDMENT AND LIMITATION OF WARRANTIES

Entire Agreement. IT IS EXPRESSLY AGREED BY LESSEE, AS A MATERIAL CONSIDERATION FOR THE EXECUTION OF THIS LEASE, THAT THIS LEASE, WITH THE SPECIFIC REFERENCES TO WRITTEN EXTRINSIC DOCUMENTS, IS THE ENTIRE AGREEMENT OF THE PARTIES; THAT THERE ARE, AND WERE, NO VERBAL REPRESENTATIONS, WARRANTIES, UNDERSTANDINGS, STIPULATIONS, AGREEMENTS OR PROMISES PERTAINING TO THIS LEASE OR TO THE EXPRESSLY MENTIONED EXTRINSIC DOCUMENTS NOT INCORPORATED IN WRITING IN THIS LEASE.

Amendment. THIS LEASE MAY NOT BE ALTERED, WAIVED, AMENDED OR EXTENDED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY LESSOR AND LESSEE.

Limitation of Warranties. LESSOR AND LESSEE EXPRESSLY AGREE THAT THERE ARE AND SHALL BE NO IMPLIED WARRANTIES OR MERCHANTABILITY, HABITABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OF ANY OTHER KIND ARISING OUT OF THIS LEASE, AND THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THOSE EXPRESSLY SET FORTH IN THIS LEASE.

ARTICLE 14.00 SIGNATURES

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SIGNED at Colorado Springs, this 23rd day of MAY, 1996

LESSOR:		LESSEE:
2221 Bijou Limited Liability Company, a Colorado Limited Liability Company		American Teleconferencing Services, Ltd.
		/s/ ROBERT A. COWEN
BY:	/s LARS E. AKERBERG
Its	MANAGING PARTNER	Its	PRESIDENT

WITNESSES:	WITNESSES:
/s/ WILLIAM PLULTO	/s/ S.L. MOCK
/s/ BONNIE A. ALTMAN	/s/ RICHARD L. CLARK

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ADDENDUM TO LEASE AGREEMENT

THIS ADDENDUM is entered this 1^st day of August, 1996, by and between 2221 Bijou Limited Liability Company (“Lessor”) and American Teleconferencing Service, Ltd. (“Lessee”).

WITNESSETH, THE FOLLOWING RECITALS:

WHEREAS, on May 23, 1996 the parties entered into that certain Standard Office Lease concerning a portion of “The Chidlaw Building” located at 2221 Bijou Street, Colorado Springs, Colorado, and

WHEREAS, on July _____, 1996, the parties agreed on the plans and specifications for the build-out of the Tenant’s space, which agreement was a condition precedent to the validity of the Lease, and

WHEREAS, said agreement on the plans and specifications resulted in the parties’ agreement to modify additional terms.

NOW. THEREFORE, in consideration of the foregoing recitals, and the mutual covenants hereafter, the parties agree to the following amended terms:

1.Base Rental Rate.    The initial Base Rental Rate shall increase from $6/sq. ft. to $6.80/sq. ft. Periodic increases thereafter shall remain at the $0 .25 or $0.50 increments as set forth in the Lease.

2.Landlord’s Build-Out Expenses.   In consideration of the rental rate increase, Landlord’s build-out expenses shall be increased by a sum of $250,000.00, which expenses are financed by and in consideration for the rent increase.

3.Ratification.    The parties hereby ratify and confirm all remaining terms, conditions and covenants of the original Standard Office Lease, not supplemented hereby.

IN WITNESS WHEREOF, the parties have signed this Addendum to Lease Agreement on the date above set forth.

LESSOR: 2221 Bijou Limited Liability Co.		LESSEE: American Teleconferencing Services,. Ltd.
By:	/s/ LARS E. AKERBERG	By:	/s/ ROBERT A. COWEN
	Lars e. Akerberg
Its:	Managing Partner	Its:	President

AMENDED ADDENDUM A

BASE RENT SCHEDULE

1.04Base Rent

(a)Lessee agrees to pay the rent as set forth under the following Base Rent Schedule as Base Rent each month through the 120 month term of this Lease. The Base Rent shall be paid on the square feet actually occupied according to the schedule and shall not include any pro-rata portion of the non-rentable building area. In addition to the Base Rent, Lessee agrees to pay all expense relating to the leased premises as required herein and to pay its pro rata share of operating expenses relating to the building. Lessor’s estimate of the operating expenses it will incur for the building and leased premises is $1.18 per square foot during the first calendar year of the lease term exclusive of tenant utilities and tenant janitorial.

YEAR	BASE NNN RENT		SQ/FT LEASED	MONTHLY NNN RENT		ANNUAL NNN RENT
1  (mo. 1 – est)	$	6.80	27,109	$	15,361.77
1  (mo. 2 – 12, est)	$	6.80	36,974	$	20,951.93	$	245,833.03
2  (mo. 13 – 18 est)	$	7.05	45,000	$	26,437.50
2  (mo. 1924 est)	$	7.05	50,470	$	29,651.12	$	336,531.72
3  9/98 – 8/99	$	7.30	50,470	$	30,702.58	$	368,430.96
4  9/99 – 8/00	$	7.55	50,470	$	31,754.04	$	381,048.48
5  9/00 – 8/01	$	7.80	50,470	$	32,805.50	$	393,666.00
6  9/01 – 8/02	$	8.05	50,470	$	33,856.96	$	406,283.52
7  9/02 – 8/03	$	8.30	50,470	$	34,908.42	$	418,901.04
8  9/03 – 8/05	$	8.55	50,470	$	35,959.88	$	431,518.56
9  9/04 – 8/05	$	8.80	50,470	$	37,011.34	$	444,136,08
10  8/05 – 8/06	$	9.30	50,470	$	39,113.96	$	469,367.52

(b)Triple Net Intent. It is the purpose and intent of Lessor and Lessee that the rent provided in Article 1.04 and 2.01 shall be absolutely net to Lessor, and that Lessee shall pay, without notice or demand, and without abatement, deduction or setoff and save Lessor harmless from and against, all costs, taxes, insurance (including the cost of the insurance set forth in Section 7.03), expenses of maintenance, repair and replacement, and other charges and expenses and obligations of every kind and nature whatsoever relating to the leased premises which may arise or become due during the term of this Lease. If Lessee is required to make any payment or incur any expense as provided in this Lease and fails to do so, then Lessor, at its option, may make the payment or incur the expense on Lessee’s behalf, and the cost thereof shall be charged to Lessee as additional rent and shall be due and payable by Lessee within twenty days from receipt of Lessor’s notice.

To accomplish a true Triple Net Lease, Lessee’s share of operating expenses shall be computed on the Lessee’s share of the “rentable” square feet rather than the “useable” square feet of the building. Until the building is 50% occupied or built out, Lessee’s share of operating expenses shall be 17.93%.

WHERE:

1.TOTAL BLDG USEABLE SF = 296,380 SF

2.TOTAL BLDG RENTABLE SF = 95% of the TOTAL BLDG
USEABLE SF (296,380 x 95% = 281,561 SF).

3.Lessee’s operating expense percentage is:
50,470 SF divided by 281,561 Rentable SF = 17.93%

Notwithstanding the foregoing, during the first eighteen (18) months of the Lease (unless Lessee’s square feet is increased by actual occupancy from the above Base Rent Schedule), Lessee shall pay its share of operating expenses on its share of the Rentable SF according to the above formula computed only on the actual square feet leased. However, when computing Lessee’s share of the building utilities, Lessee’s share shall be computed as if Lessee occupied 50,470 SF during the first 18 months even though actual occupancy may be less than 50,470 SF.

At such time as 100% of the building layout is built out or planned space according to plans and specifications, the actual building Rental SF shall be computed and shall replace the estimate of 95% of Useable SF utilized in the above formula. Lessor shall provide written notice to Lessee of the actual Rentable SF at such time and Lessee shall thereafter pay its share of operating expenses on its share of the actual Rentable SF commencing with the next due monthly rental installment. At such time as 50% occupancy or build out of the building is attained, Lessor shall have the right to adjust the total building Rentable SF to actual using the 5% non-rentable estimate for the 50% portion of the building not built out. Provided, however, the total building Rentable SF shall never be less than 90% of total building Useable SF until the entire building is built out or planned space according to plans and specifications.

LESSOR: 2221 Bijou Limited Liability Co.		LESSEE: American Teleconferencing Services, Ltd.
By:	/s/ LARS E. AKERBERG	By:	/s/ S. L. MOCK
	Lars E. Akerberg		S. L. Mock, CFO
Its:	Managing Partner	Its:

ADDENDUM D TO STANDARD OFFICE LEASE -

ACCEPTANCE OF PLANS AND SPECIFICATIONS
AND
SQUARE FOOTAGE AGREEMENT

THIS ADDENDUM D is entered this 28th day of July, 1996, by and between 2221 Bijou Limited Liability Company (“Lessor”) and American Teleconferencing Service, Ltd. (“Lessee”).

WITNESSETH, THE FOLLOWING RECITALS:

WHEREAS, on May 23, 1996 the parties entered into that certain Standard Office Lease concerning a portion of “The Chidlaw Building” located at 2221Bijou Street, Colorado Springs, Colorado, and

WHEREAS, Article 1.03 thereof specifies that the Lease “shall commence 120 days after Lessee’s acceptance of the plans and specifications as set forth in Article 6.01...”, and

WHEREAS, Article 6.01 allows either party to “declare this Lease null and void if the plans and specifications are not mutually approved ... on or before forty-five (45) days after execution of this Lease”, and

WHEREAS, Article 11.06 obligates the parties to agree on Lessee’s actual percentage for computation of its share of operating expenses concurrently with the agreement on the plans and specifications, and

WHEREAS, the parties desire to reach the agreements required in the foregoing recitals and to waive any related contingencies or rights to void the Lease.

NOW, THEREFORE, in consideration of the foregoing recitals, and the mutual covenants hereafter, the parties agree as follows:

1.Acceptance of Plans and Specifications. The parties hereby agree that the plans and specifications attached hereto as Exhibit A and executed by the parties are acceptable in all respects and shall govern the leasehold improvement obligations of the parties unless hereafter modified in a subsequent written change order executed by both parties. The right of either party to declare this Lease null and void pursuant to Article 6.01 is hereafter waived by each party.

2.Completion/Lease Commencement Date. The “completion date” for Lessor’s leasehold improvements set forth in Article 6 and the Lease commencement date shall hereafter be deemed to be 43 days from and after the date of the execution of this Addendum; such, date remaining subject to the conditions of Article 11.05 of the Lease Agreement.

3.Square Feet. Pursuant to Article 11.06, Lessee’s share of the operating expenses shall be determined by multiplying the total operating expenses as defined in the Lease times the following fraction:

the # of sq. feet actually occupied by Lessee from time to time as “phased-in” as per Rent Schedule -Addendum A _______ square feet; the total rentable building area 50,000 square feet = 17% of 296,380.

The “total rentable building area” in square feet as above indicated was computed according to the Building Owners and Managers Association’s Standards (BOMA). Should Lessor hereafter determine that the actual “total rentable building area” has decreased because of final build-out of tenant’s spaces, Lessor shall notify Lessee of the building’s new “total rentable building area” in square feet and as a result thereof, the new percentage for Lessor’s share of the operating expenses; which new percentage shall be effective immediately upon the posting of said notice.

4.Ratification. It is not the intent of the parties hereto to modify the terms of the original Standard Office Lease but to supplement and reach the agreements required therein. The parties hereby ratify and confirm all terms, conditions and covenants of the original Standard Office Lease, not supplemented hereby.

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IN WITNESS WHEREOF, the parties have signed this Addendum D on the date above set forth.

LESSOR: 2221 Bijou Limited Liability Co.		LESSEE: American Teleconferencing Services, Ltd.
By:	/s/ LARS E. AKERBERG	By:	/s/ ROBERT A. COWEN
	Lars E. Akerberg		Robert F. Cowen
Its:	Managing Partner	Its:	President

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ADDENDUM E TO LEASE AGREEMENT

THIS ADDENDUM is entered this 4th day of October, 1996, by and between 2221 Bijou Limited Liability Company (“Lessor”) and American Teleconferencing Service, Ltd. (“Lessee”).

WITNESSETH, THE FOLLOWING RECITALS:

WHEREAS, on May 23, 1996 the parties entered into that certain Standard Office Lease concerning a portion of “The Chidlaw Building” located at 2221 Bijou Street, Colorado Springs, Colorado, and

WHEREAS, on July 18, 1996, the parties agreed on the plans and specifications for the build-out of the Tenant’s space, which agreement (identified as Addendum D to Standard Office Lease) was a condition precedent to the validity of the Lease, and

WHEREAS, said agreement on the plans and specifications resulted in the parties’ agreement to modify additional terms.

NOW, THEREFORE, in consideration of the foregoing recitals, and the mutual covenants hereafter, the parties agree to the following amended terms:

1.Leased Premises. Article 1.2 of the original Lease estimated the amount of square feet to be rented to be 50,000 square feet. Pursuant to the agreed upon plans and specifications, the actual area to be occupied by Lessee is agreed to be 50,470 square feet. The square feet upon which the “Base Rent” shall be paid shall be phased in as per the Amended Rent Schedule attached as Amended Addendum A.

2.Base Rental Rate. The initial Base Rental Rate as set forth in Addendum A to the original Lease Agreement shall increase from $6/sq. ft. to $6.80/sq. ft. Periodic increases thereafter shall remain at the $0.25 or $0.50 increments as set forth in the Lease. An Amended Rent Schedule is attached as Amended Addendum A.

3.Lessor’s Build-Out Obligations.

(a)Amended Amount of Lessor’s Build-Out Obligation. In consideration of the rental rate increase and the adjusted square feet rented of 50,470 square feet, Lessor’s build-out expenses shall be increased from the original amount computed pursuant to Addendum B of the original Lease Agreement to the sum of $956,580.00 computed as follows:

50,470 SF x $14/SF	=	$706,580
plus “additional amount”	=	$250,000*
TOTAL		$956,580

*The consideration for the “additional amount” in Lessor’s obligation is the increase in the Base Rental Rate set forth in No. 2 of this Addendum E.

(b)Excess Improvement Expenses/Lessee’s Payment Obligations. Lessee shall pay the excess build out expenses over and above the sum of $956,580 except those expenses specifically allocated to Lessor in the original Lease Agreement. Pursuant to Addendum B of the original Lease, Lessee’s obligation is to pay one-half (1/2) of its share upon the completion of the plans and specifications drawings and one-half (1/2) on substantial completion. By the execution hereof, Lessor agrees to modify the initial payment obligation to the sum of $100,000.00with the balance due upon substantial completion and computation of final costs.

4.Amended Lease Commencement-Occupancy-Completion Dates. The “completion date” and the “Lease Commencement Date” originally set forth in Article 6 of the Lease Agreement were amended by the parties in Addendum D and are hereby further amended so that Lessor’s obligation is to complete the construction of Phase I to allow occupancy thereof on or before September 1, 1996 and to further cause the completion of construction of Phase II by September 30, 1996. Phase I includes the Telephony, LAN, computer rooms, bathrooms, and OPS/RES open room, with mid-east entrance. Phase II shall include the general offices, executive rooms, reception and the remainder of the premises. The construction phases were determined in acccordance with the requirements of J. Roth Hyland, consulting program manager and ATS representative for site relocation, in his June 27, 1996 correspondence to Lessor’s architect, David Weesner.

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The definition of “completion date” as set forth in Article 11.05 of the original Lease shall remain in effect including the reasonable time to complete after notice provided to Landlord not to exceed sixty (60) days unless the delays are caused by Lessee.

5.Ratification. The parties hereby ratify and confirm all remaining terms, conditions and covenants of the original Standard Office Lease, not supplemented hereby.

IN WITNESS WHEREOF, the parties have signed this Addendum to Lease Agreement on the date above set forth.

LESSOR: 2221 Bijou Limited Liability Co.		LESSEE: American Teleconferencing Services, Ltd.
By:	/s/ LARS E. AKERBERG	By:	/s/ S. L. MOCK CFO
	Lars E. Akerberg
Its:	Managing Partner	Its:

3

FIRST AMENDMENT TO
STANDARD OFFICELEASE

THIS FIRST AMENDMENT, ismade and entered into this __________ day of May, 1998 by and between 2221 BIJOU LLC, (“Lessor”), and AMERICAN TELECONFERENCING SERVICES, LTD.,(“Lessee”).

WITNESSETH, THE FOLLOWING RECITALS:

WHEREAS, on May 23, 1996, the parties entered into a Standard Office Lease, hereafter “SOL” (which included Addendums dated July 18, 1996 and October 4, 1996) wherein Lessor agreed to lease to Lessee 54,470 SF in the Chidlaw Building located at 2221 East Bijou Street, Colorado Springs, Colorado 80909; the terms of which Standard Office Lease and Addendums are incorporated herein by reference, and

WHEREAS, Lessee desires to Lease expansion space of 4,190 useable SF (4,400 rentable SF) in the Chidlaw Building, and

WHEREAS, the parties have agreed on the terms necessary to amend the original Standard Office Lease and Addendums to include theexpansion space.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, covenants and undertaking hereafter, the parties agree to this First Amendment to Standard Office Lease and the following terms:

1.LEASED PREMISES: In consideration ofthe covenants herein, the leased premises in the Standard Office Lease, hereafter “SOL” is expanded to include the 4,190 useable SF located on the upper level of the Chidlaw Building as identified on Exhibit A attached hereto and incorporated herein, hereafter “expansion space.”

2.TERM: The lease term for the expansion space shall commence May 1, 1998 and terminate on August 31, 2006 so as to be co-terminus withthe remaining term under the SOL.

3.RENT: The NNN base rent for the expansion space shall initially be $8.75/SF/yr. payable in monthly installments due concurrently with the NNN base rent under the SOL. The NNN base rent shall be based on 4,400 rentable SF. Annually, commencing May1, 1999, the NNN base rent shall increase in $.25/yr. increments. Attached asExhibit B is the Base NNN Rent Schedule for the expansion space lease term.

4.OPERATING EXPENSES: In addition to the NNN base rent, Lessee shall pay, its pro-rata share of the building and premises operating expenses as they are defined in the SOL. Payment shall be made in the same manner as set forth therein. Tenant space utilities for gas and water shallbe included in the operatingexpenses but tenant space electrical consumption shall be separately metered and paid by tenant in addition to its share of operating expenses. For calendar year 1998. Lessee shall pay the estimated monthly sum of $432.67 for operating expenses; which monthly sum is based on the estimated annual operating expenses of $1.18/SF x 4,400 SF.

5.EXPANSION SPACE LEASE IMPROVEMENTS:Lessorwill pay to Lessee a landlord’s tenant improvement allowance of $17 per rentable square foot, or the sum of $74,800. The Landlord’s tenant improvement allowance shall be due and payable within thirty (30) days after substantial completion of the space build-out by tenant and certification of completion by the City of ColoradoSprings. Lessee shall be responsible for construction of all tenant space and lease improvements to the expansion space. The provisions of Article 6.02 in Addendum B of the Standard Office Lease concerning Lessor’s consent to the plans and specifications for any improvements shall be applicable. The parties agree that Lessee intends to build out the tenant space and to construct improvements in a manner consistent with the existing leased space and landlord’s consent will not be unreasonably withheld under this understanding. Lessor may demand, as a condition of consent, that Lessee provide reasonable documentation and agreesto reasonable

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means of protecting Lessor and its lender against mechanic’s liens arising from any improvements; which protection documentation shall be provided prior to or contemporaneously with payment of the tenant improvement allowance.

The parties agree that the leased premises are currently in a condition acceptable to Lessee without further Lessor expense.

6.PARKING SPACES: In consideration of the lease of the expansion space, Lessor shall, during the term, provide Lessee with an additional 24 parking spaces in proximity to tenant’s entrance for the expansion space.

7.RATIFICATION AND CONFIRMATION: Except as herein provided, the parties hereby ratify and confirm that the remaining terms, of the Standard Office Lease dated May 23, 1996 and the Addendums dated July 18, 1996 and October 4, 1996 remain in full force and effect and, except as modified herein, shall govern the expansion space.

IN WITNESS WHEREOF, the parties have executed, this First Amendment to Standard Office Lease the dates below setforth.

LESSOR: 2221 BIJOU LIMITED LIABILITY CO.		LESSEE: AMERICAN TELECONFERENCING SERVICES, LTD.
By:	/s/ LARS E. AKERBERG	By:
	Lars E. Akerberg
Its:	Managing Partner	Its:
Dated:		Dated:

3

SECOND AMENDMENT TO
STANDARD OFFICE LEASE

THIS SECOND AMENDMENT, is made and entered into this ___ day of May, 1998 by and between 2221 BIJOU LLC, (“Lessor”), and AMERICAN TELECONFERENCING SERVICES, LTD., (“Lessee”).

WITNESSETH, THE FOLLOWING RECITALS

WHEREAS, on May 23, 1996, the parties entered into a Standard Office Lease (which Standard Office Lease included Addendums dated July 18, 1996 and October 4, 1998) wherein Lessor agreed to lease to Lessee 54,470 SF in the Chidlaw Building located at 2221 East Bijou Street, Colorado Springs, Colorado 80909, commencing September 1, 1996; the terms of which Standard Office Lease and Addendums are incorporated herein by reference;

WHEREAS, on the same date hereof, the parties entered into a First Amendment to Standard Office Lease wherein Lessor agreed to lease to Lessee 4,400 additional rentable SF in the upper level of said building, the terms of which are incorporated herein by reference;

WHEREAS, Lessee desires to Lease expansion space of 48,405 useable SF (50,825 rentable SF) in the lower level of the Chidlaw Building; and

WHEREAS, building tenant Memorial Hospital has an existing Right of First Refusal to lease all remaining lower level space in the Chidlaw Building.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, covenants and undertakings hereafter, the parties agree as follows:

1.EXPANSION OF LEASED PREMISES. As and for an expansion of the leased premises subject to the Standard office Lease and First Amendment thereto, Lessor hereby leases, lets and demises to Lessee 50,825 rentable SF (48,405 usable SF x 1.05 R/U factor) as identified on the Lower Level Floor Plan of David Weesner Associates, dated March 19, 1998 and attached hereto as Exhibit A.

2.TERM OF EXPANSION LEASED PREMISES. The term for the expansion leased premises shall be thirty-six (36) months commencing immediately upon the termination of the Right of First Refusal to lease in favor of Memorial Hospital (as hereafter required and set forth in Article 8) and ending thirty-six (36) months thereafter.

Notwithstanding the foregoing, Lessor shall have the right to terminate the term of the Lease as to part or all of the Leased Premises by the giving of ninety (90) days written notice to Lessee. Provided, however, Lessor may not give notice which becomes effective prior to the end of the eighteenth (18th) month of the Lease Term.

Lessee, at any time during the thirty-six (36) month Lease term, may, by written notice to Lessor, elect to extend the Lease Term to a term ending on August 31, 2006 for any designated portion of the Leased Premises in excess of 10,000 rentable SF. Lessor shall have the right, by written notice within ten (10) days of receipt of Lessee’s notice, to reject any area of the Leased Premises designated by Lessee if the designated area is deemed by Lessor, in its sole discretion, to be harmful to future leasing. In said notice, Lessor shall designate reasonable acceptable alternative space. Lessee shall have five (5) days thereafter to accept or reject Lessor’s alternative space proposal by written notice to Lessor.

Lessee’s election may not be exercised on any portion of the Leased Premises after the receipt of Lessor’s termination notice thereon given in accordance with the foregoing paragraph.

The NNN rental amount during any extended term elected by Lessee shall be in accordance with the Base Rent schedule set forth hereafter in Article 3.

3.RENT SCHEDULE FOR EXPA1SION SPACE. As and for Rent during the term for the expansion space, or for any extended term elected pursuant to Article 2, Lessee shall pay Base Rent and

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Operating Expenses in the manner set forth in Article 2 and ADDENDUM A of the Standard Office Lease according to the following Rent Schedule, to-wit:

Base Rent Schedule

Months	Base III Rent	SQ. PT. Leased (rentable)	Annual III Rent	Monthly III Rent
1-36	$1.50/SP	50,825.00	$  76,237.50	$    6,353.13
19-36 (on extended         term space)	$4.55/SP	50,825.00	$231,253.75	$  19,271.15
37-48      “       ”	$4.80/SP	50,825.00 (or less)	$243,960.00	$  20,330.00
49-60      “       ”	$5.05/SP	50,825,00(or less)	$256,666.25	$  21,388.85
61-72      “       ”	$5.30/SP	50,825.00 (or less)	$267,372.50	$22,4477.71
73-84      “       ”	$5.55/SP	50,825.00 (or less)	$232,078.75	$    23,50.56
85-96      “       ”	$5.33/SP	50,825.00 (or less)	$294,785.00	$  24,565.42
96-8/31/2006	$6.05/SP	50,825.00 (or less)	$307,491.25	$  25,624.27

Triple Net Intent. It is the purpose and intent of Lessor and Lessee that the base rent provided in the above schedule shall be absolutely net to Lessor, and that Lessee shall pay, AS ADDITIONAL RENT, without notice or demand, and without abatement, deduction or setoff and save Lessor harmless from and against, all prorated operating expenses in the manner and as defined in Article 2.02 and 2.03 of the Standard Office Lease. If Lessee is required to make any payment or incur any expense as provided in this Lease and fails to do so, then Lessor, at its option, may make the payment or incur the expense on Lessee’s behalf, and the cost thereof shall be charged to Lessee as additional rent and shall be due and payable by Lessee in accordance with Article 2.02 of the Standard Office Lease.

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Based on the expansion Leased Premises area of50,825 SF,Lessee’s pro-rated share of operating expenses shall be 18.05%, computed as follows: 50,825 rentable SF divided by 281,561 rentable SF.

Lessor’s estimate of the operating expenses it will incur for the building and leased premises is $1.18 per square foot during the 1998 calendar year inclusive of tenant space utilities for gas and water but excluding tenant space electrical (which shall be separately metered and paid by tenant) and exclusive of tenant janitorial. Lessee agrees to pay as additional rent monthly, along with payments of Base Rent, the sum of $4,997.79 as its pro-rata share of operating expenses during calendar year 1998 of this Lease as provided in Paragraph 2.02of the Standard Office Lease.

4.IMPROVEMENTS TO EXPANSION LEASED PREMISES. In lieu of the provisions of Article 6.01 and 6.02 and ADDENDUM B of the Standard Office Lease, Lessor shall have no obligation to build out the expansion leased premises or to pay any tenant improvement allowance to Lessee. Lessee shall be solely responsible to build out the expansion leased premises. Prior to the commencement of any improvements, Lessee shall obtain the written consent of Lessor tothe plans and specifications in the manner as provided in Article 6.02 ofthe Standard Office Lease. Lessor’s consent shall not be unreasonably withheld provided that Lessor may demand reasonable protection against mechanic’s liens and provided further that the Lessee’s planned improvements comply with applicable building codes and are in conformity and consistent with the general construction of theremainder of the leased premises including Lessee’s space leased in the original Standard Office Lease and First Amendment thereto.

Notwithstanding the foregoing, Lessor shall (1) deliver the Premises to Lessee in broom clearcondition, (2) make available comparable electrical and HVAC capacity to the boundary of the expansion space as provided to Lessee’s existing space, (3) cause the encapsulation or removal of the asbestos floor tiles inthe expansion space, at its sole expense, within forty-five (45) days after demand by written notice from Lessee, and (4) reimburse

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Lessee for one-half of the reasonable and necessary costs of the space demising walls (exclusive of interior and exterior dry wall finish) within fifteen (15) days of the completion thereof.

5.PARKING. In addition to the parking privileges granted in theStandard Office Lease andthe First Amendment thereto, Lessor shall make available to Lessee, at all times during the term for the expansion space, two (2) additional parking spaces per 1,000 rentable SF.

6.BROKERS. Lessee represents and warrants to Lessor that it has not been represented by any broker who is entitled to receive or claim a commission based on the lease of theexpansion space and shallhold Lessor harmless and indemnify Lessor from any claims to a commission. Lessor represents and warrants to Lessee that ithas been represented Brokers Michael Palmer and James Spittler, Highland Commercial Group, L.L.C., (hereinafter “Highland”) and by no other broker. Lessor shall be solely responsible for payment of any leasing commission to its Brokers as aforesaid.

7.ADOPTION OF REMAINING LEASE TERMS BY REFERENCE. Except as herein provided, the parties agree that the expansion space shall be subject to the terms, conditions and covenants of the Standard Office Lease and First Amendment thereto, which terms are adopted by reference as if fully set forth herein.

8.CONTINGENCY. The parties understand and agree that the obligations of the parties herein are subject to and expressly contingent upon the waiver or release of the Right of First Refusal to leasethe expansion space in favor of building tenant Memorial Hospital. Lessor shall be obligated to provide formal notice of the Right of First Refusal to Lease to said tenant within three (3) days after the execution hereof in the manneras set forth in the Memorial Lease, the provisions of which Lessee acknowledges receipt. Should Memorial Hospital waive or release its Right of First Refusal, this Lease shall become binding and immediately effective upon Lessor’s posting of written notice thereof to Lessee. Should Memorial exercise its Right of First Refusal, this Second Amendment to Standard Office Lease shall be deemednull and

5

void upon written notice to Lessee within two (2) business days following exercise of the right by Memorial Hospital.

IN WITNESS WHEREOF, the parties have executed this Second Amendment to Standard Office Lease the dates below set forth.

LESSOR: 2221 Bijou Limited Liability Co. Corporation		LESSEE: AMERICAN TELECONFERENCING SERVICES, LTD.
By:	/s/ LARS E. AKERBERG	By:
	Lars E. Akerberg
Its:	Managing Partner	Its:
Dated:		Dated:

6

THIRD AMENDMENT TO
STANDARD OFFICE LEASE

THIS THIRD AMENDMENT, is made and entered into this _____ day of September, 1999 by and between 2221 BIJOU LLC, a Colorado Limited Liability Company (“Lessor”), and American Teleconferencing Services, Ltd., (“Lessee”).

WITNESSETH, THE FOLLOWING RECITALS:

WHEREAS, on May 23, 1996, the parties entered into a Standard Office Lease (which Standard Office Lease included Addendums dated July 18, 1996 and October 4, 1996) wherein Lessor agreed to lease to Lessee 54,470 SF in the Chidlaw Building located at 2221 East Bijou Street, Colorado Springs, Colorado 80909, commencing September 1, 1996; the terms of which Standard Office Lease and Addendums are incorporated herein by reference;

WHEREAS, on May 5, 1998, the parties entered into a First Amendment to Standard Office Lease wherein Lessor agreed to lease to Lessee an additional 4,400 rentable SF in the upper level of said building; the terms of which are incorporated herein by reference;

WHEREAS, on May 5, 1998, the parties entered into a Second Amendment to Standard Office Lease wherein Lessor agreed to lease to Lessee 50,825 rentable SF in the lower level of said building; the terms of which are incorporated herein by reference; and

WHEREAS, the parties desire to extend the lease term on a portion of the lower level space leased under the Second Amendment to Standard Lease (hereafter “Improved Space”) and to further modify the lease terms concerning the remaining lower level space (hereafter “Unimproved Space”).

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, covenants and undertakings hereafter, the parties agree, effective as of November 15, 1999, as follows:

1.LEASED PREMISES. From and after November 15, 1999, the leased premises, originally described in the Second Amendment to Standard Office Lease as:

48,405 useable SF x 1.05 R/U factor = 50,825 rentable SF shall be designated as:

“UNIMPROVED SPACE” - consisting of 29,475 useable SF x 1.05 RU factor = 30,949 rentable SF (depicted as ATS RESERVE 14,980 SF and ATS RESERVE 14,495 SF on Exhibit A - The Lower Level Floor Plan attached hereto and incorporated herein.

AND

“IMPROVED SPACE” - consisting of 18,930 useable SF x 1.05 R/U factor = 19,876 rentable SF (depicted as PHASE ONE OCCUPIED 7,830 SF and PHASE TWO UNDER CONSTRUCTION 11,100 SF on Exhibit A - The Lower Level FloorPlan attached hereto and incorporated herein.

2.TERM. Article 2 -TERM OF EXPANSION LEASED PREMISES, as contained in the Second Amendment to Standard Office Lease, is hereby modified by its deletion in its entirety and by substitution of the following:

a.Lease Term for Unimproved Space. The original lease term of 36 months for the unimproved 30,949 rentable SF shall remain the same and the parties hereby confirm and ratify that its termination date is May 14, 2001.

Lessor shall no longer have the right to notify Lessee of the termination of the lease term prior to May 14, 2001. In consideration for Lessor’s waiver of this right of early termination, Lessee agrees that should it desire to improve all or any portion of the space during the lease term, then commencing 90 days after Lessor approves the plans and specifications for the improvements pursuant to Article 4 of the Second Amendment to Standard Office Lease, the lease term on the area approved for improvement shall be extended to August 31, 2006 so as to be coterminous with the lease term for the remainder of Lessee’s space in the building.

However, Lessee, at any time during the remaining lease term, may by written notice to Lessor, elect to extend the lease term to a term ending on August 31, 2006 for any designated portion of the unimproved space. Upon receipt of any said notice, Lessor shall have the right, by written notice within ten days of receipt of Lessee’s notice, to reject any area of the leased premises designated by Lessee if the designated area is deemed by Lessor, in its sole discretion, to be harmful to future leasing. In said notice, Lessor shall designate reasonably acceptable alternative space of the same area. Lessee shall have five days thereafter to accept or reject Lessor’s alternative space proposal by written notice to Lessor.

b.Lease Term for Improved Space. The original lease term for the 19,876 improved rentable SF is hereby extended to August 31, 2006.

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3.RENT SCHEDULE. Article3 - RENT SCHEDULE FOR EXPANSION SPACE, as contained in the Second Amendment to Standard Office Lease, is hereby modified by its deletion in its entirety and by substitution of the following:

As and for the base NNN rent during the lease terms for the Unimproved Space and for the Improved Space, Lessee shall pay base rent (and the operating expenses) in the manner set forth in Article 2 and Addendum A of the original Standard Office Lease according to the following rent schedules, to-wit:

IMPROVED SPACE
Base Rent Schedule

Term	Base NNN Rent		SQ. FT. Leased (rentable)	Annual NNN Rent			Monthly NNN Rent
11/15/99 - 5/14/2001	$	4.55	19,876	$	135,653.76	(18 mos.)	$	7,536.32
05/15/01 - 05/14/02	$	4.80	19,876	$	95,404.80		$	7,950.40
05/15/02 - 05/14/03	$	5.05	19,876	$	100,373.80		$	8,364.48
05/15/03 - 05/14/04	$	5.30	19,876	$	105,342.80		$	8,778.57
05/15/04 - 05/14/05	$	5.55	19,876	$	110,311.80		$	9,192.65
05/15/05 - 05/14/06	$	5.80	19,876	$	115,280.80		$	9,606.73
05/15/06 - 08/31/06	$	6.05	19,876	$	35,072.87	(3 ½ mos.)	$	10,020.82

UNIMPROVED SPACE
Base Rent Schedule

Term	Base NNN Rent		SQ. FT. Leased (rentable)	Annual NNN Rent			Monthly NNN Rent
11/15/99 - 5/14/2001	$	1.50	30,949	$	69,635.34	(18 mos.)	$	3,868.63

FOR ANY OF UNIMPROVED SPACE ON WHICH THE LEASE TERM IS EXTENDED TO 8/31/2006

11/15/99 - 05/14/01	$	4.55	SF Elected	As Calculated	As Calculated
05/15/01 - 05/14/02	$	4.80	SF Elected	As Calculated	As Calculated
05/15/02 - 05/14/03	$	5.05	SF Elected	As Calculated	As Calculated
05/15/03 - 05/14/04	$	5.30	SF Elected	As Calculated	As Calculated
15/15/04 - 05/14/05	$	5.55	SF Elected	As Calculated	As Calculated
05/15/05 - 05/14/06	$	5.80	SF Elected	As Calculated	As Calculated
05/15/06 - 08/31/06	$	6.05	SF Elected	As Calculated	As Calculated

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Triple Net Intent. It is the purpose and intent of Lessor and Lessee that the base rent provided in the above schedule shall be absolutely net to Lessor, and that Lessee shall pay, AS ADDITIONAL RENT, without notice or demand, and without abatement, deduction or setoff and save Lessor harmless from and against, all prorated operating expenses in the manner and as defined in Article 2.02 and 2.03 of the Standard Office Lease. If Lessee is required to make any payment or incur any expense as provided in this Lease and fails to do so, then Lessor, at its option, may make the payment or incur the expense on Lessee’s behalf, and the cost thereof shall be charged to Lessee as additional rent and shall be due and payable by Lessee in accordance with Article 2.02 of the Standard Office Lease.

4.ADOPTION OF REMAINING TERMS BY REFERENCE. Except as otherwise herein provided, the parties agree that the leased premises described herein shall be subject to the terms, conditions and covenants of the Standard Office Lease, Addendums thereto and the First and Second Amendments thereto; which terms are adopted by reference as if fully set forth herein.

IN WITNESS WHEREOF, the parties have executed this Second Amendment to Standard Office :Lease the dates below set forth.

LESSOR:		LESSEE:
2221 Bijou Limited Liability Co. a Colorado Limited Liability Company		American Teleconferencing Services, Ltd.
By:	FLENINGE PARTNERSHIP, a Minnesota General Partnership, its Chief Manager	By:	/s/ PATRICK G. JONES
		Its:	Sr. VP

By:	/s/ LARS E. AKERBERG
	Lars E. Akerberg
Its:	Partner
Dated:		9/2/99	Dated:

4

RELEASE AND WAIVER OF LIEN
AND INDEMNITY AGREEMENT

THE STATEOF COLORADO)
) ss. KNOW ALL PERSONS BY THESE PRESENTS:
COUNTY OF EL PASO)

IN CONSIDERATION of the payment made to the undersigned (“Tenant”) by 2221 Bijou LLC (“Owner”), such payment being all amounts owed to Tenant under the Lease between Owner and Tenant dated May 5, 1998, through the “Effective Date” (defined in the second paragraph below), in connection with the furnishing of labor, materials and/or services for construction or repairs (herein called the “Services”) through the Effective Date at the property having the physical address of 2221 East Bijou Street, Colorado Springs, Colorado 80909 (together with all improvements thereon called the “Property”), the receipt and adequacy of such full payment in the amount of $74,800.00 paid by check # _______ being hereby acknowledged, Tenant hereby (a) releases and discharges Owner from all amounts owed through the Effective Date in connection with the Services, and (b) releases and discharges Owner and the Property from any liens, claims of liens, and any other charges which Tenant may now or hereafter have against Owner or the Property for Services through the Effective Date, whether or not evidenced by lien affidavits, and whether or not filed for record.

It is Tenant’s intent that Owner and the Property be free from all liens and lien claims that Tenant or any party acting by, through, or under the Tenant may now or hereafter have against the Owner or the Property for Services through the Effective Date. This Release and Waiver of Lien and Indemnity Agreement is effective for all Services up to and including the 31st day of December, 1998 (the “Effective Date”).

Tenant represents that the Services work through the Effective Date have actually been done, and all subcontractors, laborers and materialmen employed by Tenant or otherwise acting through or under Tenant, and all related costs for materials placed or installed on the Property and rent payments for equipment used, if any, for the Services have been fully paid through the Effective Date.

Tenant will indemnify and hold harmless Owner and any lender holding a mortgage on the Property from and against all liability and costs arising from any claim or lien that may at any time be asserted against Owner, any such lender or the Property by Tenant or any other party by virtue of the Servicesperformed through the effective Date.

EXECUTED this 12^th day of February 1999.

TENANT:		American Teleconferencing Services, Ltd., a Missouri Corporation
By:	/s/ FERYL L.HYLAND
	Feryl L. Hyland
Its:	Facilities/Administration Manager

ACKNOWLEDGMENT

THE STATEOF COLORADO)
) ss.
COUNTY OF EL PASO)

BEFORE ME, theundersigned, a Notary Public, on this day personally appeared Feryl L. Hyland, of American Teleconferencing Services. Ltd., a Missouri Corporation, known to me to be the person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that she executed the same for thepurposes and consideration therein expressed, and in the capacity therein stated, and as the act and deed of said company.

/s/ MARIA J. LECERE

Notary Public

SWORN AFFIDAVIT OF TENANT PRINCIPAL

THE STATEOF COLORADO)
) ss.
COUNTY OF EL PASO)

The undersigned, after having been by me, a notary public in and for said County and State, first duly sworn, on oath deposes and states:

“All of the statements and facts set out above in this Release and Waiver of Lien and Indemnity Agreement are true and correct, and I herebyrestate the lien releases of Contractor contained herein. I have no notice of any claim, lien, or right to lien in favor of any laborer, serviceman or materialmen, and all money advanced by Owner has gone solely for the payment of labor, materials and/or services utilized on such job by my company.”

AMERICAN TELECONFERENCING SERVICES, LTD., a Missouri Corporation
By:	/s/ FERYL L. HYLAND
	Feryl L. Hyland
Title:	Facilities/ Administration Manager

SUBSCRIBED AND SWORN TO BEFORE THE UNDERSIGNED, a notary public in and for the county and state first above named, on this 12^th day of February 1999.

/s/ MARIA J. LECERE

Notary Public

EX-10.54

EXHIBIT 10.54

PTEK HOLDINGS, INC.
SECOND AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT

THIS SECOND AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT is made and entered into by and among PTEK HOLDINGS, INC., a Georgia corporation, f/k/a Premiere Technologies, Inc. (the “Company”), PREMIERE COMMUNICATIONS, INC., a Florida corporation(“PCI”), and BOLAND T. JONES (the “Executive”), effective as of January 1, 2002.

BACKGROUND STATEMENT

The Company and the Executive entered into that certain Amended and Restated Executive Employment and Incentive Option Agreement dated as of November 6, 1995, which was amended by that certain First Amendment to Amended and Restated Executive Employment and Incentive Option Agreement dated as of January 27, 1998, and by that certain Second Amendment to Amended and Restated Executive Employment and Incentive Option Agreement dated as of March 23, 2000 (collectively referred to as the “Original PTEK Agreement”). In addition, PCI and the Executive entered into that certain Amended and Restated Executive Employment Agreement dated as of November 6, 1995, which was amended by that certain First Amendment to Amended and Restated Executive Employment Agreement dated as of January 27, 1998, and that certain Second Amendment to Amended and Restated Executive Employment Agreement dated as of March 23, 2000 (collectively referred to as the “Original PCI Agreement”). The Company, PCI and the Executive desire to terminate the Original PCI Agreement and to amend and restate the Original PTEK Agreement as set forth herein.

THEREFORE, in consideration of and reliance upon the foregoing Background Statement and the representations and warranties contained in this Agreement, and other good and valuable consideration, the Company and the Executive amend and restate the Original PTEK Agreement as follows:

TERMS

Section 1. Duties.

The Company will continue to employ the Executive as its Chief Executive Officer. The Executive will have the powers, duties and responsibilities set forth in the Company’s Bylaws and as from time to time assigned to him by the Company’s board of directors (the “Board”) consistent with such position, and the Executive will report solely to the Board. During the term of his employment under this Agreement, the Executive will devote substantially all of his business time to faithfully and industriously perform his duties and promote the business and best interests of the Company; provided, however, that the Executive is not prohibited from serving on the board of directors of other companies and may participate in personal, civic and charitable activities.

Section 2. Compensation.

Section 2.1. Base Salary. Commencing January 1, 2002, the Company will pay the Executive a base salary at the annual rate of $826,875, payable in accordance with the Company’s standard payroll practices. At the beginning of each calendar year after 2002 during the term of this Agreement, the

Executive will be entitled to an increase in his base salary equal to five percent (5%) of the previous year’s base salary. The Executive will also be entitled to any additional compensation provided for by resolution of the Board or its Compensation Committee.

Section 2.2. Bonus Compensation.

(i) In addition to his base salary, the Executive will be entitled to earn an annual bonus for each calendar year during the term of this Agreement in an amount determined under Section 2.2(ii) based on the Company achieving its quarterly and annual targets for revenue (“Revenue”) and for earnings before interest, taxes, depreciation and amortization (“EBITDA”). Revenue and EBITDA targets and actual Revenue and EBITDA shall be determined by the Company in the same manner as under the Company’s Bonus Plan for Corporate Associates.

(ii) The Executive’s target bonus for each calendar year will be equal to 100% of his base salary for such year, subject to the sliding scale adjusters described below, with 80% of the target bonus allocated to achievement of cumulative quarterly targets (i.e., 20% per quarter) and 20% allocated to achievement of annual targets. The bonus will be based two-thirds (2/3) on achievement of EBITDA targets and one-third (1/3) on achievement of Revenue targets. The amount of bonus earned each quarter and calendar year shall be determined based on the following:

Percentage of Target	Percentage of Bonus Earned
90% - 94.99%	70%
95% - 99.99%	85%
100% - 104.99%	100%
105% - 109.99%	125%
110% or more	150%

(iii) For example, if the Executive’s base salary was $750,000 and EBITDA was 105% of target for the first quarter and Revenue was 98% of target, the Executive’s earned bonus for the first quarter would be calculated as follows:

		Target			% Earned			Bonus Earned
Target bonus for Q1
(20% of $750,000)	=	$	150,000
2/3 based on EBIDTA	=	$	100,000	x	125	%	=	$	125,000
1/3 based on Revenue	=	$	50,000	x	85	%	=	42,500
Earned bonus for Q1								$	167,500

(iv)The earned quarterly bonuses for the first three quarters of a calendar year will be paid to the Executive within forty-five (45) days following the end of the relevant quarter, and the earned fourth quarter and annual bonus for a calendar year will be paid to the Executive by March 15 following the end of such calendar year.

(v)The Executive will also be entitled to any additional bonus compensation provided for by resolution of the Board or its Compensation Committee.

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(vi)The Executive has agreed to reduce his base salary for 2002 from $826,875 to $750,000, and to reduce his target bonus for 2002 from $826,875 to $200,000, in exchange for a grant of 156,125 shares of common stock of the Company pursuant to that certain Restricted Stock Award Agreement by and between the Company and the Executive dated November 27, 2001. The reduced bonus will continue to be earned 20% per quarter and 20% for the year as provided in Section 2.2(ii). The foregoing notwithstanding, for all other purposes of this Agreement, including, without limitation, Sections 2.5, 2.10 and 5, the Executive’s base salary and target bonus for 2002 shall each be deemed to be $826,875. In addition, unless the Executive and the Company otherwise agree, the Executive’s base salary for 2003 shall be $868,219.

Section 2.3. Employee Benefits. During the term of his employment under this Agreement, the Executive will be entitled to participate in all employee benefit programs, including any pension, profit-sharing, or deferred compensation plans, any medical, health, dental, disability and other insurance programs and any fringe benefits, such as club dues, professional dues, the cost of an annual medical examination and the cost of professional fees associated with tax planning and the preparation of tax returns, on a basis at least equal to the other senior executives of the Company. In addition to such benefits, the Company will maintain a $3,000,000 reverse split dollar life insurance policy on the life of and in the name of the Executive, and such other insurance as the Board or the Compensation Committee of the Board may determine. The Executive or his designee will be the owner of such insurance policy and will have all rights pursuant thereto, subject to that certain Reverse Split-Dollar Insurance Agreement by and between the Company and the Executive dated February 2, 1995, as it may be amended from time to time. Notwithstanding anything else contained in this Agreement, (i) upon termination of the Executive’s employment where he is entitled to payments pursuant to Section 2.5 or 2.10 hereof, or (ii) upon expiration of the term of his employment pursuant to Section 4 hereof, the Executive will be entitled to participate, for the longer of (a) eighteen (18) months after the date of termination or expiration or (b) the remaining term of this Agreement as provided in Section 4 hereof as if such termination had not occurred, in any medical, health, dental, disability, life or similar programs in which he participated immediately before his employment terminated or this Agreement expired and to receive the fringe benefits provided for herein, on the same basis as during his employment (including payment by the Company of the costs and expenses associated with such programs and fringe benefits on the same terms as during the time the Executive was employed with the Company), and in meeting its obligations under this provision the Company will take all actions which may be necessary or appropriate to comply with criteria set forth by the Company’s insurance carriers and other program providers (including the continued employment of the Executive in some nominal capacity if necessary).

Section 2.4. Reimbursement of Expenditures. The Company will reimburse the Executive for all reasonable expenditures incurred by the Executive in the course of his employment or in promoting the interests of the Company, including expenditures for (i) transportation, lodging and meals during overnight business trips, (ii) business meals and entertainment, (iii) supplies and business equipment, (iv) long-distance telephone calls and (v) membership dues of business associations. Notwithstanding the foregoing, the Company will have no obligation to pay reimbursements under this Section 2.4 unless the Executive submits timely reports of his expenditures to the Company in the manner prescribed by the Company and the rules and regulations underlying Section 162 of the Internal Revenue Code (the “Code”).

Section 2.5. Severance Pay. If, for any reason whatsoever, the Company terminates the Executive’s employment under this Agreement (other than by expiration of the term of the Executive’s employment pursuant to Section 4 hereof) either (i) before a Change in Control of the Company (as

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defined in Section 2.10 (ii) hereof), or (ii) after the twenty-four (24) month period following a Change in Control of the Company,or if the Company terminates the Executive’s employment under this Agreement for Cause during the 24-month period following a Change in Control of the Company, then in addition to any other rights and remedies the Executive may have, the Executive will be entitled to receive severance pay equal to 2.99 times the greater of (a) the sum of the Executive’s annual base salary in effect at the date of termination plus his target bonus under Section 2.2 hereof for the year in which the date of termination occurs and (b) the sum of the highest annual base salary and annual cash bonus paid to the Executive for any of the three (3) calendar years prior to the date of termination. Such amount will be payable in substantially equal installments in accordance with the Company’s standard payroll practices over the twelve (12) month period following the date of termination.

Section 2.6. Disability of Executive. If during the term of the Executive’s employment under this Agreement the Executive, in the opinion of a majority of the Board (excluding the Executive), as confirmed by competent medical evidence, becomes physically or mentally unable to perform his duties for a continuous period (“Disabled”), then for the first year of his Disability the Executive will receive his full base salary and for the next six months of his Disability he will receive one-half of his base salary. (The Company may satisfy this obligation in whole or in part by payments to the Executive provided through disability insurance.) The Company will not, however, be obligated to pay any salary to the Executive under this Section 2.6 beyond expiration of his term of employment hereunder. Nor will the Company be obligated to pay bonus compensation or an automobile allowance with respect to the period of Disability. Bonus compensation in this circumstance will be a pro rata portion of the bonus the Executive would have earned absent the period of Disability based upon the number of days during the fiscal year the Executive was not Disabled. When the Executive is again able to perform his duties he will be entitled to resume his full position and salary. If the Executive’s Disability endures for a continuous period of eighteen (18) months, then the Company may terminate the Executive’s employment under this Agreement after delivery of ten (10) days written notice. The Executive hereby agrees to submit himself for appropriate medical examination by a physician selected by the Company for the purposes of this Section 2.6.

Section 2.7. Death of Executive. Within forty-five (45) days after the Executive’s death during the term of this Agreement, the Company will pay to the Executive’s estate, or his heirs, the amount of any accrued and unpaid base salary (determined as of the date of death) and accrued and unpaid bonus compensation determined as if the Company’s fiscal year ended at the date of death. In addition, the Company will pay to the Executive’s spouse (or if she is not alive, to his estate or heirs) a death benefit of $5,000.

Section 2.8. Automobile Allowance. During the term of his employment under this Agreement, the Company will pay the Executive a monthly automobile allowance of $1,000.

Section 2.9. Vacation. The Executive will be entitled to three (3) weeks paid vacation annually. Unused vacation time will accumulate and carryover to subsequent years. Any unused vacation at the date of termination of this Agreement (for any reason) will be paid to the Executive promptly following the date of termination.

Section 2.10. Change in Control.

(i)If, during the twenty-four (24) month period following a Change in Control of the Company, the Executive’s employment with the Company is terminated (1) by the Executive for any reason or (2) by the Company for any reason other than Cause (as defined in Section 5.1

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hereof), then in addition to any other rights or remedies the Executive may have, the Executive will be entitled to receive severance pay in an amount equal to the greater of:

(a)2.99 times the greater of (i) the sum of the Executive’s annual base salary in effect at the date of termination plus his target bonus under Section 2.2 hereof for the year in which the date of termination occurs and (ii) the sum of the highest annual base salary and annual cash bonus paid to the Executive for any of the three (3) calendar years prior to the date of termination; and

(b)(i) three percent (3%) of the positive amount determined by subtracting (A) the product obtained by multiplying the number of shares of Common Stock Outstanding (as defined below) at the date of (and giving effect to) the Change in Control (“CIC Date”) by a common stock price of $6.125 per share (which was the per share price of the Company’s common stock on January 7, 2000), from (B) the actual market value of the Company at the CIC Date determined by multiplying the number of shares of Common Stock Outstanding at the CIC Date (and giving effect to the Change in Control transaction) by the common stock price on the CIC Date, as quoted on the trading system on which the common stock is regularly traded, (ii) multiplied by .6, with the maximum amount payable under this subsection (b) not to exceed $25,000,000. The $6.125 per share price will be adjusted proportionately in the event that, prior to the CIC Date, a reorganization, consolidation, recapitalization, stock split, stock dividend or other change in corporate structure occurs which affects the common stock of the Company. The number of shares of Common Stock Outstanding shall include issued and outstanding common stock, restricted stock (whether or not vested) and any security which is immediately convertible into common stock, as well as any securities convertible into common stock that are issued as part of the Change in Control transaction no matter when they may be convertible, but shall not include shares of common stock issuable pursuant to outstanding stock options (whether or not vested). For avoidance of doubt, the intent of this provision is to pay Executive a percentage of the increase in the value to a shareholder of the common stock of the Company from January 7, 2000 to the CIC Date, taking in account the Change in Control transaction, and if the actual market value of the Company at the CIC Date cannot be adequately determined under (b)(i)(B) above, then the Board shall determine such actual market value by taking into consideration the aggregate consideration received by shareholders of the Company, the market value placed on the Company in structuring the Change in Control transaction or such other factors as the Board deems appropriate to carry out the intent of this provision.

Such severance pay will be payable in substantially equal installments in accordance with the Company’s standard payroll practices over the twelve (12) month period following the date of termination.

(ii)For the purposes of this Agreement, a “Change in Control” shall mean the occurrence of any of the following events:

(a)An acquisition (other than directly from the Company) of any voting securities of the Company (“Voting Securities”) by any “Person” (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 (the “1934 Act”)) immediately after which such Person has “Beneficial Ownership” (within

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the meaning of Rule 13d-3 promulgated under the 1934 Act) of 25% or more of the combined voting power of the Company’s then outstanding Voting Securities; provided, however, that in determining whether a Change in Control has occurred, Voting Securities that are acquired in an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any corporation or other person of which a majority of its voting power or its equity securities or equity interests are owned directly or indirectly by the Company (a “Subsidiary”), or (ii) the Company or any Subsidiary, or (iii) any Person in connection with a “Non-Control Transaction” (as hereinafter defined), shall not constitute an acquisition for purposes for this clause (a); or

(b)The individuals who, as of the date of this Agreement, are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least 60% of the Board; provided, however, that if the election, or nomination for election by the Company’s shareholders, of any new director was approved by a vote of at least 80% of the Incumbent Board, such new director shall for purposes of this Agreement, be considered as a member of the Incumbent Board; provided, further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened “Election Contest” (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a “Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or

(c)Approval by the shareholders of the Company of:

(i)a merger, consolidation or reorganization involving the Company, unless:

(A)the shareholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly, immediately following such a merger, consolidation or reorganization, at least two-thirds (2/3) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger, consolidation or reorganization (the “Surviving Corporation”) in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, and

(B)the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least 80% of the members of the board of directors of the Surviving Corporation. (A transaction in which both of clauses (A) and (B) above shall be applicable is hereinafter referred to as a “Non-Control Transaction.”)

(ii)A complete liquidation or dissolution of the Company; or

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(iii)An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary); or

(iv)A transaction in which the Company recapitalizes itself and uses the proceeds of such a recapitalization to buy back or tender common stock or declares a special cash dividend in excess of $.50 per share of common stock.

Section 3. Certain Additional Payments by the Company.

Section 3.1. Amount of Additional Payment. Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event the Internal Revenue Service (the “IRS”) or any other governmental agency claims that, or a determination is made under Section 3.2 that, any benefit or payment or distribution by the Company or its affiliates to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 3) (a “Payment”) is, or should be, subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive from the Company an additional payment, or more than one additional payment (each a “Gross-Up Payment”), in an amount determined under Section 3.2 such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes, social security and other employment taxes, and Excise Tax imposed upon any Gross-Up Payment (and any interest and penalties imposed with respect thereto), the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

Section 3.2. Determinations. Subject to the provisions of Section 3.3, all determinations required to be made under this Section 3, including whether and when any Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by PricewaterhouseCoopers LLP or such other certified public accounting firm as may be designated by the Executive (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 3, shall be paid by the Company to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, the Company acknowledges and agrees that it is possible that the Company may be required under this Section 3.2 to make more than one Gross-Up Payment.

Section 3.3. Contest of Claims. The Executive shall notify the Company in writing of any claim by the IRS that, if successful, would require the payment by the Company of any Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days

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after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

(i)give the Company any information reasonably requested by the Company relating to such claim,

(ii)take such action (other than waiving his right to any Payments) in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

(iii)cooperate with the Company in good faith in order effectively to contest such claim, and

(iv)permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income or other tax or other sanctions (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses on the same basis as a Payment. Without limitation of the foregoing provisions of this Section 3.3, the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive (unless otherwise prohibited by law, in which event the parties shall agree upon a mutually acceptable alternative), on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance on the same basis as a Payment; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

Section 3.4. Refunds. If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 3.3, the Executive receives any refund with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 3.3) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 3.3, a determination is made that the Executive shall not be entitled to any refund

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with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

Section 4. Term of Employment.

The Executive’s term of employment under this Agreement will expire on January 1, 2005. The term of employment will automatically renew for an additional one-year period upon the foregoing expiration, and thereafter upon the expiration of any renewal term provided by this Section 4, unless the Company or the Executive provides written notice to the other party at least thirty (30) days prior to expiration that such party does not want to renew this Agreement.

Section 5. Termination of Employment.

Section 5.1. Termination by the Company. The Company may terminate the Executive’s employment under this Agreement only for “Cause” amounting to gross, continuing and willful malconduct, misconduct or nonperformance, having a substantial, adverse effect upon the Company, or for Disability, as described in Section 2.6 hereof. No act or failure to act by the Executive will be considered “willful” unless done or not done in bad faith and without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Termination for Cause will not be effective unless the Company delivers to the Executive thirty (30) days advance written notice setting forth in reasonable detail the allegations of Cause, and the Executive does not correct the acts or omissions documented in such notice within such 30-day period. For purposes of this Agreement, any significant change to the Executive’s title, his powers, duties or responsibilities, or his employee benefits or working conditions, or any relocation of his workplace outside of Atlanta, Georgia, will, at the option of the Executive, constitute a termination of his employment by the Company without Cause. Notwithstanding anything else contained in this Agreement, if, for any reason whatsoever, the Company terminates the Executive’s employment, then the Company will reimburse the Executive for all reasonable costs and expenses incurred by him (including attorneys’ fees, court costs and the costs of paralegal and other legal or investigative support personnel) connected with investigating, preparing, defending or appealing any litigation, arbitration, mediation or similar proceeding arising out of this Agreement, whether commenced or threatened. Such reimbursements will be paid in advance of the final disposition of such litigation, arbitration, mediation or similar proceeding within ten (10) days after the Executive submits requests for reimbursement along with supporting invoices.

Section 5.2. Termination by the Executive. The Executive may terminate his employment under this Agreement thirty (30) days after giving written notice to the Company. If the Executive terminates his employment under this Agreement, then he will be entitled to pro rata portions of his base salary and bonus compensation with respect to the fiscal year in which the termination occurs (based on the number of days the Executive is employed by the Company during such fiscal year) as well as any accrued but unpaid compensation.

Section 6. Restrictive Covenants.

Section 6.1. Prohibited Activities. During the term of his employment under this Agreement and for a period of one (1) year thereafter, the Executive will not, as a shareholder, owner, operator, employee, partner, independent contractor, consultant, lender, financier, officer, director or by any other means whatsoever participate in any of the following activities:

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(i)Engage in or be associated with any business that directly or indirectly competes with the Company or PCI with respect to enhanced personal communications services;

(ii)Induce any person who is an employee, officer, agent, affiliate, supplier, client or customer of the Company or PCI to terminate such relationship or refuse to do business with the Company or PCI; or

(iii)Solicit, direct, take away, serve, interfere with, or endeavor to entice away from the Company or PCI any person, company, firm, institution, or other entity that has purchased products or services from the Company or PCI.

Section 6.2. Trade Secrets. The Executive acknowledges and recognizes that during his employment with the Company he may acquire (or may have acquired during his prior employment with the Company or PCI) secret or confidential information, knowledge, or data with respect to the business or products of the Company or PCI which may provide advantage to the Company or PCI over others not having such information. During his employment hereunder and for a period of one (1) year thereafter, the Executive will not communicate, disclose or divulge any such secret or confidential information to the detriment of the Company or PCI. Following the termination of the Executive’s employment hereunder, the provisions of this Section 6.2 shall not apply to any information that (a) was known to the Executive prior to his employment by the Company or PCI or (b) becomes generally available to the telecommunications industry other than as a result of disclosure by the Executive.

Section 6.3. Property of the Company. The Executive acknowledges that all confidential information relating to computer software or hardware currently utilized by the Company or incorporated into its products and all such information the Company currently plans to utilize or incorporate into its products is the exclusive property of the Company. Furthermore, the Executive agrees that all discoveries, inventions, creations and designs of the Executive during the course of his employment pursuant to this Agreement, the Original PTEK Agreement or the Original PCI Agreement will be the exclusive property of the Company.

Section 6.4. Remedies. In the event the Executive violates or threatens to violate the provisions of this Section 6, damages at law will be an insufficient remedy and the Company will be entitled to equitable relief in addition to any other remedies or rights available to the Company and no bond or security will be required in connection with such equitable relief.

Section 6.5. Counterclaims. The existence of any claim or cause of action the Executive may have against the Company will not at any time constitute a defense to the enforcement by the Company of the restrictions or rights provided by this Section 6.

Section 7. Service as a Director.

During the term of this Agreement, the Executive agrees to be nominated to serve as a director of the Company when his then current term expires and, subject to his election by the shareholders of the Company, to serve as a director of the Company.

Section 8. Indemnification.

Section 8.1. Non-Derivative Actions. The Company will indemnify the Executive if he becomes a party to any proceeding (other than an action by, or in the right of, the Company), by reason of

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the fact that he is or was a director, officer, employee, or agent of the Company or is or was serving at the request of the Company as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against liability incurred in connection with such proceeding, including any appeal, provided he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any proceeding by judgment, order, settlement, or conviction or upon a plea of nolo contendere or its equivalent will not, of itself, create a presumption that the Executive did not act in good faith and in a manner which he reasonably believed to be in, and not opposed to, the best interests of the Company or, with respect to any criminal proceeding, had reasonable cause to believe that his conduct was unlawful.

Section 8.2. Derivative Actions. The Company will indemnify the Executive if he becomes a party to any proceeding by or in the right of the Company to procure a judgement in its favor by reason of the fact that he is or was a director, officer, employee, or agent of the Company or is or was serving at the request of the Company as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses and amounts paid in settlement not exceeding, in the judgement of the Board, the estimated expense of litigating the proceeding to conclusion, actually and reasonably incurred in connection with the defense or settlement of such proceeding, including any appeal; provided that he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Company.

Section 8.3. Advancement of Expenses. Expenses incurred by the Executive in defending a civil or criminal proceeding described in this Section 8 will be paid by the Company in advance of the final disposition of the proceeding within ten (10) days after the Executive submits a request for payment; provided, however, that the Executive has undertaken in writing to repay such amounts if he is ultimately found not to be entitled to indemnification by the Company.

Section 8.4. Non-Exclusivity; Continuity. The indemnification provided for by this Agreement will not be exclusive and the Company may make any other indemnification allowed by law. The indemnification provided for by this Agreement will continue after the Executive has ceased to be a director, officer, employee, or agent of the Company or ceases to serve at the request of the Company as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, and will inure to the Executive’s heirs, executors, and administrators.

Section 8.5. No Subrogation. The indemnification provided for by this Agreement will be personal in nature and the Company will not have any liability under this Section 8 to any insurer or any person, corporation, partnership, trust or association or other entity (other than heirs, executors or administrators) by reason of subrogation, assignment, or succession by any other means to the claim of the Executive.

Section 9. Compliance With Other Agreements.

The Executive represents and warrants to the Company that he is free to enter into this Agreement and that the execution of this Agreement and the performance of the obligations under this Agreement will not, as of the date of this Agreement or with the passage of time, conflict with, cause a breach of or constitute a default under any agreement to which the Executive is a party or may be bound.

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Section 10. Severability.

Every provision of this Agreement is intended to be severable. If any provision or portion of a provision is illegal or invalid, then the remainder of this Agreement will not be affected. Moreover, any provision of this Agreement which is determined to be unreasonable, arbitrary or against public policy will be modified as necessary so that it is not unreasonable, arbitrary or against public policy.

Section 11. Waivers.

A waiver by a party to this Agreement of any breach of this Agreement by the other party will not operate or be construed as a waiver of any other breach or of the same breach on a future occasion. No delay or omission by either party to enforce any rights it may have under this Agreement will operate or be construed as a waiver.

Section 12. Modification.

This Agreement may not be modified or amended except by a writing signed by the Company and the Executive.

Section 13. Headings.

The various headings contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of any of the provisions of this Agreement.

Section 14. Counterparts.

This Agreement may be executed in several counterparts, each of which will be deemed an original, but all of which taken together will constitute one and the same instrument.

Section 15. Number and Pronouns.

Wherever from the context it appears appropriate, each term stated in either the singular or the plural will include the singular and the plural and pronouns stated in the masculine, feminine or neuter gender will include the masculine, feminine and neuter genders.

Section 16. Survival of Representations and Warranties.

The respective representations and warranties of the parties to this Agreement will survive the execution of this Agreement and continue without limitation.

Section 17. Assignment; Binding Effect.

Neither this Agreement nor any right or interest hereunder shall be assignable by either the Executive or the Company without the other party’s prior written consent; provided, however, that nothing in this Section 17 shall preclude (i) the Executive from designating a beneficiary to receive any benefits payable hereunder upon his death, or (ii) the executors, administrators or other legal representatives of the Executive or his estate from assigning any rights hereunder to the person or persons entitled thereto.

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In addition, at the request of the Executive, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business, assets or stock of the Company, by agreement in form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession will be a breach of this Agreement and will entitle the Executive to compensation from the Company in the same amount and on the same terms as he would be entitled to hereunder if his employment was terminated by the Company without Cause pursuant to Section 2.10 (i) as of the effectiveness of any such succession.

Except as otherwise provided herein, this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, administrators, executors, successors and assigns.

Section 18. Waiver of Jury.

With respect to any dispute which may arise in connection with this Agreement each party to this Agreement hereby irrevocably waives all rights to demand a jury trial.

Section 19. Entire Agreement.

With respect to its subject matter, this Agreement constitutes the entire understanding of the parties superseding all prior agreements, understandings, negotiations and discussions between them, whether written or oral, and there are no other understandings, representations, warranties or commitments with respect thereto.

Section 20. Governing Law; Venue.

This Agreement will be governed by and interpreted in accordance with the substantive laws of the State of Georgia without reference to conflicts of law. Venue for the purposes of any litigation in connection with this Agreement will lie solely in the state court in and for Fulton County, Georgia or the United States District Court in and for the Northern District of Georgia.

Section 21. Notices.

Any notices or other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and delivered when delivered in person, two (2) days after being mailed postage prepaid by certified or registered mail with return receipt requested, or when delivered by overnight delivery service or by facsimile to the recipient at the following address or facsimile number, or to such other address or facsimile number as to which the other party subsequently shall have been notified in writing by such recipient:

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If to the Company:

PTEK Holdings, Inc.
3399 Peachtree Road
The Lenox Building
Suite 600
Atlanta, GA 30326
Attn: Chief Legal Officer

If to the Executive:

Boland T. Jones
229 The Prado
Atlanta, Georgia 30309

Section 22. Termination of Original PCI Agreement.

The Original PCI Agreement is terminated as of January 1, 2002 and shall be of no further force or effect thereafter.

Section 23. Original PTEK Agreement Superseded.

The Original PTEK Agreement has been amended and restated by this Agreement, and the Original PTEK Agreement shall be of no further force or effect after the effective date of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement.

	PTEK HOLDINGS, INC
ATTEST:	By:	/s/  JEFFREY A. ALLRED
/s/  PATRICK G. JONES		Jeffrey A. Allred
Patrick G. Jones Secretary

	PREMIERE COMMUNICATIONS, INC.
ATTEST:	By:	/s/  JEFFREY A. ALLRED
/s/  PATRICK G. JONES		Jeffrey A. Allred
Patrick G. Jones Secretary

THE EXECUTIVE

/s/  BOLAND T. JONES

Boland T. Jones

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EX-10.55

EXHIBIT 10.55

PTEK HOLDINGS, INC.
SECOND AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT

THIS SECOND AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT is made and entered into by and among PTEK HOLDINGS, INC., a Georgia corporation, f/k/a Premiere Technologies, Inc. (the “Company”), and JEFFREY A. ALLRED (the “Executive”), effective as of January 1, 2002.

BACKGROUND STATEMENT

The Company and the Executive entered into that certain Executive Employment and Incentive Option Agreement dated as of July 24, 1997, which was amended and restated by that certain Amended and Restated Executive Employment and Incentive Option Agreement dated as of January 27, 1998, which was amended by that certain First Amendment to Amended and Restated Executive Employment and Incentive Option Agreement dated as of March 23, 2000 (collectively referred to as the “Original PTEK Agreement”). The Company and the Executive desire to amend and restate the Original PTEK Agreement as set forth herein.

THEREFORE, in consideration of and reliance upon the foregoing Background Statement and the representations and warranties contained in this Agreement, and other good and valuable consideration, the Company and the Executive amend and restate the Original PTEK Agreement as follows:

TERMS

Section 1.Duties.

The Company will continue to employ the Executive as its President and Chief Operating Officer. The Executive will have the powers, duties and responsibilities set forth in the Company’s Bylaws and as from time to time assigned to him by the Company’s board of directors (the “Board”) or its Chief Executive Officer consistent with such position, and the Executive will report directly to the Chief Executive Officer. During the term of his employment under this Agreement, the Executive will devote substantially all of his business time to faithfully and industriously perform his duties and promote the business and best interests of the Company; provided, however, that the Executive is not prohibited from serving on the board of directors of other companies and may participate in personal, civic and charitable activities.

Section 2. Compensation.

Section 2.1.Base Salary. Commencing January 1, 2002, the Company will pay the Executive a base salary at the annual rate of $551,250, payable in accordance with the Company’s standard payroll practices. At the beginning of each calendar year after 2002 during the term of this Agreement, the Executive will be entitled to an increase in his base salary equal to five percent (5%) of the previous year’s base salary. The Executive will also be entitled to any additional compensation provided for by resolution of the Board or its Compensation Committee.

Section 2.2. Bonus Compensation.

(i)In addition to his base salary, the Executive will be entitled to earn an annual bonus for each calendar year during the term of this Agreement in an amount determined under Section 2.2(ii) based on the Company achieving its quarterly and annual targets for revenue (“Revenue”)

and for earnings before interest, taxes, depreciation and amortization (“EBITDA”). Revenue and EBITDA targets and actual Revenue and EBITDA shall be determined by the Company in the same manner as under the Company’s Bonus Plan for Corporate Associates.

(ii)The Executive’s target bonus for each calendar year will be equal to 100% of his base salary for such year, subject to the sliding scale adjusters described below, with 80% of the target bonus allocated to achievement of cumulative quarterly targets (i.e., 20% per quarter) and 20% allocated to achievement of annual targets. The bonus will be based two-thirds (2/3) on achievement of EBITDA targets and one-third (1/3) on achievement of Revenue targets. The amount of bonus earned each quarter and calendar year shall be determined based on the following:

Percentage of Target	Percentage of Bonus Earned
90% - 94.99%	70%
95% - 99.99%	85%
100% - 104.99%	100%
105% - 109.99%	125%
110% or more	150%

(iii)For example, if the Executive’s base salary was $500,000 and EBITDA was 105% of target for the first quarter and Revenue was 98% of target, the Executive’s earned bonus for the first quarter would be calculated as follows:

		Target			% Earned			Bonus Earned
Target bonus for Q1 (20% of $500,000)	=	$	100,000
2/3 based on EBIDTA	=	$	66,667	x	125	%	=	$	83,334
1/3 based on Revenue	=	$	33,333	x	85	%	=	28,333
Earned bonus for Q1								$	111,667

(iv)The earned quarterly bonuses for the first three quarters of a calendar year will be paid to the Executive within forty-five (45) days following the end of the relevant quarter, and the earned fourth quarter and annual bonus for a calendar year will be paid to the Executive by March 15 following the end of such calendar year.

(v)The Executive will also be entitled to any additional bonus compensation provided for by resolution of the Board or its Compensation Committee.

(vi)The Executive has agreed to reduce his base salary for 2002 from $551,250 to $500,000, and to reduce his target bonus for 2002 from $551,250 to $150,000, in exchange for a grant of 100,750 shares of common stock of the Company pursuant to that certain Restricted Stock Award Agreement by and between the Company and the Executive dated November 27, 2001. The reduced bonus will continue to be earned 20% per quarter and 20% for the year as provided in Section 2.2(ii). The foregoing notwithstanding, for all other purposes of this Agreement, including, without limitation, Sections 2.5, 2.10 and 5, the Executive’s base salaryand target bonus for 2002 shall each be deemed to be $551,250. In addition, unless the Executive and the Company otherwise agree, the Executive’s base salary for 2003 shall be $578,813.

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Section 2.3. Employee Benefits. During the term of his employment under this Agreement, the Executive will be entitled to participate in all employee benefit programs, including any pension, profit-sharing, or deferred compensation plans, any medical, health, dental, disability and other insurance programs and any fringe benefits, such as club dues, professional dues, the cost of an annual medical examination and the cost of professional fees associated with tax planning and the preparation of tax returns, on a basis at least equal to the other senior executives of the Company. In addition to such benefits, the Company will maintain a $1,000,000 term life insurance policy on the life of and in the name of the Executive, and such other insurance as the Board or the Compensation Committee of the Board may determine. The Executive or his designee will be the owner of such insurance policy and will have all rights pursuant thereto, including, without limitation, the right to transfer ownership and designate beneficiaries. Notwithstanding anything else contained in this Agreement, (i) upon termination of the Executive’s employment where he is entitled to payments pursuant to Section 2.5 or 2.10 hereof, or (ii) upon expiration of the term of his employment pursuant to Section 4 hereof, the Executive will be entitled to participate, for the longer of (a) eighteen (18) months after the date of termination or expiration or (b) the remaining term of this Agreement as provided in Section 4 hereof as if such termination had not occurred (the “Benefits Period”), in any medical, health, dental, disability, life or similar programs in which he participated immediately before his employment terminated or this Agreement expired and to receive the fringe benefits provided for herein, on the same basis as during his employment (including payment by the Company of the costs and expenses associated with such programs and fringe benefits on the same terms as during the time the Executive was employed with the Company), and in meeting its obligations under this provision the Company will take all actions which may be necessary or appropriate to comply with criteria set forth by the Company’s insurance carriers and other program providers (including the continued employment of the Executive in some nominal capacity if necessary). Following the expiration of the Benefits Period the Executive will be entitled to assume the payment of the premiums on the insurance policy referred to above.

Section 2.4. Reimbursement of Expenditures. The Company will reimburse the Executive for all reasonable expenditures incurred by the Executive in the course of his employment or in promoting the interests of the Company, including expenditures for (i) transportation, lodging and meals during overnight business trips, (ii) business meals and entertainment, (iii) supplies and business equipment, (iv) long-distance telephone calls and (v) membership dues of business associations. Notwithstanding the foregoing, the Company will have no obligation to pay reimbursements under this Section 2.4 unless the Executive submits timely reports of his expenditures to the Company in the manner prescribed by the Company and the rules and regulations underlying Section 162 of the Internal Revenue Code (the “Code”).

Section 2.5. Severance Pay. If the Company terminates the Executive’s employment under this Agreement for any reason other than Cause (other than by expiration of the term of the Executive’s employment pursuant to Section 4 hereof) either (i) before a Change in Control of the Company (as defined in Section 2.10 (ii) hereof), or (ii) after the twenty-four (24) month period following a Change in Control of the Company, then in addition to any other rights and remedies the Executive may have, the Executive will be entitled to receive severance pay equal to 2.99 times the greater of (a) the sum of the Executive’s annual base salary in effect at the date of termination plus his target bonus under Section 2.2 hereof for the year in which the date of termination occurs and (b)  the sum of the highest annual base salary and annual cash bonus paid to the Executive for any of the three (3) calendar years prior to the date of termination. Such amount will be payable in substantially equal installments in accordance with the

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Company’s standard payroll practices over the twelve (12) month period following the date of termination.

Section 2.6. Disability of Executive. If during the term of the Executive’s employment under this Agreement the Executive, in the opinion of a majority of the Board (excluding the Executive), as confirmed by competent medical evidence, becomes physically or mentally unable to perform his duties for a continuous period (“Disabled”), then for the first year of his Disability the Executive will receive his full base salary and for the next six months of his Disability he will receive one-half of his base salary. (The Company may satisfy this obligation in whole or in part by payments to the Executive provided through disability insurance.) The Company will not, however, be obligated to pay any salary to the Executive under this Section 2.6 beyond expiration of his term of employment hereunder. Nor will the Company be obligated to pay bonus compensation or an automobile allowance with respect to the period of Disability. Bonus compensation in this circumstance will be a pro rata portion of the bonus the Executive would have earned absent the period of Disability based upon the number of days during the fiscal year the Executive was not Disabled. When the Executive is again able to perform his duties he will be entitled to resume his full position and salary. If the Executive’s Disability endures for a continuous period of eighteen (18) months, then the Company may terminate the Executive’s employment under this Agreement after delivery of ten (10) days written notice. The Executive hereby agrees to submit himself for appropriate medical examination by a physician selected by the Company for the purposes of this Section 2.6.

Section 2.7. Death of Executive. Within forty-five (45) days after the Executive’s death during the term of this Agreement, the Company will pay to the Executive’s estate, or his heirs, the amount of any accrued and unpaid base salary (determined as of the date of death) and accrued and unpaid bonus compensation determined as if the Company’s fiscal year ended at the date of death. In addition, the Company will pay to the Executive’s spouse (or if she is not alive, to his estate or heirs) a death benefit of $5,000.

Section 2.8. Automobile Allowance. During the term of his employment under this Agreement, the Company will pay the Executive a monthly automobile allowance of $1,000.

Section 2.9. Vacation. The Executive will be entitled to three (3) weeks paid vacation annually. Unused vacation time will accumulate and carryover to subsequent years. Any unused vacation at the date of termination of this Agreement (for any reason) will be paid to the Executive promptly following the date of termination.

Section 2.10. Change in Control.

(i)If, during the twenty-four (24) month period following a Change in Control of the Company, the Executive’s employment with the Company is terminated (1) by the Executive for any reason or (2) by the Company for any reason other than Cause (as defined in Section 5.1 hereof), then in addition to any other rights or remedies the Executive may have, the Executive will be entitled to receive severance pay in an amount equal to the greater of:

(a)2.99 times the greater of (i) the sum of the Executive’s annual base salary in effect at the date of termination plus his target bonus under Section 2.2 hereof for the year in which the date of termination occurs and (ii) the sum of the highest annual base salary and annual cash bonus paid to the Executive for any of the three (3) calendar years prior to the date of termination; and

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(b)(i) three percent (3%) of the positive amount determined by subtracting (A) the product obtained by multiplying the number of shares of Common Stock Outstanding (as defined below) at the date of (and giving effect to) the Change in Control (“CIC Date”) by a common stock price of $6.125 per share (which was the per share price of the Company’s common stock on January 7, 2000), from (B) the actual market value of the Company at the CIC Date determined by multiplying the number of shares of Common Stock Outstanding at the CIC Date (and giving effect to the Change in Control transaction) by the common stock price on the CIC Date, as quoted on the trading system on which the common stock is regularly traded, (ii) multiplied by .4, with the maximum amount payable under this subsection (b) not to exceed $15,000,000. The $6.125 per share price will be adjusted proportionately in the event that, prior to the CIC Date, a reorganization, consolidation, recapitalization, stock split, stock dividend or other change in corporate structure occurs which affects the common stock of the Company. The number of shares of Common Stock Outstanding shall include issued and outstanding common stock, restricted stock (whether or not vested) and any security which is immediately convertible into common stock, as well as any securities convertible into common stock that are issued as part of the Change in Control transaction no matter when they may be convertible, but shall not include shares of common stock issuable pursuant to outstanding stock options (whether or not vested). For avoidance of doubt, the intent of this provision is to pay Executive a percentage of the increase in the value to a shareholder of the common stock of the Company from January 7, 2000 to the CIC Date, taking into account the Change in Control transaction, and if the actual market value of the Company at the CIC Date cannot be adequately determined under (b)(i)(B) above, then the Board shall determine such actual market value by taking into consideration the aggregate consideration received by shareholders of the Company, the market value placed on the Company in structuring the Change in Control transaction or such other factors as the Board deems appropriate to carry out the intent of this provision.

Such severance pay will be payable in substantially equal installments in accordance with the Company’s standard payroll practices over the twelve (12) month period following the date of termination.

(ii)For the purposes of this Agreement, a “Change in Control” shall mean the occurrence of any of the following events:

(a)An acquisition (other than directly from the Company) of any voting securities of the Company (“Voting Securities”) by any “Person” (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 (the “1934 Act”)) immediately after which such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 25% or more of the combined voting power of the Company’s then outstanding Voting Securities; provided, however, that in determining whether a Change in Control has occurred, Voting Securities that are acquired in an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any corporation or other person of which a majority of its voting power or its equity securities or equity interests are owned directly or indirectly by the Company (a “Subsidiary”), or (ii) the Company or any Subsidiary, or (iii) any Person in connection with a “Non-Control Transaction” (as hereinafter defined), shall not constitute an acquisition for purposes for this clause (a); or

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(b)The individuals who, as of the date of this Agreement, are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least 60% of the Board; provided, however, that if the election, or nomination for election by the Company’s shareholders, of any new director was approved by a vote of at least 80% of the Incumbent Board, such new director shall for purposes of this Agreement, be considered as a member of the Incumbent Board; provided, further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened “Election Contest” (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a “Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or

(c)Approval by the shareholders of the Company of:

(i)a merger, consolidation or reorganization involving the Company, unless:

(A)the shareholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly, immediately following such a merger, consolidation or reorganization, at least two-thirds (2/3) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger, consolidation or reorganization (the “Surviving Corporation”) in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, and

(B)the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least 80% of the members of the board of directors of the Surviving Corporation. (A transaction in which both of clauses (A) and (B) above shall be applicable is hereinafter referred to as a “Non-Control Transaction.”)

(ii)A complete liquidation or dissolution of the Company; or

(iii) An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary); or

(iv)A transaction in which the Company recapitalizes itself and uses the proceeds of such a recapitalization to buy back or tender common stock or declares a special cash dividend in excess of $.50 per share of common stock.

Section 3. Certain Additional Payments by the Company.

Section 3.1. Amount of Additional Payment. Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event the Internal Revenue Service (the “IRS”) or

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any other governmental agency claims that, or a determination is made under Section 3.2 that, any benefit or payment or distribution by the Company or its affiliates to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 3) (a “Payment”) is, or should be, subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive from the Company an additional payment, or more than one additional payment (each a “Gross-Up Payment”), in an amount determined under Section 3.2 such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes, social security and other employment taxes, and Excise Tax imposed upon any Gross-Up Payment (and any interest and penalties imposed with respect thereto), the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

Section 3.2.Determinations. Subject to the provisions of Section 3.3, all determinations required to be made under this Section 3, including whether and when any Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by PricewaterhouseCoopers LLP or such other certified public accounting firm as may be designated by the Executive (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 3, shall be paid by the Company to the Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, the Company acknowledges and agrees that it is possible that the Company may be required under this Section 3.2 to make more than one Gross-Up Payment.

Section 3.3.Contest of Claims. The Executive shall notify the Company in writing of any claim by the IRS that, if successful, would require the payment by the Company of any Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

(i)give the Company any information reasonably requested by the Company relating to such claim,

(ii)take such action (other than waiving his right to any Payments) in connection with contesting such claim as the Company shall reasonably request in writing from time to time,

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including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

(iii)cooperate with the Company in good faith in order effectively to contest such claim, and

(iv)permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income or other tax or other sanctions (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses on the same basis as a Payment. Without limitation of the foregoing provisions of this Section 3.3, the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive (unless otherwise prohibited by law, in which event the parties shall agree upon a mutually acceptable alternative), on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance on the same basis as a Payment; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

Section 3.4.Refunds. If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 3.3, the Executive receives any refund with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 3.3) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 3.3, a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

Section 4.Term of Employment.

The Executive’s term of employment under this Agreement will expire on January 1, 2005. The term of employment will automatically renew for an additional one-year period upon the foregoing expiration, and thereafter upon the expiration of any renewal term provided by this Section 4, unless the

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Company or the Executive provides written notice to the other party at least thirty (30) days prior to expiration that such party does not want to renew this Agreement.

Section 5.Termination of Employment.

Section 5.1.Termination by the Company. The Company may terminate the Executive’s employment under this Agreement only for “Cause” amounting to gross, continuing and willful malconduct, misconduct or nonperformance, having a substantial, adverse effect upon the Company, or for Disability, as described in Section 2.6 hereof. No act or failure to act by the Executive will be considered “willful” unless done or not done in bad faith and without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Termination for Cause will not be effective unless the Company delivers to the Executive thirty (30) days advance written notice setting forth in reasonable detail the allegations of Cause, and the Executive does not correct the acts or omissions documented in such notice within such 30-day period. For purposes of this Agreement, any significant change to the Executive’s title, his powers, duties or responsibilities, or his employee benefits or working conditions, or any relocation of his workplace outside of Atlanta, Georgia, will, at the option of the Executive, constitute a termination of his employment by the Company without Cause. Notwithstanding anything else contained in this Agreement, if, for any reason whatsoever, the Company terminates the Executive’s employment, then the Company will reimburse the Executive for all reasonable costs and expenses incurred by him (including attorneys’ fees, court costs and the costs of paralegal and other legal or investigative support personnel) connected with investigating, preparing, defending or appealing any litigation, arbitration, mediation or similar proceeding arising out of this Agreement, whether commenced or threatened. Such reimbursements will be paid in advance of the final disposition of such litigation, arbitration, mediation or similar proceeding within ten (10) days after the Executive submits requests for reimbursement along with supporting invoices.

Section 5.2.Termination by the Executive. The Executive may terminate his employment under this Agreement thirty (30) days after giving written notice to the Company. If the Executive terminates his employment under this Agreement, then he will be entitled to pro rata portions of his base salary and bonus compensation with respect to the fiscal year in which the termination occurs (based on the number of days the Executive is employed by the Company during such fiscal year) as well as any accrued but unpaid compensation.

Section 6.Restrictive Covenants.

Section 6.1.Prohibited Activities. During the term of his employment under this Agreement and for a period of one (1) year thereafter, the Executive will not, as a shareholder, owner, operator, employee, partner, independent contractor, consultant, lender, financier, officer, director or by any other means whatsoever participate in any of the following activities:

(i)Engage in or be associated with any business that directly or indirectly competes with the Company with respect to enhanced personal communications services;

(ii)Induce any person who is an employee, officer, agent, affiliate, supplier, client or customer of the Company to terminate such relationship or refuse to do business with the Company; or

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(iii)Solicit, direct, take away, serve, interfere with, or endeavor to entice away from the Company any person, company, firm, institution, or other entity that has purchased products or services from the Company.

Section 6.2.Trade Secrets. The Executive acknowledges and recognizes that during his employment with the Company (including periods prior to the date of his employment with the Company when he represented the Company as its outside general counsel) he may acquire (or may have acquired) secret or confidential information, knowledge, or data with respect to the business or products of the Company which may provide advantage to the Company over others not having such information. During his employment hereunder and for a period of one (1) year thereafter, the Executive will not communicate, disclose or divulge any such secret or confidential information to the detriment of the Company. Following the termination of the Executive’s employment hereunder, the provisions of this Section 6.2 shall not apply to any information that (a) was known to the Executive prior to the Company retaining his law firm to represent the Company or (b) becomes generally available to the telecommunications industry other than as a result of disclosure by the Executive.

Section 6.3.Property of the Company. The Executive acknowledges that all confidential information relating to computer software or hardware currently utilized by the Company or incorporated into its products and all such information the Company currently plans to utilize or incorporate into its products is the exclusive property of the Company. Furthermore, the Executive agrees that all discoveries, inventions, creations and designs of the Executive during the course of his employment pursuant to this Agreement or the Original PTEK Agreement will be the exclusive property of the Company.

Section 6.4.Remedies. In the event the Executive violates or threatens to violate the provisions of this Section 6, damages at law will be an insufficient remedy and the Company will be entitled to equitable relief in addition to any other remedies or rights available to the Company and no bond or security will be required in connection with such equitable relief.

Section 6.5.Counterclaims. The existence of any claim or cause of action the Executive may have against the Company will not at any time constitute a defense to the enforcement by the Company of the restrictions or rights provided by this Section 6.

Section 7.Service as a Director.

During the term of this Agreement, the Executive agrees to be nominated to serve as a director of the Company when his then current term expires and, subject to his election by the shareholders of the Company, to serve as a director of the Company.

Section 8.Indemnification.

Section 8.1.Non-Derivative Actions. The Company will indemnify the Executive if he becomes a party to any proceeding (other than an action by, or in the right of, the Company), by reason of the fact that he is or was a director, officer, employee, or agent of the Company or is or was serving at the request of the Company as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against liability incurred in connection with such proceeding, including any appeal, provided he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any proceeding by

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judgment, order, settlement, or conviction or upon a plea of nolo contendere or its equivalent will not, of itself, create a presumption that the Executive did not act in good faith and in a manner which he reasonably believed to be in, and not opposed to, the best interests of the Company or, with respect to any criminal proceeding, had reasonable cause to believe that his conduct was unlawful.

Section 8.2.Derivative Actions. The Company will indemnify the Executive if he becomes a party to any proceeding by or in the right of the Company to procure a judgement in its favor by reason of the fact that he is or was a director, officer, employee, or agent of the Company or is or was serving at the request of the Company as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses and amounts paid in settlement not exceeding, in the judgement of the Board, the estimated expense of litigating the proceeding to conclusion, actually and reasonably incurred in connection with the defense or settlement of such proceeding, including any appeal; provided that he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Company.

Section 8.3.Advancement of Expenses. Expenses incurred by the Executive in defending a civil or criminal proceeding described in this Section 8 will be paid by the Company in advance of the final disposition of the proceeding within ten (10) days after the Executive submits a request for payment; provided, however, that the Executive has undertaken in writing to repay such amounts if he is ultimately found not to be entitled to indemnification by the Company.

Section 8.4.Non-Exclusivity; Continuity. The indemnification provided for by this Agreement will not be exclusive and the Company may make any other indemnification allowed by law. The indemnification provided for by this Agreement will continue after the Executive has ceased to be a director, officer, employee, or agent of the Company or ceases to serve at the request of the Company as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, and will inure to the Executive’s heirs, executors, and administrators.

Section 8.5.No Subrogation. The indemnification provided for by this Agreement will be personal in nature and the Company will not have any liability under this Section 8 to any insurer or any person, corporation, partnership, trust or association or other entity (other than heirs, executors or administrators) by reason of subrogation, assignment, or succession by any other means to the claim of the Executive.

Section 9.Compliance With Other Agreements.

The Executive represents and warrants to the Company that he is free to enter into this Agreement and that the execution of this Agreement and the performance of the obligations under this Agreement will not, as of the date of this Agreement or with the passage of time, conflict with, cause a breach of or constitute a default under any agreement to which the Executive is a party or may be bound.

Section 10.Severability.

Every provision of this Agreement is intended to be severable. If any provision or portion of a provision is illegal or invalid, then the remainder of this Agreement will not be affected. Moreover, any provision of this Agreement which is determined to be unreasonable, arbitrary or against public policy will be modified as necessary so that it is not unreasonable, arbitrary or against public policy.

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Section 11.Waivers.

A waiver by a party to this Agreement of any breach of this Agreement by the other party will not operate or be construed as a waiver of any other breach or of the same breach on a future occasion. No delay or omission by either party to enforce any rights it may have under this Agreement will operate or be construed as a waiver.

Section 12.Modification.

This Agreement may not be modified or amended except by a writing signed by the Company and the Executive.

Section 13.Headings.

The various headings contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of any of the provisions of this Agreement.

Section 14.Counterparts.

This Agreement may be executed in several counterparts, each of which will be deemed an original, but all of which taken together will constitute one and the same instrument.

Section 15.Number and Pronouns.

Wherever from the context it appears appropriate, each term stated in either the singular or the plural will include the singular and the plural and pronouns stated in the masculine, feminine or neuter gender will include the masculine, feminine and neuter genders.

Section 16.Survival of Representations and Warranties.

The respective representations and warranties of the parties to this Agreement will survive the execution of this Agreement and continue without limitation.

Section 17.Assignment; Binding Effect.

Neither this Agreement nor any right or interest hereunder shall be assignable by either the Executive or the Company without the other party’s prior written consent; provided, however, that nothing in this Section 17 shall preclude (i) the Executive from designating a beneficiary to receive any benefits payable hereunder upon his death, or (ii) the executors, administrators or other legal representatives of the Executive or his estate from assigning any rights hereunder to the person or persons entitled thereto.

In addition, at the request of the Executive, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business, assets or stock of the Company, by agreement in form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession will be a breach of this Agreement and will entitle the Executive to compensation from the Company in the same

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amount and on the same terms as he would be entitled to hereunder if his employment was terminated by the Company without Cause pursuant to Section 2.10 (i) as of the effectiveness of any such succession.

Except as otherwise provided herein, this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, administrators, executors, successors and assigns.

Section 18.Waiver of Jury.

With respect to any dispute which may arise in connection with this Agreement each party to this Agreement hereby irrevocably waives all rights to demand a jury trial.

Section 19.Entire Agreement.

With respect to its subject matter, this Agreement constitutes the entire understanding of the parties superseding all prior agreements, understandings, negotiations and discussions between them, whether written or oral, and there are no other understandings, representations, warranties or commitments with respect thereto.

Section 20.Governing Law; Venue.

This Agreement will be governed by and interpreted in accordance with the substantive laws of the State of Georgia without reference to conflicts of law. Venue for the purposes of any litigation in connection with this Agreement will lie solely in the state court in and for Fulton County, Georgia or the United States District Court in and for the Northern District of Georgia.

Section 21.Notices.

Any notices or other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and delivered when delivered in person, two (2) days after being mailed postage prepaid by certified or registered mail with return receipt requested, or when delivered by overnight delivery service or by facsimile to the recipient at the following address or facsimile number, or to such other address or facsimile number as to which the other party subsequently shall have been notified in writing by such recipient:

If to the Company:

PTEK Holdings, Inc.
3399 Peachtree Road
The Lenox Building
Suite 600
Atlanta, GA 30326
Attn: Chief Legal Officer

If to the Executive:

Jeffrey A. Allred
100 Inman Circle
Atlanta, Georgia 30309

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Section 22.Original PTEK Agreement Superseded.

The Original PTEK Agreement has been amended and restated by this Agreement, and the Original Agreement shall be of no further force or effect after the effective date of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement.

	PTEK HOLDINGS, INC.
ATTEST:	By:	/s/  BOLAND T. JONES
/s/  PATRICK G. JONES		Boland T. Jones
Patrick G. Jones Secretary

THE EXECUTIVE

/s/  JEFFREY A. ALLRED

Jeffrey A. Allred

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EX-10.56

EXHIBIT 10.56

[PTEK Letterhead]

August 6, 2001

Mr. Richard J. Buyens
814 South Bayside Drive
Tampa, FL 33609-3618

Dear Rick:

I would like to extend to you this offer of employment with Ptek Holdings, Inc. (“Ptek”), subject to approval by the Compensation Committee (the “Committee”) of our Board of Directors (the “Board”). If this offer is accepted by you and approved by the Committee, Ptek would enter into an employment agreement with you that would incorporate the following terms and such other terms and conditions as are customary in executive employment agreements (including noncompete, nonsolicitation and confidentiality provisions) and are consistent with the executive employment practices of Ptek.

Title and Role:	You will be employed as President of Global Services of Ptek. In that role, you will have full P&L responsibility for the global operating units of Ptek, including service definition and development, sales and marketing, and customer care. You will report to the President and Chief Operating Officer of Ptek, who, in addition to overseeing your activities, will be responsible for global finance, accounting, tax, legal and regulatory compliance, investor relations, public relations, mergers and acquisitions, strategic investments and ventures, and other centralized holding company services functions. You, the President and Chief Operating Officer of Ptek and I will form the Office of the Chairman. The Office of the Chairman will be responsible for developing Ptek’s strategic plan and yearly budgets, for approval of the Board.
	While it is our current intent to operate under the Office of the Chairman structure for the foreseeable future, we understand that you would like to be considered periodically for a larger role within the corporate organization including that of the role of Chief Executive Officer. In that regard, I will recommend that the Board consider an annual performance review of you for your potential promotion to the office of Chief Executive Officer (starting at the end of 2002) and that no Board sanctioned consideration would be given to an alternate candidate without the Board giving equal consideration to your candidacy. If the Board were to select a candidate outside our Office of the Chairman you will be entitled to resign and be treated as if Ptek terminated your employment without cause, with the economic implications as described below.
	Your office will be located in the Ptek corporate headquarters in Atlanta, Georgia. Because you will have responsibility for global client services, we would expect that you would spend the appropriate amount of time in the field locations of Ptek’s operating units.

	In addition to your role as an executive officer of Ptek, I will submit your name to the Board’s Nominating Committee for consideration of your becoming a member of the Board. If you are appointed or elected to become a member of the Board, you would agree to serve in that capacity. If you leave the employment of Ptek for any reason, you would agree to immediately resign from the Board. Under current policies, as an executive officer you would not be entitled to any additional compensation, equity participation or benefits for service on the Board.
Cash Compensation:	You will be eligible for targeted aggregate cash compensation (“Targeted Compensation”) at the rate of $700,000 for each full calendar year of employment, based on achievement of the Board approved plan and individually assigned management objectives, and you will have the opportunity to earn up to an aggregate cash compensation at the rate of $875,000 per annum, upon the over achievement of all plan objectives, as described below. Payment of the cash compensation will be consistent with the payment scheme applicable to the Chairman and CEO and the President and COO. That payment scheme currently calls for: (i) the payment of 50% of Targeted Compensation as base salary (“Base Salary”) ratably in 26 biweekly payments each year; (ii) the payment of up to 50% of Targeted Compensation as targeted bonus compensation (“Target Bonus”), and (iii) the payment of up to an additional 25% of Targeted Compensation as incentive bonus (“Incentive Bonus”, and together with the Target Bonus, the “Bonus”).
	Determination of the amount of Bonus payable and the date of payment of the Bonus would be consistent with the eligibility criteria and payment schedule applicable to the Chairman and CEO and the President and COO. The Bonus plan that you have requested (and which is described below) differs somewhat from the structure currently applicable to the Chairman and CEO and the President of Ptek, but will be submitted to the Committee as part of this offer. Assuming the Committee makes the plan changes applicable to the Chairman and CEO, the President and COO and you, the Bonus plan would allocate 20% of the Bonus payment to achievement of goals for each quarter (for a total of 80%) and 20% to achievement of goals for the entire fiscal year. The goals are currently defined as the achievement of aggregate revenue and EBITDA goals outlined in the Board approved annual plan, with 33% allocated to achievement of revenue targets and 67% allocated to achievement of EBITDA targets. No Bonus is payable for a particular target unless it is achieved at a level of 90% or better. Under the plan as proposed by you, 70% of the allocable Target Bonus would be payable for achievement of between 90% and 94% of the relevant target goal, 85% of the allocable Target Bonus would be payable for achievement of between 95% and 99% of the relevant target goal, and 100% of the allocable Target Bonus would be payable for achievement of 100% up to 104% of the relevant target goal. At 105% up to 109% of target achievement, 50% of the allocable Incentive Bonus would be payable. At 110% or more of target achievement, 100% of the Incentive Bonus would be payable. The Bonus would be currently payable within 45 days following completion of the relevant quarter for which the Bonus is earned (except with respect

	to the bonus payable for the fourth quarter and the annual goals, which would be payable by March 15 of the year following the end of the fourth quarter). You should understand that the Committee sets the bonus targets each year based on financial criteria that the Committee believes to be relevant to that year. Next year, for example, the Committee may choose to allocate some of the bonus to other criteria, including achievement of earnings or EPS objectives, cash generation objectives or others. In any case, the criteria applicable to you would be consistent with the criteria applicable to the Chairman and CEO and the President and COO.
	Consistent with the compensation arrangements applicable to other executive officers of Ptek, your Targeted Compensation will be reviewed by the Committee annually and adjusted upward at the beginning of each full year of employment as determined by the Committee, but in no case less than 5% per annum following your first full year of employment.
Stock Options:	You will be granted a minimum of 750,000 options to purchase Ptek common stock. Because of annual grant limitations contained in the 1995 Stock Plan, you will be granted 500,000 of the options as of your effective date of employment and 250,000 as of January 1, 2002. The exercise price of the options will be the fair market value of the common stock on the date of grant as determined by the Committee of the 1995 Stock Plan. Consistent with options issued to other executive officers of Ptek, the options will vest 1/3 on each of the first, second and third anniversaries of the grant date, or January 1, 2005, whichever is earlier. The options will also be subject to accelerated vesting upon a change of control of Ptek or termination of your employment by Ptek without cause, to the extent described below.
	You will be eligible for consideration of the grant of additional options following your first full calendar year of employment.
Change of Control:	Upon a change of control of Ptek, as defined consistent with the definition appearing in the employment agreements of other Ptek executive officers, (a) all unvested stock options that you hold will automatically vest and any restrictions under any restricted stock grants that you may then hold will be automatically lifted, and (b) if you leave the employment of Ptek (other than by being terminated for cause) within 24 months following the change of control, you will be entitled to a cash payment in an amount equal to two times the greater of (i) the Target Compensation for the year in which the change of control occurs, or (ii) the highest actual cash compensation (Base Salary and Bonus) paid by Ptek for any of the two years preceding the year in which the change of control occurs.
Car Allowance:	Consistent with other executive officers of Ptek, you will be entitled to a car allowance of $1,000 per month in addition to your other cash compensation.

Vacation:	You will be eligible to take three weeks of paid vacation per year. Every four months you earn one week. If vacation is earned and not taken, you cannot carry over vacation time into the following year.
Insurance:	You will be eligible for medical and dental insurance under Ptek’s plans starting on the first day of the month following 30 consecutive days of employment. Ptek will reimburse you for any COBRA cost in the transition.
Life Insurance:	You will be entitled to $1,000,000 of term life insurance to be paid for by Ptek.
401(k); ASPP:	You will be entitled to participate in Ptek’s 401(k) plan and Associate Stock Purchase Plan, subject to the terms and conditions of those plans.
Other Benefits:	Ptek will provide you with reasonable reimbursement of club dues, cost of an annual medical exam, and cost of tax planning and tax returns, in a manner consistent with other executive officers of Ptek.
Indemnification:	Ptek will enter into an Indemnification Agreement with you in the same form as other executive officers of Ptek.
Relocation:	Ptek will provide to you a standard relocation package not to exceed $50,000 that will include commissions on the sale of your primary residence, customary closing costs on both ends of the relocation, shipment of household goods and other moving costs. The relocation will be coordinated through Ptek’s designated relocation service. In addition, Ptek will reimburse you for reasonable travel expenses and temporary living expenses during your transition period to Atlanta.
Term; Termination:	The initial term of your employment agreement with Ptek will commence on your first day of active employment with Ptek (expected to be no later than August 15, 2001) and will run through January 1, 2005 (the “Initial Term”), which is coterminous with the current employment agreements of the other members of the Office of the Chairman. Your employment agreement will be extended for successive one-year terms (“Extended Terms”), unless either party notifies the other of the intent not to so renew the term prior to 30 days before the end of the Initial Term or an Extended Term, as applicable.
	The employment agreement will be terminated prior to the end of the otherwise applicable Term upon your death, your disability (as defined in other employment agreements of Ptek executive officers), upon determination that you should be terminated for cause (as defined and determined in other employment agreements of Ptek executive officers), or upon notice of either party.
	If you terminate your employment or Ptek terminates your employment for cause, you will receive the amount of accrued Base Salary through the date of termination. If your employment is terminated due to death, your estate will receive the amount of accrued and unpaid Base Salary

and Bonus earned through the date of death. If your employment is terminated due to your disability, you will receive the amount of accrued and unpaid Base Salary and earned Bonus through the date of your disability and in addition will receive your Base Salary for the greater of 6 months or the remaining Term of your employment. If your employment is terminated by Ptek without cause, (a) you will receive an amount equal to the greater of one times (i) your Targeted Compensation for the year in which such termination occurs or (ii) the highest amount of actual cash compensation (Base Salary and Bonus) paid to you by Ptek during the two years prior to the one in which the termination occurs, and (b) the next tranche of your options that have not yet vested will automatically vest.

Rick, we are excited about the prospect of your joining our team and Jeff Allred and I are personally looking forward to working with you. If you have any questions regarding the above, please call me at (404) 262-8425.

Sincerely,

PTEK HOLDINGS, INC.

/s/BOLAND T. JONES

Boland T. Jones
Chief Executive Officer

Accepted:
By:	/s/RICHARD J. BUYENS
	Richard J. Buyens

EX-10.57

EXHIBIT 10.57

STOCK PLEDGE AGREEMENT

          THIS STOCK PLEDGE AGREEMENT is made and entered into as of the 3rd day of January, 2002, by and between BOLAND T. JONES (the “Pledgor”) and PTEK HOLDINGS, INC., Georgia corporation (the “Secured Party”).

W I T N E S S E T H:

          WHEREAS, the Pledgor has been granted 320,716 shares of the $.01 par value common stock (the “Shares”) of Secured Party pursuant to that certain Restricted Stock Award Agreement dated December 28, 2001 (the “RSA Agreement”); and

          WHEREAS, in connection with such grant, Pledgor has delivered a Promissory Note of even date herewith (the “Note”) to the Secured Party in the principal amount of $140,071.61; and

          WHEREAS, to secure the payment of all obligations of the Pledgor under the Note, the Pledgor has agreed to pledge to the Secured Party, and to grant the Secured Party a security interest in, all of the Shares;

          NOW, THEREFORE, for and in consideration of the premises and the agreements and covenants contained herein, the parties hereto agree as follows:

          1.          Security Interest.  The Pledgor hereby unconditionally grants and assigns to the Secured Party, its successors and assigns, a continuing security interest in and security title to the Shares.  The Pledgor has delivered to and deposited with the Secured Party certificates representing the Shares and stock powers endorsed in blank, as security for payment of (i) all obligations of the Pledgor to the Secured Party under the Note, and any extension, renewal, amendment or modification thereof, and (ii) all obligations of the Pledgor to the Secured Party hereunder. Beneficial ownership of the Shares, including, without limitation, all voting, consensual and dividend rights, shall remain in the Pledgor until the occurrence of a Default pursuant to Section 3 hereof.

          2.          Representation and Warranty.   The Pledgor hereby represents and warrants to the Secured party that except for the security interest created hereby, the Pledgor owns the Shares free and clear of all liens, claims and encumbrances, and has the unencumbered right to pledge the Shares, subject to the terms and conditions of the RSA Agreement.

          3.          Default.  Upon the occurrence of an Event of Default under the Note, or if the Pledgor shall fail to perform or observe any provision of this Agreement and such failure shall continue for thirty (30) days after notice is given by the Secured Party to the Pledgor of such failure (any of such occurrences being hereinafter referred to as a “Default”), the Secured Party shall be entitled, without limitation, to exercise the following rights, which the Pledgor hereby agrees to be commercially reasonable:

          (a)          to receive all amounts payable in respect of the Shares otherwise payable to the Pledgor, and to exercise all of the rights, powers and remedies of the Pledgor with respect to such payments;

          (b)          to transfer all or any part of the Shares into the Secured Party’s name or the name of its nominee or nominees;

          (c)          to vote all or any part of the Shares (whether or not transferred into the name of the Secured Party) and give all consents, waivers and ratifications in respect of the Shares and otherwise act with respect thereto as though it were the outright owner thereof;

          (d)          at any time or from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Shares in one or more blocks, or any interest therein, at any public or private sale at any exchange or elsewhere, without demand of performance, advertisement or notice of intention to sell or of the time or place of sale or adjournment thereof (all of which are hereby expressly and irrevocably waived by the Pledgor), for cash, on credit or for other property, for immediate or future delivery without any assumption of credit risk, and for such price or prices and on such terms as the Secured Party in its sole discretion may determine; the Pledgor agrees that to the extent that notice of sale shall be required by law that at least five (5) business days’ notice to the Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification; the Secured Party shall not be obligated to make any sale of the Shares regardless of notice of sale having been given; the Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and any such sale may, without further notice, be made at the time and place to which it was so adjourned; the Pledgor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Shares, whether before or after sale hereunder, and all rights, if any, of marshalling the Shares; at any such sale, unless prohibited by applicable law, the Secured Party may bid for and purchase all or any part of the Shares so sold free from any such right or equity of redemption; and the Secured Party shall not be liable for failure to collect or realize upon any or all of the Shares or for any delay in so doing nor shall any of them be under any obligation to take any action whatsoever with regard thereto; and

          (e)          generally, to take all such other action as the Secured Party in its sole discretion may determined as incidental or conducive to any of the matters or powers mentioned in the foregoing provisions of this Section 3 and which the Secured Party may or can be do lawfully and to use the name of the Pledgor for the purposes aforesaid and in any proceedings arising therefrom.

          4.          Application of Proceeds.  The proceeds of the public or private sale or other disposition shall be applied (a) to the costs incurred in connection with the sale; (b) to any unpaid interest which may have accrued on any obligations secured hereby; (c) to any unpaid principal on any obligations secured hereby; and (d) to damages incurred by the Secured Party by reason of any breach secured against hereby, in such order as the Secured Party may determine, and any remaining proceeds shall be paid over to the Pledgor or others as provided by law.  In the event

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the proceeds of the sale or other disposition of the Shares are insufficient to pay such expenses, interest, principal, obligations and damages, the Pledgor shall remain liable to the Secured Party for any such deficiency.

          5.          Additional Rights of Secured Party.  In addition to its rights and privileges under this Agreement, the Secured Party shall have all the rights, powers and privileges of a secured party under the Georgia Uniform Commercial Code.

          6.          Return of Shares to Pledgor.  Upon payment in full of all principal and interest on the Note, this Agreement shall terminate and the Secured Party shall return to the Pledgor all of the then remaining Shares.

          7.          Voting Rights.

          (a)          For so long as any of the obligations secured hereby remain unpaid, after a Default, (i) the Secured Party may exercise all voting rights, and all other ownership or consensual rights of the Shares, but under no circumstances is the Secured Party obligated by the terms of this Agreement to exercise such rights, and (ii) the Pledgor hereby appoints the Secured Party the Pledgor’s true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote the Shares in any manner the Secured Party seems advisable for or against all matters submitted or which nay be submitted to a vote of shareholders.  The power-of-attorney granted hereby is coupled with an interest and shall be irrevocable.

          (b)          For so long as the Pledgor shall have the right to vote the Shares, the Pledgor covenants and agrees that it will not, without the prior written consent of the Secured Party, vote or take any consensual action with respect to the Shares which would constitute a default under this Agreement.

          8.          Assignment.  The Pledgor shall not transfer, assign or otherwise dispose of its beneficial interest in any of the Shares without the prior written consent of the Secured Party.

          9.          Notices.  Any notices or other communications required or permitted by this Agreement shall be in writing and shall be deemed to have been duly given and delivered when delivered in person, when mailed postage prepaid by registered or certified mail with return receipt requested, or when delivered by overnight delivery service to the recipient at the address set forth below, or to such other address as to which the other party has been subsequently notified in writing by such recipient.

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Pledgor:	Secured Party:
Boland T. Jones	PTEK Holdings, Inc.
229 The Prado	3399 Peachtree Road
Atlanta, GA 30309	The Lenox Building, Suite 600
	Atlanta, GA 30326
	Attention: Chief Legal Officer

          10.          Applicable Law; Binding Agreement.  The provisions of this Agreement shall be construed and interpreted, and all rights and obligations of the parties hereto determined, in accordance with the laws of the State of Georgia.  This Agreement, together with all documents referred to herein, constitutes the entire agreement between the Pledgor and the Secured Party with respect to the matters addressed herein and may not be modified except by a writing executed by the Secured Party and Pledgor.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which, taken together, shall constitute one and the same instrument.

          11.          Severability.  If any Section or part thereof shall for any reason be held or adjudged to be invalid, illegal or unenforceable by any court of competent jurisdiction, such Section or part thereof so adjudicated invalid, illegal or unenforceable shall be deemed separate, distinct and independent, and the remainder of this Agreement shall remain in full force and effect and shall not be affected by such holding or adjudication.

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

PLEDGOR:
/s/ BOLAND T. JONES
Boland T. Jones
SECURED PARTY:
PTEK HOLDINGS, INC.
By:	/s/ PATRICK G. JONES
	Patrick G. Jones Executive Vice President

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EX-10.58

EXHIBIT 10.58

STOCK PLEDGE AGREEMENT

          THIS STOCK PLEDGE AGREEMENT is made and entered into as of the 3rd day of January, 2002, by and between JEFFREY A. ALLRED (the “Pledgor”) and PTEK HOLDINGS, INC., Georgia corporation (the “Secured Party”).

W I T N E S S E T H:

          WHEREAS, the Pledgor has been granted 455,540 shares of the $.01 par value common stock (the “Shares”) of Secured Party pursuant to that certain Restricted Stock Award Agreement dated December 28, 2001 (the “RSA Agreement”); and

          WHEREAS, in connection with such grant, Pledgor has delivered a Promissory Note of even date herewith (the “Note”) to the Secured Party in the principal amount of $265,570.50; and

          WHEREAS, to secure the payment of all obligations of the Pledgor under the Note, the Pledgor has agreed to pledge to the Secured Party, and to grant the Secured Party a security interest in, all of the Shares;

          NOW, THEREFORE, for and in consideration of the premises and the agreements and covenants contained herein, the parties hereto agree as follows:

          1.          Security Interest.  The Pledgor hereby unconditionally grants and assigns to the Secured Party, its successors and assigns, a continuing security interest in and security title to the Shares.  The Pledgor has delivered to and deposited with the Secured Party certificates representing the Shares and stock powers endorsed in blank, as security for payment of (i) all obligations of the Pledgor to the Secured Party under the Note, and any extension, renewal, amendment or modification thereof, and (ii) all obligations of the Pledgor to the Secured Party hereunder. Beneficial ownership of the Shares, including, without limitation, all voting, consensual and dividend rights, shall remain in the Pledgor until the occurrence of a Default pursuant to Section 3 hereof.

          2.          Representation and Warranty.   The Pledgor hereby represents and warrants to the Secured party that except for the security interest created hereby, the Pledgor owns the Shares free and clear of all liens, claims and encumbrances, and has the unencumbered right to pledge the Shares, subject to the terms and conditions of the RSA Agreement.

          3.          Default.  Upon the occurrence of an Event of Default under the Note, or if the Pledgor shall fail to perform or observe any provision of this Agreement and such failure shall continue for thirty (30) days after notice is given by the Secured Party to the Pledgor of such failure (any of such occurrences being hereinafter referred to as a “Default”), the Secured Party shall be entitled, without limitation, to exercise the following rights, which the Pledgor hereby agrees to be commercially reasonable:

          (a)          to receive all amounts payable in respect of the Shares otherwise payable to the Pledgor, and to exercise all of the rights, powers and remedies of the Pledgor with respect to such payments;

          (b)          to transfer all or any part of the Shares into the Secured Party’s name or the name of its nominee or nominees;

          (c)          to vote all or any part of the Shares (whether or not transferred into the name of the Secured Party) and give all consents, waivers and ratifications in respect of the Shares and otherwise act with respect thereto as though it were the outright owner thereof;

          (d)          at any time or from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Shares in one or more blocks, or any interest therein, at any public or private sale at any exchange or elsewhere, without demand of performance, advertisement or notice of intention to sell or of the time or place of sale or adjournment thereof (all of which are hereby expressly and irrevocably waived by the Pledgor), for cash, on credit or for other property, for immediate or future delivery without any assumption of credit risk, and for such price or prices and on such terms as the Secured Party in its sole discretion may determine; the Pledgor agrees that to the extent that notice of sale shall be required by law that at least five (5) business days’ notice to the Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification; the Secured Party shall not be obligated to make any sale of the Shares regardless of notice of sale having been given; the Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and any such sale may, without further notice, be made at the time and place to which it was so adjourned; the Pledgor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Shares, whether before or after sale hereunder, and all rights, if any, of marshalling the Shares; at any such sale, unless prohibited by applicable law, the Secured Party may bid for and purchase all or any part of the Shares so sold free from any such right or equity of redemption; and the Secured Party shall not be liable for failure to collect or realize upon any or all of the Shares or for any delay in so doing nor shall any of them be under any obligation to take any action whatsoever with regard thereto; and

          (e)          generally, to take all such other action as the Secured Party in its sole discretion may determined as incidental or conducive to any of the matters or powers mentioned in the foregoing provisions of this Section 3 and which the Secured Party may or can be do lawfully and to use the name of the Pledgor for the purposes aforesaid and in any proceedings arising therefrom.

          4.          Application of Proceeds.  The proceeds of the public or private sale or other disposition shall be applied (a) to the costs incurred in connection with the sale; (b) to any unpaid interest which may have accrued on any obligations secured hereby; (c) to any unpaid principal on any obligations secured hereby; and (d) to damages incurred by the Secured Party by reason of any breach secured against hereby, in such order as the Secured Party may determine, and any remaining proceeds shall be paid over to the Pledgor or others as provided by law.  In the event

2

 the proceeds of the sale or other disposition of the Shares are insufficient to pay such expenses, interest, principal, obligations and damages, the Pledgor shall remain liable to the Secured Party for any such deficiency.

          5.          Additional Rights of Secured Party.  In addition to its rights and privileges under this Agreement, the Secured Party shall have all the rights, powers and privileges of a secured party under the Georgia Uniform Commercial Code.

          6.          Return of Shares to Pledgor.  Upon payment in full of all principal and interest on the Note, this Agreement shall terminate and the Secured Party shall return to the Pledgor all of the then remaining Shares.

          7.          Voting Rights.

          (a)          For so long as any of the obligations secured hereby remain unpaid, after a Default, (i) the Secured Party may exercise all voting rights, and all other ownership or consensual rights of the Shares, but under no circumstances is the Secured Party obligated by the terms of this Agreement to exercise such rights, and (ii) the Pledgor hereby appoints the Secured Party the Pledgor’s true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote the Shares in any manner the Secured Party seems advisable for or against all matters submitted or which nay be submitted to a vote of shareholders.  The power-of-attorney granted hereby is coupled with an interest and shall be irrevocable.

          (b)          For so long as the Pledgor shall have the right to vote the Shares, the Pledgor covenants and agrees that it will not, without the prior written consent of the Secured Party, vote or take any consensual action with respect to the Shares which would constitute a default under this Agreement.

          8.          Assignment.  The Pledgor shall not transfer, assign or otherwise dispose of its beneficial interest in any of the Shares without the prior written consent of the Secured Party.

          9.          Notices.  Any notices or other communications required or permitted by this Agreement shall be in writing and shall be deemed to have been duly given and delivered when delivered in person, when mailed postage prepaid by registered or certified mail with return receipt requested, or when delivered by overnight delivery service to the recipient at the address set forth below, or to such other address as to which the other party has been subsequently notified in writing by such recipient.

3

Pledgor:	Secured Party:
Jeffrey A. Allred	PTEK Holdings, Inc.
100 Inman Circle	3399 Peachtree Road
Atlanta, GA 30309	The Lenox Building, Suite 600
	Atlanta, GA 30326
	Attention: Chief Legal Officer

          10.          Applicable Law; Binding Agreement.  The provisions of this Agreement shall be construed and interpreted, and all rights and obligations of the parties hereto determined, in accordance with the laws of the State of Georgia.  This Agreement, together with all documents referred to herein, constitutes the entire agreement between the Pledgor and the Secured Party with respect to the matters addressed herein and may not be modified except by a writing executed by the Secured Party and Pledgor.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which, taken together, shall constitute one and the same instrument.

          11.          Severability.  If any Section or part thereof shall for any reason be held or adjudged to be invalid, illegal or unenforceable by any court of competent jurisdiction, such Section or part thereof so adjudicated invalid, illegal or unenforceable shall be deemed separate, distinct and independent, and the remainder of this Agreement shall remain in full force and effect and shall not be affected by such holding or adjudication.

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

PLEDGOR:
/s/ JEFFREY A. ALLRED
Jeffrey A. Allred
SECURED PARTY:
PTEK HOLDINGS, INC.
By:	/s/ PATRICK G. JONES
	Patrick G. Jones Executive Vice President

4

EX-10.59

EXHIBIT 10.59

STOCK PLEDGE AGREEMENT

          THIS STOCK PLEDGE AGREEMENT is made and entered into as of the 3rd day of January, 2002, by and between PATRICK G. JONES (the “Pledgor”) and PTEK HOLDINGS, INC., Georgia corporation (the “Secured Party”).

W I T N E S S E T H:

          WHEREAS, the Pledgor has been granted 96,000 shares of the $.01 par value common stock (the “Shares”) of Secured Party pursuant to that certain Restricted Stock Award Agreement dated December 28, 2001 (the “RSA Agreement”); and

          WHEREAS, in connection with such grant, Pledgor has delivered a Promissory Note of even date herewith (the “Note”) to the Secured Party in the principal amount of $68,846.46; and

          WHEREAS, to secure the payment of all obligations of the Pledgor under the Note, the Pledgor has agreed to pledge to the Secured Party, and to grant the Secured Party a security interest in, all of the Shares;

          NOW, THEREFORE, for and in consideration of the premises and the agreements and covenants contained herein, the parties hereto agree as follows:

          1.          Security Interest.  The Pledgor hereby unconditionally grants and assigns to the Secured Party, its successors and assigns, a continuing security interest in and security title to the Shares.  The Pledgor has delivered to and deposited with the Secured Party certificates representing the Shares and stock powers endorsed in blank, as security for payment of (i) all obligations of the Pledgor to the Secured Party under the Note, and any extension, renewal, amendment or modification thereof, and (ii) all obligations of the Pledgor to the Secured Party hereunder. Beneficial ownership of the Shares, including, without limitation, all voting, consensual and dividend rights, shall remain in the Pledgor until the occurrence of a Default pursuant to Section 3 hereof.

          2.          Representation and Warranty.   The Pledgor hereby represents and warrants to the Secured party that except for the security interest created hereby, the Pledgor owns the Shares free and clear of all liens, claims and encumbrances, and has the unencumbered right to pledge the Shares, subject to the terms and conditions of the RSA Agreement.

          3.          Default.  Upon the occurrence of an Event of Default under the Note, or if the Pledgor shall fail to perform or observe any provision of this Agreement and such failure shall continue for thirty (30) days after notice is given by the Secured Party to the Pledgor of such failure (any of such occurrences being hereinafter referred to as a “Default”), the Secured Party shall be entitled, without limitation, to exercise the following rights, which the Pledgor hereby agrees to be commercially reasonable:

          (a)          to receive all amounts payable in respect of the Shares otherwise payable to the Pledgor, and to exercise all of the rights, powers and remedies of the Pledgor with respect to such payments;

          (b)          to transfer all or any part of the Shares into the Secured Party’s name or the name of its nominee or nominees;

          (c)          to vote all or any part of the Shares (whether or not transferred into the name of the Secured Party) and give all consents, waivers and ratifications in respect of the Shares and otherwise act with respect thereto as though it were the outright owner thereof;

          (d)          at any time or from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Shares in one or more blocks, or any interest therein, at any public or private sale at any exchange or elsewhere, without demand of performance, advertisement or notice of intention to sell or of the time or place of sale or adjournment thereof (all of which are hereby expressly and irrevocably waived by the Pledgor), for cash, on credit or for other property, for immediate or future delivery without any assumption of credit risk, and for such price or prices and on such terms as the Secured Party in its sole discretion may determine; the Pledgor agrees that to the extent that notice of sale shall be required by law that at least five (5) business days’ notice to the Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification; the Secured Party shall not be obligated to make any sale of the Shares regardless of notice of sale having been given; the Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and any such sale may, without further notice, be made at the time and place to which it was so adjourned; the Pledgor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Shares, whether before or after sale hereunder, and all rights, if any, of marshalling the Shares; at any such sale, unless prohibited by applicable law, the Secured Party may bid for and purchase all or any part of the Shares so sold free from any such right or equity of redemption; and the Secured Party shall not be liable for failure to collect or realize upon any or all of the Shares or for any delay in so doing nor shall any of them be under any obligation to take any action whatsoever with regard thereto; and

          (e)          generally, to take all such other action as the Secured Party in its sole discretion may determined as incidental or conducive to any of the matters or powers mentioned in the foregoing provisions of this Section 3 and which the Secured Party may or can be do lawfully and to use the name of the Pledgor for the purposes aforesaid and in any proceedings arising therefrom.

          4.          Application of Proceeds.  The proceeds of the public or private sale or other disposition shall be applied (a) to the costs incurred in connection with the sale; (b) to any unpaid interest which may have accrued on any obligations secured hereby; (c) to any unpaid principal on any obligations secured hereby; and (d) to damages incurred by the Secured Party by reason of any breach secured against hereby, in such order as the Secured Party may determine, and any remaining proceeds shall be paid over to the Pledgor or others as provided by law.  In the event

2

the proceeds of the sale or other disposition of the Shares are insufficient to pay such expenses, interest, principal, obligations and damages, the Pledgor shall remain liable to the Secured Party for any such deficiency.

          5.          Additional Rights of Secured Party.  In addition to its rights and privileges under this Agreement, the Secured Party shall have all the rights, powers and privileges of a secured party under the Georgia Uniform Commercial Code.

          6.          Return of Shares to Pledgor.  Upon payment in full of all principal and interest on the Note, this Agreement shall terminate and the Secured Party shall return to the Pledgor all of the then remaining Shares.

          7.          Voting Rights.

          (a)          For so long as any of the obligations secured hereby remain unpaid, after a Default, (i) the Secured Party may exercise all voting rights, and all other ownership or consensual rights of the Shares, but under no circumstances is the Secured Party obligated by the terms of this Agreement to exercise such rights, and (ii) the Pledgor hereby appoints the Secured Party the Pledgor’s true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote the Shares in any manner the Secured Party seems advisable for or against all matters submitted or which nay be submitted to a vote of shareholders.  The power-of-attorney granted hereby is coupled with an interest and shall be irrevocable.

          (b)          For so long as the Pledgor shall have the right to vote the Shares, the Pledgor covenants and agrees that it will not, without the prior written consent of the Secured Party, vote or take any consensual action with respect to the Shares which would constitute a default under this Agreement.

          8.          Assignment.  The Pledgor shall not transfer, assign or otherwise dispose of its beneficial interest in any of the Shares without the prior written consent of the Secured Party.

          9.          Notices.  Any notices or other communications required or permitted by this Agreement shall be in writing and shall be deemed to have been duly given and delivered when delivered in person, when mailed postage prepaid by registered or certified mail with return receipt requested, or when delivered by overnight delivery service to the recipient at the address set forth below, or to such other address as to which the other party has been subsequently notified in writing by such recipient.

3

Pledgor:	Secured Party:
Patrick G. Jones	PTEK Holdings, Inc.
155 Helmsley Drive	3399 Peachtree Road
Atlanta, GA 30327	The Lenox Building, Suite 600
	Atlanta, GA 30326
	Attention: Chief Legal Officer

          10.          Applicable Law; Binding Agreement.  The provisions of this Agreement shall be construed and interpreted, and all rights and obligations of the parties hereto determined, in accordance with the laws of the State of Georgia.  This Agreement, together with all documents referred to herein, constitutes the entire agreement between the Pledgor and the Secured Party with respect to the matters addressed herein and may not be modified except by a writing executed by the Secured Party and Pledgor.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which, taken together, shall constitute one and the same instrument.

          11.          Severability.  If any Section or part thereof shall for any reason be held or adjudged to be invalid, illegal or unenforceable by any court of competent jurisdiction, such Section or part thereof so adjudicated invalid, illegal or unenforceable shall be deemed separate, distinct and independent, and the remainder of this Agreement shall remain in full force and effect and shall not be affected by such holding or adjudication.

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

PLEDGOR:
/s/ PATRICK G. JONES
Patrick G. Jones
SECURED PARTY:
PTEK HOLDINGS, INC.
By:	/s/ PATRICK G. JONES
	Patrick G. Jones Executive Vice President

4

EX-10.60

EXHIBIT 10. 60

STOCK PLEDGE AGREEMENT

          THIS STOCK PLEDGE AGREEMENT is made and entered into as of the 3rd day of January, 2002, by and between RICHARD J. BUYENS (the “Pledgor”) and PTEK HOLDINGS, INC., Georgia corporation (the “Secured Party”).

W I T N E S S E T H:

          WHEREAS, the Pledgor has been granted 1,000 shares of the $.01 par value common stock (the “Shares”) of Secured Party pursuant to that certain Restricted Stock Award Agreement dated November 27, 2001 (the “RSA Agreement”); and

          WHEREAS, in connection with such grant, Pledgor has delivered a Promissory Note of even date herewith (the “Note”) to the Secured Party in the principal amount of $1,344.68; and

          WHEREAS, to secure the payment of all obligations of the Pledgor under the Note, the Pledgor has agreed to pledge to the Secured Party, and to grant the Secured Party a security interest in, all of the Shares;

          NOW, THEREFORE, for and in consideration of the premises and the agreements and covenants contained herein, the parties hereto agree as follows:

          1.          Security Interest.  The Pledgor hereby unconditionally grants and assigns to the Secured Party, its successors and assigns, a continuing security interest in and security title to the Shares.  The Pledgor has delivered to and deposited with the Secured Party certificates representing the Shares and stock powers endorsed in blank, as security for payment of (i) all obligations of the Pledgor to the Secured Party under the Note, and any extension, renewal, amendment or modification thereof, and (ii) all obligations of the Pledgor to the Secured Party hereunder. Beneficial ownership of the Shares, including, without limitation, all voting, consensual and dividend rights, shall remain in the Pledgor until the occurrence of a Default pursuant to Section 3 hereof.

          2.          Representation and Warranty.   The Pledgor hereby represents and warrants to the Secured party that except for the security interest created hereby, the Pledgor owns the Shares free and clear of all liens, claims and encumbrances, and has the unencumbered right to pledge the Shares, subject to the terms and conditions of the RSA Agreement.

          3.          Default.  Upon the occurrence of an Event of Default under the Note, or if the Pledgor shall fail to perform or observe any provision of this Agreement and such failure shall continue for thirty (30) days after notice is given by the Secured Party to the Pledgor of such failure (any of such occurrences being hereinafter referred to as a “Default”), the Secured Party shall be entitled, without limitation, to exercise the following rights, which the Pledgor hereby agrees to be commercially reasonable:

          (a)          to receive all amounts payable in respect of the Shares otherwise payable to the Pledgor, and to exercise all of the rights, powers and remedies of the Pledgor with respect to such payments;

          (b)          to transfer all or any part of the Shares into the Secured Party’s name or the name of its nominee or nominees;

          (c)          to vote all or any part of the Shares (whether or not transferred into the name of the Secured Party) and give all consents, waivers and ratifications in respect of the Shares and otherwise act with respect thereto as though it were the outright owner thereof;

          (d)          at any time or from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Shares in one or more blocks, or any interest therein, at any public or private sale at any exchange or elsewhere, without demand of performance, advertisement or notice of intention to sell or of the time or place of sale or adjournment thereof (all of which are hereby expressly and irrevocably waived by the Pledgor), for cash, on credit or for other property, for immediate or future delivery without any assumption of credit risk, and for such price or prices and on such terms as the Secured Party in its sole discretion may determine; the Pledgor agrees that to the extent that notice of sale shall be required by law that at least five (5) business days’ notice to the Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification; the Secured Party shall not be obligated to make any sale of the Shares regardless of notice of sale having been given; the Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and any such sale may, without further notice, be made at the time and place to which it was so adjourned; the Pledgor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Shares, whether before or after sale hereunder, and all rights, if any, of marshalling the Shares; at any such sale, unless prohibited by applicable law, the Secured Party may bid for and purchase all or any part of the Shares so sold free from any such right or equity of redemption; and the Secured Party shall not be liable for failure to collect or realize upon any or all of the Shares or for any delay in so doing nor shall any of them be under any obligation to take any action whatsoever with regard thereto; and

          (e)          generally, to take all such other action as the Secured Party in its sole discretion may determined as incidental or conducive to any of the matters or powers mentioned in the foregoing provisions of this Section 3 and which the Secured Party may or can be do lawfully and to use the name of the Pledgor for the purposes aforesaid and in any proceedings arising therefrom.

          4.          Application of Proceeds.  The proceeds of the public or private sale or other disposition shall be applied (a) to the costs incurred in connection with the sale; (b) to any unpaid interest which may have accrued on any obligations secured hereby; (c) to any unpaid principal on any obligations secured hereby; and (d) to damages incurred by the Secured Party by reason of any breach secured against hereby, in such order as the Secured Party may determine, and any

2

remaining proceeds shall be paid over to the Pledgor or others as provided by law.  In the event the proceeds of the sale or other disposition of the Shares are insufficient to pay such expenses, interest, principal, obligations and damages, the Pledgor shall remain liable to the Secured Party for any such deficiency.

          5.          Additional Rights of Secured Party.  In addition to its rights and privileges under this Agreement, the Secured Party shall have all the rights, powers and privileges of a secured party under the Georgia Uniform Commercial Code.

          6.          Return of Shares to Pledgor.  Upon payment in full of all principal and interest on the Note, this Agreement shall terminate and the Secured Party shall return to the Pledgor all of the then remaining Shares.

          7.          Voting Rights.

          (a)          For so long as any of the obligations secured hereby remain unpaid, after a Default, (i) the Secured Party may exercise all voting rights, and all other ownership or consensual rights of the Shares, but under no circumstances is the Secured Party obligated by the terms of this Agreement to exercise such rights, and (ii) the Pledgor hereby appoints the Secured Party the Pledgor’s true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote the Shares in any manner the Secured Party seems advisable for or against all matters submitted or which nay be submitted to a vote of shareholders.  The power-of-attorney granted hereby is coupled with an interest and shall be irrevocable.

          (b)          For so long as the Pledgor shall have the right to vote the Shares, the Pledgor covenants and agrees that it will not, without the prior written consent of the Secured Party, vote or take any consensual action with respect to the Shares which would constitute a default under this Agreement.

          8.          Assignment.  The Pledgor shall not transfer, assign or otherwise dispose of its beneficial interest in any of the Shares without the prior written consent of the Secured Party.

          9.          Notices.  Any notices or other communications required or permitted by this Agreement shall be in writing and shall be deemed to have been duly given and delivered when delivered in person, when mailed postage prepaid by registered or certified mail with return receipt requested, or when delivered by overnight delivery service to the recipient at the address set forth below, or to such other address as to which the other party has been subsequently notified in writing by such recipient.

3

Pledgor:	Secured Party:
Richard J. Buyens	PTEK Holdings, Inc.
101 Avery Drive	3399 Peachtree Road
Atlanta, GA 30309	The Lenox Building, Suite 600
	Atlanta, GA 30326
	Attention: Chief Legal Officer

          10.          Applicable Law; Binding Agreement.  The provisions of this Agreement shall be construed and interpreted, and all rights and obligations of the parties hereto determined, in accordance with the laws of the State of Georgia.  This Agreement, together with all documents referred to herein, constitutes the entire agreement between the Pledgor and the Secured Party with respect to the matters addressed herein and may not be modified except by a writing executed by the Secured Party and Pledgor.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which, taken together, shall constitute one and the same instrument.

          11.          Severability.  If any Section or part thereof shall for any reason be held or adjudged to be invalid, illegal or unenforceable by any court of competent jurisdiction, such Section or part thereof so adjudicated invalid, illegal or unenforceable shall be deemed separate, distinct and independent, and the remainder of this Agreement shall remain in full force and effect and shall not be affected by such holding or adjudication.

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

PLEDGOR:
/s/ RICHARD J. BUYENS
Richard J. Buyens
SECURED PARTY:
PTEK HOLDINGS, INC.
By:	/s/ PATRICK G. JONES
	Patrick G. Jones Executive Vice President

4

EX-10.61

EXHIBIT 10. 61

STOCK PLEDGE AGREEMENT

          THIS STOCK PLEDGE AGREEMENT is made and entered into as of the 3rd day of January, 2002, by and between THEODORE P. SCHRAFFT (the “Pledgor”) and PTEK HOLDINGS, INC., Georgia corporation (the “Secured Party”).

W I T N E S S E T H:

          WHEREAS, the Pledgor has been granted 82,456 shares of the $.01 par value common stock (the “Shares”) of Secured Party pursuant to that certain Restricted Stock Award Agreement dated December 28, 2001 (the “RSA Agreement”); and

          WHEREAS, in connection with such grant, Pledgor has delivered a Promissory Note of even date herewith (the “Note”) to the Secured Party in the principal amount of $72,453.28; and

          WHEREAS, to secure the payment of all obligations of the Pledgor under the Note, the Pledgor has agreed to pledge to the Secured Party, and to grant the Secured Party a security interest in, all of the Shares;

          NOW, THEREFORE, for and in consideration of the premises and the agreements and covenants contained herein, the parties hereto agree as follows:

          1.          Security Interest.  The Pledgor hereby unconditionally grants and assigns to the Secured Party, its successors and assigns, a continuing security interest in and security title to the Shares.  The Pledgor has delivered to and deposited with the Secured Party certificates representing the Shares and stock powers endorsed in blank, as security for payment of (i) all obligations of the Pledgor to the Secured Party under the Note, and any extension, renewal, amendment or modification thereof, and (ii) all obligations of the Pledgor to the Secured Party hereunder. Beneficial ownership of the Shares, including, without limitation, all voting, consensual and dividend rights, shall remain in the Pledgor until the occurrence of a Default pursuant to Section 3 hereof.

          2.          Representation and Warranty.   The Pledgor hereby represents and warrants to the Secured party that except for the security interest created hereby, the Pledgor owns the Shares free and clear of all liens, claims and encumbrances, and has the unencumbered right to pledge the Shares, subject to the terms and conditions of the RSA Agreement.

          3.          Default.  Upon the occurrence of an Event of Default under the Note, or if the Pledgor shall fail to perform or observe any provision of this Agreement and such failure shall continue for thirty (30) days after notice is given by the Secured Party to the Pledgor of such failure (any of such occurrences being hereinafter referred to as a “Default”), the Secured Party shall be entitled, without limitation, to exercise the following rights, which the Pledgor hereby agrees to be commercially reasonable:

          (a)          to receive all amounts payable in respect of the Shares otherwise payable to the Pledgor, and to exercise all of the rights, powers and remedies of the Pledgor with respect to such payments;

          (b)          to transfer all or any part of the Shares into the Secured Party’s name or the name of its nominee or nominees;

          (c)          to vote all or any part of the Shares (whether or not transferred into the name of the Secured Party) and give all consents, waivers and ratifications in respect of the Shares and otherwise act with respect thereto as though it were the outright owner thereof;

          (d)          at any time or from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Shares in one or more blocks, or any interest therein, at any public or private sale at any exchange or elsewhere, without demand of performance, advertisement or notice of intention to sell or of the time or place of sale or adjournment thereof (all of which are hereby expressly and irrevocably waived by the Pledgor), for cash, on credit or for other property, for immediate or future delivery without any assumption of credit risk, and for such price or prices and on such terms as the Secured Party in its sole discretion may determine; the Pledgor agrees that to the extent that notice of sale shall be required by law that at least five (5) business days’ notice to the Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification; the Secured Party shall not be obligated to make any sale of the Shares regardless of notice of sale having been given; the Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and any such sale may, without further notice, be made at the time and place to which it was so adjourned; the Pledgor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Shares, whether before or after sale hereunder, and all rights, if any, of marshalling the Shares; at any such sale, unless prohibited by applicable law, the Secured Party may bid for and purchase all or any part of the Shares so sold free from any such right or equity of redemption; and the Secured Party shall not be liable for failure to collect or realize upon any or all of the Shares or for any delay in so doing nor shall any of them be under any obligation to take any action whatsoever with regard thereto; and

          (e)          generally, to take all such other action as the Secured Party in its sole discretion may determined as incidental or conducive to any of the matters or powers mentioned in the foregoing provisions of this Section 3 and which the Secured Party may or can be do lawfully and to use the name of the Pledgor for the purposes aforesaid and in any proceedings arising therefrom.

          4.          Application of Proceeds.  The proceeds of the public or private sale or other disposition shall be applied (a) to the costs incurred in connection with the sale; (b) to any unpaid interest which may have accrued on any obligations secured hereby; (c) to any unpaid principal on any obligations secured hereby; and (d) to damages incurred by the Secured Party by reason of any breach secured against hereby, in such order as the Secured Party may determine, and any remaining proceeds shall be paid over to the Pledgor or others as provided by law.  In the event

2

the proceeds of the sale or other disposition of the Shares are insufficient to pay such expenses, interest, principal, obligations and damages, the Pledgor shall remain liable to the Secured Party for any such deficiency.

          5.          Additional Rights of Secured Party.  In addition to its rights and privileges under this Agreement, the Secured Party shall have all the rights, powers and privileges of a secured party under the Georgia Uniform Commercial Code.

          6.          Return of Shares to Pledgor.  Upon payment in full of all principal and interest on the Note, this Agreement shall terminate and the Secured Party shall return to the Pledgor all of the then remaining Shares.

          7.          Voting Rights.

          (a)          For so long as any of the obligations secured hereby remain unpaid, after a Default, (i) the Secured Party may exercise all voting rights, and all other ownership or consensual rights of the Shares, but under no circumstances is the Secured Party obligated by the terms of this Agreement to exercise such rights, and (ii) the Pledgor hereby appoints the Secured Party the Pledgor’s true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote the Shares in any manner the Secured Party seems advisable for or against all matters submitted or which nay be submitted to a vote of shareholders.  The power-of-attorney granted hereby is coupled with an interest and shall be irrevocable.

          (b)          For so long as the Pledgor shall have the right to vote the Shares, the Pledgor covenants and agrees that it will not, without the prior written consent of the Secured Party, vote or take any consensual action with respect to the Shares which would constitute a default under this Agreement.

          8.          Assignment.  The Pledgor shall not transfer, assign or otherwise dispose of its beneficial interest in any of the Shares without the prior written consent of the Secured Party.

          9.          Notices.  Any notices or other communications required or permitted by this Agreement shall be in writing and shall be deemed to have been duly given and delivered when delivered in person, when mailed postage prepaid by registered or certified mail with return receipt requested, or when delivered by overnight delivery service to the recipient at the address set forth below, or to such other address as to which the other party has been subsequently notified in writing by such recipient.

3

Pledgor:	Secured Party:
Theodore P. Schrafft	PTEK Holdings, Inc.
315 Majestic Cove	3399 Peachtree Road
Alpharetta, GA 30004	The Lenox Building, Suite 600
	Atlanta, GA 30326
	Attention: Chief Legal Officer

          10.          Applicable Law; Binding Agreement.  The provisions of this Agreement shall be construed and interpreted, and all rights and obligations of the parties hereto determined, in accordance with the laws of the State of Georgia.  This Agreement, together with all documents referred to herein, constitutes the entire agreement between the Pledgor and the Secured Party with respect to the matters addressed herein and may not be modified except by a writing executed by the Secured Party and Pledgor.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which, taken together, shall constitute one and the same instrument.

          11.          Severability.  If any Section or part thereof shall for any reason be held or adjudged to be invalid, illegal or unenforceable by any court of competent jurisdiction, such Section or part thereof so adjudicated invalid, illegal or unenforceable shall be deemed separate, distinct and independent, and the remainder of this Agreement shall remain in full force and effect and shall not be affected by such holding or adjudication.

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

PLEDGOR:
/s/ THEODORE P. SCHRAFFT
Theodore P. Schrafft
SECURED PARTY:
PTEK HOLDINGS, INC.
By:	/s/ PATRICK G. JONES
	Patrick G. Jones Executive Vice President

4

EX-10.62

EXHIBIT 10.62

PROMISSORY NOTE

$140,071.61 January 3, 2002

          BOLAND T. JONES (hereinafter referred to as “Debtor”), for value received, hereby promises to pay to the order of PTEK HOLDINGS, INC., a Georgia corporation (hereinafter referred to as “Payee”), the principal sum of ONE HUNDRED FORTY THOUSAND SEVENTY-ONE AND 61/100 DOLLARS ($140,071.61) on January 3, 2012, together with interest on the unpaid principal balance at the rate of five and forty-six hundredths percent (5.46%)per annum, compounded annually. Any principal of or interest on this Note not paid when due shall bear interest after such due date until paid at the rate of seven and forty-six hundredths percent (7.46%) per annum, and Debtor shall pay all costs of collection.  The principal hereof and the interest thereon are payable at 3399 Peachtree Road, The Lenox Building, Suite 600, Atlanta, Georgia 30326, or at such other place as Payee may from time to time designate to Debtor in writing, in coin or currency of the United States of America.

          Prepayment. Debtor may, at any time and from time to time, prepay all or any portion of the principal of this Note remaining unpaid, without penalty or premium.  In the event Debtor sells any of the shares of $.01 par value common stock of Payee that are held by Payee pursuant to the Stock Pledge Agreement described below, Debtor shall prepay a portion of this Note in an amount equal to the after-tax proceeds received by Debtor from the sale of such shares. Prepayments shall be applied first to the payment of accrued but unpaid interest on this Note and the balance to principal.

          Events of Default.  If any of the following events (an “Event of Default”) shall occur and be continuing for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or otherwise), then this Note shall thereupon be and become due and payable, without any further notice or demand of any kind whatsoever, all of which are hereby expressly waived:

          (a)          If Debtor defaults in the payment of principal or interest on this Note when and as the same shall become due and payable and such default continues for twenty (20) days after Debtor receives notice from Payee of such default; or

          (b)          If Debtor makes an assignment for the benefit of creditors or admits in writing his inability to pay his debts generally as they become due; or

          (c)          If an order, judgment or decree is entered adjudicating Debtor bankrupt or insolvent; or

          (d)          If Debtor petitions or applies to any tribunal for the appointment of a trustee or receiver of Debtor, or of any substantial part of the assets of Debtor, or commences any proceedings relating to Debtor under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect; or

          (e)          If any such petition or application is filed, or any such proceedings are commenced, against Debtor, and Debtor by any act indicates his approval thereof, consent thereto, or acquiescence therein, or an order is entered appointing any such trustee or receiver, or approving the petition in any such proceedings, and such order remains unstayed and in effect for more than ninety (90) days.

          Security.  This Note is secured by a pledge of shares of $.01 par value common stock of Payee pursuant to that certain Stock Pledge Agreement by and between Payee and Debtor of even date herewith, which shares were received by Payee pursuant to that certain Restricted Stock Award Agreement by and between Payee and Debtor dated December 28, 2001.

          Waiver.  Any failure on the part of Payee at any time to require the performance by Debtor of any of the terms or provisions hereof, even if known, shall in no way affect the right thereafter to enforce the same, nor shall any failure of Payee to insist on strict compliance with the terms and conditions hereof be taken or held to be a waiver of any succeeding breach or of the right of Payee to insist on strict compliance with the terms and conditions hereof.

          Time.  Time is of the essence.

          Notices.  All notices, requests, demands and other communications to Debtor hereunder shall be in writing and shall be deemed to have been duly given and delivered when delivered in person, when mailed postage prepaid by registered or certified mail with return receipt requested, or when delivered by overnight delivery service to 229 The Prado, Atlanta, Georgia 30309, or to such other address as Debtor may designate to Payee in writing.

          Applicable Law.  This Note shall be governed by, and enforced and interpreted in accordance with, the laws of the State of Georgia.

          IN WITNESS WHEREOF, Debtor has executed this Note under seal as of the date first set forth above.

/s/ BOLAND T. JONES (L.S.)

Boland T. Jones

2

EX-10.63

EXHIBIT 10.63

PROMISSORY NOTE

$265,570.50 January 3, 2002

          JEFFREY A. ALLRED (hereinafter referred to as “Debtor”), for value received, hereby promises to pay to the order of PTEK HOLDINGS, INC., a Georgia corporation (hereinafter referred to as “Payee”), the principal sum of TWO HUNDRED SIXTY-FIVE THOUSAND FIVE HUNDRED SEVENTY AND 50/100 DOLLARS ($265,570.50) on January 3, 2012, together with interest on the unpaid principal balance at the rate of five and forty-six hundredths percent (5.46%)per annum, compounded annually. Any principal of or interest on this Note not paid when due shall bear interest after such due date until paid at the rate of seven and forty-six hundredths percent (7.46%) per annum, and Debtor shall pay all costs of collection.  The principal hereof and the interest thereon are payable at 3399 Peachtree Road, The Lenox Building, Suite 600, Atlanta, Georgia 30326, or at such other place as Payee may from time to time designate to Debtor in writing, in coin or currency of the United States of America.

          Prepayment. Debtor may, at any time and from time to time, prepay all or any portion of the principal of this Note remaining unpaid, without penalty or premium.  In the event Debtor sells any of the shares of $.01 par value common stock of Payee that are held by Payee pursuant to the Stock Pledge Agreement described below, Debtor shall prepay a portion of this Note in an amount equal to the after-tax proceeds received by Debtor from the sale of such shares. Prepayments shall be applied first to the payment of accrued but unpaid interest on this Note and the balance to principal.

          Events of Default.  If any of the following events (an “Event of Default”) shall occur and be continuing for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or otherwise), then this Note shall thereupon be and become due and payable, without any further notice or demand of any kind whatsoever, all of which are hereby expressly waived:

          (a)          If Debtor defaults in the payment of principal or interest on this Note when and as the same shall become due and payable and such default continues for twenty (20) days after Debtor receives notice from Payee of such default; or

          (b)          If Debtor makes an assignment for the benefit of creditors or admits in writing his inability to pay his debts generally as they become due; or

          (c)          If an order, judgment or decree is entered adjudicating Debtor bankrupt or insolvent; or

          (d)          If Debtor petitions or applies to any tribunal for the appointment of a trustee or receiver of Debtor, or of any substantial part of the assets of Debtor, or commences any proceedings relating to Debtor under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect; or

          (e)          If any such petition or application is filed, or any such proceedings are commenced, against Debtor, and Debtor by any act indicates his approval thereof, consent thereto, or acquiescence therein, or an order is entered appointing any such trustee or receiver, or approving the petition in any such proceedings, and such order remains unstayed and in effect for more than ninety (90) days.

          Security.  This Note is secured by a pledge of shares of $.01 par value common stock of Payee pursuant to that certain Stock Pledge Agreement by and between Payee and Debtor of even date herewith, which shares were received by Payee pursuant to that certain Restricted Stock Award Agreement by and between Payee and Debtor dated December 28, 2001.

          Waiver.  Any failure on the part of Payee at any time to require the performance by Debtor of any of the terms or provisions hereof, even if known, shall in no way affect the right thereafter to enforce the same, nor shall any failure of Payee to insist on strict compliance with the terms and conditions hereof be taken or held to be a waiver of any succeeding breach or of the right of Payee to insist on strict compliance with the terms and conditions hereof.

          Time.  Time is of the essence.

          Notices.  All notices, requests, demands and other communications to Debtor hereunder shall be in writing and shall be deemed to have been duly given and delivered when delivered in person, when mailed postage prepaid by registered or certified mail with return receipt requested, or when delivered by overnight delivery service to 100 Inman Circle, Atlanta, Georgia 30309, or to such other address as Debtor may designate to Payee in writing.

          Applicable Law.  This Note shall be governed by, and enforced and interpreted in accordance with, the laws of the State of Georgia.

          IN WITNESS WHEREOF, Debtor has executed this Note under seal as of the date first set forth above.

/s/ JEFFREY A. ALLRED (L.S.)

Jeffrey A. Allred

2

EX-10.64

EXHIBIT 10.64

PROMISSORY NOTE

$68,846.46 January 3, 2002

          PATRICK G. JONES (hereinafter referred to as “Debtor”), for value received, hereby promises to pay to the order of PTEK HOLDINGS, INC., a Georgia corporation (hereinafter referred to as “Payee”), the principal sum of SIXTY-EIGHT THOUSAND EIGHT HUNDRED FORTY-SIX AND 46/100 DOLLARS ($68,846.46) on January 3, 2012, together with interest on the unpaid principal balance at the rate of five and forty-six hundredths percent (5.46%)per annum, compounded annually. Any principal of or interest on this Note not paid when due shall bear interest after such due date until paid at the rate of seven and forty-six hundredths percent (7.46%) per annum, and Debtor shall pay all costs of collection.  The principal hereof and the interest thereon are payable at 3399 Peachtree Road, The Lenox Building, Suite 600, Atlanta, Georgia 30326, or at such other place as Payee may from time to time designate to Debtor in writing, in coin or currency of the United States of America.

          Prepayment. Debtor may, at any time and from time to time, prepay all or any portion of the principal of this Note remaining unpaid, without penalty or premium.  In the event Debtor sells any of the shares of $.01 par value common stock of Payee that are held by Payee pursuant to the Stock Pledge Agreement described below, Debtor shall prepay a portion of this Note in an amount equal to the after-tax proceeds received by Debtor from the sale of such shares. Prepayments shall be applied first to the payment of accrued but unpaid interest on this Note and the balance to principal.

          Events of Default.  If any of the following events (an “Event of Default”) shall occur and be continuing for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or otherwise), then this Note shall thereupon be and become due and payable, without any further notice or demand of any kind whatsoever, all of which are hereby expressly waived:

          (a)          If Debtor defaults in the payment of principal or interest on this Note when and as the same shall become due and payable and such default continues for twenty (20) days after Debtor receives notice from Payee of such default; or

          (b)          If Debtor makes an assignment for the benefit of creditors or admits in writing his inability to pay his debts generally as they become due; or

          (c)          If an order, judgment or decree is entered adjudicating Debtor bankrupt or insolvent; or

          (d)          If Debtor petitions or applies to any tribunal for the appointment of a trustee or receiver of Debtor, or of any substantial part of the assets of Debtor, or commences any proceedings relating to Debtor under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect; or

          (e)          If any such petition or application is filed, or any such proceedings are commenced, against Debtor, and Debtor by any act indicates his approval thereof, consent thereto, or acquiescence therein, or an order is entered appointing any such trustee or receiver, or approving the petition in any such proceedings, and such order remains unstayed and in effect for more than ninety (90) days.

          Security.  This Note is secured by a pledge of shares of $.01 par value common stock of Payee pursuant to that certain Stock Pledge Agreement by and between Payee and Debtor of even date herewith, which shares were received by Payee pursuant to that certain Restricted Stock Award Agreement by and between Payee and Debtor dated December 28, 2001.

          Waiver.  Any failure on the part of Payee at any time to require the performance by Debtor of any of the terms or provisions hereof, even if known, shall in no way affect the right thereafter to enforce the same, nor shall any failure of Payee to insist on strict compliance with the terms and conditions hereof be taken or held to be a waiver of any succeeding breach or of the right of Payee to insist on strict compliance with the terms and conditions hereof.

          Time.  Time is of the essence.

          Notices.  All notices, requests, demands and other communications to Debtor hereunder shall be in writing and shall be deemed to have been duly given and delivered when delivered in person, when mailed postage prepaid by registered or certified mail with return receipt requested, or when delivered by overnight delivery service to 155 Helmsley Drive, Atlanta, Georgia 30327, or to such other address as Debtor may designate to Payee in writing.

          Applicable Law.  This Note shall be governed by, and enforced and interpreted in accordance with, the laws of the State of Georgia.

          IN WITNESS WHEREOF, Debtor has executed this Note under seal as of the date first set forth above.

/s/ PATRICK G. JONES	(L.S.)
Patrick G. Jones

2

EX-10.65

EXHIBIT 10.65

PROMISSORY NOTE

$1,344.68 January 3, 2002

          RICHARD J. BUYENS (hereinafter referred to as “Debtor”), for value received, hereby promises to pay to the order of PTEK HOLDINGS, INC., a Georgia corporation (hereinafter referred to as “Payee”), the principal sum of ONE THOUSAND THREE HUNDRED FORTY-FOUR AND 68/100 DOLLARS ($1,344.68) on January 3, 2012, together with interest on the unpaid principal balance at the rate of five and forty-six hundredths percent (5.46%)per annum, compounded annually. Any principal of or interest on this Note not paid when due shall bear interest after such due date until paid at the rate of seven and forty-six hundredths percent (7.46%) per annum, and Debtor shall pay all costs of collection.  The principal hereof and the interest thereon are payable at 3399 Peachtree Road, The Lenox Building, Suite 600, Atlanta, Georgia 30326, or at such other place as Payee may from time to time designate to Debtor in writing, in coin or currency of the United States of America.

          Prepayment. Debtor may, at any time and from time to time, prepay all or any portion of the principal of this Note remaining unpaid, without penalty or premium.  In the event Debtor sells any of the shares of $.01 par value common stock of Payee that are held by Payee pursuant to the Stock Pledge Agreement described below, Debtor shall prepay a portion of this Note in an amount equal to the after-tax proceeds received by Debtor from the sale of such shares. Prepayments shall be applied first to the payment of accrued but unpaid interest on this Note and the balance to principal.

          Events of Default.  If any of the following events (an “Event of Default”) shall occur and be continuing for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or otherwise), then this Note shall thereupon be and become due and payable, without any further notice or demand of any kind whatsoever, all of which are hereby expressly waived:

          (a)          If Debtor defaults in the payment of principal or interest on this Note when and as the same shall become due and payable and such default continues for twenty (20) days after Debtor receives notice from Payee of such default; or

          (b)          If Debtor makes an assignment for the benefit of creditors or admits in writing his inability to pay his debts generally as they become due; or

          (c)          If an order, judgment or decree is entered adjudicating Debtor bankrupt or insolvent; or

          (d)          If Debtor petitions or applies to any tribunal for the appointment of a trustee or receiver of Debtor, or of any substantial part of the assets of Debtor, or commences any proceedings relating to Debtor under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect; or

          (e)          If any such petition or application is filed, or any such proceedings are commenced, against Debtor, and Debtor by any act indicates his approval thereof, consent thereto, or acquiescence therein, or an order is entered appointing any such trustee or receiver, or approving the petition in any such proceedings, and such order remains unstayed and in effect for more than ninety (90) days.

          Security.  This Note is being executed and delivered pursuant to, and is subject to the terms and conditions of, that certain Restricted Stock Award Agreement by and between Payee and Debtor dated November 27, 2001, and this Note is secured by a pledge of shares of $.01 par value common stock of Payee pursuant to that certain Stock Pledge Agreement by and between Payee and Debtor of even date herewith.

          Waiver.  Any failure on the part of Payee at any time to require the performance by Debtor of any of the terms or provisions hereof, even if known, shall in no way affect the right thereafter to enforce the same, nor shall any failure of Payee to insist on strict compliance with the terms and conditions hereof be taken or held to be a waiver of any succeeding breach or of the right of Payee to insist on strict compliance with the terms and conditions hereof.

          Time.  Time is of the essence.

          Notices.  All notices, requests, demands and other communications to Debtor hereunder shall be in writing and shall be deemed to have been duly given and delivered when delivered in person, when mailed postage prepaid by registered or certified mail with return receipt requested, or when delivered by overnight delivery service to101 Avery Drive, Atlanta, Georgia 30309, or to such other address as Debtor may designate to Payee in writing.

          Applicable Law.  This Note shall be governed by, and enforced and interpreted in accordance with, the laws of the State of Georgia.

          IN WITNESS WHEREOF, Debtor has executed this Note under seal as of the date first set forth above.

/s/ RICHARD J. BUYENS	(L.S.)
Richard J. Buyens

2

EX-10.66

EXHIBIT 10.66

PROMISSORY NOTE

$72,453.28 January 3, 2002

          THEORDORE P. SCHRAFFT (hereinafter referred to as “Debtor”), for value received, hereby promises to pay to the order of PTEK HOLDINGS, INC., a Georgia corporation (hereinafter referred to as “Payee”), the principal sum of SEVENTY-TWO THOUSAND FOUR HUNDRED FIFTY-THREE AND 28/100 DOLLARS ($72,453.28) on January 3, 2012, together with interest on the unpaid principal balance at the rate of five and forty-six hundredths percent (5.46%)per annum, compounded annually. Any principal of or interest on this Note not paid when due shall bear interest after such due date until paid at the rate of seven and forty-six hundredths percent (7.46%) per annum, and Debtor shall pay all costs of collection.  The principal hereof and the interest thereon are payable at 3399 Peachtree Road, The Lenox Building, Suite 600, Atlanta, Georgia 30326, or at such other place as Payee may from time to time designate to Debtor in writing, in coin or currency of the United States of America.

          Prepayment. Debtor may, at any time and from time to time, prepay all or any portion of the principal of this Note remaining unpaid, without penalty or premium.  In the event Debtor sells any of the shares of $.01 par value common stock of Payee that are held by Payee pursuant to the Stock Pledge Agreement described below, Debtor shall prepay a portion of this Note in an amount equal to the after-tax proceeds received by Debtor from the sale of such shares. Prepayments shall be applied first to the payment of accrued but unpaid interest on this Note and the balance to principal.

          Events of Default.  If any of the following events (an “Event of Default”) shall occur and be continuing for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or otherwise), then this Note shall thereupon be and become due and payable, without any further notice or demand of any kind whatsoever, all of which are hereby expressly waived:

          (a)          If Debtor defaults in the payment of principal or interest on this Note when and as the same shall become due and payable and such default continues for twenty (20) days after Debtor receives notice from Payee of such default; or

          (b)          If Debtor makes an assignment for the benefit of creditors or admits in writing his inability to pay his debts generally as they become due; or

          (c)          If an order, judgment or decree is entered adjudicating Debtor bankrupt or insolvent; or

          (d)          If Debtor petitions or applies to any tribunal for the appointment of a trustee or receiver of Debtor, or of any substantial part of the assets of Debtor, or commences any proceedings relating to Debtor under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect; or

          (e)          If any such petition or application is filed, or any such proceedings are commenced, against Debtor, and Debtor by any act indicates his approval thereof, consent thereto, or acquiescence therein, or an order is entered appointing any such trustee or receiver, or approving the petition in any such proceedings, and such order remains unstayed and in effect for more than ninety (90) days.

          Security.  This Note is secured by a pledge of shares of $.01 par value common stock of Payee pursuant to that certain Stock Pledge Agreement by and between Payee and Debtor of even date herewith, which shares were received by Payee pursuant to that certain Restricted Stock Award Agreement by and between Payee and Debtor dated December 28, 2001.

          Waiver.  Any failure on the part of Payee at any time to require the performance by Debtor of any of the terms or provisions hereof, even if known, shall in no way affect the right thereafter to enforce the same, nor shall any failure of Payee to insist on strict compliance with the terms and conditions hereof be taken or held to be a waiver of any succeeding breach or of the right of Payee to insist on strict compliance with the terms and conditions hereof.

          Time.  Time is of the essence.

          Notices.  All notices, requests, demands and other communications to Debtor hereunder shall be in writing and shall be deemed to have been duly given and delivered when delivered in person, when mailed postage prepaid by registered or certified mail with return receipt requested, or when delivered by overnight delivery service to 315 Majestic Cove, Alpharetta, Georgia 30004, or to such other address as Debtor may designate to Payee in writing.

          Applicable Law.  This Note shall be governed by, and enforced and interpreted in accordance with, the laws of the State of Georgia.

          IN WITNESS WHEREOF, Debtor has executed this Note under seal as of the date first set forth above.

/s/ THEODORE P. SCHRAFFT	(L.S.)
Theodore P. Schrafft

2

EX-10.67

EXHIBIT 10.67

AGREEMENT

          THIS AGREEMENT (this “Agreement”) is made and entered into as of the 5^th day of March, 2002, by and among PTEK HOLDINGS, INC., a Georgia corporation (the “Company”), and JEFFREY M. CUNNINGHAM (“Cunningham”).

W I T N E S S E T H:

          WHEREAS, Cunningham has been appointed Vice Chairman of the Company; and

          WHEREAS, Cunningham has considerable business expertise that the Company desires to utilize with respect to the businesses conducted by the Company and its business units; and

          WHEREAS, Cunningham and the Company desire to enter into this Agreement to set forth the rights and duties of the parties hereto;

          NOW, THEREFORE, in consideration of the premises and the mutual conditions and promises herein contained, and other good and valuable consideration, the parties hereto agree as follows:

          1.     Services.    Cunningham shall devote at least fifty percent (50%) of his business time to the performance of his duties hereunder, and Cunningham shall report to the Chairman of the Board of the Company (the “Chairman”). Cunningham shall furnish to the Company his best advice, information, judgment and knowledge with respect to strategic planning, customer development and business development concerning the Company and its business units, as requested by the Chairman, including, but not limited to, the following:

(a) Cunningham shall initially focus on customer development at the Premiere Conferencing business unit, in particular working with the Convex Group;

(b) Cunningham shall meet on a regular basis with management at the corporate and business unit level;

(c) Cunningham shall be involved in mergers and acquisition activity, both as a sounding board for management and, as needed, to meet with investment bankers and other advisors;

(d) Cunningham shall assist in the recruitment process of management candidates;

(e) Cunningham shall assist in developing a high profile advisory board for the Company;

(f) Cunningham shall work with the Company’s President of Global Services and with members of senior management of the Company’s business units and their sales teams to provide assistance on key accounts;

(g) Cunningham shall be available to participate in industry forums and conferences; and

(h) Cunningham shall keep the Chairman apprised of his activities through monthly activity reports.

          2.      Compensation.    For all services that Cunningham renders to the Company or any of its subsidiaries or affiliates during the term hereof, the Company shall pay to Cunningham the following:

(a) $10,000 per month for the first twelve (12) months; and

(b) a two percent (2%) commission on all Cunningham Revenue (as defined below) in excess of $6,000,000 up to $10,000,000, with the maximum commission payable being $80,000. “Cunningham Revenue” shall mean new or incremental revenue, excluding taxes, tariffs, surcharges and other government mandated charges, received by the Premiere Conferencing business unit from customers (i) identified by the Convex Group on which members of the Convex Group are paid commissions and (ii) that are mutually agreed to by Cunningham and the Chairman.

          3.      Expenses.   The Company shall pay all reasonable expenses incurred by Cunningham in the performance of his duties hereunder, including an office allowance of $1,000 per month and travel accident insurance, and Cunningham shall submit to the Company periodic statements of all expenses so incurred. Subject to such audits as the Company may deem necessary, the Company shall reimburse Cunningham the full amount of any such expenses advanced by Cunningham, in the ordinary course.

          4.      Term.   The term of this Agreement shall begin on March 5, 2002 and shall continue until March 5, 2007, unless sooner terminated as set forth herein.

          5.     Confidential Information and Intellectual Property.

(a) Cunningham shall maintain in strict confidence, and not use or disclose except pursuant to written instructions from the Company, any Trade Secret (as defined below) of the Company, for so long as the pertinent data or information remains a Trade Secret, provided that the obligation to protect the confidentiality of any such information or data shall not be excused if such information or data ceases to qualify as a Trade Secret as a result of the acts or omissions of Cunningham.

(b) Cunningham shall maintain in strict confidence and, except as necessary to perform his duties hereunder, not to use or disclose any Confidential Business Information (as hereinafter defined) during the term of this Agreement and for a period of one (1) year thereafter.

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(c) Cunningham may disclose Trade Secrets or Confidential Business Information pursuant to any order or legal process requiring the disclosing party (in its legal counsel’s reasonable opinion) to do so, provided that the disclosing party shall first have notified the Company in writing of the request or order to so disclose the Trade Secrets or Confidential Business Information in sufficient time to allow the Company to seek an appropriate protective order.

(d) “Trade Secret” shall mean any information, including, but not limited to, technical or non-technical data, a formula, a pattern, a compilation, a program, a plan, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers which (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.  “Confidential Business Information” shall mean any nonpublic information of a competitively sensitive or personal nature, other than Trade Secrets, acquired by Cunningham in connection with performing services for the Company, including (without limitation) oral and written information concerning the Company’s financial positions and results of operations (revenues, margins, assets, net income, etc.)), annual and long-range business plans, marketing plans and methods, account invoices, oral or written customer information, and personnel information.

(e) All original works of authorship that result from the performance by Cunningham of his duties hereunder are deemed to be “works made for hire” under the copyright laws of the United States, and will be and will remain the sole and exclusive property of the Company.  Cunningham, at the Company’s request and sole expense, will assign to the Company in perpetuity all proprietary rights that he may have in such works of authorship.  Such assignment shall be done by documents as prepared by the Company. Should the Company elect to register claims of copyright to any such works of authorship, Cunningham will, at the expense of the Company, do such things, sign such documents and provide such reasonable cooperation as is necessary for the Company to register such claims, and obtain, protect, defend and enforce such proprietary rights. Cunningham shall have no right to use any trademarks or proprietary marks of the Company without the express, prior written consent of the Company regarding each use.

(f) In the event Cunningham shall violate or threaten to violate the provisions of this Section 5, damages at law will be an insufficient remedy and the Company shall be entitled to equitable relief in addition to any other remedies or rights available to the Company and no bond or security will be required in connection with such equitable relief.

(g) The existence of any claim or cause of action that Cunningham may have against the Company will not at any time constitute a defense to the enforcement by the Company of the restrictions or rights provided by this Section 5, but the failure to assert such claim or cause of action shall not be deemed to be a waiver of such claim or cause of action.

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(h) For purposes of this Section 5 and Section 6 hereof, “Company” shall include the Company and all of its direct and indirect subsidiaries and any predecessors of the Company.

          6.     Nonsolicitation.  During the term of this Agreement and for a period of one (1) year thereafter, Cunningham shall not:

(a) solicit business, either directly or indirectly, on his own behalf or on behalf of or in conjunction with any person or entity engaged in any part of the design, development, marketing, sale or provisioning of multimedia messaging or multimedia conferencing and collaboration solutions (collectively the “Restricted Business”) from (i) any person or entity who is, or at any time during the term of this Agreement was, a customer of the Company, or (ii) any prospective customer of the Company who, at any time during the term of this Agreement, had been solicited by the Company and where Cunningham supervised or participated in any way in such solicitation activities.

(b) Solicit or induce, or attempt to solicit or induce, any of the Company’s employees, consultants, vendors, suppliers or independent contractors to terminate their relationship with the Company, or to establish a relationship with a person or entity engaged in any part of the Restricted Business.

          7.     Termination.

(a) This Agreement shall automatically terminate on the date that Cunningham ceases to be Vice Chairman of the Company or a member of the Board of Directors of the Company (the “Board”), in which event Cunningham shall be entitled to all compensation earned through the termination date

(b) The Company may terminate this Agreement for “Cause,” which shall consist of any of the following:  (i) the commission by Cunningham of a willful act or a grossly negligent act, or the willful or grossly negligent omission to act by Cunningham, which is intended to cause, causes or is reasonably likely to cause material harm to the Company or any of its subsidiaries (including harm to the business reputation of the Company or any of its subsidiaries); (ii) the indictment of Cunningham for the commission or perpetration of any felony or any crime involving dishonesty, moral turpitude or fraud; or (iii) the breach by Cunningham of any material term or covenant of this Agreement. Termination for Cause shall not be effective unless the Company delivers to Cunningham thirty (30) days advance written notice setting forth in reasonable detail the allegations of Cause, and Cunningham does not convince the Board within such 30-day period that Cause does not exist.  The final determination for the Company of whether a

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termination of Cunningham was with or without Cause shall rest with the Board, which shall act in good faith by a majority of the directors, with Cunningham abstaining from the consideration of and vote on the matter as a director.  If this Agreement is terminated for Cause, then Cunningham shall not be entitled to any compensation after the date of termination.

(c) Cunningham may terminate this Agreement by giving the Company at least thirty (30) days prior written notice.  If Cunningham terminates this Agreement as provided in the preceding sentence, then he shall be entitled to all compensation earned through the termination date.

          8.     Severable Provisions.    The provisions of this Agreement are severable, and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions, and any partially enforceable provision to the extent enforceable in any jurisdiction, shall nevertheless be binding and enforceable.

          9.     Binding Agreement.   The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company. The rights, obligations and duties of Cunningham hereunder may not be assigned or delegated without the Company’s prior written consent.

          10.     Relationship of Parties.   Cunningham is an independent contractor and not an employee of the Company. 

          11.     Notices.  Any notices or other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and delivered when delivered in person, three (3) business days after being mailed postage prepaid by certified or registered mail with return receipt requested, or when delivered by overnight delivery service or by facsimile to the recipient at the following address or facsimile number, or to such other address or facsimile number as to which the other party subsequently shall have been notified in writing by such recipient:

If to the Company:
	PTEK Holdings, Inc.
	3399 Peachtree Road
	The Lenox Building
	Suite 700
	Atlanta, GA 30326
	Attn: Boland T. Jones
	Facsimile:  (404) 262-8522

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With a copy to (which shall not constitute notice):
	PTEK Holdings, Inc.
	3399 Peachtree Road
	The Lenox Building
	Suite 700
	Atlanta, GA 30326
	Attn: Patrick G. Jones
	Facsimile:  (404) 262-8540
If to Cunningham:
	Jeffrey M. Cunningham
	Two Crow Island
	Manchester, MA 01944

          12.     Waiver. Either party’s failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any such provision or provisions as to future violations thereof, nor prevent that party thereafter from enforcing each and every other provision of this Agreement. The rights granted the parties herein are cumulative and the waiver by a party of any single remedy shall not constitute a waiver of such party’s right to assert all other legal remedies available to him or it under the circumstances.

          13.     Governing Law.   This Agreement will be governed by and interpreted in accordance with the substantive laws of the State of Georgia without reference to conflicts of law. 

          14.     Captions and Section Headings.   The various captions and section headings contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of any of the provisions of this Agreement.

          15.     Amendment.   This Agreement may not be amended except by a writing signed by the Company and Cunningham.

          16.     Entire Agreement.   With respect to its subject matter, this Agreement constitutes the entire understanding of the parties superseding all prior agreements, understandings, negotiations and discussions between them, whether written or oral, and there are no other under-standings, representations, warranties or commitments with respect thereto.

          17.     Arbitration.   Any dispute between the parties with respect to this Agreement shall be resolved through binding arbitration conducted by the American Arbitration Association under the rules then in effect.  The parties agree that any arbitration proceeding shall be conducted in Atlanta, Georgia and hereby consent to jurisdiction and venue there. The predominately nonprevailing party, as determined by the arbitrator(s), shall pay the reasonable attorneys’ fees and other expenses of the predominately prevailing party in any such arbitration. The findings of the arbitrator(s) shall be final and binding on the parties and Cunningham shall

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forever refrain and forbear from (a) commencing, instituting or prosecuting any lawsuit, action, claim or proceeding before or in any court against the Company, any of its affiliates, or the employees, officers or directors thereof, or (b) naming or joining the Company or any of its affiliates or the employees, officers or directors thereof, as parties to enforce any claims or causes of action related to this Agreement.

          IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first written above.

PTEK HOLDINGS, INC.
By:	/s/ PATRICK G. JONES
	Patrick G. Jones Executive Vice President
	/s/ JEFFREY M. CUNNINGHAM
	JEFFREY M. CUNNINGHAM

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EX-10.68

Exhibit 10.68

LEASE AGREEMENT

FROM

TOWNSEND XPD, LLC

TO

XPEDITE SYSTEMS, INC.

PREMISES:

OFFICE BUILDING TO BE CONSTRUCTED ON LAND LOCATED AT
THE INTERSECTION OF SHAFTO ROAD AND TORMEE DRIVE, TINTON FALLS

DATED: As of June 15, 2000

TABLE OF CONTENTS

		Page
1.	Premises Demised	1
2.	Term	1
3.	Rental	3
4.	Construction of the Base Building and Tenant Improvements	5
5.	Tenant’s Use of Premises Before Commencement Date	9
6.	Use	9
7.	Tenant’s Care of the Premises	11
8.	Landlord’s Obligations	13
9.	Hazardous Wastes/Environmental Compliance	13
10.	Assignment and Sublease	15
11.	Damage or Destruction	16
12.	Eminent Domain	16
13.	Insurance	17
14.	Subrogation and Waiver	20
15.	Indemnity	20
16.	Subordination and Non-Disturbance	21
17.	Landlord’s Right of Entry	23
18.	Use of the Roof and Building Structure	23
19.	Tenant’s Default; Rights and Remedies	23
20.	Landlord’s Default	27
21.	Yield-Up and Holding Over	28
22.	Quiet Enjoyment	28

23.	Mutual Representation of Authority	28
24.	Landlord’s Liability	29
25.	Real Estate Brokers	29
27.	Attorneys’ Fees	29
28.	Estoppel Certificate	29
29.	No Recording	30
30.	Waiver	30
31.	Governing Law	30
32.	Notices	30
33.	Counterparts	31
34.	Entire Agreement	31
35.	Partial Invalidity	31
36.	Parties Bound	32
37.	Survival	32
38.	Force Majeure	32
39.	Construction Against Drafter	32
40.	Time of the Essence	32
41.	Signage	32
42.	Access	32
43.	Security Deposit	33
44.	Guaranty	33

EXHIBIT A    THE LAND A-1

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EXHIBIT B    BASE BUILDING AND TENANT IMPROVEMENTS	B-1
EXHIBIT C    TENANT’S PROPERTY	C-1
EXHIBIT D    EVIDENCE OF SELF-INSURANCE	D-5
EXHIBIT E    RULES AND REGULATIONS FOR USE OF THE COMMUNICATION EQUIPMENT	E-1
EXHIBIT F    MEMORANDUM OF LEASE	F-1
EXHIBIT G    FORM SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE AGREEMENT	G-1
EXHIBIT H    GUARANTY AGREEMENT	H-1

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LEASE AGREEMENT

THIS LEASE AGREEMENT made this 15th day of June, 2000 between Townsend XPD, LLC (“Landlord”), a Delaware limited liability company, having an office at 210 West Pennsylvania Avenue, Suite 700, Towson, Maryland 21204 and Xpedite Systems, Inc. (“Tenant”), a Delaware Corporation having an office at One Industrial Way West, Building D, Eatontown, New Jersey 07724 and PTEK Holdings, Inc. (“Guarantor”), a Georgia corporation, having an office at The Lenox Building, 3399 Peachtree Road, N.E., Suite 600, Atlanta, Georgia 30326.

WITNESSETH:

1. Premises Demised.

Landlord leases and demises to Tenant and Tenant leases from Landlord the Premises, consisting of (i) the approximately 90,000 square foot office building (the “Building”) located or to be constructed on that certain parcel of ground containing approximately 8.65 acres of land, more or less, located at the intersection of Shafto Road and Tormee Drive and known as Block 120.02, Lot 1.03 (formerly Block 120, Part of Lots 1.01 and 2.01) or the official tax map of Tinton Falls Borough, Monmouth County, New Jersey, as more fully described on Exhibit A attached hereto (the “Land”) and (ii) all entrances, lobbies, walkways, corridors, elevators, conduit and riser space, stairs, restrooms, driveways, parking, loading and storage areas, mechanical rooms, equipment rooms, telephone and electrical closets, roof space and other amenities of the Building and Land (collectively, the “Appurtenances”) (the Land together with the Building and the Appurtenances being collectively referred to as the “Premises”).

2. Term.

(a)The primary term of this Lease (the “Primary Term”) shall commence on the date that all of the following shall have occurred : (i) the Premises are “substantially complete” (defined in Paragraph 4); (ii) Landlord has delivered to Tenant written notice that a certificate of occupancy has been issued by the Borough of Tinton Falls; and (iii) Tenant has had the opportunity, following notice from the Landlord, to access the Premises to install Tenant’s Property (defined in paragraph 5) furniture, computers, phone systems, and the like for thirty (30) days (the “Commencement Date”) and shall expire on 11:59 p.m. on the date that is fifteen (15) years from the Commencement Date (the “Expiration Date”). As used in this Lease, “Term” shall mean the Primary Term and any duly exercised renewal term provided for herein.

(b)(i)Provided there is no uncured Event of Default (as hereinafter defined) under this Lease at the time of Tenant’s First Option Notice (defined below) or on the First Renewal Term Commencement Date (defined below), Tenant shall have the option to renew this Lease for an additional term of five (5) years (the “First Renewal Term”) by

giving Landlord written notice (the “First Option Notice”) at least nine (9) months prior to the Expiration Date. If Tenant fails to deliver to Landlord the First Option Notice on or before the date that is nine (9) months prior to the Expiration Date, time being of the essence hereunder, the option to renew this Lease for the First Renewal Term shall terminate and be of no further force or effect and Tenant shall have no further right to extend or renew this Lease. The First Renewal Term shall be on all of the same terms and conditions as set forth in this Lease, except that (A) the Fist Renewal Term shall commence on the day following the Expiration Date (the “First Renewal Term Commencement Date”) and shall expire on the day prior to the fifth (5th) anniversary of the First Renewal Term Commencement Date (the “First Renewal Term Expiration Date”); and (B) the Fixed Rent for the First Renewal Term shall be the greater of (1) the Fixed Rent in effect for the last Lease Year (as hereinafter defined) of the Primary Term under subparagraph 3(a) and (2) ninety-five (95%) percent of Fair Market Rent (defined below).

(ii)Provided Tenant has exercised its option for the First Renewal Term as set forth in subparagraph 2(b)(i) above, and provided further that there is no uncured Event of Default under this Lease on the date of the Second Option Notice (defined below) or on the Second Renewal Term Commencement Date (defined below), Tenant shall have the option to renew this Lease for an additional term of five (5) years (the “Second Renewal Term”) by giving Landlord written notice (the “Second Option Notice”) at least nine (9) months prior to the First Renewal Term Expiration Date. If Tenant fails to provide Landlord with the Second Option Notice on or before the date that is nine (9) months prior to the First Renewal Term Expiration Date, time being of the essence hereunder, said option to extend the Term for the Second Renewal Term shall terminate and be of no further force or effect and Tenant shall have no further right to extend or renew this Lease. The Second Renewal Term shall be on all of the same terms and conditions as this Lease, except that (A) the Second Renewal Term shall commence on the day following the First Renewal Term Expiration Date (the “Second Renewal Term Commencement Date”) and shall expire on the day prior to the fifth (5th) anniversary of the Second Renewal Term Commencement Date; (B) there shall be no further option to extend or renew this Lease; and (C) the Fixed Rent for the Second Renewal Term shall be the greater of (1) the Fixed Rent last payable during the First Renewal Term and (2) ninety-five (95%) percent of Fair Market Rent (defined below)

(iii)“Fair Market Rent” shall be determined as set forth below. Within one hundred sixty (160) days after Tenant exercises an option to renew, Landlord shall furnish to Tenant a notice in writing (“Landlords Notice”) which sets forth the Landlord’s determination of Fair Market Rent for the renewal term in question effective as of the commencement date of the renewal term in question. Landlord’s Notice shall be accompanied by a statement from a qualified real estate appraiser stating the appraiser’s opinion of Fair Market Rent and that it has been determined in accordance with this Paragraph. If the Tenant disagrees with the estimate of Fair Market Rent submitted by Landlord in Landlord’s Notice, then within sixty (60) days after receipt of Landlord’s Notice, Tenant shall have the right to submit to Landlord an appraisal by a qualified real estate appraiser of Fair Market Rent for the renewal term in question effective as of the commencement date of the renewal term in question. If the higher estimate is not more than 110% of the lower estimate, the Fair Market Rent shall be established as the average of the two appraisals. If not, the two appraisers acting on behalf of Landlord and Tenant shall, within fifteen (15) days after Tenant’s appraisal has been submitted,

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jointly appoint a third qualified real estate appraiser (the “Referee”). If the two appraisers are unable to agree upon the selection of a Referee, then the Referee shall be selected within fifteen (15) days thereafter by an arbitrator pursuant to the rules of the American Arbitration Association.

The Referee shall, within thirty (30) days after appointment, render his decision which decision shall be strictly limited to choosing one of the two determinations made by the two appraisers chosen by Landlord and Tenant with respect to Fair Market Rent. The decision of the Referee shall be binding upon Landlord and Tenant. Landlord and Tenant shall each pay for their own appraisal, and the cost of the Referee shall be shared equally by Landlord and Tenant. In determining Fair Market Rent, the appraisers shall each take into account the following: (a) the amount of space and length of term taken by Tenant; (b) the creditworthiness and quality of Tenant; (c) the amenities offered at the Premises; (d) any special or unusual features of the Premises as it relates to Tenant’s business; and (e) rent in comparable buildings in the relevant competitive market adjusted to account for concessions offered to new tenants such as free rent, tenant improvement allowances, moving allowances and other such concessions. In determining Fair Market Rent, the appraisers shall make adjustments to account for the following: (i) tenant improvements installed by Tenant; (ii) alterations installed by Tenant at its expense during the Term; and (iii) concessions offered to new tenants such as free rent, tenant improvement allowances, moving allowances and other concessions.

(c)“Lease Year” as used herein shall mean (i) each and every consecutive twelve (12) month period during the Term of this Lease, or (ii) in the event of Lease expiration or termination, the period between the last complete Lease Year and said expiration or termination. The first such twelve (12) month period shall commence on the Commencement Date. If the Commencement Date is any day other than the first day of the month, then the first Lease Year shall be the partial month in which the Commencement Date occurs and the next consecutive twelve (12) months.

3. Rental.

(a)Tenant agrees to pay Landlord annual rent (the “Fixed Rent”) at the rates set forth below monthly for the Primary Term in advance in the monthly installments set forth below beginning on the Commencement Date and thereafter on the first day of each month during the Primary Term, without prior notice or demand except as provided herein, and without deduction, offset or counterclaim. Fixed Rent for any renewal term(s) shall be as set forth in Section 2(b) above, and shall be paid without prior notice, demand, deduction, offset or counterclaim. Tenant shall also pay all other sums of money that shall become due from Tenant under this Lease other than Fixed Rent (“Additional Rent”) without deduction, offset or counterclaim within the time periods set forth herein, and if no such period is established, then within thirty (30) days of receipt of Landlord’s written demand therefor. As used in this Lease, “Rent” shall mean Fixed Rent and Additional Rent. Rent for any month’s partial occupancy shall be prorated.

Based on an estimated total rentable square foot area of 90,000 square feet, Fixed Rent will be as follows:

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Period	Annual Fixed Rent		Monthly Fixed Rent		Per SF
Lease Years 1-5	$	1,395,000	$	116,250	$	15.50
Lease Years 6-10	$	1,485,000	$	123,750	$	16.50
Lease Years 11-15	$	1,597,500	$	133,125	$	17.75
First Renewal Term	as set forth in subparagraph 2(b)(i)
Second Renewal Term	as set forth in subparagraph 2(b)(ii)

If the actual total rentable square feet of the Building is more or less than 90,000 square feet, as the same is certified by Landlord’s architect upon substantial completion of the Building, the annual Fixed Rent and monthly Fixed Rent for each year of the Lease Term shall be adjusted accordingly based upon the per square foot annual Fixed Rent amount stated above. Upon certification of the actual square footage of the Building, Landlord shall prepare a final Fixed Rent Schedule and shall deliver the same to Tenant, which Fixed Rent schedule shall become a part of and incorporated into this Paragraph 3(a) as if originally set forth herein.

(b)This is a “net” lease. Tenant’s rent payments shall be completely net to Landlord so that this Lease yields to Landlord the net annual Base Rental and Tenant shall pay all Fixed Rent, Additional Rent and costs of every kind relating to the Premises without setoff, deduction, counterclaim or abatement.

(c)Tenant shall pay directly to the party entitled to such payment as Additional Rent all costs and expenses of every kind and nature in operating, managing, equipping, lighting, heating, cooling, cleaning, maintaining, repairing, replacing, and landscaping the Premises to the full extent of Tenant’s obligations hereunder, and all premiums for insurance (including, without limitation, casualty and general liability coverages) relating to the Premises.

(d)Tenant shall pay to Landlord, as Additional Rent hereunder, all real estate taxes, assessments, water and sewer rents, taxes on rentals, taxes in lieu of existing taxes and other public charges on the Premises, each relating to the Term of this Lease within ten (10) days of receipt of an invoice therefor from landlord (which invoice shall contain a copy of the bill for such tax or assessment).

(e)Tenant shall pay to Landlord, as Additional Rent hereunder, the premiums for such fire and casualty insurance maintained by Landlord with respect to the Premises, within ten (10) days of receipt of an invoice therefor from Landlord.

(f)Tenant acknowledges that Tenant’s failure to pay Fixed Rent and Additional Rent promptly may cause Landlord to incur unanticipated costs which are impractical or extremely difficult to ascertain and may include, without limitation, processing and accounting charges and late charges imposed on Landlord by any ground lease, mortgage or deed of trust. As a result, if Landlord does not receive any payment within five (5) days of the due date, Tenant shall pay Landlord, a late charge equal to five percent (5%) of the overdue amount, which charge Landlord and Tenant agree represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment. Landlord’s acceptance of the late charge shall in

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no event constitute a waiver of Tenant’s default with respect to any overdue amount nor prevent Landlord from exercising any other rights or remedies granted under this Lease and/or applicable law. In the event that any payment of Rent or other amount due under this Lease from Tenant to Landlord is not paid within fifteen (15) days after written notice from Landlord, Tenant shall pay interest from the date due until the date paid at the rate of 2% above the current “prime rate” of The Chase Manhattan Bank N.A. (the “Default Rate”). Tenant shall not be required to pay any other late charge or fee for any such late payment.

4. Construction of the Base Building and Tenant Improvements.

(a)(i)Landlord shall cause the Base Building and Tenant Improvements (as defined below) to be designed and constructed at Landlord’s sole cost and expense, in a first-class and workmanlike manner, using new, first quality materials, in compliance with all certificates, permits and approvals required by applicable laws, statutes, ordinances, orders, codes, rules and regulations of all federal, state, county, city and local departments and agencies including, without limitation, the Americans With Disabilities Act of 1990 (as amended) (collectively, “Legal Requirements”) and in accordance with the Final Building Plans and Specifications (defined below).

(ii)The base building (the “Base Building”) shall consist of a two-story office building containing approximately 90,000 square feet with a minimum of 4.5 surface parking spaces per 1,000 square feet of rentable space, substantially of the design as shown as; “Phase 1’ on the preliminary drawings and building standards attached hereto as Exhibit “B” (the “Preliminary Building Drawings”).

(iii)Promptly after execution of this Lease, Landlord shall cause an architect selected by Landlord and approved by Tenant (which approval Tenant shall not unreasonably withhold or delay) (“Landlord’s Architect”) to prepare working drawings and design specifications for the Base Building based on the Preliminary Building Drawings (“Landlord’s Working Drawings and Specifications”), which shall be submitted to Tenant for Tenant’s approval in accordance with the procedures set forth below. Tenant hereby approves Gilligan & Bubnowski as Landlord’s Architect hereunder. Landlord shall use its reasonable, good faith efforts to cause the delivery of Landlord’s Working Drawings and Specifications to Tenant within thirty (30) days from the date hereof (or as soon as reasonably practicable thereafter). Within twenty (20) days after Tenant’s receipt of Landlord’s Working Drawings and Specifications, Tenant shall send a written notice to Landlord either (A) approving Landlord’s Working Drawings and Specifications, in which event Landlord’s Working Drawings and Specifications shall be binding upon Tenant in all respects and shall be deemed to be the “Final Building Plans and Specifications” hereunder, or (B) rejecting Landlord’s Working Drawings and Specifications, in which case Tenant shall include in said notice comments, in reasonable detail and in a reasonable format under the circumstances (including, without limitation, mark-ups of Landlord’s Working Drawings and Specifications) explaining the revisions and/or corrections to Landlord’s Working Drawings and Specifications desired by Tenant, which comments Tenant agrees shall be in good faith and commercially reasonable under the circumstances. In no event shall Tenant have the right to modify (except at its sole expense) the design of the Base Building

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as reflected by the Landlord’s Working Drawings and Specifications to the extent such design is substantially similar to the design reflected by the Preliminary Building Drawings. If Tenant shall fail to respond in writing to Landlord as provided above within twenty (20) days after Tenant’s receipt of the Landlord’s Working Drawings and Specifications, then Landlord’s Working Drawings and Specifications shall be deemed to be approved by, and binding upon, Tenant in all respects and shall be deemed to be the Final Landlord’s Building Plans and Specifications hereunder. In the event Tenant rejects Landlord’s Working Drawings and Specifications as provided above, Landlord shall either (I) give Tenant written notice within three (3) business days after Landlord’s receipt of Tenant’s notice that Landlord disputes the appropriateness of one or more of the revisions and/or corrections requested by Tenant or (II) make the appropriate revisions or corrections to Landlord’s Working Drawings and Specifications and resubmit the same to Tenant within thirty (30) days after Landlord’s receipt of Tenant’s comments, whereupon the foregoing procedure shall apply to the revised Landlord’s Working Drawings and Specifications as well as to any one or more further revisions of Landlord’s Working Drawings and Specifications thereafter submitted by Landlord to Tenant as aforesaid, until such time as a revised version of Landlord’s Working Drawings and Specifications shall be deemed to be approved by Tenant as aforesaid (except that Tenant’s time to respond to any revised or further revised Landlord’s Working Drawings and Specifications shall be reduced to ten (10) days). Any dispute regarding the preparation of Landlord’s Working Drawings and Specifications under this Paragraph shall be resolved by expedited arbitration in the manner provided in subparagraph 4(h) below. Landlord and Tenant shall each act in a good faith manner with respect to the conduct of such arbitration so as to obtain a resolution of their differences at the earliest possible time and thus minimize the amount of such delay. Notwithstanding the time frames provided above for the review of Landlord’s Working Drawings and Specifications (or revisions thereto) and for Landlord’s revisions of the same, the parties shall endeavor in good faith to respond to the other’s submission at their earliest practicable time under the circumstances.

(iv)Upon Tenant’s acceptance of the Final Building Plans and Specifications, Landlord shall cause Patock Construction to commence construction of the Premises. Promptly after execution of a construction contract, Landlord shall apply for a building permit and all other necessary governmental approvals for the construction of the Base Building. Landlord shall use diligent efforts to obtain such building permits and government approvals. Notwithstanding the foregoing to the contrary, in the event Landlord is not able to obtain a building permit and all required governmental approvals for the construction of the Base Building (subject only to conditions as are commercially reasonable to Landlord) on or before September 1, 2000, either party shall have the right to terminate this Lease by written notice to the other given by October 15, 2000, in which event this Lease shall terminate and neither party will have any further rights or obligations hereunder.

(b)(i)Landlord will complete the tenant improvements within the Premises in accordance with Exhibit “B” (the “Tenant Improvements”) in a first class and workmanlike manner, in compliance with the Legal Requirements and free of all construction liens and claims and Notices of Unpaid Balance. All materials used by Landlord shall be new and of first class quality. Landlord shall be responsible for obtaining all certificates of occupancy for the Premises.

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(ii)In consideration of and conditioned upon Tenant’s execution and delivery of this Lease and agreement to occupy the Premises for the Term and perform its obligations hereunder, and provided there is no Event of Default continuing, Landlord agrees to provide Tenant with an allowance in the amount of One Million Three Hundred Fifty Thousand Dollars ($1,350,000) (the “Tenant Allowance”), which Tenant Allowance shall be paid by Landlord to Tenant on the Commencement Date; such amount shall be in addition to Landlord’s obligation to construct the Tenant Improvements at Landlord’s cost and expense except as specifically provided herein. In addition, if Tenant renews for the First Renewal Term, Landlord will contribute $10.00 per square foot of the portion of the Base Building at the First Renewal Term Commencement Date. If Tenant renews this Lease for the Second Renewal Term, Landlord will contribute $5.00 per square foot of the portion of the Base Building at the Second Renewal Term Commencement Date. If for any reason (other than the default of Tenant), Landlord (or Landlord’s mortgagee if such mortgagee exercises its rights under any mortgage recorded against the Premises and takes possession of the Premises prior to payment of the Tenant Allowance) does not pay the Tenant Allowance to Tenant within ninety (90) days of Tenant’s occupancy of the Premises, the Tenant Allowance may be paid to Tenant, at Tenant’s election exercised by written notice delivered to Landlord and such mortgagee at least fifteen (15) days prior to such exercise, as follows: (i) the Tenant Allowance shall be amortized at the rate of six percent (6%) per annum for a term of sixty (60) months, and (ii) each month as Rent under the Lease becomes due, Tenant shall reduce the monthly Rent payment by the respective monthly amortized amount of the Tenant Allowance until the entire amount of Tenant Allowance and all interest thereon are paid in full.

(c)Landlord shall cause its contractors to use all commercially reasonable efforts to phase the construction of the Base Building, with the goal that the Base Building and Tenant Improvements will be substantially completed (as defined below) on or before May 1, 2001, subject to Tenant’s delivery to Landlord of an executed copy of this Lease by June 7, 2000 (the “Target Date”). The Base Building and Tenant Improvements shall be deemed “substantially completed” on the date (i) the Base Building and Tenant Improvements are completed except for minor or insubstantial details of construction, mechanical adjustment or decoration which remain to be performed, the non-completion of which do not materially interfere with Tenant’s installation of Tenant’s Property and Tenant’s use of the Premises for Tenant’s intended purposes. At or prior to the Commencement Date, representatives of Landlord and Tenant shall inspect the Premises and shall cooperate in producing and signing a punch list identifying any portions of the Base Building which have either not been completed or which have been not completed properly, and Landlord shall cause all items on such agreed punch list to be diligently completed or corrected, but such items shall not cause a postponement in the Commencement Date.

(d)If the Premises are not substantially complete by July 1, 2001, Landlord shall compensate Tenant for the difference between (i) the monthly rent (base rent and additional rent) payments that Tenant is obligated to pay under its lease for Tenant’s current location at 6 Industrial Way, Eatontown, New Jersey (the “Existing Space”) during the last year of the term of such lease and (ii) the monthly rent payment due on and after July 1, 2001 (as calculated, the “Holdover Rent”), prorated on a day for day basis based upon the actual number of days between July 1, 2001 and the date of substantial completion that elapse. Provided,

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however, the number of days for which Landlord shall be required to compensate Tenant pursuant to this Section 4(d) shall be decreased on a one for one basis for each day of delay caused by any of the actions, occurrences or omissions described in Section 4(e) below. Landlord will only be liable to Tenant hereunder for actual Holdover Rent charged by and paid to Tenant’s landlord at the Existing Space.

(e)If the occurrence of substantial completion of the Base Building and Tenant Improvements shall be delayed due to:

(i)changes in the Base Building and Tenant Improvements which are requested by Tenant and approved by Landlord;

(ii)interference by Tenant or its agents, employees or contractors in installation of Tenant’s Property; or

(iii)any act or omission or Tenant or any of its employees, agents or contractors,

then the Premises shall be deemed substantially complete on the date when they would have been ready but for such delay (certified to Tenant in writing by Landlord’s Architect), and the Commencement Date shall be deemed to occur on such earlier date.

(f)If and when Tenant shall take actual possession of the Premises, it shall be conclusively presumed that the same were in satisfactory condition as of the date of such taking of possession, unless within thirty (30) days after such date Tenant shall give Landlord notice specifying the respects in which the Premises were not in satisfactory condition.

(g)In the event of a dispute between Landlord and Tenant with respect to the approval of Landlord’s Working Drawings and Specifications, such dispute shall be resolved by a single arbitrator appointed in accordance with the then-rules of the American Arbitration Association (or successor thereto) which arbitrator shall render his decision within fifteen (15) days of appointment. The arbitrator shall have at least ten (10) years recent experience as an architect in the area in which the Premises is located and shall not be related in any way to either Landlord or Tenant.

(h)Provided no Event of Default has occurred and subject to any written agreement of the parties, any trade fixtures or equipment installed in or attached to the Premises and all other property of Tenant which was personal property before its installation shall remain Tenant’s property. Tenant shall have the right during the Term, and shall be obligated before the Expiration Date, to remove its trade fixtures, trade equipment and personal property which it may have installed in or attached to the Premises (but not the Tenant Improvements), and which have not been conveyed to Landlord. Tenant shall, in a good and workmanlike manner, on or before the Expiration Date, promptly repair any damage resulting from such removal, plug or close in an approved manner any connection to sources of gas, air, water, electricity or heat or cooling ducts, and do whatever is necessary to leave the Premises undefaced and undamaged. In addition, Tenant shall be liable for any damage incurred by

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Landlord as a result of Tenant’s failure to remove such fixtures, equipment and property by the Expiration Date.

(i)Within thirty (30) days after the Commencement Date, Landlord shall cause the square footage of the as-built Base Building to be measured by Landlord’s Architect. The determination of Landlord’s Architect shall be conclusive. For the purposes of this Lease, “square footage” shall mean the square footage of floor area within the Base Building and all components thereof measured to the outside of exterior glass, without exclusion for interior partitions, structural members, mechanical rooms or vertical penetrations. Within ten (10) days of Landlord’s Architect’s determination of the square footage amount, the parties shall execute an amendment to the Lease reflecting the actual Commencement Date, the actual square footage of the Base Building, and the Fixed Rent payable under the Lease.

(j)Notwithstanding anything contained in this Lease to the contrary, if the Premises are not substantially complete by October 31, 2001, either Landlord or Tenant may terminate this Lease by giving the other party not less than ten (10) days prior written notice; provided, however, Tenant’s right to terminate this Lease by October 31, 2001 shall be extended on a day for day basis, for any delay in Landlord substantially completing the Premises caused by the actions, occurrences or omissions described in Section 4(e) above; and further provided, if Landlord substantially completes the Premises within the ten (10) day notice period set forth herein, any notice to terminate given by Tenant shall be deemed null and void and Landlord and Tenant shall remain bound by the terms of this Lease.

(k)Upon substantial completion of the Premises, Landlord shall make available to and, to the extent possible without terminating Landlord’s rights thereunder, assign all warranties and rights against all contractors, subcontractors, material suppliers and manufacturers with respect to any portion of the Premises and the fixtures and equipment installed therein by Landlord under this Lease for which Tenant is responsible under this Lease to complete all repairs and maintenance and replacement, if necessary. Without limiting the foregoing, Landlord will use all reasonable efforts to obtain standard warranties provided by the specific trade or material, equipment or system manufacturer, in accordance with the provisions of Exhibit “B” attached hereto.

(l)Subject to the right of Landlord to terminate this Lease pursuant to subparagraph 4(a)(iv) above, and subparagraph 4(m) below, and provided that no Event of Default shall have occurred and is continuing after expiration applicable notice and cure periods, Dennis Townsend hereby guaranties to Tenant the lien free completion of the Premises in accordance with this Paragraph 4, as the same may be affected by any actions, occurrences or omissions described in subparagraph 4(e) above.

(m)Tenant acknowledges that Landlord does not own the Land upon which the Premises and the Tenant Improvements are being completed, Landlord having entered into an agreement of sale dated as of June 1, 2000 (the “Agreement of Sale”) with Tormee Company to acquire the Land. Landlord’s right to purchase the Land is expressly contingent upon certain contingencies contained in the Agreement of Sale being satisfied or otherwise waived by Landlord. If Landlord determines for any reason that it will not obtain legal title to

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the Land, Landlord shall have the right to terminate this Lease by written notice to Tenant given by July 3, 2000, in which event the Lease shall terminate and neither party will have any further rights or obligations hereunder. Unless Landlord or Tenant has terminated this Lease pursuant to subparagraph 4(a)(iv) or this subparagraph 4(m), if Landlord does not obtain legal title to the Land on or before the earlier of (i) sixty (60) days after the date that Landlord receives all permits and approvals necessary for completion of the Base Building and the Tenant Improvements, or (ii) November 1, 2000, Tenant shall have the right, exercisable by written notice delivered to Landlord no later than 5:00 pm on November 5, 2000, to terminate this Lease.

5. Tenant’s Use of Premises Before Commencement Date. (a) Tenant may, at any time after written notice from Landlord, without incurring any liability for payment of Rent, enter upon the Premises to measure the Premises, design and layout the Tenant Improvements and Tenant’s Property, and place and install its personal property, furniture, furnishings, signs, telecommunication equipment, equipment and trade fixtures (“Tenant’s Property”) and construct the Tenant Improvements, in the Premises at Tenant’s risk and expense and subject to all other terms and conditions of this Lease, including, but not limited to, the insurance requirements set forth at Paragraphs 13 and 14 hereof. In exercising the foregoing rights, Tenant shall not cause any interference with or delay to Landlord or any of its employees, agents, representatives, contractors or invitees in constructing the Base Building. Tenant’s indemnity in Paragraph 15 shall apply to Tenant’s entry under this Paragraph 5. Notwithstanding the foregoing, if Tenant exercises the rights hereunder and is conducting business from the Premises, Tenant shall pay to Landlord within ten (10) days of Tenant’s receipt of a bill or invoice therefor, Tenant’s share of all electricity, water, sewer, gas, air conditioning, heating and ventilation and all other utilities serving the Base, Building in connection with such early access to and use of the Premises.

6. Use.

(a)Tenant shall have the right to use and occupy the Premises for executive and general office use, research and development, computer processing and similar, related uses permitted under the Borough of Tinton Falls Zoning Code; provided, however, Tenant shall not use or occupy the Premises for the following purposes:

(i)manufacturing, fabricating and assembly operations;

(ii)agricultural uses; or

(iii)retail/warehouse uses, lumber yards or home improvement centers.

(b)Notwithstanding anything to the contrary provided in Paragraph 6(a), Tenant shall not use or occupy the Premises or any portion thereof, permit or suffer the same to be used or occupied and/or do, or permit or suffer anything to be done, in or on the Premises or any part thereof, that would, in any manner or respect:

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(i)violate any certificate of occupancy or Legal Requirement in force relating to the Premises;

(ii)make void or voidable any insurance then in force with respect to the Premises, or render it impossible to obtain fire or other insurance thereon required to be furnished by Landlord or Tenant under this Lease;

(iii)cause structural or other injury to the Premises, or constitute a private or public nuisance or waste;

(iv)render the Premise incapable of being used or occupied after the expiration or sooner termination of the term of this Lease for the purposes for which the same were permitted to be used and occupied on the day upon which Tenant shall first open the Premises for business to the public, except for ordinary wear and tear and damage by fire or other casualty and repairs for which Tenant is not responsible under this Lease; and/or

(v)violate the provisions of Paragraph 9 hereof.

7. Tenant’s Care of the Premises.

(a)Tenant shall, at Tenant’s sole expense, maintain the interior of the Building in a neat, clean, sanitary condition and in good order and repair (making replacements as necessary). In addition, Tenant agrees to not overload, damage or deface the Premises; and to properly store and dispose of trash. Notwithstanding anything to the contrary contained herein, in the event of damage to the Building systems or structural elements of the Premises due to the negligence of Tenant, its employees, agents, invitees or contractors, then Tenant shall be solely responsible for the necessary repairs and replacements; however, if Landlord receives any monies from any insurance carrier issuing insurance on the Premises and covering the damage which occurred, Landlord shall either credit against the amounts due from Tenant hereunder for repair of such damage the amount of the insurance actually received or, if Tenant shall be required to repair such damage, make such insurance proceeds available to Tenant to pay the actual costs incurred by Tenant to complete such repairs.

(b)Tenant may make alterations, additions or improvements to the Premises without the prior written consent of Landlord only if such alterations, additions or improvements do not involve changes to the structural elements of the Base Building or building systems and do not lessen the value of the Premises. In the event any such alterations, additions or improvements to be made involve structural elements of the Premises or building systems in the Building, the same shall only be made upon the prior written consent of Landlord, which consent Landlord shall not unreasonably withhold provided that such alterations, additions or improvements do not lessen the value of the Premises or do not change the basic design or utility of the Property. All work performed in connection with such alterations, additions or improvements shall be performed in accordance with Legal Requirements and otherwise pursuant to the terms of this Lease. Any and all permits and governmental approvals in connection with any such work shall be obtained by the Tenant at its sole cost and expense prior to the commencement of any such work. Landlord agrees to cooperate with Tenant, at no

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expense to Landlord, in obtaining any such required permits or approvals. All alterations, additions or improvements of a permanent nature made or installed by Tenant in the Premises shall become the property of Landlord at the expiration or early termination of this Lease. Landlord reserves the right to require Tenant to remove any improvements or additions made to the Premises by Tenant after the date hereof without Landlord’s consent (to the extent consent is required) and to restore the Premises to their condition prior to such alteration, addition or improvement, reasonable wear and tear, unrepaired casualty and condemnation excepted.

(c)(i)Tenant, at its expense, shall comply with all present or future Legal Requirements affecting the Premises and with any reasonable requirements of the insurance companies insuring Landlord against damage, loss or liability for accidents in or connected with the Premises to the extent that the same shall affect or be applicable to (i) Tenant’s particular manner of use of the Premises (as opposed to its mere use thereof), (ii) alterations and improvements made by Tenant, or (iii) a breach by Tenant of its obligations under this Lease, it being understood that Tenant shall not be, and Landlord shall be, responsible for complying with Legal Requirements or insurance requirements imposed on the Premises generally and which would have to be complied with whether Tenant was then in occupancy of the Premises. Nothing herein contained, however, shall be deemed to impose any obligation upon Tenant to make any structural changes or repairs unless necessitated by reason of a particular use by Tenant of the Premises. Landlord shall be responsible for complying with all Legal Requirements affecting the design, construction and operation of the Base Building and/or Tenant Improvements or relating to the performance by Landlord of any duties or obligations to be performed by it hereunder.

(ii)The parties acknowledge that Title III of the Americans With Disabilities Act of 1990 and the regulations and rules promulgated thereunder, as all of the same may be amended and supplemented from time to time (collectively referred to herein as the “ADA”) establish requirements for accessibility and barrier removal, and that such requirements may or may not apply to the Premises and the Property depending on, among other things: (1) whether Tenant’s business is deemed a “public accommodation” or “commercial facility”, (2) whether such requirements are “readily achievable”, and (3) whether a given alteration affects a “primary function area” or triggers “path of travel” requirements. The parties hereby agree that: (a) Landlord shall be responsible for ADA Title III compliance in the common areas and those portions of the Premises not in possession of Tenant, (b) Tenant shall be responsible for ADA Title III compliance within the Premises following delivery of possession, and (c) Landlord may perform, or require that Tenant perform, and Tenant shall be responsible for the cost of, ADA Title III “path of travel” requirements triggered by alterations within the Premises made subsequent to the commencement of the Term at the request of Tenant.

(d)No later than the Expiration Date or earlier termination of this Lease as provided herein, Tenant will remove all Tenant’s equipment, furnishings, furniture, including removable partitions and workstations, and other personal property and repair all injury done by or in connection with installation or removal of said property and surrender the Premises (together with all keys, access cards or entrance passes to the Building) in as good a condition as they were at the beginning of the Term, reasonable wear and tear, insured casualty and condemnation excepted. All property of Tenant remaining in the Premises after expiration or

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earlier termination of the Term shall be deemed conclusively abandoned and may be removed by Landlord, and Tenant shall reimburse Landlord for the cost of removing the same, subject however, to Landlord’s right to require Tenant to remove any improvements or additions made to the Premises by Tenant.

(e)In doing any work in the Premises, Tenant will use only contractors or workers reasonably consented to by Landlord in writing prior to the time such work is commenced. Tenant shall promptly remove any lien or claim of lien for material or labor claimed against the Premises, by such contractors or workmen engaged by Tenant if such claim should arise, and hereby indemnifies and holds Landlord harmless from and against any and all losses, costs, damages, expenses or liabilities including, but not limited to, attorney’s fees, incurred by Landlord, as a result of or in any way related to such claims or such liens of contractors or workmen engaged by Tenant. All work shall be performed in accordance with Legal Requirements.

(f)All personal property brought into the Premises by Tenant, its employees, licensees and invitees shall be at the sole risk of Tenant, and Landlord shall not be liable for theft thereof or of money deposited therein or for any damages thereto, such theft or damage being the sole responsibility of Tenant, except to the extent caused by the negligence of Landlord or its employees, it being understood Landlord shall not be responsible for the negligence or willful misconduct of its contractors or representatives.

(g)Tenant, at its expense, shall comply with all Legal Requirements which pertain to Tenant’s, its agents’, employees’, and contractors’ use of the Premises, including, but not limited to the Americans with Disabilities Act and all Laws affecting the physical condition of the Premises or the particular manner in which Tenant uses the Premises, and all legal Requirements pertaining to Tenant’s, its agents’, employees’, and contractors’ use, storage or disposal of any hazardous substance, pollutant or other contaminant, waste disposal, air emissions and other environmental matters.

8. Landlord’s Obligations

(a)During the Term, Landlord shall perform in a good and workmanlike manner in compliance with all applicable Legal Requirements, all maintenance, repairs and replacements, in a good and workmanlike manner, using materials of comparable quality, to the following: (i) the structural components of the Premises, including without limitation the roof, roofing system, exterior walls (to the extent of a failure of the same), bearing walls, support beams, foundations, columns, and lateral support to the Premises; and (ii) the Premises caused by the negligence or willful misconduct of Landlord, its agents, independent contractors, representatives or employees. All maintenance, repair and replacements of any and all other improvements to the Premises, including, but not limited to the plumbing, lawn and fire sprinklers, heating, ventilation and air conditioning systems, electrical and mechanical lines and equipment associated therewith, the elevators, all exterior improvements, including walks, drive aisles, parking areas and landscaping and all windows, doors, door frames and window glass, shall be the sole responsibility of Tenant, except as specifically limited by this Lease, and shall be completed in a good and workmanlike manner, using materials of comparable quality.

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(b)Landlord shall have no obligation or liability with respect to or in any way connected with the Premises, or service to the Premises, except as specifically set forth in Paragraph 8(a) above. Landlord shall not be deemed to have committed a breach of any repair obligations unless it makes repairs negligently or fails to commence repairs in a reasonable time after Landlord receives notice from Tenant, and Landlord’s liability in any case shall be limited to the cost of making the required repairs.

(c)Landlord shall not be liable For indirect or consequential damages for any reason, or for any inconvenience, interruption or consequences resulting from the failure of utilities or any service, making repairs, improvements or resulting from leaks from steam, gas, electricity, water or any other substance from pipes, wires or other conduits, or from the bursting or stoppage thereof; or from leaks of water, snow or rain from the plumbing or roof, or for wetness or dampness for any reason.

9. Hazardous Wastes/Environmental Compliance.

(a)Tenant covenants and agrees that Tenant will not store, use, or dispose of any substances, pollutants, or other contaminants on or about the Premises which would or could be deemed or determined to be a “hazardous substance” or “hazardous waste” under any federal, state or local statute, law, ordinance or regulation now or hereafter in effect (“Hazardous Substances”), except in such quantities as allowed and in_. such containers as permitted under and only in accordance with all applicable environmental laws. Tenant further agrees to indemnify and hold Landlord harmless from and against all claims, costs, and liabilities, including but not limited to attorneys’ fees and costs of litigation, incurred as a result of a release or threatened release on the Premises of Hazardous Substances and which are not caused by Landlord, its employees, agents or contractors. The foregoing indemnification of Landlord by Tenant includes, without limitation, all costs incurred by or imposed upon Landlord in connection with any judgments, damages, penalties, fines, liabilities or losses (including, without limitation, diminution in value of the Premises, damages for the loss or restriction on use of any space or of any amenity in or around the Premises, damages arising from any adverse impact on marketing of space, and sums paid in settlement of claims, attorneys’ fees, consultant fees and expert fees) or in connection with the investigation of site conditions or any clean-up, or remedial removal or restoration work required by anyfederal, state or local governmental agency or political subdivision occurring as a result of the presence of any Hazardous Substance in the Premises caused or permitted by Tenant or for which Tenant is legally liable. Tenant further agrees to maintain insurance to cover such claims, costs, and liabilities, in amounts and with coverages and insurance carriers satisfactory to Landlord, in Landlord’s reasonable judgment. Tenant’s obligations under this Paragraph will survive the termination or early expiration of the Lease. Any default under this Paragraph 9 shall be a material default enabling Landlord to exercise any of the remedies set forth in this Lease.

(b)Tenant agrees to comply with the provisions of the New Jersey Industrial Site Recovery Act (“ISRA”), if applicable, or other similar applicable laws, prior to its termination of any activities in the Premises or the expiration of the term of this Lease, whichever is earlier. If ISRA is not applicable, Tenant will obtain a Letter of Nonapplicability from the New Jersey Department of Environmental Protection by the time sated in the previous

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sentence. If in connection with a sale, transfer, or mortgage of the Property by Landlord or other transaction by the Landlord where Landlord is required or deems it desirable to comply with ISRA, Tenant will cooperate with Landlord and provide any information reasonably requested by Landlord to comply with ISRA or to obtain a Letter of Nonapplicability.

(c)Landlord shall indemnify and hold Tenant harmless from and against all claims, costs and liabilities including, but not limited to, attorneys’ fees and costs of litigation, incurred as a result of a release of Hazardous Substances on the Premises which occurs prior to the date Tenant first occupies or otherwise has the right to enter upon the Premises, which release occurred as a result of the acts or omissions of Landlord, its employees, agents or contractors. The foregoing indemnification of Tenant by Landlord includes, without limitation, all costs incurred by or imposed upon Tenant in connection with any judgments, damages, penalties, fines, liabilities or losses or in connection with the investigation of site conditions or any clean-up, or remedial removal or restoration work required by any federal, state or local governmental agency or political subdivision occurring as a result of the presence of any Hazardous Substance in the Premises caused or permitted by Landlord or for which Landlord is legally liable hereunder.

10. Assignment and Sublease.

(a)Tenant may not, without the prior written consent of the Landlord, which shall not be unreasonably withheld, delayed or qualified, assign this Lease or sublet the whole or any part of the Premises. Landlord’s failure to respond within ten (10) business days after submittal of the name of the proposed subtenant or assignee, and any material financial information which the subtenant or assignee has given to Tenant, and the basic business terms of the assignment or sublease, shall be deemed approval of the proposed assignment or sublease. It shall be deemed unreasonable for Landlord to withhold its consent if such assignment or sublease meets all of the following conditions:

(i)Tenant is not in default of its obligations under this Lease beyond any applicable cure period;

(ii)the assignee assumes all of the obligations of this Lease, or the subleassee agrees not to violate the terms and conditions of this Lease;

(iii) such assignment or subleassee will not permit the use of the Premises for any purpose forbidden by this Lease;

(iv)Tenant promptly furnishes Landlord with an executed copyof the assignment or sublease; and

(v)such assignee has a net worth equal to or greater than Tenant and an image and reputation consistent with a first class office building.

(b)Any assignment of this Lease or any sublease of the Premises shall not relieve Tenant of any of its obligations under this Lease.

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(c)The consent of the Landlord need not be obtained if the assignment or sublease is to any present or future affiliate (including any wholly-owned subsidiary thereof) of Tenant, or to any unaffiliated new entities that may be formed by Tenant pursuant to a corporate reorganization, including any subsidiary or affiliated entity thereof (collectively a “Tenant Affiliate”) which Tenant Affiliate’s stock shall be at least 51% owned by the same entities or persons which own at least 51% of the stock of Tenant. Tenant shall give Landlord written notice of any assignment to a Tenant Affiliate, including the effective date of the assignment (“Effective Date”). Tenant shall remain bound to the terms of this Lease.

(d)Tenant, after notice to, but without the consent of Landlord, may assign this Lease to an entity to which it sells or assigns all or substantially all of its assets or ownership interests or with which it may be consolidated or merged, provided such purchasing, consolidated, or merged entity, in writing, shall assume and agree to perform all of the obligations of Tenant under this Lease, such purchasing, consolidated, or merged entity shall have a net worth at least equal to the net worth of the Tenant as of the date hereof, and such assignee shall deliver such assumption with a copy of such assignment to Landlord within ten (10) days after such assignment is completed, and provided further that Tenant shall not be released or discharged from any liability under this Lease by reason of such assignment.

(e)Notwithstanding the foregoing, Landlord’s consent to a sale of Tenant s stock shall not be required for and such sale shall not be deemed an assignment or sublease under this Section 10 if such sale occurs (I) in connection with an offering of securities in Tenant to generate capital for its business operations, (ii) in connection with an initial public offering; of stock in Tenant that results in Tenant being listed on a “national securities exchange,” or (iii) after such time as Tenant’s stock is publicly traded on a “national securities exchange.”

(f)If Landlord consents to a proposed assignment or sublease, then Landlord will have the right to require Tenant to pay to Landlord a sum equal to fifty percent (50%) of any rent or other consideration paid to Tenant by any proposed transferee that (after deducting the costs of Tenant, if any, in effecting the assignment or sublease, including reasonable alterations costs, commissions and legal fees) is in excess of the Fixed Rent allocable to the transferred space then being paid by Tenant to Landlord pursuant to this Lease. All such sums owed to Landlord will be payable to Landlord at the time Tenant receives such payment from the assignee or subtenant. Paragraph 10(d) shall not apply to any assignment or sublease under Paragraph 10(c).

11. Damage or Destruction.

(a)In the event of any fire or other casualty (“Casualty”) affecting all or any part of the Premises Landlord shall, within sixty (60) days after the Casualty, give notice to Tenant (“Landlord’s Notice”) of the length of time required to complete the restoration of the Premises. If restoration of the Premises shall be reasonably estimated to require more than 180 days to complete from the date of the Casualty or the Premises are not restored within 270 days from the date of the Casualty, then, in either such instance, Tenant shall have the right, exercisable by notice to Landlord (“Tenant’s Notice”) within thirty (30) days after receipt by Tenant of Landlord’s Notice or after the expiration of the 270 day period for completion of

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restoration, as the case may be, to terminate this Lease effective not less than thirty (30) days after the date of Tenant’s Notice or the expiration of such 270 day period.

(b)If this Lease is not terminated as provided in Paragraph 11(a), then Landlord shall, at its sole cost and expense, but only to the extent of available insurance proceeds, restore the Premises as soon as reasonably practical to the condition existing prior to the Casualty. During the restoration period, the Rent shall abate for the period during which the Premises are not suitable for Tenant’s business needs. If only a portion of the Premises is damaged, the Rent shall abate proportionately.

12. Eminent Domain. If all of the Premises are taken by exercise of the power of eminent domain (or conveyed by Landlord in lieu of such exercise), this Lease will terminate on a date (the “Termination Date”) which is the earlier of the date upon which the condemning authority takes possession of the Premises or the date on which title to the Premises is vested in the condemning authority. If more than twenty-five percent (25%) of the Premises or twenty-five percent (25%) of the parking area is so taken, Tenant will have the right to cancel this Lease by written notice to Landlord given within twenty (20) days after the Termination Date. If less than twenty-five percent (25%) of the Premises or twenty-five percent (25%) of the parking area is so taken, or if the Tenant does not cancel this Lease according to the preceding sentence, the Fixed Rent and Additional Rent will be abated in the proportion of the rentable area of the Premises so taken to the rentable area of the Premises immediately before such taking. If twenty-five percent (25%) or more of the Premises is so taken, Landlord may cancel this Lease by written notice to Tenant given within thirty (30) days after the Termination Date. In the event of any such taking, the entire award will be paid to Landlord, and Tenant will have no right or claim to any part of such award; however, Tenant will have the right to assert a claim against the condemning authority, so long as Landlord’s award is no: reduced as a consequence of such claim, for Tenant’s moving expenses and trade fixtures owned by Tenant and interruption to Tenant’s business.

13. Insurance.

(a)Tenant shall carry (at its sole expense from and after the date Landlord permits Tenant and/or its contractors to enter the Premises for purposes of installation of Tenant’s Property and during the Term) the following insurance:

(i)all-risk insurance, or its equivalent, insuring Tenant’s interest in its improvements to the Premises and any and all furniture, equipment, supplies, contents and other property owned, leased, held or possessed by it and contained therein, such insurance coverage to be in an amount equal to the full insurable value of such improvements and property, as such may increase from time to time;

(ii)workers’ compensation insurance as required by applicable law;

(iii)commercial general liability insurance containing coverages reasonably acceptable to Landlord, insuring Tenant, Landlord, Townsend Capital,

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LLC and Landlord’s mortgagee against any and all liability for injury to or death of a person or persons and for damage to property occasioned by or arising out of any construction work being done on the Premises, or arising out of the use or occupancy of the Premises by Tenant, its employees, agents, representatives or contractors, such policy to have a combined single limit of not less than Five Million and No/100 Dollar ($5,000,000) for any bodily injury or property damage occurring as a result of or in conjunction with the above, which liability insurance shall (A) be primary insurance as to all claims thereunder and provide that any insurance carried by Landlord is not excess and is non-contributing with any insurance requirement of Tenant; (B) contain cross-liability endorsements or a severability of interest clause acceptable to Landlord; and (C) specifically cover the liability assumed by Tenant under this Lease including, without limitation, Tenant’s obligations under Paragraph 13(a);

(iv)insurance, against loss or damage from (A) leakage of sprinkler systems and (B) explosion of steam boilers, air-conditioning equipment, high pressure piping, machinery and equipment, pressure vessels or similar apparatus now or hereafter installed in the Premises (without exclusion for explosions), in an amount at least equal to $2,000,000; and

(v)business interruption insurance.

The insurance required in subparagraph (iii) above shall name Landlord, Townsend Capital, LLC and Landlord’s mortgagee as additional insureds. All said insurance policies maintained by Tenant shall be carried with companies licensed to do business in the State of New Jersey reasonably satisfactory to Landlord and shall be noncancellable except after thirty (30) days’ written notice to Landlord. Evidence of such insurance in Accord Form 27 format and signed by a reputable insurance agent shall be delivered to Landlord on or prior to Tenant’s possession of the Premises and at least twenty (20) days prior to the expiration of each respective policy term. Each insurance policy will contain a provision requiring thirty (30) days prior written notice to Landlord and any named insured if the policy is canceled or not renewed.

(b)Throughout the making of any alterations or improvements (other than mere decorations) by Tenant, its agents, contractors or employees, Tenant or Tenant’s contractor(s), at its expense, shall carry or cause to be carried (i) workers’ compensation insurance in statutory limits, covering all persons employed in connection with such Improvements, (ii) property insurance, completed value form, covering all physical loss (including any loss of or damage to supplies, machinery and equipment) in connection with the making of such alterations or improvements, and (iii) comprehensive liability insurance, with completed operations endorsement, covering any occurrence in or about the Premises in connection with such improvements, which comprehensive liability insurance policy shall have a combined single limit of not less than Three Million and No/100 dollars ($3,000,000). Tenant shall furnish Landlord with satisfactory evidence that such insurance is in effect before the commencement of its improvements and, on request, at reasonable intervals thereafter. Evidence of such insurance in Accord Form 27 format and signed by a reputable insurance agent shall be delivered to Landlord prior to the commencement of any such alterations or improvements. Each policy shall name Landlord, Townsend Capital, LLC and Landlord’s mortgagee as an additional

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insured and shall contain a provision requiring thirty (30) days prior written notice to Landlord and any named insured if the policy is canceled or not renewed.

(c)Landlord shall maintain, at Tenant’s expense, fire insurance, with standard “all risk” coverage, for the Building in an amount equal to 100% of the full replacement value of the Building, boiler insurance and loss of rents insurance. If Landlord elects to self-insure, then Tenant shall have the same waiver of subrogation and other benefits as Tenant would have had if Landlord had carried a commercially customary casualty insurance policy with standard deductibles.

(d)Tenant shall have the right to include the Premises within a blanket policy of insurance including the Premises and other locations.

(e)(i)As long as Xpedite Systems, Inc. or a permitted assignee under Paragraph 11 remains the Tenant under this Lease, Tenant shall have the right to self-insure for the coverages required above, on and subject to the following terms and conditions:

(A)“Self-insure” shall mean that Tenant is itself acting as though it were the insurance company providing the insurance required under the provisions hereof and Tenant shall pay the amounts due in lieu of insurance proceeds and costs of defense that would have been payable if the insurance policies had been carried, which amounts shall be treated as insurance proceeds for all purposes under this Lease;

(B)All amounts which Tenant pays or is required to pay and all loss or damages resulting from risks for which Tenant has elected to self-insure shall be subject to the waiver of subrogation provisions of Paragraph 14 hereof and shall not limit Tenant’s indemnification obligations set forth in Paragraph 15(a) hereof;

(C)Tenant’s right to self-insure and to continue to self-insure is conditioned upon and subject to the following:

(1)Tenant now having and hereafter maintaining a tangible net worth of at least $500,000,000 or Tenant maintaining a rating of BBB or better by Standard and Poor’s; and

(2)No events occurring that make it apparent that such net worth has been diminished below the required level (such as the bankruptcy of Tenant);

(D)In the event Tenant fails to fulfill the requirements of Paragraph 13(e)(i)(C) above, then Tenant shall immediately lose the right to self insure and shall be required to provide the insurance otherwise specified herein; provided, however, that Tenant’s self-insurance shall continue in full force and effect until such insurance is issued by a qualifying insurance company.

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(ii)In the event Tenant elects to self-insure and an event or claim occurs for which a defense and/or coverage would have been available from the insurance company, Tenant shall do the following:

(A)Undertake the defense of any claim, including, without limitation, a defense of Landlord, at Tenant’s sole cost and expense; and

(B)use its own funds to pay any claim or replace any property or otherwise provide the funding which would have been available from insurance proceeds but for such election by Tenant to self-insure.

(iii)In the event of a casualty, the following shall apply:

(A)the self-insurance proceeds shall be paid to Landlord for restoration of the Premises and the Tenant’s obligations under the Lease shall continue in full force and effect; or

(B)if Tenant elects to terminate this Lease in accordance with Paragraph 11 hereof, the proceeds allocated to the Tenant Improvements shall be paid to Landlord and the Lease shall thereupon terminate.

(iv)In the event that Tenant elects to self-insure, Tenant shall provide Landlord and Landlord’s mortgagee, and such other parties that Landlord may request with evidence of self-insurance specifying the extent of self-insurance coverage hereunder in the form attached as Exhibit D hereto and containing a provision reasonably satisfactory to Landlord pursuant to which Tenant, as self-insurer, waives its right of recovery against Landlord. Any insurance coverage provided by Tenant shall be for the benefit of Tenant, Landlord and Mortgagee, and such other parties requested by Landlord as their respective interests may appear and shall be subject to the coverage inclusions and exclusions typically found in the respective insurance policies issued by national reputable insurance companies. Notwithstanding Tenant’s election to self-insure, Landlord, at its election, may purchase owner’s commercial general liability Insurance and Tenant shall reimburse Landlord for such costs as additional rent within 30 days of Tenant’s receipt of a bill therefor.

(v)If Tenant elects to self-insure as provided herein, its obligations as self-insurer shall not limit, restrict or adversely affect in any way any of Tenant’s other obligations under this Lease including, without limitation, the indemnification set forth in Paragraph 15.

14. Subrogation and Waiver. Anything in this Lease to the contrary notwithstanding, Landlord and Tenant each hereby waives any and all rights of recovery, claim, action or cause of action, against the other, its agents, servants, partners, shareholders, officers, or employees, for any loss or damage that may occur to the Premises, or any improvements thereto, or any personal property of such party therein, by reason of fire, the elements, or any other cause which could be insured against under the terms of standard fire and extended coverage insurance policies regardless of cause or origin, including negligence of the other party hereto, its agents,

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officers, partners, shareholders, servants, or employees, and covenants that no insurer shall hold any right of subrogation against such other party. Landlord and Tenant will cause their respective insurers to issue appropriate waiver of subrogation rights endorsements to all policies of fire and extended coverage insurance carried in connection with the Premises.

15. Indemnity.

(a)Tenant shall indemnify Landlord against any expense, loss or liability paid, suffered or incurred as the result of the breach of any covenant or condition of this Lease by, or negligence or willful misconduct of, Tenant, its agents, servants and employees. Except as otherwise provided in this Lease, Tenant shall indemnify and hold the Landlord harmless against all claims and expenses for personal injury or property damage occurring upon the Premises, except any claim or expense which is due to the negligence or willful misconduct of the Landlord, its agents or employees. The indemnity herein provided shall be for the exclusive benefit of the Landlord, its agents and employees, successors and assigns, and shall not inure to the benefit of any third party. The liability of Tenant to indemnify Landlord shall not extend to any matter against which Landlord shall be effectively protected by insurance. This provision shall constitute the only indemnification by Tenant in this Lease.

(b)Tenant covenants and agrees that, on and after the date hereof, Landlord shall not be liable to Tenant for any injury to or death of any person or persons or for damage to any property of Tenant, or any person claiming through Tenant, arising out of any accident or occurrence in or about the Premises, including, but not limited to, injury, death or damage caused by the Premises becoming out of repair or caused by any defect in or failure of equipment, pipes or wiring, or caused by broken glass, or caused by the backing up of drains, or caused by gas, water, steam, electricity, or oil leaking, escaping or flowing into the Premises, or caused by fire or smoke, excepting however, liability caused by or resulting from the [gross] negligence or willful misconduct of Landlord or its agents, employees, licensees or contractors.

(c)The obligations of Tenant under this Paragraph 15 shall survive the expiration or earlier termination of this Lease.

16. Subordination and Non-Disturbance.

(a)Subject to the following sentence, this Lease is and shall be subject and subordinate to all ground leases, deeds of trust and mortgages (collectively, “Mortgages”) which may now or hereafter affect the Premises and to all renewals, modifications, consolidations, replacements, and extensions of such Mortgages; provided, that at Landlord’s election, this Lease shall be superior to any or al Mortgages. This provision is self-executing and no further instrument shall be required to establish such subordination or superiority; provided, if Landlord shall obtain and deliver to Tenant from any present or future mortgagee, trustee, fee owner, prime lessor or any person having an interest in the Premises superior to this Lease (“Mortgagee”) such Mortgagee’s customary form of a written subordination, non-disturbance and attornment agreement in recordable form providing, among other things, that so long as Tenant performs all of the terms, covenants and conditions of this Lease and agrees to attorn to the mortgagee, beneficiary of the deed of trust, purchaser at a foreclosure sale,

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prime lessor or fee owner or such customary terms and conditions as such Mortgagee may reasonably require, substantially in the form attached hereto as Exhibit “G”, this provision is self-executing and no further instrument shall be required to establish such subordination or superiority. Tenant’s rights under this Lease shall not be disturbed and shall remain in full force and effect for the Term, and Tenant shall not be joined by the holder of any mortgage or deed of trust in any action or proceeding to foreclose thereunder. Tenant’s obligations to pay rent upon the Commencement Date shall be conditioned upon receipt of a non-disturbance agreement substantially in the form attached hereto as Exhibit “G”

(b)After receiving notice and a notice address from any Mortgagee, no notice from Tenant to Landlord alleging any default by Landlord shall be effective unless and until a copy of the same is given to such Mortgagee. Any such Mortgagee shall have thirty (30) days for the cure of any such default and if such default cannot reasonably be cured within such thirty (30) days, then Mortgagee shall have thirty (30) days within which to commence a cure and provided such Mortgagee is proceeding diligently, such longer period as may be reasonably necessary to complete such cure. The curing of any of Landlord’s defaults by such Mortgagee shall be treated as performance by Landlord.

(c)With respect to any assignment by Landlord of Landlord’s interest in this Lease, or the rents payable hereunder, conditional in nature or otherwise, which assignment is made to any Mortgagee, Tenant agrees that the execution thereof by Landlord, and the acceptance thereof by the Mortgagee, shall never be deemed an assumption by such Mortgagee of any of the obligations of Landlord hereunder, unless such Mortgagee shall, by written notice sent to Tenant, specifically elect, or unless such Mortgagee shall foreclose the Mortgage and take possession of the Premises. Tenant, upon receipt of written notice from a Mortgagee that such Mortgagee is entitled to collect Rent hereunder may in good faith remit such Rent to Mortgagee without incurring liability to Landlord for the non-payment of such Rent.

(d)If the Mortgagee, or any party deriving its interest therefrom shall succeed to the rights of Landlord in the Premises or under this Lease, whether through possession or foreclosure action or delivery of a new lease or deed, then Tenant shall attorn to and recognize such party succeeding to Landlord’s rights (the party so succeeding to Landlord’s rights herein sometimes called the “Successor Landlord”) as Tenant’s landlord under this Lease, and shall promptly execute and deliver any instrument that such Successor Landlord may reasonably request to confirm such attornment. This Lease shall continue in full force and effect as, or as if it were, a direct lease between the Successor Landlord and Tenant, and all of the terms, conditions and covenants set forth in this Lease shall be applicable after such attornment, except that the Successor Landlord shall not:

(i)be liable for any previous act or omission of Landlord under this Lease;

(ii)be subject to any offset that shall have theretofore accrued to Tenant against Landlord; or

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(iii)be bound by:

(A)any previous modification of this Lease, not expressly provided for in this Lease unless consented to by such Successor Landlord; or

(B)any previous prepayment of more than one (1) month’s Rent or any Additional Rent then due, unless such prepayment shall have been expressly approved in writing by the Mortgagee through or by reason of which the Successor Landlord shall have succeeded to the rights of Landlord under this Lease.

The provisions for attornment set forth in this Paragraph 16(d) shall be self-operative and shall not require the execution of any further instrument. However, any Mortgagee and/or any other party to whom Tenant agrees to attorn as aforesaid reasonably requests a further instrument confirming such attornment, Tenant agrees to execute and deliver the same within twenty (20) days after a request is made to do so in accordance with the provisions of this Lease.

17. Landlord’s Right of Entry.

(a)Landlord has the right to enter the Premises at any reasonable time upon reasonable notice to Tenant, or without notice in case of emergency, for any purpose including examining or performing maintenance, repairs, and replacements to the Premises as are permitted under this Lease.

(b)During Business Hours and upon reasonable notice to Tenant, Landlord may, during the Term, show the Premises to prospective purchasers and Mortgagees, during the twelve (12) months prior to expiration of this Lease, to prospective tenants, and for the purpose of exhibiting the Premises and putting up “To Rent” or “For Sale” notices, which notices shall not be removed, obliterated or hidden by Tenant.

(c)In exercising its rights under Paragraph 17, Landlord shall not materially interfere with or disrupt the normal operation of Tenant’s business. Landlord, and any third parties entering the Premises at Landlord’s invitation or request shall at all times strictly observe Tenant’s reasonable rules relating to security on the Premises. Except in the event of an emergency, Tenant shall have the right, in its sole discretion, to designate a representative to accompany Landlord, or any third parties, while they are on the Premises.

18. Use of the Roof and Building Structure. Tenant shall have the exclusive right to use the roof of the Building and building structure including shafts, risers and conduits between the Premises and the Building for: (i) installation and use of one or more microwave dishes or other communications radio antenna and associated equipment, including cables and data processing devices (“Communication Equipment”) and (ii) for installation and maintenance of conduits, ducts, flues and pipes for supplemental heating ventilating and air conditioning and other facilities (“HVAC Equipment”). Tenant shall have no obligation to pay Rent for such right, but Tenant shall, at its sole cost and expense, repair, maintain and keep in good condition and repair the roof areas and other areas upon which the Communication Equipment and HVAC

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Equipment has been placed or otherwise affected thereby, and comply with all Legal Requirements and the terms and conditions set forth on Exhibit “E” for use of the roof and building structure.

19. Tenant’s Default; Rights and Remedies.

(a)The occurrence of any one or more of the following matters constitutes an “Event of Default” by Tenant under this Lease:

(i)failure by Tenant to pay Fixed Rent, Additional Rent, or any other monetary obligation hereunder when due and such failure continues for five (5) days after written notice from Landlord; provided, however, Tenant shall not be entitled to more than one (1) written notice for such monetary defaults during any twelve (12) month period, and if after such one (1) written notice Fixed Rent is not paid when due hereunder, an Event of Default will be deemed to have occurred without the requirement of any notice by Landlord;

(ii)Tenant fails to bond off or otherwise remove any lien filed against the Premises by reason of Tenant’s actions, within twenty (20) days after Tenant has notice of the filing of such lien;

(iii)Tenant or any guarantor of Tenant’s obligations (“Guarantor”) (if either is a corporation) is liquidated or dissolved or its charter expires or is revoked, or Tenant or Guarantor (if either is a partnership or business association) is dissolved or partitioned, or Tenant or Guarantor (if either is a trust) is terminated or expires, or if Tenant or Guarantor (if either is an individual) dies;

(iv)Tenant fails to perform any other term, covenant, agreement or condition of this Lease not heretofore described in this Paragraph 19 within twenty (20) days after Landlord shall have notified Tenant in writing of such failure; provided, however, that if such performance requires work to be done, actions to be taken, or conditions to be remedied, which cannot by their nature reasonably be done, taken or remedied, as the case may be, within such twenty (20) day period, then so long as within such twenty (20) day period Tenant (i) notifies Landlord of the need for extra time and the reasons therefor; (ii) commences remedial action; and (iii) proceeds toward completion in an expeditious manner, Tenant may take such additional time, not in excess of ninety (90) days from the date of Landlord’s notice, as is reasonably necessary to complete such performance; or

(v)Tenant becomes a “Debtor” under the Federal Bankruptcy Code or commits any act of bankruptcy under any federal or state law providing for composition, arrangement, reorganization or relief for debtors or files or has filed against it a petition in bankruptcy or for arrangement or for reorganization pursuant to the Federal Bankruptcy Code or other similar laws, federal or state, or if, by a decree of a court of competent jurisdiction, Tenant is adjudicated bankrupt or declared insolvent, or makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts generally when or as they become due, or consents to the appointment of a trustee, receiver or the liquidation of all or any part of its assets; provided, that if any such proceeding is commenced by a person other than Tenant, there shall be

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no Event of Default if such proceeding is dismissed within sixty (60) days after the filing of the initial pleading therein.

(b)If an Event of Default by Tenant occurs, Landlord may

(i)declare due and payable and sue for and recover, all unpaid Fixed Rent, Additional Rent and any other sums due under this Lease for the unexpired period of the Term (including all Additional Rent as the amount(s) of the same can be determined or reasonably estimated) as if by the terms of this Lease the same were payable in advance, together with all reasonable legal fees and other expenses incurred by Landlord in connection with the enforcement of any of Landlord’s rights and remedies hereunder; provided that in the absence of an Event of Default under subparagraphs 19(a)(iii), (iv) or (v) above, Tenant shall have the right (exercisable not more than twice during the Primary Term and not more than once during each of the First Renewal Term and the Second Renewal Term), to cure an Event of Default under subparagraphs 19(a)(i) or (ii) by payment of all sums due Landlord as of the date of the cure (including all reasonable attorneys’ fees, court costs and other expenses incurred by Landlord in enforcing Landlord’s rights in connection with the specific Event of Default), and provided further that, except with respect to an Event of Default under subparagraphs 19(a)(iii), (iv) or (v), Landlord shall not accelerate Rent until Tenant has actual receipt of or has refused receipt of notice of the Event of Default; and/or

(ii)terminate the Term by giving written notice thereof to Tenant and, upon the giving of such notice, the Term and the estate hereby granted shall expire and terminate with the same force and effect as though the date of such notice was the date hereinbefore fixed for the expiration of the Term, and all rights of Tenant hereunder shall expire and terminate, but Tenant shall remain liable as hereinafter provided, and/or

(iii)exercise any other rights and remedies available to Landlord at law or in equity.

(c)If any Event of Default shall have occurred, Landlord may, whether or not the Term has been terminated as herein provided, re-enter and repossess the Premises or any part thereof without resorting to summary proceedings and Landlord shall have the right to remove all persons and property therefrom. Landlord shall be under no liability for or by reason of any such entry, repossession or removal, and no such re-entry or taking of possession of the Premises by Landlord shall be construed as an election on Landlord’s part to terminate the Term unless a written notice of such intention be given to Tenant pursuant to Paragraph 31(b)(iii) or unless the termination of this Lease be decreed by a court of competent jurisdiction.

(d)At the time after an Event of Default occurs, Landlord may enter the Premises as the agent of Tenant without the requirement of resorting to the dispossessory procedures and without being liable for any claim for trespass or damages therefor, and, in connection therewith, rekey the Premises, remove Tenant’s effects therefrom and store the same at Tenant's expense, without being liable for any damage thereto, and relet the Premises as the agent of Tenant, with or without advertisement, by private negotiations or otherwise, for any

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term Landlord deems proper, and receive the rent therefor. Tenant shall not be entitled to any surplus so arising. Tenant shall reimburse Landlord for all costs and expenses (including, without limitation, brokerage and attorneys’ fees and expenses) incurred in connection with or in any way related to the eviction of Tenant and reletting the Premises, and for the amount of any other Rent which would have been due from Tenant to Landlord hereunder which is not recovered from reletting or due to inability to relet the Premises. Landlord, in addition to but not in lieu of or in limitation of any other right or remedy provided to Landlord under the terms of this Lease or otherwise (but only to the extent such sum is not reimbursed to Landlord in conjunction with any other payment made by Tenant to Landlord), shall have the right to be immediately repaid by Tenant the amount of all reasonable sums expended by Landlord and not repaid by Tenant in connection with preparing or improving the Premises to Tenant’s specifications and any and all reasonable costs and expenses incurred in renovating or altering the Premises to make it suitable for reletting, provided that Landlord shall amortize the reasonable renovation costs and expenses over the term of the reletting with Tenant being charged only for that portion of the term of the reletting which coincides with the balance of the current term of this Lease.

(e)No expiration or termination of the Term pursuant to Paragraph 19(b)(iii) hereof, by operation of law or otherwise, and no repossession of the Premises or any part thereof pursuant to Paragraph 19(b)(iii) hereof, or otherwise, and no reletting of the Premises or any part thereof pursuant to Paragraph 19(d) hereof shall relieve Tenant of its liabilities and obligations hereunder, all of which shall survive such expiration, termination, repossession or reletting.

(f)In the event of any expiration or termination of this Lease or repossession of the Premises or any part thereof by reason of the occurrence of an Event of Default, and Landlord has not elected to accelerate Fixed Rent, Additional Rent and other sums pursuant to Paragraph 19(b), Tenant shall pay to Landlord the Fixed Rent, Additional Rent and other sums required to be paid by Tenant to and including the date of such expiration, termination or repossession; and, thereafter, Tenant shall, until the end of what would have been the expiration of the Term in the absence of such expiration, termination or repossession, and whether or not the Premises or any part thereof shall have been relet, be liable to Landlord for, and shall pay to Landlord, as liquidated and agreed current damages, the Fixed Rent, Additional Rent and other sums which would be payable under this Lease by Tenant in the absence of such expiration, termination or repossession, less the net proceeds, if any, of any reletting effected for the account of Tenant pursuant to Paragraph 19(d) hereof, after deducting from such proceeds all of Landlord’s reasonable expenses in connection with such reletting (including all related repossession costs, brokerage commissions, legal expenses, employees’ expenses, alteration costs and expenses of preparation for such reletting). Tenant shall pay such current damages on the days on which the Fixed Rent would have been payable under this Lease in the absence of such expiration, termination or repossession, and Landlord shall be entitled to recover the same from Tenant on each such day.

(g)No right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy herein by law provided, but each shall be

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cumulative and in addition to every right or remedy given herein or now or hereafter existing at law or in equity or by statute.

(h)No waiver by Landlord of any breach by Tenant of any of Tenant’s obligations, agreements or covenants herein shall be a waiver of any subsequent breach or of any obligation, agreement or covenant, nor shall any forbearance by Landlord to seek a remedy for any breach by Tenant be a waiver by Landlord of any rights and remedies with respect to such or any subsequent breach.

(i)In the event of a breach or threatened breach by Tenant of any of the covenants or provisions hereof, Landlord shall have the right of injunction and right to invoke any remedy allowed at law or in equity as if re-entry summary proceedings and other remedies were not herein provided for.

(j)Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Tenant being evicted or dispossessed for any cause, or in the event of Landlord obtaining possession of the Premises by reason of the violation by Tenant of any of the covenants and conditions of this Lease, or otherwise. Tenant hereby waives and releases all errors, defects and imperfections in any proceedings instituted by Landlord to enforce the terms of this Lease, as well as the right of inquisition on any real estate that may be levied upon to collect any amount which may become due under this Lease. Tenant agrees that Landlord only be required to mitigate its damages in the event of the occurrence of an Event of Default by Tenant hereunder to the extent required by law.

(k)Tenant shall pay upon demand all of Landlord’s reasonable costs, charges and expenses, including the reasonable fees and out-of-pocket expenses of legal counsel, agents and others retained by Landlord incurred in enforcing Tenant’s obligations hereunder or incurred by Landlord in any litigation, negotiation or transaction in which Tenant causes Landlord, without Landlord’s fault, to become involved or concerned, together with Interest from the date incurred by Landlord to the date of payment by Tenant.

20. Landlord’s Default.

(a)The occurrence of the following constitutes an “Event of Default by Landlord” under this Lease: failure by Landlord to observe or perform any covenant, agreement, condition or provision of this Lease, if such failure shall continue for thirty (30) days after receipt of written notice from Tenant to Landlord, except that if such default cannot be cured within such thirty (30) day period, it shall not be considered an Event of Default if Landlord commences to cure the default within the thirty (30) day period and proceeds diligently thereafter to seek to effect such cure.

(b)Subject to the provisions of Paragraph 24 hereof, if an event of default by Landlord Occurs, Tenant shall have all rights and remedies available at law or in equity; provided, however, that in no event shall Tenant have any right to set off against Rent.

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(c)Subject to the provisions of Paragraph 24 hereof, (i) if an event of default by Landlord occurs which has a material and adverse impact on the ability of Tenant to conduct its business operations from the Premises, then Tenant may cure such default on condition that prior to actually curing such event of default, Tenant shall have given Landlord not less than five (5) business days prior written notice (herein called the “Self-Help Notice”) of the anticipated expenditure Tenant expects to incur in remedying such default or (ii) if a default by Landlord occurs which has a material and adverse impact on the ability of Tenant to conduct its business operations from the Premises and there are exigent circumstances requiring an immediate cure thereof, then Tenant may cure such default on condition that prior to actually curing such event of default, Tenant shall have given Landlord a Self Help Notice on the same business day prior to effectuating such cure of the anticipated expenditure Tenant expects to incur in remedying such default. The extent of the work performed by Tenant in curing any such default shall not exceed the work that is reasonably necessary to effectuate such remedy and the cost of such work shall be reasonably prudent and economical under the circumstances. Tenant shall not be entitled to cure any default of Landlord pursuant to the foregoing provisions if such cure is done in a fashion so as to impair any roof or other warranty of Landlord relating to the Premises provided by Landlord to Tenant. In prosecuting any cure, Tenant shall comply with all Legal Requirements and perform any necessary work to the Premises in a good and workmanlike fashion using new, first quality materials and otherwise in compliance with the terms of this Lease. This right to self help includes the right to bring suit against Landlord for the costs incurred by Tenant in exercising such self help; provided however, that in no event shall Tenant have any right to set off against Rent.

21. Yield-Up and Holding Over. Upon termination of this Lease, Tenant shall surrender the Premises to Landlord in the same condition and repair in which the Premises were on the Commencement Date, or as the same may have been improved during the Term, in “broom clean” condition reasonable wear and tear excepted, and subject to fire and insured casualty and eminent domain taking which shall be governed by the applicable provisions of this Lease and repairs that are not the responsibility of Tenant hereunder. Without limiting the generality of the foregoing, Tenant shall repair all truck door covers, load levelers and all cracks in the floor of the Building, loading areas, drives and walks and other areas within the Premises. Tenant shall not be required to remove any improvements to the Premises unless Landlord’s consent thereto was conditioned in writing upon removal thereof. Tenant shall, however, have the right to remove such improvements and any trade fixtures or equipment, provided it shall repair any damage to the Premises resulting therefrom. Notwithstanding the above, Tenant shall not be required to make any improvements, which under generally accepted accounting principles would be required to be capitalized, to the Premises at the Expiration Date.

If Tenant remains on the Premises beyond the Expiration Date or an earlier termination of this Lease, such holding over shall not be deemed to create any tenancy at will, but Tenant shall be a tenant at sufferance only, at a daily rate equal to One Hundred Fifty (150%) percent of the Fixed Rent and Additional Rent for the last year under this Lease. In addition, notwithstanding any of the foregoing to the contrary, Tenant shall be liable for all damages incurred by Landlord as a result of any such holdover. If Tenant fails to vacate the Premises upon the expiration or termination of this Lease, Landlord’s sole and exclusive remedies (which remedies nay be exercised simultaneously) shall be to: (i) collect from Tenant until Tenant

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vacates the Premises use and occupancy for the Premises at a monthly rate of: (A) 125% of the monthly Fixed Rent payable during the last month of the Term for each of the next six (6) succeeding months; and (B) thereafter 150% of the monthly Fixed Rent payable during the last month of the Term; and (ii) evict Tenant from the Premises by appropriate legal proceedings.

22. Quiet Enjoyment. Landlord covenants that if and for so long as Tenant pays the Rent and performs the covenants and conditions and is otherwise in full compliance with the terms hereof, Tenant shall peaceably and quietly have, hold and enjoy the Premises for the Term, subject to the terms hereof and matters of record now affecting the Premises and any easements, restrictions, liens or encumbrances recorded and against the Premises by Landlord or any predecessor in title to Landlord after the date of execution of this Lease against the Premises, which easements, restrictions, liens or encumbrances will not materially interfere with Tenant’s use of the Premises as contemplated by this Lease.

23. Mutual Representation of Authority.

(a)Landlord and Tenant represent and warrant to each other that they have full right, power and authority to enter into this Lease without the consent or approval of any other entity or person and each party makes these representations knowing that the other party will rely thereon.

(b)The signatories on behalf of Landlord and Tenant further represent and warrant that each has full right, power and authority to act for and on behalf of Landlord and Tenant in entering into this Lease.

24. Landlord’s Liability. The obligations of Landlord hereunder shall be binding upon Landlord and each succeeding owner of Landlord’s interest hereunder only during the period of such ownership and Landlord and each succeeding owner shall have no liability whatsoever except for their obligations during each such respective period. Tenant hereby agrees for itself and each succeeding holder of Tenant’s interest, or any portion thereof, hereunder, that any judgment, decree or award obtained against Landlord, or any succeeding owner of Landlord’s interest, which is in any manner related to this Lease, the premises, or Tenant’s use or occupancy of the Premises, whether at law or in equity, shall be satisfied only out of Landlord’s interest in the Premises and neither Landlord nor any of its partners, members, officers, employees or affiliates shall have any personal liability under this Lease.

25. Real Estate Brokers.

(a)Tenant represents that Tenant has dealt directly with and only with Cushman & Wakefield and the Schultz Organization (collectively, “Broker”) (whose commission shall be paid by Landlord pursuant to separate agreement), in connection with this Lease and agrees to defend, indemnify and save harmless Landlord against all claims, liabilities, losses, damages costs and expenses (including reasonable attorneys’ fees and other costs of defense) arising from Tenant’s breach of this representation.

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(b)Landlord represents that Landlord has dealt directly with and only with Broker (whose commission shall be paid by Landlord pursuant to separate agreement), in connection with this Lease and Landlord hereby agrees to defend, indemnify and save harmless Tenant against all claims, liabilities, losses, damages, costs and expenses (including reasonable attorneys’ fees and other costs of defense) arising from Landlord’s breach of this representation.

26. Intentionally Omitted.

27. Attorneys’ Fees. In the event either party institutes legal proceedings against the other for breach of or interpretation of any of the terms, conditions or covenants of this Lease, the party against whom a judgment is entered shall reimburse on demand all reasonable costs and expenses relative thereto, including reasonable attorneys’ fees and court costs, incurred by the other party.

28. Estoppel Certificate.

(a)Tenant agrees, upon not less than ten (10) days prior written request by Landlord, to deliver to Landlord and Landlord’s Mortgagee and any prospective purchasers a statement in writing signed by Tenant certifying (i) Tenant has accepted the Premises; (ii) that this Lease is unmodified and in full force and effect (or if there have been modifications, identifying the modifications); (iii) the Commencement Date, the date upon which Tenant began paying Fixed Rent and the dates to which the Fixed Rent has been paid and the Expiration Date; (iv) that, to the best of Tenants knowledge, the Landlord is not in default under any provision of thisus Lease, or, if in default, the nature thereof; and whether Tenant is in default under the Lease (v) that there has been no prepayment of Fixed Rent other than that provided for in this Lease; (vi) the amount of Fixed Rent and Additional Rent payable under the Lease.

(b)Landlord, upon not less than twenty (20) days prior written request from Tenant, shall furnish a statement in writing to Tenant covering the matters set forth in Paragraph 28(a), to the extent applicable to Landlord.

29. No Recording. Landlord and Tenant agree not to record this Lease. However, Landlord and Tenant shall execute a Memorandum of Lease, in the form attached hereto as Exhibit F, which memorandum shall be recorded against the Premises upon Landlord’s closing of title to the Premises.

30. Waiver. LANDLORD AND TENANT EACH HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY CLAIM, ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST THE OTHER IN CONNECTION WITH ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT HEREUNDER, TENANT’S USE OR OCCUPANCY OF THE PREMISES, OR ANY CLAIM OR INJURY OR DAMAGE. TENANT HEREBY WAIVES ANY RIGHT TO FILE A NON-MANDATORY COUNTERCLAIM AGAINST LANDLORD IN ANY SUMMARY DISPOSSESS OR SIMILAR PROCEEDING.

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31. Governing Law. This Lease shall be construed and interpreted in accordance with the laws of the state where the Premises are located, without regard for its conflict of law rules.

32. Notices. Any notice by either party to the other shall be in writing and shall be deemed to be duly given only if delivered personally or sent by registered or certified mail return receipt requested, or overnight delivery service, to the following:

If to Tenant:

If before the date of substantial completion of the Premises:

One Industrial Way West
Building D
Eatontown, New Jersey 07724
Attention: Finance Director

If after the date of substantial completion of the Premises:

At the Premises
Attention: Finance Director

If to Guarantor:

PTEK Holdings, Inc.
The Lenox Building
3399 Peachtree Road, N. E.
Suite 600
Atlanta, Georgia 30326
Attn: Patrick G. Jones, Esquire
          Ms. Nicole Kamen

with a copy to:

Nelsen Mullins Riley & Scarborough, L.L.P.
First Union Plaza, Suite 1400
99 Peachtree Street, N.E.
Atlanta, Georgia 30309

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If to Landlord:

210 West Pennsylvania Avenue
Suite 700
Towson, MD 21204
Attention: Judith S. Waranch, Esquire

with a copy to:

Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103
Attention: Bart I. Mellits, Esquire

If to Dennis Townsend:

210 West Pennsylvania Avenue
Suite 700
Towson, MD 21204

With a copy to:

Ballard Spahr Andrews & Ingersol1, LLP
1735 Market Street
Philadelphia, PA 19103
Attention: Bart I. Mellits, Esquire

Notice shall be deemed to have been given on the date received, if delivered personally or by overnight delivery service, or, if mailed, three (3) business days after the date postmarked.

33. Counterparts. This Lease may be executed in one or more counterparts each one of which shall be deemed an original.

34. Entire Agreement. This Lease constitutes the entire agreement between the parties, there being no other terms, oral or written, except as herein expressed. No modification of this Lease shall be binding on the parties unless it is in writing and signed by both parties hereto.

35. Partial Invalidity. The invalidity of one or more phrases, sentences, clauses or articles shall not affect the remaining portions of this Lease, and if any part of this Lease should be declared invalid by the final order, decree or judgment of a court of competent jurisdiction, this Lease shall be construed as if such invalid phrases, sentences, clauses or articles had not been inserted.

36. Parties Bound. The words “Landlord” and “Tenant” and the pronouns referring thereto, as used in this Lease, shall mean, where the context requires or admits, the

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persons or entities named herein as Landlord and Tenant, respectively, and their respective heirs, legal representatives, successors and assigns, irrespective of whether singular or plural, masculine, feminine or neuter. Except as otherwise provided herein, the agreements and conditions in this Lease contained on the part of Landlord to be performed and observed shall be binding upon Landlord and its heirs, legal representatives, successors and assigns and shall inure to the benefit of Tenant and its heirs, legal representatives, successors and assigns; and the agreements and conditions on the part of Tenant to be performed and observed shall be binding upon Tenant and its heirs, legal representatives, successors and permitted assigns and shall inure to the benefit of Landlord and its heirs, legal representatives, successors and assigns.

37. Survival. Except as otherwise set forth herein, any obligations of Tenant and Landlord, as set forth herein (including, without limitation, Tenant’s rental and other monetary obligations, repair obligations, and obligations to indemnify Landlord), shall survive the expiration or earlier termination of this Lease.

38. Force Majeure. Landlord shall be excused for the period of any delay and shall not be deemed in default with respect to the performance of any of the terms, covenants, and conditions of this Lease when prevented from so doing by causes beyond its control, which shall include, but not be limited to, all labor disputes, governmental regulations or controls, fire or other casualty, inability to obtain any material or services, or acts of God.

39. Construction Against Drafter. The parties agree that this Lease shall be construed as if both parties were equally responsible for drafting the same and the rule of construction of construing against the drafter shall not apply.

40. Time of the Essence. All time for payments, and performance herein are of the essence of the agreement between the parties hereto.

41. Signage. Tenant at its sole cost, expense and liability may place signs for identification, directional and safety purposes anywhere on the Premises including on the exterior. The size, design and location on the Premises of such signs shall be in Tenant’s sole discretion, provided that all such signs shall comply with Legal Requirements and provided further that the erection of such signs shall not cause any structural damage to the Premises or the roof. Tenant shall remove all such signs and restore any damage caused by such removal at the expiration or earlier termination of this Lease.

42. Access. Tenant, its permitted assignees, subtenants and their employees, licensees and guests, shall have access to the Premises at all times, 24 hours per day, every day of the year. Landlord shall have the right to enter the Premises at reasonable times upon reasonable notice, except in the event of emergency in which case no notice shall be required. Tenant shall have the right to reasonably designate certain areas of the Premises as secured areas to which Landlord shall have no access.

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43. Security Deposit.

(a)Tenant shall deliver to Landlord on or before the Commencement Date a letter of credit from a financial institution reasonably acceptable to Landlord (“Letter of Credit”), in an amount equal to six (6) month’s Rent as security for the performance by Tenant of the covenants and obligations hereunder (“Security”). Beginning in Lease Year 2, Tenant will replace the original Letter of Credit with a Letter of Credit in an amount equal to five (5) month’s Rent, and beginning in Lease Year 3, the Letter of Credit amount shall be reduced to an amount equal to four (4) month’s Rent.

(b)If Tenant defaults in the performance of any of its covenants hereunder, Landlord may apply all or any part of the Security, to the extent required for the payment of any Rent or other sums due from Tenant, in addition to any other remedies available to Landlord. If such application occurs, Landlord shall make a reasonable effort to advise Tenant, promptly following such application. In the event the Security is so applied, Tenant shall, upon demand, immediately deposit with Landlord a sum equal to the amount to used. If Tenant fully and faithfully complies with all of the covenants hereunder, the Security (or any balance thereof) shall be returned to Tenant within thirty (30) days after the last to occur of (i) the date this Lease expires or terminates or (ii) delivery to Landlord of possession of the Premises. Landlord may deliver the Security to any purchasers of Landlord’s interest in the Property and thereupon Landlord shall be discharged from any further liability with respect the Security.

(c)So long as no Lease Event of Default or Event of Default under this Lease or the Guaranty shall exist prior to or after giving effect to such transaction, if, after the Guarantor consolidates with any Person, merges into any person, or conveys, transfers, leases or otherwise disposes to any Person of all or substantially all of its assets in any single transaction (or series of related transactions), and, after giving full effect to the transaction, the Surviving Guarantor shall have a Net Worth that is less than seventy-five percent (75%) of the Net Worth of the Guarantor on the date of execution of this Lease, Tenant shall deliver to Landlord on or before the date such transaction(s) are effective a replacement letter of credit equal to not less than one (1) years Rent as security for the performance of Tenant’s obligations under this Lease, upon receipt and verification of the validity of which Landlord shall return the original letter of credit delivered by Tenant and then held by Landlord pursuant to Paragraph 43(a) above. For purposes of this Paragraph 43(c), “Net Worth” shill mean the consolidated net worth of Guarantor (computed without regard to goodwill) in accordance with GAAP less the amount of any and all guarantees made by Guarantor of obligations (which obligations would be on-balance sheet with respect to the below-described Affiliate) of (i) any Affiliate of Guarantor that holds beneficially or of record, five percent (5%) or more of the equity securities of Guarantor and (ii) any Affiliate of any such Affiliate (other than Guarantor and any subsidiaries of Guarantor whose financial statements are consolidated with Guarantor’s financial statements).

44. Guaranty. PTEK Holdings, Inc. (“Guarantor”) hereby unconditionally and absolutely guarantees Tenant’s obligations under this Lease, which guaranty shall be evidenced by the execution by Guarantor, simultaneously with execution of this Lease, of the Guaranty attached hereto as Exhibit H.

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IN WITNESS WHEREOF, the parties hereto have duly executed this Lease as of the day and year first above written.

WITNESS:	LANDLORD:
	TOWNSEND XPD, LLC

By:	/s/ JUDITH S. WARANCH	By:	/s/ DAVID B. TOWNSEND
Name:	Judith S. Waranch	Name:	David B. Townsend
		Title:	Vice President

	TENANT:
ATTEST:	XPEDITE SYSTEM, INC.

By:	/s/ PATRICK G. JONES	By:	/s/ VINCENT DEVITA
Name:	Patrick G. Jones	Name:	Vincent Devita
Title:	EVP	Title:	EVP & COO

ATTEST:		GUARANTOR: PTEK HOLDINGS, INC.
By:	/s/ WILLIAM A. THURBER	By:	/s/ PATRICK G. JONES
Name:	William A. Thurber	Name:	Patrick G. Jones
Title:	Asst. Sec’y	Title:	EVP

I hereby join in the execution of this Lease for the sole purpose of acknowledging and agreeing to the guaranty set forth in Paragraph 4(1) above

/s/ DENNIS TOWNSEND

Dennis Townsend

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EX-10.69

Exhibit 10.69

FIRST AMENDMENT TO
PINE RIDGE BUSINESS PARK
STANDARD OFFICE LEASE

THIS FIRST AMENDMENT TO PINE RIDGE BUSINESS PARK STANDARD OFFICE LEASE (this “Amendment”) is made as of the 4th day of May, 1999 (the “Effective Date”) by and between PERG BUILDINGS, LLC (“Lessor”), and AMERICAN TELECONFERENCING SERVICES, LTD (“Lessee”).

WITNESSETH

WHEREAS, Lessor and Lessee entered into a lease for space in that certain building (the “Building”), located at 10310 West 84th Terrace, Lenexa, Kansas, pursuant to that certain Pine Ridge Business Park Standard Office Lease by and between Lessor and Lessee, dated January 29, 1999 (the “Lease”); and

WHEREAS, Lessor and Lessee desire to amend the Lease pursuant to the terms and conditions as hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual promises of the parties and themutual benefits to be derived by the performances of the parties hereunder; and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1.Recitals. The above recitals are true and correct.

2.Defaults and Remedies. Section 21.1(i) of the Lease is hereby deleted in its entirety and replaced with the following:

Any failure by Lessee to pay the rental or to make any other payment required to be made by Lessee hereunder, where such failure continues for five (5) days after receipt of written notice thereof;

3.Permitted Use. A new sentence is hereby added to the end of Section 7 which shall read as follows:

Notwithstanding the foregoing, Lessor acknowledges that Lessee intends to use and occupy the Premises for purposes of providing telecommunications services on a for-profit basis, and hereby agrees that such use and occupancy of the Premises shall be a permitted use under this Lease.

4.Non-Disturbance. Section 17 of the Lease is hereby deleted in its entirety and replaced with the following:

On or before August 1, 1999 Lessor shall obtain and deliver to Lessee a subordination, non-disturbance and attornment agreement (the “SNDA”, in form and substance substantially similar to that attached as Exhibit “1” hereto), executed by Lessor’s lending institution (or any other entity in a

superior position to Lessee in relation to the Building or the land upon which the Building is located). Lessor shall use its best efforts to obtain a non-disturbance agreement upon commercially reasonable terms from any future mortgagee or other entity in a superior position to Lessee. Any such agreement shall extend to sublessees and assignees.

5.Lessee’s Right to Terminate. Lessee acknowledges that Lessor intends to acquire a fee simple interest in the Building on or before June 1, 1999. In the event that Lessor has not acquired such interest by August 1, 1999, Lessee shall have the right to terminate this Lease upon written notice to Lessor. Upon any such termination, Lessor shall return or cause the return of Lessee’s pre-payment of first month’s rent and thereafter, the parties shall have no further liability to one another under this Lease.

6.Lessee’ Right of Self-Help. In the event Lessor fails to perform any obligation under this Lease, and such failure of performance continues for a period of thirty (30) days after written notice thereof from Lessee to Lessor (unless such failure cannot reasonably be cured within such thirty (30) day period, in which case Lessor shall fail to commence the cure of such failure within such initial thirty (30) day period and thereafter to diligently prosecute same to completion), Lessee may undertake all reasonable action to cure Lessor’s failure and Landlord agrees to reimburse Lessee, within thirty (30) days of written request, for all reasonable sums expended or obligations incurred by Lessee in connection therewith (including reasonable attorneys’ fees actually incurred).

7.Delivery of Estoppel Certificate and SNDA. Upon execution of this Amendment, Lessee shall execute the SNDA described in Paragraph 4 hereof, together with an estoppel certificate in form and substance substantially similar to that attached as Exhibit “2” hereto. Such SNDA and estoppel certificate shall be delivered to Lessor in escrow for Lessor’s delivery to its lending institution at the closing for Lessor’s acquisition of the Building.

8.Miscellaneous.

a.The lease shall continue in full force and effect in all other respects not inconsistent with the express wording of this Amendment.

b.This Amendment may be executed in two or more of counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument.

c.Captions and section headings appearing herein are included solely for convenience of reference only and are not intended to affect the interpretation of any provision of this Amendment.

d.This Amendment and the Lease shall be governed by, and construed in accordance with, the laws of the State of Kansas, without regard to principles of conflict of laws.

e.Any term or provision of this Amendment of the Lease which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms or provisions of this Amendment or the Lease or affecting the validity or

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enforceability of any of the terms or provisions of this Amendment or the Lease in any other jurisdiction.

IN WITNESS WHEREOF, Lessor and Lessee have executed this First Amendment to Pine Ridge Business Park Standard Office Lease as of the day and year first above written.

LESSOR: PERG BUILDINGS, LLC
By:	/s/ Kenneth G. Block
Print name:	Kenneth G. Block
Title:	Managing Member

LESSEE: AMERICAN TELECONFERENCING SERVICES, LTD
By:	/s/ PATRICK E. JONES
Print name:	Patrick E. Jones
Title:	Senior Vice President

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PINE RIDGE BUSINESS PARK
STANDARD OFFICE LEASE

This Lease is made this 29^th day of January,1999, by and between PERG BUILDINGS, LLC, referred to hereinafter as “Lessor” and AMERICAN TELECONFERENCING SERVICES, LTD, a Missouri Corporation, hereinafter referred to as “Lessee”.

1 .PREMISES: WITNESSETH: Lessor does hereby demise and Lease under Lessee and Lessee does hereby Lease from Lessor that certain office space in the Building, located at 10310 West 84^th Terrace, as shown on Exhibit “A”, attached hereto. For the purpose of this Lease, it is agreed by and between the parties that the net rentable square footage attributable to the Leased Premises shall be deemed to be approximately 46,045 square feet.

1.1Net Useable Footage :

2.TERM: This Lease is for a term of ten (10) years beginning on the 1st day of September, 1999 and ending on the 31^st day of August, 2009.

However, in no event, shall the Lease term commence later than September 1, 1999, unless otherwise consented to by the parties hereto.

Lessee and Lessor acknowledge that Lessee will have the right to occupy the Premises for the purpose of construction of tenant finish improvements commencing June 1, 1999, after first obtaining a certificate of occupancy and business license from the City of Lenexa, Kansas (on an as-is basis). During such period of construction, Lessee shall pay to Lessor an expense reimbursement payment in the amount of FIFTEEN THOUSAND THREE HUNDRED FORTY NINE & NO/100 DOLLARS ($15,349.00) per month, which will be utilized by Lessor to maintain the Premises, except for any janitorial services. Lessee and Lessor further acknowledge that the utilities for this space shall be placed in the name of Lessee and Lessee shall be fully responsible for the payment of all utilities.

3.BASE RENT: Lessor reserves, and Lessee in consideration of said demise agrees to pay to the Lessor as rent for said premises for the original term aforesaid the amount as set forth below:

Commencing September 1, 1999 and continuing through August 31, 2000, the full service monthly rental of FORTY FOUR THOUSAND FIVE HUNDRED EIGHTY SEVEN & NO/100 DOLLARS ($44,587.00) per month;

Commencing September 1, 2000 and continuing through August 31, 2004, the full service monthly rental of FORTY SEVEN THOUSAND NINE HUNDRED SIXTY FOUR & NO/100 DOLLARS ($47,964.00) per month;

Commencing September 1, 2004 and continuing through August 31, 2009, the full service monthly rental of FIFTY ONE THOUSAND FOUR HUNDRED SEVENTEEN & NO/100 DOLLARS ($51,417.00) per month.

Base Rent is not subject to revision in the event of any discrepancy in the net rentable area of the building due to independent measurement.

3.1FIRST MONTH’S RENT: Receipt of FORTY FOUR THOUSAND FIVE HUNDRED EIGHTY SEVEN & NO/100 DOLLARS ($44,587.00) is hereby acknowledged for rent for the first month of this Lease, commencing on September 1, 1999.

3.2OPERATING EXPENSES: In the event that in any calendar year the “Operating Expenses” of the building, including ground in connection therewith and related parking areas, shall exceed the sum of the total cost for operating expenses for the period from September

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1, 1999 through August 31, 2000, the Base Year. Lessee shall pay additional rent for each full or partial calendar year during the lease term an amount equal to 100% of these additional operating expenses over the Base Year.

Lessee will contract for and pay direct to the provider the cost of all utilities, including, but not limited to, water, gas and electricity.

In no event shall the total adjusted monthly rent be less than the base amount provided for herein. For the purposes of making any adjustments in the base rent under this Lease, the term “Operating Expenses” shall include the operating expenses of the Building and are herein defined to include, but not be limited to, the following types of expenses:

(a) A reasonable percentage of the wages and salaries of all employees engaged in the operating and maintenance of the building, (if not 100% of their time) including employer’s Social Security Taxes and any other taxes which may be levied on such wages and salaries, and also including any other fringe benefits, but excluding income tax liabilities incurred by Lessor out of its building operations;

(b) All costs of management (management fees shall not exceed 5%), operation, and maintenance of the land, the building, and other improvements thereon and appurtenances thereto;

(c) All janitor and office supplies and material used in the operation and maintenance of the building;

(d) Cost of all maintenance and service agreements on equipment related to the operation of the Building, including window cleaning;

(e) Insurance costs allocable to the building;

(f) Cost of repairs and general maintenance, exclusive of expense of alterations of building for the accommodation of a specific Lessee or Lessees; and exclusive of all capital improvements made in the premises or in the building of which the premises are a part;

(g) Cost of all operation and maintenance of heating, lighting, ventilating, and air conditioning equipment serving the building and parking lot;

(h) Cost of maintenance and upkeep of the landscaping and grounds of said building;

(i) Real Estate taxes and special assessments and reasonable costs to protest or appeal same for the Building;

(j) Patrol service and/or security guard service;

(k) Such other operating expenses which Lessor determines relate to the building, grounds, parking area and other common areas.

Operating Costs shall not include:

(a) any cost that, if included, will not comply with the proper treatment under generally accepted accounting principles (GAAP);

(b) promotional, advertising and marketing costs

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(c) leasing expenses including commissions, related legal fees and any compensation for personnel involved in leasing activities

(d) architectural costs including ADA audits/consulting and other design work

(e) Tenant improvements including architectural/engineering fees and expenses

(f) Late charges on billings

(g) Expenses caused by the negligence of other tenants

(h) Back taxes caused by Lessor’s default

(i) Payment of revenue bonds for capital items

(j) Initial costs of tools and equipment used in the operation, maintenance or repair of Building and Building Land

(k) Costs not directly attributable to the Building or costs that are properly allocated among other properties or accounts

(l) Interest or amortization payments on any mortgage

(m) Expenses for repair or other work occasioned by fire or other casualty which is covered under a standard fire policy with extended coverage

(n) Revenue off-sets and bad debt expenses

(o) Rental under any ground lease or other underlying lease

The Lessee’s share of such increased cost shall be determined and paid on an annual basis for each twelve (12) months, September through August ending on August 31st, prorating fractional years for the entire lease term. The Lessee’s share of such increased cost shall be estimated beginning on the first day of the year following the end of the Base Year and during the lease term and at the beginning of each year thereafter, and a monthly rate determined. The Lessee shall pay such estimated charge on the first day of each month, (or within ten days thereafter) in advance; provided, however, that within ninety days after the end of each year the Lessor or his designated agent shall determine its net cost for such year (and Lessee’s share thereof) and furnish a copy of such computation in writing to the Lessee. If the monthly payment made by the Lessee in such year exceeds Lessee’s prorata portion of such increased operating expenses of the building, the Lessor or his designated agent shall apply such excess toward subsequent monthly payments. If Lessee’s prorata portion of such increased operating expenses of the building exceed the monthly payments made in such year by the Lessee, the Lessee shall pay the difference to the Lessor’s designated agent. Such payment to the Lessor or his designated agent shall be paid within ten (10) days of notification. Default of any payment required under this paragraph shall be deemed to be a default under the Lease of which it is a part. The payments provided for in this paragraph may at Lessor’s option be computed on the actual cost or reasonable estimates and billed on a monthly or on any other basis determined by Lessor provided Lessee is notified of a change and shall be paid by the Lessee within ten (10) days receipt of billing thereof from Lessor. If estimates are used for computations of operating expenses of the building, said estimated cost shall be corrected at the end of each calendar year by Lessor when actual cost are known and the Lessee shall be billed for any deficiencies if any and said deficiencies shall be paid by Lessee within ten (10) days of notice by Lessor. If estimated payments result in excess and said ______________ shall be applied toward subsequent monthly charges estimated and said subsequent monthly payments reduced in accordance therewith, or refunded to Lessee as appropriate.

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The Lessor at the office of his designated agent shall make available during normal business hours for a period not to exceed sixty (60) days following the billing of said expenses, copies of all invoices and reasonably detailed accounting records copy and for review by Lessee at Lessor’s designated agent’s office or at Lessee’s or Lessee’s agent’s premises. In the event Lessee fails to notify Lessor within said sixty (60) day period, said billing will be deemed to be accurate and conclusive. In the event Lessee elects to audit Lessor’s operating costs in accordance with this clause, such audit must be conducted by an independent recognized accounting firm that is not being compensated on a contingency fee basis.

The expenses for “labor” as hereinabove referred to shall include without limitation Workman’s Compensation Insurance, Social Security and any fringe benefits paid or accrued to employees of the building. The term “labor” shall mean all wages allocable to the operation, maintenance or repair of the building whether the person(s) receiving such wages are employed by Lessor or by a contractor or agent, provided, however, that the salaries paid to executive employees of Lessor shall not be included as operating expenses, but salaries and wages of the superintendent of the building and all employees subject to his direction shall be so included. For all purposes of computing additional rents due Lessor pursuant to this paragraph, Lessee’s share shall be 100% of the total cost to Lessor. In no event will Lessee be required to share in any cost which is or could be reimbursed to Lessor by insurance.

Lessee will not pay for any costs related to adhering to any future government regulations (example: ADA), unless as a direct result of its occupancy.

4.ASSIGNMENT & SUBLETTING: Lessee shall not sublet the Premises or any part thereof and Lessee shall not assign, transfer, pledge, mortgage or otherwise encumber this Lease, or any portion of the term thereof, without the previous written consent in each instance of Lessor, which consent shall not be unreasonably withheld, and Lessee shall furnish to Lessor copy of such proposed instrument; Lessor agreeing, however, not to arbitrarily withhold or delay its consent to subletting for any legitimate business not detrimental to the premises or adjacent property, or occupants thereof, and not more hazardous on account of fire or otherwise, and not creating wear and tear to the Premises more than the business for which the Premises are herein leased. Lessee may assign this Lease and also to sublet the Premises to any subsidiary corporation of Lessee, or parent corporation of Lessee, upon giving Lesser written notice of intent to do so. In the event of any subletting, Lessee shall remain the principal obligor to the Lessor under all covenants of this Lease, and by accepting any subletting, a sublessee shall become bound by and shall perform and shall become entitled to the benefit of all of the terms, conditions and covenants by which the Lessee hereunder is bound.

5.MAINTENANCE: Lessor shall, at its expense, maintain in good condition and repair (including replacements where necessary) the roof, down spouts, exterior doors, windows and walls, foundation, and structural parts of the building of which the demised premises constitute a part. Such costs shall be shared by Lessee by virtue of Paragraph “3.2” of this Lease.

Lessee covenants and agrees to maintain the interior of the leased premises in good condition and repair, excepting normal wear and tear.

So long as any action is not inconsistent with the provisions of this Lease, Lessor reserves the right to make repairs and alterations to the building or any part thereof and to the leased premises when and where it may deem necessary in its reasonable opinion. Reasonable notice (except in case of emergency) shall be provided by Lessor and Lessor shall perform such alterations and repairs with as little disruption to Lessee as possible. No damage or compensation shall be claimed by Lessee by reason of any inconvenience, annoyance or otherwise arising from the completion of the building.

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6.CARE OF PREMISES: The Lessee shall not perform any acts or carry on any practices which may damage the building or be a nuisance or menace to other Lessees in the building. The Lessee shall not use or permit the use of any portion of said premises as sleeping apartments, lodging rooms, for cooking (except in a designated kitchen or lunchroom used as a convenience area in conjunction with the office use permitted herein), or for any purpose not permitted under the use clause of this Lease, or for any unlawful purpose or purposes.

7.PERMITTED USE: Lessee shall use and occupy the Premises for general office and computer support purposes and no other use or purpose, and Lessee agrees for itself and its employees, agents, clients, customers, invitees, and guests to comply with the rules and conditions as outlined in this Lease and with such reasonable modifications thereof and additions thereto as Lessor may make for the Building, its being agreed that Lessor shall not be liable for any non-observance thereof by any other Lessee. Lessee shall not make or permit to be made any use of the Premises which, directly or indirectly, is forbidden by law, ordinance or governmental regulation or which may be dangerous to persons or property or which may invalidate or increase the premium cost of any policy of insurance carried on the Building or covering its operations; nor shall Lessee do or permit to be done any act or thing upon the Premises which will be in conflict with fire insurance policies covering the Building.

8.ALTERATIONS AND IMPROVEMENTS: Lessee shall not, without the prior written consent of Lessor, which consent shall not be unreasonably withheld, make any alterations, improvements or additions to the Premises. If Lessor consents to said alterations, improvements or additions, it may impose such conditions with respect thereto as Lessor deems appropriate, including without limitation requiring Lessee to furnish Lessor with security for the payment of all costs to be incurred in connection with such work and the plans and specifications together with all permits necessary for such work. The work necessary to make any alterations, improvements or additions to the premises shall be done at Lessee’s expense by employees of or contractors hired by Lessor except to the extent Lessor gives its prior written consent to Lessee’s hiring contractors. Lessee shall promptly pay to Lessor or to Lessee’s contractors, as the case may be, when due, the cost of all such work and of all decorating required by reason thereof. Upon completion of such work, Lessee shall deliver to Lessor, if payment is made directly to contractors, evidence of payment, contractor’s affidavits and full and final waivers of all liens for labor, services or materials. Lessee shall defend and hold Lessor and the Land and the Building harmless from all costs, damages, liens and expenses related to such work. Lessor reserves the right to require separate documentation in the event it elects to have third-party financing of any improvements to be performed by Lessor. All work done by Lessee or its contractors shall be done in a first-class, workmanlike manner, using only good grades of materials and shall comply with all insurance requirements and all applicable laws and ordinances and rules and regulations of governmental departments or agencies. All alterations, improvements and additions to the Premises, whether temporary or permanent in character, made or paid for by Lessor or Lessee shall become Lessor’s property at the termination of this Lease and shall, unless Lessor requests their removal or approves their removal, be relinquished to Lessor in good condition, ordinary wear and tear excepted. In the event Lessee and Lessor agree in writing that certain improvements may be removed, Lessee shall be required to repair any damage occasioned by such removal. Lessor’s permission for removal shall not apply to any telecommunications equipment, switches, or devices owned or leased by Lessee in which title to Lessor shall not pass, in any manner whatsoever, and Lessee may remove upon termination of the Lease without Lessor consent, subject to Lessee’s obligation to repair any damage caused by removal, not including ordinary wear and tear.

9.REPAIRS AND REPLACEMENTS: Lessee shall, at its own expense, keep the Premises in good repair and tenantable condition during the Term of this Lease except as otherwise provided in Section 14 of this Lease, and Lessee shall promptly and adequately repair all damages to the Premises occasioned by Lessee’s use or occupancy of the Premises and replace or repair all damaged or broken glass, fixtures and appurtenances, under the supervision and with the approval of Lessor and within any reasonable period of time specified

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by Lessor. If Lessee does not do so, Lessor may (but need not) make such repairs and replacements, and Lessee shall pay Lessor the cost thereof forthwith upon being billed for same. Lessor may, but shall not be required to, enter the Premises at all reasonable times to make such repairs, alterations, improvements and additions, including ducts and all other improvements and additions, including ducts and all other facilities for air conditioning service as Lessor shall desire or deem necessary to the Premises or to the Building or as Lessor may be required to do by any governmental authority.

10.INSURANCE: The Lessee agrees to pay as additional rental any increase in premiums for insurance against loss by fire that may be charged during the term of this Lease on the amount of insurance to be carried by the Lessor on the improvements situated on said premises, resulting from the business carried on in the leased premises by the Lessee whether or not the Lessor has consented to same. If the Lessee installs any electrical equipment that overloads the lines in the herein leased premises, the Lessee shall at his own expense make whatever changes are necessary to comply with the requirements of the Insurance Underwriters and the City Electrical Inspector’s Department. Lessee agrees not to use any electric irons, electric grills, or other electrical equipment that contains a heating element unless said electrical equipment is used in connection with a red pilot light, connected and operated in compliance with underwriters specifications.

Lessee, at Lessee’s cost and expense, shall maintain comprehensive general liability insurance protecting and indemnifying Lessor and Lessee against any and all claims of liability for injury or damage to persons or property or for the loss of life or of property occurring upon, in or about the demised premises, and the public portions of the building caused by or resulting from any act or omission (in whole or in part) of Lessee, his employees, agents, servants, invitees, or guests such insurance to afford minimum protection during the term of this Lease, of not less than $2,000,000 combined single limit coverage for personal injury to any one person, including death and for personal injury including death to more than one person arising out of any one occurrence and with respect to property damage. All such insurance shall be effected under valid and enforceable policies; shall be issued by insurers of recognized responsibility; and, shall contain a provision whereby the insurer agrees not to cancel the insurance without ten (10) days prior written notice to Lessor. On or before the commencement date, Lessee shall furnish Lessor with certificates evidencing the aforesaid insurance coverage and renewal policies or certificates therefor shall be furnished to Lessor at least thirty (30) days prior to the expiration date of each policy for which a certificate was theretofore furnished.

Lessor agrees to indemnify Lessee from and against any and all claims, demands, damages, actions, suits, judgments, decrees, orders, and expenses arising out of or on account of any damage or injuries sustained or claimed to have been sustained to any person or property in or upon any of the common facilities of the office building by any person whatsoever, unless the same shall be due to the willful or negligent act of Lessee, its agents, servants, employees, or persons or firms in privity with Lessee.

As part of the consideration for this Lease, each of the parties hereto does hereby release the other party hereto from all liability for damage due to any act or neglect of the other party (except as hereinafter provided) occasioned to property owned by said parties which is or might be incident to or the result of a fire or any other casualty against loss for which either of the parties is now carrying or hereafter may carry insurance; provided, however, that the releases herein contained shall not apply to any loss or damage occasioned by the willful, wanton acts of either of the parties hereto, and the parties hereto further covenant that any insurance that they obtain on their respective properties shall contain an appropriate provision whereby the insurance company, or companies, consent to the mutual release, of liability contained in this paragraph.

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Lessee shall comply with all insurance regulations so that the lowest fire and extended coverage, liability and other insurance rates may be obtained and nothing shall be done, or kept in or on the premises by Lessee which will cause cancellation, invalidation or an unreasonable increase in the premiums of Lessor’s insurance.

11.EXAMINATION & ACCEPTANCE OF PREMISES: The Lessee takes the premises as they will be on the beginning date hereof on an as is basis excepting latent defects and is fully informed independent of the Lessor as to the character of the building, its construction and structure. It is further agreed that by occupying said premises as the Lessee, the Lessee formally accepts the same and acknowledges that Lessor has complied with all requirements imposed upon Lessor under the terms of the Lease, unless Lessee shall have given written notice to Lessor of any items not satisfactorily completed. Should Lessee occupy the premises without notifying Lessor within thirty (30) days of items not completed in conformance with the lease terms, it will be conclusively presumed that the premises have been satisfactorily completed and fully accepted by Lessee. It is understood and agreed that all property kept, stored, or maintained in the demised premises shall be so kept, stored, or maintained at the risk of the Lessee only.

12.ENVIRONMENTAL CONCERNS: Lessor is responsible for the delivery of the space free of environmental concerns, prior to and during occupancy. Lessor has received a “clean” Phase I environmental audit on the property, a copy of which has been provided to Lessee. Lessee is responsible for any contamination due to contaminants brought on the Premises by Lessee. All covenants shall survive termination of the lease.

13.DESTRUCTION OR DAMAGES: If during the term hereof, said leased premises shall become untenantable by reason of fire or other unavoidable casualty the rent therefor shall abate with proportionate refund of any prepayment of rentals that may have been made until the premises shall have been restored and put in good condition by the Lessor for use by the Lessee; provided, however, if the Lessor determines that the leased premises cannot be readied for occupancy within 120 days to give written notice to the Lessee whether it intends to continue with the lease or terminate same if,however, the building or any portion thereof shall be or become so damaged, as in the opinion and at the option of the Lessor, possession of the leased premises is desired or required by it for demolition, reconstruction, sale, or any other purpose whatsoever, the Lessor may, by written notice to the Lessee, within thirty days after such casualty, terminate the within lease and the term thereof. The Lessor shall indemnify and hold harmless the Lessee, its officers and employees, against any liability for damage to the premises of the Lessor caused by fire or any other cause covered by the standard fire insurance with extended coverage policy used in the State of Kansas whether or not such damage is caused by the negligence of the Lessee or any of its officers or employees.

14.UTILITIES & SERVICES: Lessor agrees to furnish Lessee with fluorescent tubes or incandescent bulbs for the electrical fixtures installed by Lessor in the leased premises, but not for special fixtures, lamps, and the like installed or caused to be installed by Lessee. Lessor agrees to furnish standard janitor cleaning service for the premises in accordance with the specifications attached hereto as Exhibit “D”. Lessee agrees that Lessor shall not be held liable for failure to supply such heating, air conditioning service or any of them, it being understood that Lessor reserves the right to temporarily discontinue such services, or any of them, at such times as may be necessary by reason of accident, repairs, alterations or improvements. No person or persons other than the Lessor’s janitor and his assistants will be permitted to enter the building for such purpose without the written consent of Lessor being first had and obtained except in cases of emergency.

15.KEYS & INSPECTIONS: Lessee will be supplied, free of charge, with two keys for each door entering the leased premises. All such keys shall remain the property of Lessor. No additional locks shall be allowed on any door of the leased premises. Lessor and Lessor’s designees shall have the right at all times to enter the leased premises, by pass key or otherwise, to examine same, or to make such repairs, decoration, additions or alterations as may be necessary for the safety, betterment, improvement, and/or preservation thereof, or of

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the building, without in any manner affecting the obligations of Lessee hereunder, or to show the leased premises for rental purposes. In this regard, Lessor agrees to provide Lessee with prior notice of inspection and to not interfere or cause interference with the operations of lessee during such examination or inspection of the Premises.

16.QUIET POSSESSION AND SUBORDINATION: Lessor covenants and agrees with Lesseethat upon Lessee’s paying the Rent and Additional Rent and observing and performing all of the terms, covenants and conditions on Lessee’s part to be observed and performed, Lessee shall peaceably and quietly enjoy the Premises throughout the Term of this Lease without hindrance or molestation by anyone claiming through or under Lessor, subject, however, to the terms and conditions of this Lease and any ground or underlying leases and mortgages or deeds of trust on the Land or Building. This Lease is subject and subordinate to all present or future ground or underlying leases of the Land or Building and to the lien of any mortgages or deeds of trust now or hereafter in force against the Land and Building or either and to all renewals, extensions, modifications, consolidations and replacements thereof and to all advances made or hereafter to be made upon the security thereof; Such subordination shall be self-executing without further act on the part of Lessor or Lessee; provided, however, that Lessee shall at any time hereafter, on the demand of Lessor or any lienholder, execute any instruments, releases or other documents that may be required by any lienholder for the purpose of confirming the subordination of this Lease to the lien of such lienholder. Lessee hereby irrevocably authorizes Lessor to execute and deliver in the name of Lessee any such instrument or instruments if Lessee fails to do so. In the event that any mortgagee through foreclosure of any mortgage or deed of trust to which this Lease is unsubordinated (or by deed in lieu thereof), or any ground or underlying Lessor through termination of any ground or underlying lease, or any purchaser at a foreclosure sale becomes the owner of the Premises, Lessee will attorn to and recognize such entities becoming such owner for all purposes in place of the Lessor named in this Lease; provided that there shall be no credit given by such entity to Lessee for any Rent or Additional Rent which has been prepaid to Lessor named herein.

17.NON-DISTURBANCE: Lessor shall use its best efforts to obtain non-disturbance agreement(s) from its lending institution(s) and from any present Lessee or future entity in a superior position to Lessee. Such non-disturbance agreement(s), as well as Lessor’s non-disturbance agreement, shall extend to sublessees and assignees. Such agreements shall be delivered contemporaneously with the execution of the lease.

18.HOLDING OVER: If Lessee retains possession of the Premises or any part thereof after the termination of the Term or any extension thereof by lapse of time or otherwise, Lessee shall pay Lessor rent at a rate equal to one hundred fifty percent (150%) of the rate payable for the month immediately preceding the commencement of said holding over (including any Additional Rent) computed on a per month basis for each month or part thereof (without reduction for any such partial month) that Lessee remains in possession; and in addition thereto, Lessee shall pay Lessor all damages, consequential as well as direct, sustained by reason of Lessee’s retention of possession. Except as otherwise provided in this Section, such retention of possession shall constitute a month-to-month lease. Alternately, at the election of Lessor expressed in a notice to Lessee and not otherwise, such retention of possession shall constitute a renewal of this Lease for one (1) year at an annual rental equal to one hundred and fifty percent (150%) of the rental paid in the year preceding. The provisions of this Section shall not exclude Landlord’s right of reentry or any other right hereunder. If Lessor has not elected to renew this Lease for one (1) year, nothing herein contained shall preclude Lessor from terminating such retention of possession by service of a thirty (30) day notice as provided by law. The acceptance by Lessor of any payment of Rent subsequent to the commencement of such retention of possession by Lessee shall not be deemed to constitute a waiver by Lessor of any of the provisions of this Section.

19.INDEMNIFICATION OF LESSOR: Lessee agrees to indemnify and save harmless Lessor against and from, and to require any sublessee to indemnify and save harmless Lessor against and from, any and all claims by or on behalf of any person or persons, firm or

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firms, corporation or corporations, arising from the conduct or management of or from any work or thing whatsoever done by Lessee or any sublessee in or about the Building, the Land or the sidewalks in front of the Building, or arising from any act or negligence of Lessee or any sublessee, or any of their agents, contractors, servants, invitees, employees or licensees, and from and against all costs, counsel fees, expenses and liabilities incurred in or in connection with any such claim or action or proceeding brought thereon; and in case any action or proceeding be brought against Lessor by reason of any such claim. Lessee hereby covenants, and shall require any sublessee likewise to covenant, upon notice from Lessor to resist or defend at Lessee’s or such sublessee’s expenses such action or proceeding by counsel reasonably satisfactory to Lessor. Lessee, as a material part of the consideration to Lessor, hereby assumes and agrees to require any sublessee to assume all risk of damage to property in or upon the Premises from any source and to whomever belonging, and Lessee hereby waives and agrees to require any sublessee to waive all claims in respect thereof against Lessor and agrees to defend and save Lessor harmless from and against, and require any sublessee likewise to agree to defend and save Lessor harmless from and against, any such claims by others.

There is excluded from the foregoing indemnification and assumption any claims arising from the active negligence of Lessor, structural or latent defects in the Building or its equipment and the willful failure of Lessor to perform its obligations hereunder, for which Lessor agrees to indemnify, defend and hold Lessee harmless from and against any claims for loss or liability by third parties.

20.SURRENDER OF POSSESSION: Upon the expiration of the term or any extension thereof, or upon the termination of Lessee’s right of possession whether by lapse of time or at the option of Lessor as herein provided, Lessee shall forthwith surrender the Premises to Lessor in good order, repair and condition, ordinary wear and tear excepted. Any interest of Lessee in the alterations, improvements and additions to the Premises (including without limitation all carpeting and floor covering) made or paid for by Lessor or Lessee shall become Lessor’s property at the termination of this Lease by lapse of time or otherwise, and such alterations, improvements and additions shall be relinquished to Lessor in good condition, ordinary wear and tear excepted. At the termination of the term or of Lessee’s right of possession, Lessee agrees to remove the following items of Lessee’s property: office furniture, trade fixtures, office equipment and other items of Lessee’s property on the Premises. Lessee shall pay to Lessor upon demand the cost of repairing any damage to the Premises and to the Building caused by any such removal. If Lessee shall fail or refuse to remove any such property from the Premises, Lessee shall he conclusively presumed to have abandoned the same, and title thereto shall thereupon pass to Lessor without any cost (by set-off, credit, allowance or otherwise), and Lessor may at its option accept the title to such property or at Lessee’s expense may (a) remove the same or any part in any manner that Lessor may choose, repairing any damage to the Premises caused by such removal, and (b) store, destroy or otherwise dispose of the same without incurring liability to Lessee or any other person.

21.DEFAULT AND REMEDIES:

21.1EVENTS: The occurrence of any of the following shall, at the option of Lessor, constitute a material default and breach of this Lease by Lessee: (i) Any failure by Lessee to pay the rental or to make any other payment required to be made by Lessee hereunder; (ii) The abandonment or vacation of the Premises by Lessee; (iii) A failure by Lessee to observe and perform any other provision of this Lease to be observed or performed by Lessee, where such failure continues for thirty (30) days after written notice thereof by Lessor to Lessee provided however, that if the nature of such default is such that the same cannot reasonably be cured within such thirty (30) day period commence such cure and thereafter diligently prosecute the same to completion; (iv) The making by Lessee of any general assignment for the benefit of creditors; the filing by or against Lessee of a petition to have Lessee adjudged a bankrupt or of a petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against Lessee, the same is dismissed within sixty (60) days); appointment of a trustee or receiver to take possession of

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substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where possession is not restored to Lessee within thirty (30) days or the attachment, execution or other judicial seizure of Lessee’s interest in this Lease, where such seizure is not discharged within thirty (30) days.

21.2RIGHT OF RECOVERY: In the event of any such default by Lessee, then in addition to any other remedies available to Lessor at law or in equity, Lessor shall have the immediate option to terminate this Lease and all rights of Lessee hereunder by giving written notice of such intention to terminate.In the event that Lessorshall elect to terminate this Lease then Lessor may recover from Lessee: (i) The worth at the time of award of any unpaid rent which had been earned at the time of such termination plus; (ii) any other amount necessary to compensate Lessor for all the detriment proximately caused by Lessee’s failure to perform his obligations under this Lease or which in the ordinary course of events would be likely to result therefrom, and; (iii) at the Lessor’s election such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable Kansas law. The term “rent” as used herein, shall be deemed to be and to mean the minimum annual rental and all other sums required to be paid by Lessee pursuant to the terms of this Lease. As used in subparagraph (i) above, the “worth at the time of award” is computed by allowing interest at the rate of ten (10%) percent per annum.

21.3RIGHT TO RE-ENTER: In the event of any such default by Lessee, Lessor shall also have the right, with or without terminating this Lease, to re-enter the Premises and remove all persons and property from the Premises; such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Lessee.

21.4RIGHTS OF LANDLORD: In the event of the vacation or abandonment of the Premises by Lessee or in the event that Lessor shall elect to re-enter as provided in Paragraph 22.3 above or shall take possession of the Premises pursuant to legal proceeding or pursuant to any notice provided by law, then if Lessor does not elect to terminate this Lease, as provided in Paragraph 22.2 above, then Lessor may from time to time, without terminating this Lease, either recover all rentals as it becomes due or relet the Premises or any part thereof for such term or terms and at such rental or rentals and upon such other terms and conditions as Lessor in its sole discretion may deem advisable with the right to make necessary and repairs to the Premises.

In the event that Lessor shall elect to so relet, then rentals received by Lessor from such reletting shall be applied; first, to the payment of any indebtedness other than rent due hereunder from Lessee to Lessor; second, to the payment of any cost of such reletting; third, to the payment of the cost of any alterations and repairs to the Premises; fourth, to the payment of rent due and unpaid hereunder; and the residue, if any, shall be held by Lessor and applied in payment of future rent as the same may become due and payable hereunder. Should that portion of such rentals received from such reletting during any month, which is applied by the payment of rent hereunder, be less than the rent payable during that month by Lessee hereunder, then Lessee shall pay such deficiency to Lessor immediately upon demand therefor by Lessor. Such deficiency shall be calculated and paid monthly. Lessee shall also pay to Lessor, as soon as ascertained, any costs and expenses incurred by Lessor in such reletting or in making such alterations and repairs not covered by the rentals received from such reletting.

22.SEVERABILITY: In the event any provisions of this Lease be officially found to be contrary to law, or void as against public policy or otherwise, such provisions shall be either modified to conform to the law or considered severable with the remaining provisions hereof continuing in full force and effect.

23.EXPENSES OF ENFORCEMENT: The nonprevailing party shall pay upon demand, all of the prevailing party’s costs, charges and expenses, including the reasonable fees of counsel, agents and others retained by the prevailing party, incurred in enforcing either

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parties’ obligations hereunder or incurred by either party in any litigation, arbitration, negotiation or transaction in which either party causes the other to become involved or concerned as a result of the relationship created hereby.

24.EMINENT DOMAIN: If the whole or a substantial part of the premises hereby leased shall be taken by any public or quasi-public authority under the power of eminent domain so that such taking would render the use of the remainder unsuitable for Lessee’s purposes, then the terms of this lease shall cease on the part so taken from the date the possession of that part shall be required for any public purpose and the rent shall be paid up to that day, and from that day and for thirty (30) days thereafter the Lessee shall have the right either to cancel this Lease and declare same null and void or to continue in the possession of the remainder of the same under the terms herein provided, except that the rent shall be reduced in proportion to the amount of the premises taken. All damages awarded for such taking shall belong to and be the property of the Lessor whether such damages shall be awarded as compensation for diminution in value to the leasehold or to the fee of the premises herein leased; provided, however, that the Lessor shall not be entitled to any portion of the award made to the Lessee for loss of business, depreciation to and cost of removal of office furniture.

25.BANKRUPTCY: Neither this Lease, nor any interest therein nor any estate hereby created shall pass to any trustee or receiver in Bankruptcy, or to any other receiver or assignee for the benefit of creditors or otherwise by operation of law during the term of this Lease or any renewal or extension thereof.

26.ACCESS TOPREMISES: In accordance with Article 15 above, Lessor shall have the right to enter upon the leased premises at all reasonable hours and upon reasonable notice (except in case of emergency) for the purpose of inspecting the same and/or for the purpose of maintenance and repair of any pipes and/or conduits and/or ducts whether same are used in the supply of services to the Lessee or to the other occupants of the building or adjacent buildings and at all reasonable hours in connection with (a) construction of additional floors on its building, or (b) carrying on any work, repairs, alterations or improvements in and about the building.

27.RIGHT TOMORTGAGE: The Lessor reserves the right to subordinate this Lease at all times to the lien of any mortgage(s) or deed(s) of trust now or hereafter placed upon the Lessor’s interest in the said Premises, Building and Land. Lessee agrees to execute and deliver within ten (10) days after demand such further instrument or instruments, including an instrument subordinating this Lease to the lien of any such mortgage or deed of trust as shall be desired by the Lessor and/or any mortgagees or proposed mortgagees,and hereby irrevocably appoints the Lessor the attorney-in-fact of the Lessee to execute and deliver any such instrument or instruments for and in the name of the Tenant, if Tenant fails to execute said instrument within the above described time period.

28.WAIVER OF SUBROGATION: Lesser and Lessee each hereby waive all rights against the other in respect of any loss or damage for which (but only to the extent that) such party has been compensated under any policy of insurance carried by it or for its benefit. Lessor and Lessee each shall cause its insurance carriers to consent to such waiver and to waive all rights of subrogation against the other party.

29.LESSOR’S LIABILITY:No partner of Lessor shall have any personal liability for the performance or nonperformance of Lessor’s obligations made under this Lease, and such liability shall be strictly limited to the assets of the Lessor.

30.FINANCIAL STATEMENT: The persons signing this Lease on behalf of Lessee hereby personally represent and warrant to Lessor that the financial statements delivered to Lessor prior to the execution of this Lease properly reflect the true and correct value of all the assets and liabilities of Lessee. Lessee acknowledges that in entering into this Lease, Lessor is relying upon the accuracy and completeness of such statements.

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31.TRANSFER OF LESSOR’S INTEREST: Lessee acknowledges that Lessor has the right to transfer its interest in the Land and Building and in this Lease, and Lessee agrees that in the event of any such transfer Lessor shall automatically be released from all obligations under this Lease (but any liabilities of Lessor which have accrued prior to such transfer shall not be released), and Lessee agrees to look solely to such transferee for the performance of Lessor’s obligations hereunder. Lessee further acknowledges that Lessor may assign its interest in this Lease to a mortgage lender as additional security and agrees that such an assignment shall not release Lessor from its obligations hereunder and that Lessee shall continue to look solely to Lessor for the performance of Lessor’s obligations hereunder.

32.CONDITIONS: Lessee agrees to the following rules and regulations of the Lessor:

Lessee:

Will take good care of the premises at all times, keeping them clean and free from danger or damage by fire, open windows, open faucets or improper handling of apparatus or equipment of all kinds;

Will use a backing for window screens or draperies approved by Lessor;

Will conduct Lessee’s business on the leased premises so as not to interfere with any other Lessee in the building and will not play or permit to be played in the leased premises any musical instrument, phonograph or radio, or any sound equipment which will disturb others, other than that which might be supplied by the Lessor, or introduce or operate anything which may increase insurance rates of the building;

Will not permit animals or birds to be brought or kept in or about the building;

Will not move into or through any part of the building any furniture, fixtures, apparatus or supplies or any articles of weight or bulk except in such manner and at such times as Lessor may approve;

Will not overload the building floors or place thereon any weight exceeding one hundred (100) pounds per square foot;

Will have all decorating, carpentry work or any labor required for the installation of Lessee’s equipment, furnishing or other property, performed at its expense and only by the employees of Lessor or with the consent of Lessor by persons duly authorized by Lessor or; provided, however, special equipment, such as duplicating equipment, may be installed by persons other than Lessor’s employees;

Will not install any electrical lighting, heating, ventilating, or power equipment in the premises without first obtaining the written approval of Lessor;

Will not allow anything to be placed outside windows or on ledges nor permit anything to be thrown by Lessee or others therefrom;

Will not use the water closets, urinals and other water fixtures for anyother purpose than that for which they were constructed;

Will not mark, paint, drill into or in any way deface the windows, doors, walls, ceiling,partitions, floors or the wood, stone or aluminum work in the building and shall not put therein any spikes, hooks, screws or nails without Lessor’s written consent, except for office pictures and wall hangings;

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Will abide by and perform all such reasonable rules and regulations as Lessor may now or hereafter make which are according to Lessor’s judgment for the general good of the building and its Lessees.

Less ee agrees to repair at its expense any damage to the leased premises over and above normal wear and tear, except such damage as is or could be covered by the broadest available form of fire insurance with extended coverages.

According to the City of Lenexa, Kansas ordinance, smoking is prohibited within the building. Lessee may, at Lessee’s option, designate an area within the leased premises for such purposes.

33.PARKING: Lessee and Lessor acknowledge that Lessee shall have all parking on-site designated for its use. The parties understand that according to the survey of the premises, that there are two hundred sixty-four marked spaces. These parking spaces will be made available to Lessee throughout the initial term or any renewal thereof at no additional cost. Lessee may designate such parking at its discretion.

34.WAIVER: One or more waivers of any covenant or condition by the Lessor shall not be construed as a waiver of a further breach of the same covenant or condition, and the consent or approval by the Lessor to or of any act by the Lessee requiring the Lessor’s consent or approval shall not be deemed to waive or render unnecessary the Lessor’s consent or approval to any subsequent similar act by the Lessee.

35.NOTICE: Whenever under this Lease a provision is made for any demand, notice or declaration of any kind, or whether it is deemed desirable or necessary by either party to give or serve any such notice, demand, or declaration to the other party, it shall be deemed sufficient notice and service thereof if such notice to the Lessee is in writing addressed to the Lessee in care of the Premises;

and to the Landlord in care of:	PERG BUILDINGS, LLC
	c/o Block & Company, Inc., Realtors 605 West 47th Street, Suite 100 Kansas City, Missouri 64112

and served by certified or registered mail, and postage prepaid. Notice needs to be only sent to one Lessee or Lessor when the Lessee or Lessor is more than one person. Either party may, by like notice at any time and from time to time, designate a different address to which notices shall be sent.

36.REAL ESTATE COMMISSION: Lessor and Lessee acknowledge that GLAZE COMMERCIAL REAL ESTATE ADVISORS, as Lessee’s Representative, and BLOCK & COMPANY, INC., REALTORS, as Owner’s Representative, were the only Brokers that participated in the negotiations for this lease. Lessor shall compensate Glaze & Block per separate agreement.

37.ENVIRONMENTAL: Lessor is rsponsible for the delivery of the Building free of environmental concerns prior to and during occupancy. Lessor has received a clean Phase I environmental audit of the property which defines the above. Lessee is responsible for any contamination due to contaminants brought on the Premises or the Building by Lessee. All covenants shall survive termination of the Lease.

38.ENTIRE AGREEMENT: This Lease, together with the Exhibits scheduled below, constitutes the entire agreement between the parties with respect to the subject matter hereof, and no representation or agreement, oral or otherwise, not contained herein shall be binding upon the parties or otherwise have any force and effect. The following are Exhibits to this Lease and are incorporated herein by reference:

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Exhibit A - Floor Plan

Exhibit B - Legal Description

Exhibit C - Option to Renew

Exhibit D - Tenant Finish Floor Plan

Exhibit E - Lease Estoppel Certificate – Sample

Exhibit F - Memorandum of Lease

39.ESTOPPEL CERTIFICATE: Lessee agrees that from time to time, upon not less than ten (10) days prior request by Lessor, Lessee will deliver to Lessor a duly executed Lease Estoppel Certificate in the form attached hereto as Exhibit “E”.

40.RECORDING: Recording of this Lease may be done by either party byrecording the Memorandum of Lease in the form attached hereto as Exhibit “F”.

41.CORPORATE TENANT: Lessee, in the event that it is a corporation, hereby covenant and warrants that: (a) it is duly incorporated (or duly qualified if foreign) and authorized to do business in the State of Kansas; (b) the persons executing this Lease on behalf of Lessee are officers of Lessee; (c) such officers were duly authorized by Lessee to sign and execute this Lease on its behalf; (d) this Lease is a valid and binding obligation of Lessee, enforceable in accordance with its terms; and (e) the execution and performance of this Lease by Lessee does not conflict or result in a breach of Lessee’s certificate or articles of incorporation, Lessee’s by-laws or any other agreement which affects the property or assets of Lessee.

42.MODIFICATION OF LEASE: If a lender requires as a condition to its lending funds, the repayment of which is to be secured by a mortgage or deed of trust on the Land and Building or either, that certain modifications be made to this Lease, which modifications willnot require Lessee to pay any additional rentals or otherwise materially change the rights or obligations of Lessee hereunder, Lessee shall, upon Lessor’s request, execute appropriate instruments affecting such modifications.

43.DISCLOSURE: Lessee acknowledges that Lessee has been informed that person(s) associated with Block & Company, Inc., Realtors may have or may acquire an ownership interest in the (shopping center, property), and Lessee acknowledges that such ownership interest shall not affect the terms, conditions or validity of this Lease.

44.OPTION TO TERMINATE: Lessee and Lessor acknowledge that Lessee will have the right toterminate the Lease effective at the end of the 7^th lease year (August 31, 2006)by giving Lessor six (6) months prior written notice (on or before March 1, 2006) and with the payment to Lessor of a termination fee of TWO HUNDRED FIFTEEN THOUSAND & NO/100 DOLLARS ($215,000.00). Said fee will be paid on the effective date of the termination.

45.TENANTIMPROVEMENTS: Lessee and Lessor acknowledge that Lessee will be provided a tenant improvement allowance in the amount of TWO HUNDRED THOUSAND & NO/100 DOLLARS ($200,000.00) payable at the lease commencement, to be used at Lessee’s sole discretion, but provided that it is designated and utilized for building improvements. In addition, Lessee will have the right to request Lessor to provide an additional ONE HUNDRED THOUSAND & NO/100 DOLLARS ($100,000.00) of tenant improvements to the Lessee for its use, which would be amortized over the ten year initial term at the rate of 9% per year. Lessee shall notify Lessor in writing of its requirement for this additional payment on or prior to August 1, 1999. Lessee will provide Lessor plans and specifications for all tenant improvements to be performed by Lessee for its approval and said plans and specifications, upon approval by Lessor, will be attached hereto as Exhibit “D”.

46.SIGNAGE: Lessee acknowledges that it will have the right to modify theexisting monument signage at its cost to reflect its name. Said modification shall be in conformance with the signage covenants,which are a partof the Protective Covenants of Pine Ridge Business Park.

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47.SECURITY SYSTEM: Lessee and Lessor acknowledge that the existing security system that is currently in place will remain in tact for Lessee’s use, provided, however, that Lessees acknowledges that Lessor does not own said system and has no control over the removal of the equipment by the alarm company.

(THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)

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SIGNATURE PAGE
BY AND BETWEEN
PERG BUILDINGS, LLC, LESSOR
AMERICAN TELECONFERENCING SERVICES, LTD., LESSEE

The Parties Hereto affix their signature effective as of this ___ day of January 29, 1999.

PLEASE READ THIS LEASE CAREFULLY. BLOCK & COMPANY, INC., REALTORS, ITS AGENTS OR EMPLOYEES, ARE NOT AUTHORIZED TO GIVE LEGAL, TAX OR ACCOUNTING ADVICE. IF YOU DESIRE SUCH ADVICE, CONSULT YOUR ATTORNEY AND/OR ACCOUNTANT BEFORE SIGNING.

LESSOR:	PERG BUILDINGS, LLC
	By:	/s/ Kenneth G. Block
WITNESS:		Kenneth G. Block, Managing Member
/s/ Bruce D	Date:	1/29/99	Time:	4:00 PM

	LESSEE:		AMERICAN TELECONFERENCING SERVICES, LTD.
			By:	/s/ Patrick G. Jones
			Date:	1/28/99	Time:
ATTEST:		/s/ Mark Hamtz

(If Lessor or Lessee shall be a Corporation the Corporate Seal must be affixed and the authorized officers must sign on behalf of the Corporation. The Lease must be executed by the President or a Vice President and the Secretary or Assistant Secretary unless the By Laws or a Resolution of the Board of Directors shall otherwise provide, in which event the By Laws or a certified copy of the Resolution as the case may be, must be furnished.)

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EX-21.1

EXHIBIT 21.1

SUBSIDIARIES OF PTEK HOLDINGS, INC.

SUBSIDIARY	JURISDICTION OF ORGANIZATION
American Teleconferencing Services, Ltd.	Missouri
Comwave UK, Ltd.	United Kingdom
Connaught Commercial Services Limited	United Kingdom
EBIS Communications, Inc.	Georgia
Intellivoice Communications, LLC	Delaware
PCI Acquisition Corp.	Georgia
Premiere Communications, Inc.	Florida
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 GmbH	Germany
Premiere Conferencing Limited	New Zealand
Premiere Conferencing Pte. Ltd.	Singapore
Premiere Conferencing Pty Limited	Australia
Premiere Technologies (United Kingdom) Limited	United Kingdom
PTEK Communications Limited	United Kingdom
Ptek Investors I LLC	Delaware
PTEK Services, Inc.	Delaware
Ptek Ventures I LLC	Delaware
Ptek, Inc.	Georgia
Swift Global Communications (HK) Limited	Hong Kong
Swift Global Communications, Inc.	Delaware
Swift Global International Ltd.	New York
Transmit International Limited	United Kingdom
ViTel Bureau Services Limited	United Kingdom
ViTel Limited	United Kingdom
Voice-Tel Enterprises, LLC	Delaware
Voice-Tel of Canada Ltd.	Canada
Voice-Tel of New Zealand Limited	New Zealand
Voice-Tel Pty Ltd.	Australia
Xpedite Communications and Data Services GmbH	Austria
Xpedite IN Services GmbH	Germany
Xpedite Ltd.	Korea
Xpedite Systems (Malaysia) Sdn. Bhd.	Malaysia
Xpedite Systems AG	Switzerland
Xpedite Systems Canada, Inc.	Canada
Xpedite Systems Finance S.N.C.	France
Xpedite Systems GmbH	Germany
Xpedite Systems Holdings (UK) Limited	United Kingdom
Xpedite Systems Holdings GmbH	Germany
Xpedite Systems Holdings S.A.R.L.	France
Xpedite Systems Limited	New Zealand
Xpedite Systems Limited	England
Xpedite Limited	Hong Kong
Xpedite Systems NV/SA	Belgium
Xpedite Systems Participation E.U.R.L.	France

SUBSIDIARIES OF PTEK HOLDINGS, INC.
(Continued)

SUBSIDIARY	JURISDICTION OF ORGANIZATION
Xpedite Systems Pte. Ltd.	Singapore
Xpedite Systems Pty Limited	Australia
Xpedite Systems S.r.l.	Italy
Xpedite Systems Spain, S.A.	Spain
Xpedite Systems Worldwide, Inc.	Delaware
Xpedite Systems, Inc.	Delaware
Xpedite Systems, S.A.	France
Xpedite, Inc.	Japan

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-11281, 333-17593, 333-29787, 333-39693, 333-52357, 333-79599, 333-87635, 333-89891, 333-51380, 333-57698, 333-67292, 333-101262) and Form S-3 (No. 333-36557) of PTEK Holdings, Inc. of our report dated March 27, 2003 relating to the financial statements, which appears in this Form 10-K.

/s/ PRICEWATERHOUSECOOPERS LLP

March 27, 2003

EX-99.1

EXHIBIT 99.1

STATEMENT OF CHIEF EXECUTIVE OFFICER AND
CHIEF FINANCIAL OFFICER OF
PTEK HOLDINGS, 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 PTEK Holdings, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2002 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, and William E. Franklin, Executive Vice President and Chief Financial Officer of the Company, certify, 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	/s/ WILLIAM E. FRANKLIN
Boland T. Jones Chief Executive Officer PTEK Holdings, Inc. March 31, 2003	William E. Franklin Executive Vice President and Chief Financial Officer PTEK Holdings, Inc. March 31, 2003

A signed original of this written statement required by Section 906 has been provided to PTEK Holdings, Inc. and will be retained by PTEK Holdings, Inc. and furnished to the Securities and Exchange Commission upon request.