CSG SYSTEMS INTERNATIONAL INC (Form: 10-Q, Received: 05/10/2010 17:00:53)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2010

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-27512

CSG SYSTEMS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware

47-0783182

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

9555 Maroon Circle

Englewood, Colorado 80112

(Address of principal executive offices, including zip code)

(303) 200-2000

(Registrant’s telephone number, including area code)

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

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

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

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

Shares of common stock outstanding at May 3, 2010: 34,053,736

CSG SYSTEMS INTERNATIONAL, INC.

FORM 10-Q for the Quarter Ended March 31, 2010

INDEX


		Page No.
Part I -	FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009 (Unaudited)	3

	Condensed Consolidated Statements of Income for the Quarter Ended March 31, 2010 and 2009 (Unaudited)	4

	Condensed Consolidated Statements of Cash Flows for the Quarter Ended March 31, 2010 and 2009 (Unaudited)	5

	Notes to Condensed Consolidated Financial Statements (Unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	25

Part II -	OTHER INFORMATION	26

Item 1.	Legal Proceedings	26

Item1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 6.	Exhibits	32

	Signatures	33

	Index to Exhibits	34

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED

(in thousands, except share and per share amounts)


	March 31, 2010			December 31, 2009
ASSETS
Current assets:
Cash and cash equivalents	$	165,290		$	163,489
Short-term investments		45,455			34,888

Total cash, cash equivalents and short-term investments		210,745			198,377
Trade accounts receivable-
Billed, net of allowance of $2,289 and $2,036		107,167			107,810
Unbilled and other		9,899			9,140
Deferred income taxes		13,038			16,826
Income taxes receivable		2,788			2,114
Other current assets		12,103			9,575

Total current assets		355,740			343,842
Property and equipment, net of depreciation of $93,467 and $88,195		53,252			56,799
Software, net of amortization of $41,474 and $40,266		11,734			12,157
Goodwill		107,537			107,052
Client contracts, net of amortization of $125,515 and $122,666		39,838			41,407
Other assets		8,632			4,920

Total assets	$	576,733		$	566,177

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Client deposits	$	32,789		$	29,906
Trade accounts payable		30,502			26,856
Accrued employee compensation		21,582			26,598
Deferred revenue		32,601			26,307
Other current liabilities		9,618			9,894

Total current liabilities		127,092			119,561

Non-current liabilities:
Long-term debt, net of unamortized original issue discount of $41,238 and $12,853		159,166			157,447
Deferred revenue		19,450			20,498
Income taxes payable		4,585			5,889
Deferred income taxes		53,120			42,198
Other non-current liabilities		8,003			8,474

Total non-current liabilities		244,324			234,506

Total liabilities		371,416			354,067

Stockholders’ equity:
Preferred stock, par value $.01 per share; 10,000,000 shares authorized; zero shares issued and outstanding		—			—
Common stock, par value $.01 per share; 100,000,000 shares authorized; 34,060,278 and 35,125,943 shares outstanding		640			636
Additional paid-in capital		430,181			408,722
Treasury stock, at cost, 29,956,808 and 28,456,808 shares		(704,963	)		(675,623	)
Accumulated other comprehensive income (loss):
Unrealized gain on short-term investments, net of tax		8			10
Unrecognized pension plan losses and prior service costs, net of tax		(897	)		(919	)
Accumulated earnings		480,348			479,284

Total stockholders’ equity		205,317			212,110

Total liabilities and stockholders’ equity	$	576,733		$	566,177

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

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(in thousands, except per share amounts)


	Quarter Ended
	March 31, 2010			March 31, 2009
Revenues:
Processing and related services	$	122,046		$	114,728
Software, maintenance and services		8,217			8,818

Total revenues		130,263			123,546

Cost of revenues (exclusive of depreciation, shown separately below):
Processing and related services		67,004			60,254
Software, maintenance and services		5,968			6,402

Total cost of revenues		72,972			66,656
Other operating expenses:
Research and development		18,512			17,151
Selling, general and administrative		16,534			13,818
Depreciation		5,622			4,240
Restructuring charges		221			102

Total operating expenses		113,861			101,967

Operating income		16,402			21,579

Other income (expense):
Interest expense		(1,548	)		(1,573	)
Amortization of original issue discount		(2,300	)		(2,225	)
Gain (loss) on repurchase of convertible debt securities		(10,952	)		1,468
Interest and investment income, net		116			482
Other, net		(2	)		—

Total other		(14,686	)		(1,848	)

Income before income taxes		1,716			19,731
Income tax provision		(652	)		(6,906	)

Net income	$	1,064		$	12,825

Weighted-average shares outstanding - Basic:
Common stock		33,051			33,070
Participating restricted common stock		743			1,352

Total		33,794			34,422

Weighted-average shares outstanding - Diluted:
Common stock		33,313			33,113
Participating restricted common stock		743			1,352

Total		34,056			34,465

Earnings per common share:
Basic	$	0.03		$	0.37
Diluted	$	0.03		$	0.37

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

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(in thousands)


	Year Ended
	March 31, 2010			March 31, 2009
Cash flows from operating activities:
Net income	$	1,064		$	12,825
Adjustments to reconcile net income to net cash provided by operating activities-
Depreciation		5,622			4,240
Amortization		4,111			2,963
Amortization of original issue discount		2,300			2,225
Gain on short-term investments and other		(38	)		(192	)
(Gain) loss on repurchase of convertible debt securities		10,952			(1,468	)
Deferred income taxes		1,433			6,978
Excess tax benefit of stock-based compensation awards		(1,077	)		(137	)
Stock-based employee compensation		3,009			3,015
Changes in operating assets and liabilities:
Trade accounts and other receivables, net		(116	)		(11,137	)
Other current and non-current assets		(3,110	)		(2,229	)
Income taxes payable/receivable		(1,246	)		(4,495	)
Trade accounts payable and accrued liabilities		3,174			(3,065	)
Deferred revenue		5,246			6,490

Net cash provided by operating activities		31,324			16,013

Cash flows from investing activities:
Purchases of property and equipment		(4,048	)		(10,024	)
Purchases of short-term investments		(41,932	)		(2,937	)
Proceeds from sale/maturity of short-term investments		31,400			24,400
Acquisition of businesses, net of cash acquired		(2,264	)		(6,296	)
Acquisition of and investments in client contracts		(1,280	)		(1,489	)

Net cash provided by (used in) investing activities		(18,124	)		3,654

Cash flows from financing activities:
Proceeds from issuance of common stock		451			264
Repurchase of common stock		(33,504	)		(6,047	)
Payments on acquired equipment financing		(285	)		(248	)
Proceeds from issuance of convertible debt securities		150,000			—
Payments of deferred financing costs		(4,146	)		—
Repurchase of convertible debt securities		(124,992	)		(13,229	)
Excess tax benefit of stock-based compensation awards		1,077			137

Net cash used in financing activities		(11,399	)		(19,123	)

Net increase in cash and cash equivalents		1,801			544
Cash and cash equivalents, beginning of period		163,489			83,886

Cash and cash equivalents, end of period	$	165,290		$	84,430

Supplemental disclosures of cash flow information:
Net cash paid during the period for-
Interest	$	852		$	142
Income taxes		466			4,328

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

CSG SYSTEMS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. GENERAL

We have prepared the accompanying unaudited condensed consolidated financial statements as of March 31, 2010 and December 31, 2009, and for the first quarter ended March 31, 2010 and 2009, in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, and pursuant to the instructions to Form 10-Q and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of our management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position and operating results have been included. The unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in our Annual Report on Form 10-K for the year ended December 31, 2009, filed with the SEC. The results of operations for the first quarter ended March 31, 2010 are not necessarily indicative of the expected results for the entire year ending December 31, 2010.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates in Preparation of Condensed Consolidated Financial Statements. The preparation of the accompanying Condensed Consolidated 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 the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Reclassification. Certain prior year amounts have been reclassified to conform to the March 31, 2010 presentation.

Accounting Pronouncements Issued But Not Yet Effective. In October 2009, the FASB issued a new pronouncement related to revenue arrangements with multiple deliverables. This new guidance requires a vendor to allocate revenue to each unit of accounting in many arrangements involving multiple deliverables based upon the relative selling price of each deliverable. It also changes the level of evidence of stand-alone selling price required to separate deliverables by allowing a vendor to make its best estimate of the stand-alone selling price of deliverables when more objective evidence of selling price is not available. The pronouncement also prohibits the use of the residual method of allocating arrangement consideration to deliverables, but instead, requires the use of the relative selling price method where the vendor must determine a stand-alone selling price for all deliverables that meet the separation criteria. The pronouncement’s scope is limited to multiple element arrangements, and does not apply to deliverables within the scope of the software revenue recognition rules or other authoritative literature that addresses both separation and allocation. The provisions of this new pronouncement are effective for fiscal years beginning on or after June 15, 2010, and can be adopted prospectively to new or materially modified revenue arrangements entered into or materially modified after the effective date or retrospectively for all periods presented. We are currently evaluating the impact that this new guidance will have on our consolidated results of operations and financial condition, which we expect to adopt on a prospective basis on January 1, 2011.

Postage. We pass through to our clients the cost of postage that is incurred on behalf of those clients, and typically require an advance payment on expected postage costs. These advance payments are included in “client deposits” in the accompanying Condensed Consolidated Balance Sheets and are classified as current liabilities regardless of the contract period. We net the cost of postage against the postage reimbursements, and include the net amount in processing and related services revenues. The cost of postage that has been shown net of the postage reimbursements from our clients for the first quarter of 2010 and 2009 was $69.0 million and $67.3 million, respectively.

Short-term Investments and Other Financial Instruments . Our financial instruments as of March 31, 2010 and December 31, 2009, include cash and cash equivalents, short-term investments, accounts receivable, accounts payable, and long-term debt. Because of their short maturities, the carrying amounts of cash equivalents, accounts receivable, and accounts payable approximate their fair value.

Our short-term investments and certain cash equivalents are considered “available-for-sale” and are reported at fair value in our accompanying Condensed Consolidated Balance Sheets, with unrealized gains and losses, net of the related income tax effect, excluded from earnings and reported in a separate component of stockholders’ equity. Realized and unrealized gains and losses were not material in any period presented.

Our short-term investments at March 31, 2010, and December 31, 2009, consisted of the following (in thousands):


	March 31, 2010		December 31, 2009
Commercial paper	$	45,455	$	31,388
Certificates of deposit		—		3,500

Total	$	45,455	$	34,888

All short-term investments held by us as of March 31, 2010, have contractual maturities of less than one year from the time of acquisition. Proceeds from the sale/maturity of short-term investments in the first quarter of 2010 and 2009 were $31.4 million and $24.4 million, respectively.

The following table represents the fair value hierarchy based upon three levels of inputs, of which Levels 1 and 2 are considered observable and Level 3 is unobservable, for our cash equivalents and short-term investments measured at fair value (in thousands):


	March 31, 2010						December 31, 2009
	Level 1		Level 2		Total		Level 1		Level 2		Total
Money market funds	$	66,465	$	—	$	66,465	$	122,942	$	—	$	122,942
Commercial paper		—		116,645		116,645		—		56,641		56,641
Certificates of deposit		—		—		—		—		3,500		3,500

Total	$	66,465	$	116,645	$	183,110	$	122,942	$	60,141	$	183,083

Valuation inputs used to measure the fair values of our money market funds were derived from quoted market prices. The fair values of all other instruments are based upon pricing provided by third-party pricing services. These prices were derived from observable market inputs.

As of March 31, 2010, our long-term debt consists of our 2004 Convertible Debt Securities and our 2010 Convertible Notes (see Note 6). As of March 31, 2010 and December 31, 2009, the fair value of our 2004 Convertible Debt Securities, based upon quoted market prices or recent sales activity, was approximately $52 million and $169 million, respectively. As of March 31, 2010, the fair value of our 2010 Convertible Notes, based upon quoted market prices or recent sales activity, was approximately $158 million.

3. STOCKHOLDERS’ EQUITY AND EQUITY COMPENSATION PLANS

Stock Repurchase Program. We currently have a stock repurchase program, approved by our Board of Directors, authorizing us to repurchase our common stock from time-to-time as market and business conditions warrant (the “Stock Repurchase Program”). During the quarter ended March 31, 2010, we repurchased 1.5 million shares of our common stock under the Stock Repurchase Program for $29.3 million ($19.56 per share). During the quarter ended March 31, 2009, we repurchased 250,000 shares of our common stock under the Stock Repurchase Program for $3.8 million (weighted-average price of $15.13 per share). As of March 31, 2010, the total remaining number of shares available for repurchase under the Stock Repurchase Program totaled 4.2 million shares.

Stock Repurchases for Tax Withholdings. In addition to the above mentioned stock repurchases, a summary of shares repurchased from our employees and then cancelled during the first quarter ended March 31, 2010 and 2009 in connection with minimum tax withholding requirements resulting from the vesting of restricted common stock under our stock incentive plans is as follows (in thousands):


	Quarter Ended March 31,
	2010		2009
Shares repurchased		204		161
Total amount paid	$	4,165	$	2,266

Stock-Based Awards. A summary of our unvested restricted common stock activity during the first quarter ended March 31, 2010, is as follows:


	Quarter Ended March 31, 2010
	Shares		Weighted- Average Grant Date Fair Value
Unvested awards, beginning	1,751,717		$	16.12
Awards granted	610,830			20.14
Awards forfeited/cancelled	(3,375	)		16.22
Awards vested	(588,380	)		17.26

Unvested awards, ending	1,770,792		$	17.13

Included in the awards granted during the quarter ended March 31, 2010, are performance-based awards for 83,500 restricted common stock shares issued to members of executive management, which vest in equal installments over three years upon meeting either pre-established financial performance objectives or pre-established stock price objectives. The performance-based awards become fully vested upon a change in control, as defined, and the subsequent involuntary termination of employment.

All other restricted common stock shares granted during the quarter ended March 31, 2010, are time-based awards, which generally vest annually over four years with no restrictions other than the passage of time. Certain shares of the restricted common stock become fully vested upon a change in control, as defined, and the subsequent involuntary termination of employment.

We recorded stock-based compensation expense for the first quarter of 2010 and 2009 of $3.0 million in both periods.

4. EARNINGS PER COMMON SHARE

Basic and diluted earnings per common share (“EPS”) amounts are presented on the face of the accompanying Condensed Consolidated Statements of Income. The amounts attributed to both common stock and participating restricted common stock used as the numerators in both the basic and diluted EPS calculations are as follows (in thousands):


	Quarter Ended March 31,
	2010		2009
Net Income attributed to:
Common stock	$	1,041	$	12,321
Participating restricted common stock		23		504

Total	$	1,064	$	12,825

The weighted-average shares outstanding used in the basic and diluted EPS denominators related to common stock and participating restricted common stock are as follows (in thousands):


	Quarter Ended March 31,
	2010	2009
Weighted-average shares outstanding – Basic:
Common stock	33,051	33,070
Participating restricted common stock	743	1,352

Total	33,794	34,422

Weighted-average shares outstanding – Diluted:
Common stock	33,313	33,113
Participating restricted common stock	743	1,352

Total	34,056	34,465

The reconciliation of the basic and diluted EPS denominators related to the common shares is included in the following table (in thousands):


	Quarter Ended March 31,
	2010	2009
Basic weighted-average common shares	33,051	33,070
Dilutive effect of common stock options	29	28
Dilutive effect of non-participating restricted common stock	233	15
Dilutive effect of 2010 Convertible Notes	—	—
Dilutive effect of 2004 Convertible Debt Securities	—	—

Diluted weighted-average common shares	33,313	33,113

Potentially dilutive common shares related to stock options and non-participating unvested shares of restricted common stock of 0.2 million for the first quarter of 2010 and 2009, were excluded from the computation of diluted EPS related to common shares as their effect was antidilutive.

The 2010 Convertible Notes have a dilutive effect only in those quarterly periods in which our average stock price exceeds the current effective conversion price of $24.45 per share. The 2004 Convertible Debt Securities have a dilutive effect only in those quarterly periods in which our average stock price exceeds the current effective conversion price of $26.77 per share. See Note 6 for additional discussion of our 2010 Convertible Notes and 2004 Convertible Debt Securities.

5. COMPREHENSIVE INCOME

The components of our comprehensive income were as follows (in thousands):


	Quarter Ended March 31,
	2010			2009
Net income	$	1,064		$	12,825
Other comprehensive income (loss), net of tax, if any:
Change in unrecognized pension plan gains and prior service costs, net of tax		22			—
Unrealized loss on short-term investments		(2	)		(145	)

Comprehensive income	$	1,084		$	12,680

6. DEBT

As of March 31, 2010 and December 31, 2009, our long-term debt, net of unamortized original issue discount (“OID”), was as follows (in thousands):


	March 31, 2010		December 31, 2009
Liability component:
2010 Convertible Notes – senior subordinated convertible notes; due March 1, 2017; cash interest at 3.0%; net of unamortized OID of $38,055 and zero, respectively	$	111,945	$	—

2004 Convertible Debt Securities – senior subordinated convertible contingent debt securities; due June 15, 2024; cash interest at 2.5%; net of unamortized OID of $3,183 and $12,853, respectively		47,221		157,447

		159,166		157,447
Current portion of long-term debt		—		—

Total long-term debt	$	159,166	$	157,447

Equity component (included within additional paid-in capital, net of tax):
2010 Convertible Notes	$	23,727	$	—
2004 Convertible Debt Securities		38,270		39,752

The OID related to the 2010 Convertible Notes is being amortized to interest expense through March 1, 2017, the maturity date of the 2010 Convertible Notes. The OID related to the 2004 Convertible Debt Securities is being amortized to interest expense through June 15, 2011, which is the first date that the 2004 Convertible Debt Securities can be put back to us by the holders for cash. The effective interest rates of the liability components for the 2010 Convertible Notes and the 2004 Convertible Debt Securities are 7.75% and 8.00%, respectively.

2010 Convertible Notes. On March 1, 2010, we completed an offering of $150 million of 3.0% senior subordinated convertible notes due March 1, 2017 (“2010 Convertible Notes”) to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2010 Convertible Notes are unsecured obligations, equal in right of payment to our 2004 Convertible Debt Securities, subordinated to any future senior indebtedness and to any future junior subordinated debt. The 2010 Convertible Notes were issued at a price of 100% of their par value and bear interest at a rate of 3.0% per annum, which is payable semiannually in arrears on March 1 and September 1 of each year, beginning on September 1, 2010.

The net proceeds from the sale of the 2010 Convertible Notes were approximately $145 million, after debt issuance costs. We used the net proceeds, along with available cash, cash equivalents and short-term investments, to: (i) repurchase 1.5 million shares of our common stock for $29.3 million ($19.56 per share) under our existing Stock Repurchase Program; and (ii) repurchase $119.9 million (par value) of our 2004 Convertible Debt Securities for a total purchase price of $125.8 million, which included accrued interest of $0.8 million.

The 2010 Convertible Notes are convertible into our common stock, under the specified conditions and settlement terms outlined below, at an initial conversion rate of 40.8998 shares of our common stock per $1,000 par value of the 2010 Convertible Notes, which is equivalent to an initial conversion price of approximately $24.45 per share. The Indenture related to the 2010 Convertible Notes (“Notes Indenture”) includes anti-dilution provisions for the holders such that the conversion rate can be adjusted in the future for certain events, to include stock dividends, the issuance of rights, options or warrants to purchase our common stock at a price below the then-current market price, and certain distributions of common stock, property or rights, options or warrants to acquire our common stock to all or substantially all holders of our common stock. Additionally, the conversion rate may be adjusted prior to the maturity date in connection with the occurrence of specified corporate transactions for a “make-whole” premium as set forth in the Notes Indenture.

Prior to September 1, 2016, holders of the 2010 Convertible Notes can convert their securities: (i) at any time the price of our common stock trades over $31.79 per share (130% of the $24.45 effective conversion price) for a specified period of time; (ii) at any time the trading price of the 2010 Convertible Notes falls below 98% of the average conversion value for the 2010 Convertible Notes for a specified period of time; and (iii) at any time upon the occurrence of specified corporate transactions, to include a change of control (as defined in the Notes Indenture). On or after September 1, 2016, the holders of the 2010 Convertible Notes can elect to convert their securities at any time, with the settlement occurring on March 1, 2017. As of March 31, 2010, none of the contingent conversion features have been achieved, and thus, the 2010 Convertible Notes are not convertible by the holders.

Upon conversion of the 2010 Convertible Notes, we will settle our conversion obligation as follows: (i) we will pay cash for 100% of the par value of the 2010 Convertible Notes that are converted; and (ii) to the extent the value of our conversion obligation exceeds the par value, we will satisfy the remaining conversion obligation in our common stock, cash or any combination of our common stock and cash. As of March 31, 2010, the value of our conversion obligation did not exceed the par value of the 2010 Convertible Notes.

2004 Convertible Debt Securities. The 2004 Convertible Debt Securities are unsecured, subordinated to any of our future senior indebtedness, and senior to any future junior subordinated debt. The 2004 Convertible Debt Securities were issued at a price of 100% of their par value and bear interest at a rate of 2.5% per annum, which is payable semiannually in arrears on June 15 and December 15 of each year. The 2004 Convertible Debt Securities are callable by us for cash, on or after June 20, 2011, at a redemption price equal to 100% of the par value of the 2004 Convertible Debt Securities, plus accrued interest. The 2004 Convertible Debt Securities can be put back to us by the holders for cash at June 15, 2011, 2016 and 2021, or upon a change of control, as defined in the 2004 Convertible Debt Securities bond indenture (“Bonds Indenture”), at a repurchase price equal to 100% of the par value of the 2004 Convertible Debt Securities, plus any accrued interest.

The 2004 Convertible Debt Securities are convertible into our common stock, under the specified conditions and settlement terms outlined below, at a conversion rate of 37.3552 shares per $1,000 par value of the 2004 Convertible Debt Securities, which is equal to an effective conversion price of $26.77 per share. The Bonds Indenture includes anti-dilution provisions for the holders such that the conversion rate (and thus, the effective conversion price) can be adjusted in the future for certain events, to include stock dividends, stock splits/reverse splits, the issuance of warrants to purchase our stock at a price below the then-current market price, cash dividends, and certain purchases by us of our common stock pursuant to a self-tender offer or exchange offer.

Holders of the 2004 Convertible Debt Securities can convert their securities: (i) at any time the price of our common stock trades over $34.80 per share (130% of the $26.77 effective conversion price) for a specified period of time; (ii) at any time the trading price of the 2004 Convertible Debt Securities falls below 98% of the average conversion value for the 2004 Convertible Debt Securities for a specified period of time; (iii) upon us exercising our right to redeem the 2004 Convertible Debt Securities at any time after June 20, 2011; (iv) at any time upon the occurrence of specified corporate transactions, to include a change in control (as defined in the Bonds Indenture); and (v) if a certain level of dividends are declared, or a certain number of shares of our common stock are repurchased under a self-tender offer by us. As of March 31, 2010, none of the contingent conversion features have been achieved, and thus, the 2004 Convertible Debt Securities are not convertible by the holders.

Upon conversion of the 2004 Convertible Debt Securities, we will settle our conversion obligation as follows: (i) we will pay cash for 100% of the par value of the 2004 Convertible Debt Securities that are converted; and (ii) to the extent the value of our conversion obligation exceeds the par value, we will satisfy the remaining conversion obligation in our common stock, cash or any combination of our common stock and cash. As of March 31, 2010, the value of our conversion obligation did not exceed the par value of the 2004 Convertible Debt Securities.

In March 2010, we repurchased $119.9 million (par value) of our 2004 Convertible Debt Securities for a total purchase price of $125.8 million, which included accrued, but unpaid interest of $0.8 million. We recognized a non-cash loss on the repurchase of approximately $11 million, after the write-off of a proportional amount of deferred financing costs. This debt has been considered extinguished for accounting purposes.

As a result of the repurchase of our 2004 Convertible Debt Securities in the first quarter of 2010 and the repurchases we made during 2009, beginning in 2014, we will have to pay cash of approximately $26 million ratably over five years related to the deferred tax liabilities associated with the repurchased securities. In addition, if the remaining 2004 Convertible Debt Securities are put back to us on June 15, 2011, in 2011, we will have to settle in cash approximately $12 million of deferred tax liabilities associated with the outstanding securities.

Deferred Financing Costs. As of March 31, 2010, net deferred financing costs related to the 2010 Convertible Notes were $3.7 million, and are being amortized to interest expense through maturity (March 1, 2017). As of March 31, 2010, net deferred financing costs related to the 2004 Convertible Debt Securities were $0.2 million, and are being amortized to interest expense through the first date the holders of the 2004 Convertible Debt Securities can be put back to us (June 15, 2011). The net deferred financing costs are reflected in Other Assets in the accompanying Condensed Consolidated Balance Sheets. Interest expense for the quarter ended March 31, 2010 and 2009 includes amortization of deferred financing costs of $0.2 million in both periods.

7. LONG-LIVED ASSETS

Goodwill. The changes in the carrying amount of goodwill for the quarter ended March 31, 2010 were as follows (in thousands):


January 1, 2010, balance	$	107,052
Adjustments related to prior acquisitions		485

March 31, 2010, balance	$	107,537

The adjustments related to prior acquisitions are mainly due to the recording of a contingent purchase price payment of $0.5 million associated with the Quaero acquisition.

Other Intangible Assets. Our intangible assets subject to ongoing amortization consist primarily of client contracts and software. As of March 31, 2010 and December 31, 2009, the carrying values of these assets were as follows (in thousands):


	March 31, 2010							December 31, 2009
	Gross Carrying Amount		Accumulated Amortization			Net Amount		Gross Carrying Amount		Accumulated Amortization			Net Amount
Client contracts	$	165,353	$	(125,515	)	$	39,838	$	164,073	$	(122,666	)	$	41,407
Software		53,208		(41,474	)		11,734		52,423		(40,266	)		12,157

Total	$	218,561	$	(166,989	)	$	51,572	$	216,496	$	(162,932	)	$	53,564

The total amortization expense related to intangible assets for the first quarter of 2010 and 2009 was $3.9 million and $2.8 million, respectively. Based on the March 31, 2010 net carrying value of our intangible assets, the estimated total amortization expense for each of the five succeeding fiscal years ending December 31 are: 2010 – $15.7 million; 2011 – $14.5 million; 2012 – $12.0 million; 2013 – $4.7 million; and 2014 – $3.4 million.

8. COMMITMENTS, GUARANTEES AND CONTINGENCIES

Warranties. We generally warrant that our solutions and related offerings will conform to published specifications, or to specifications provided in an individual client arrangement, as applicable. The typical warranty period is 90 days from delivery of the solution or offering. For certain service offerings we provide a limited warranty for the duration of the services provided. We generally warrant that services will be performed in a professional and workmanlike manner. The typical remedy for breach of warranty is to correct or replace any defective deliverable, and if not possible or practical, we will accept the return of the defective deliverable and refund the amount paid under the client arrangement that is allocable to the defective deliverable. Our contracts also generally contain limitation of damages provisions in an effort to reduce our exposure to monetary damages arising from breach of warranty claims. Historically, we have incurred minimal warranty costs, and as a result, do not maintain a warranty reserve.

Product and Services Indemnifications. Our arrangements with our clients generally include an indemnification provision that will indemnify and defend a client in actions brought against the client that claim our products and/or services infringe upon a copyright, trade secret, or valid patent. Historically, we have not incurred any significant costs related to such indemnification claims, and as a result, do not maintain a reserve for such exposure.

Claims for Company Non-performance. Our arrangements with our clients typically cap our liability for breach to a specified amount of the direct damages incurred by the client resulting from the breach. From time-to-time, these arrangements may also include provisions for possible liquidated damages or other financial remedies for our non-performance, or in the case of certain of our outsourced customer care and billing solutions, provisions for damages related to service level performance requirements. The service level performance requirements typically relate to system availability and timeliness of service delivery. As of March 31, 2010, we believe we have adequate reserves, based on our historical experience, to cover any reasonably anticipated exposure as a result of our nonperformance for any past or current arrangements with our clients. The amount of the reserve maintained for this purpose is not material.

Indemnifications Related to Sold Businesses. In conjunction with the sale of the GSS business in December 2005, we provided certain indemnifications to the buyer of this business which are considered routine in nature (such as employee, tax, or litigation matters that occurred while these businesses were under our ownership). Under the provisions of this indemnification agreement, payment by us is conditioned on the other party making a claim pursuant to the procedures in the indemnification agreement, and we are typically allowed to challenge the other party’s claims. In addition, certain of our obligations under this indemnification agreement are limited in terms of time and/or amounts, and in some cases, we may have recourse against a third party if we are required to make certain indemnification payments.

We estimated the fair value of these indemnifications at $2.8 million as of the closing date for the sale of the GSS business. Since the sale of the GSS business, we have made an indemnification payment of $0.1 million, and as of March 31, 2010, the indemnification liability was $2.3 million and related principally to indemnifications related to income tax matters. It is not possible to predict the maximum potential amount of future payments we may be required to make under this indemnification agreement due to the conditional nature of our obligations and the unique facts and circumstances associated with each indemnification provision. We believe that if we were required to make payments in excess of the indemnification liability we have recorded, the resulting loss would not have a material effect on our financial condition or results of operations. If any amounts required to be paid by us would differ from the amounts initially recorded as indemnification liabilities as of the closing dates for the sale of the GSS business, the difference would be reflected in the discontinued operations section of our Consolidated Statements of Income.

Indemnifications Related to Officers and the Board of Directors. We have agreed to indemnify certain of our officers and members of our Board of Directors if they are named or threatened to be named as a party to any proceeding by reason of the fact that they acted in such capacity. We maintain directors’ and officers’ (D&O) insurance coverage to protect against such losses. We have not historically incurred any losses related to these types of indemnifications, and are not aware of any pending or threatened actions or claims against any officer or member of our Board of Directors. As a result, we have not recorded any liabilities related to such indemnifications as of March 31, 2010. In addition, as a result of the insurance policy coverage, we believe these indemnification agreements are not significant to our results of operations.

Legal Proceedings. From time-to-time, we are involved in litigation relating to claims arising out of our operations in the normal course of business. We are not presently a party to any material pending or threatened legal proceedings.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto (our “Financial Statements”) included in this Form 10-Q and the audited consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2009 (our “2009 10-K”).

Forward-Looking Statements

This report contains a number of forward-looking statements relative to our future plans and our expectations concerning our business and the industries we serve. These forward-looking statements are based on assumptions about a number of important factors, and involve risks and uncertainties that could cause actual results to differ materially from estimates contained in the forward-looking statements. Some of the risks that are foreseen by management are outlined within Part II Item 1A., “Risk Factors”. Item 1A. constitutes an integral part of this report, and readers are strongly encouraged to review this section closely in conjunction with MD&A.

Company Overview

Our Company. We are a leading provider of customer interaction management solutions to the North American market. We provide fully outsourced customer care and billing solutions to the cable and direct broadcast satellite (“DBS”) industry that combine the reliability and high-volume transaction processing capabilities of an enterprise server platform with the flexibility of client/server architecture. In addition to these critical business support services that we provide to our clients, our Intelligent Customer Communications solutions facilitate effective interactions between our clients and their end customers through various touch points, including electronic communication channels such as the Internet, interactive communications channels such as voice and text messaging, and through enhanced print communications.

Our broad suite of solutions help our clients improve their profitability by creating more compelling product offerings and an enhanced customer experience through more relevant and targeted interactions. Our solutions help our clients maximize the value and minimize the costs associated with their customer interactions by:

•

Targeting and acquiring the right customers through the most effective communications channels;

•

Analyzing customer purchasing and interaction patterns and other data to offer new products and services in relevant and meaningful packages;

•

Managing the critical back office processes required to offer, deploy, service, and bill customer orders and requests more efficiently;

•

Empowering our clients’ workforce with the tools and the information required for them to improve customer satisfaction and retention through informed and efficient interactions;

•

Improving the communications between our clients and their end customers by providing meaningful, relevant, and targeted messages via the desired communication vehicle, whether that be electronic or print; and

•

Improving efficiencies by streamlining all operations through a customer-centric focus.

Our proven approach and solutions are based on more than 25 years of experience in serving clients in the communications industry (primarily cable and DBS providers) as their businesses evolved from a single product offering, high volume, recurring model to a highly complex, highly competitive, multi-product service offering. Our approach has centered on using the best technology for the various functions required to provide a world-class scalable solution.

Recently, we have broadened and enhanced our Intelligent Customer Communication solutions to not only increase our capabilities to our existing clients, but to also expand these services into new industries, including utilities, healthcare, home security, financial services, and content distribution. These are industries where companies require solutions that foster relevant interactions with customers that result in increased customer satisfaction and revenues. This approach has helped us to diversify our revenue base. During the first quarter of 2010, 84% of our revenues came from the cable and DBS industry, whereas three years ago, nearly all of our revenues came from the cable and DBS industry. The shift in revenue mix has primarily been achieved through acquisitions, which has expanded the capabilities of our Intelligent Customer Communications solutions, and provided us new markets to penetrate.

Our solutions are delivered and supported by an experienced and dedicated workforce of more than 2,000 employees. We are a S&P SmallCap 600 company.

Market Concentration. The North American communications industry has experienced significant consolidation over the past decade, resulting in a large percentage of the market being served by a limited number of service providers with greater size and scale. Consistent with this market concentration, a large percentage of our revenues are generated from a limited number of clients, with approximately two-thirds of our revenues being generated from our four largest clients, which are Comcast Corporation (“Comcast”), DISH Network Corporation (“DISH”), Time Warner Cable Inc. (“Time Warner”), and Charter Communications (“Charter”).

General Market Conditions. Over the past few years, the U.S. has experienced a significant economic downturn and difficulties within all industry sectors, but in particular, the financial and credit markets. While these adverse economic conditions appear to be easing, our sales cycles continue to be extended and revenues related to our clients’ discretionary spending for such things as special project work, marketing activities, new product sales, and software and professional services projects continue to be negatively impacted.

We believe that our recurring revenue and predictable cash flow business model, our sufficient sources of liquidity, and our stable capital structure lessen the risk of a significant negative impact to our business as a result of the current economic conditions. Also, our business model has certain economic advantages to our clients since it generally requires a lower initial capital investment, thus, allowing clients to utilize our advanced, integrated product offerings on a pay-as-you-grow basis. Additionally, we believe our key clients have business models that have historically performed well, as compared to other industries, in down economic conditions. However, there can be no assurances regarding the performance of our business, and the potential impact to our clients and key vendors, resulting from the current or future economic conditions.

Management Overview of Quarterly Results

First Quarter Highlights. A summary of our results of operations for the first quarter of 2010, when compared to the first quarter of 2009, is as follows (in thousands, except per share amounts and percentages):


	Quarter March 31,
	2010			2009
Revenues	$	130,263		$	123,546
Customer Accounts (end of period)		48,975			45,379
Operating Results:
Operating Income	$	16,402		$	21,579
Operating Income Margin		12.6	%		17.5	%
Diluted EPS	$	0.03		$	0.37
Supplemental Data:
Data center transition expenses	$	7,717		$	1,389
Stock-based compensation		3,009			3,015
Amortization of acquired intangible assets		1,164			1,381
Amortization of OID		2,300			2,225
(Gain) loss on repurchase of convertible debt securities		10,952			(1,468	)

Revenues. Our revenues for the first quarter of 2010 were $130.3 million, up 5.4% when compared to $123.5 million for the same period in 2009, with the increase entirely a result of organic growth factors.

Operating Results. Operating income for the first quarter of 2010 was $16.4 million, or a 12.6% operating income margin percentage, compared to $21.6 million, or a 17.5% operating income margin percentage, for the first quarter of 2009. These decreases in operating income and operating income margin percentage are related to the $6.3 million increase in quarterly data center transition expenses between years, which resulted in a negative 4.8 percentage point decrease in our operating income margin percentage. See the Data Center Transition Expenses section below for further discussion of these expenses.

Diluted EPS. Diluted EPS the first quarter of 2010 was $0.03 per diluted share, which compares to $0.37 per diluted share for the first quarter of 2009. This year-over-year decrease can be attributed primarily to the following items:

•

a negative impact of $0.23 related to an $11.0 million loss, or $0.20 per diluted share impact, on the repurchase of our convertible debt securities incurred in the first quarter of 2010, as compared to a $1.5 million gain, or $0.03 per diluted share impact that occurred in the first quarter of 2009 for similar debt repurchases; and

•

a negative impact of $0.11 related to the $6.3 million increase in quarterly data center transition expenses between years.

Balance Sheet and Cash Flows. As of March 31, 2010, we had cash, cash equivalents, and short-term investments of $210.7 million, as compared to $198.4 million as of December 31, 2009. We continue to generate strong cash flows from operations. Cash flows from operating activities for the first quarter of 2010 were $31.3 million, compared to $16.0 million for the first quarter of 2009, with the increase primarily attributed to favorable changes in operating assets and liabilities, discussed in further detail below.

Capital Structure Changes. On March 1, 2010, we completed an offering of $150.0 million (par value) of 3.0% senior subordinated convertible notes due March 1, 2017. Concurrent with the receipt of net proceeds from the 2010 Convertible Notes of approximately $145 million, we repurchased 1.5 million shares of our common stock for $29.3 million ($19.56 per share) under our existing Stock Repurchase Program. See Notes 3 and 6 to our Financial Statements for additional information related to our share repurchases and long-term debt.

On March 22, 2010, we repurchased $119.9 million (par value) of our 2004 Convertible Debt Securities from one holder, for a total purchase price of $125.0 million. As of March 31, 2010, $50.4 million (par value) of our 2004 Convertible Debt Securities remain outstanding.

These capital structure changes allowed us to significantly reduce the level of debt that was subject to repayment in June 2011, and extended the term of a substantial portion of our long-term debt from 2011 to 2017.

Significant Client Relationships

Client Concentration. Approximately two-thirds of our total revenues are generated from our four largest clients, which include Comcast, DISH, Time Warner, and Charter. Revenues from these clients represented the following percentages of our total revenues for the indicated periods:


	Quarter Ended
	March 31, 2010		December 31, 2009		March 31, 2009
Comcast	24	%	24	%	25	%
DISH	18	%	18	%	18	%
Time Warner	12	%	13	%	13	%
Charter	10	%	10	%	9	%

The percentages of net billed accounts receivable balances attributable to our largest clients as of the indicated dates were as follows:


	As of
	March 31, 2010		December 31, 2009		March 31, 2009
Comcast	24	%	19	%	24	%
DISH	17	%	26	%	28	%
Time Warner	11	%	9	%	13	%
Charter	12	%	13	%	9	%

See our 2009 10-K for additional discussion of our business relationships with the above mentioned significant clients.

Risk of Client Concentration. In the near term, we expect to continue to generate a large percentage of our total revenues from our four largest clients mentioned above. There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of clients. One such risk is that, should a significant client: (i) terminate or fail to renew its contract with us, in whole or in part, for any reason; (ii) significantly reduce the number of customer accounts processed on our solutions, the price paid for our services, or the scope of services that we provide; or (iii) experience significant financial or operating difficulties, it could have a material adverse effect on our financial condition and results of operations.

Data Center Transition

We currently utilize First Data Corporation (“FDC”) to provide the data center computing environment for the delivery of most of our customer care and billing services and related solutions under a contract that was scheduled to expire at the end of June 2010, but was recently amended to provide us options to continue the use of certain FDC data center services through December 31, 2010. FDC has provided these data center services to us since the inception of our company in 1994.

In December 2008, we entered into an agreement with Infocrossing LLC (“Infocrossing”), a Wipro Limited company, to transition these outsourced data center services from FDC to Infocrossing prior to the expiration of the FDC contract term. The term of the Infocrossing agreement is five years beginning on the date of full conversion of our computing environment from FDC to Infocrossing. We are changing data center providers to partner with a global provider that focuses on data center operations in greater scale, and as their core business focus. This allows us to further improve the delivery of our solutions while benefiting from an improved cost structure.

We began our transition efforts to the new Infocrossing data center in the first quarter of 2009, and expect to substantially complete the transition project in mid-2010. We are tracking the expenses attributable to our decision to change data center service providers separately, as these expenses are not considered reflective of our recurring core business operating results. These expenses relate primarily to our efforts to set-up, replicate, transition, and operate the computing environment at Infocrossing, while maintaining and operating the computing environment at the FDC data center. The network and computing environment will be transitioned from FDC to Infocrossing in various planned stages over the project period, requiring us to incur certain costs to operate two separate data centers. This staged and replicated data center approach was designed to mitigate the risk of disruption to our clients during the transition period, but does result in certain cost inefficiencies during the transition period due to such things as redundant data processing costs, accelerated and redundant hardware- and software-related purchases, and costs incurred to maintain communications and data integrity between the two data center locations.

During the first quarter of 2010 and 2009, we incurred $7.7 million and $1.4 million (pretax impact), respectively, of expenses related to these transition efforts, or approximately $0.14 and $0.03 per diluted share negative impact. These expenses include such things as the following: (i) equipment- and software-related costs; (ii) data communications and data processing costs; and (iii) labor and third-party consulting fees for the transition team. These data center transition expenses are included in the following captions in the Condensed Consolidated Statements of Income (in thousands):


	Quarter Ended
	March 31, 2010		March 31, 2009
Cost of processing and related services	$	6,395	$	1,389
Depreciation		1,322		—

Total data center transition expenses	$	7,717	$	1,389

Additionally, during the first quarter of 2010 and 2009, we spent approximately $1 million in each quarter on capital expenditures related to network and computer equipment needed to set-up and replicate the computing environment at the new Infocrossing data center location.

For the full year 2010, we estimate that the data center transition expenses will be approximately $23 million to $24 million (pretax impact), or approximately $0.45 to $0.47 per diluted share negative impact, and are expected to have a negative impact of approximately $13 million on our 2010 cash flows from operations. Additionally, we expect our full year 2010 capital expenditures related to the data center transition to be approximately $3 million. These amounts are based on the best available estimates at this time and may fluctuate up or down as we continue to execute on our transition plan.

The Infocrossing agreement, with confidential information redacted, is included in the exhibits to our periodic filings with the SEC.

Stock-Based Compensation Expense

Stock-based compensation expense is included in the following captions in the accompanying Condensed Consolidated Statements of Income (in thousands):


	Quarter Ended
	March 31, 2010		March 31, 2009
Cost of processing and related services	$	762	$	922
Cost of software, maintenance and services		192		195
Research and development		410		419
Selling, general and administrative		1,645		1,479

Total stock-based compensation expense	$	3,009	$	3,015

Critical Accounting Policies

The preparation of our Financial Statements in conformity with accounting principles generally accepted in the U.S. requires us to select appropriate accounting policies, and to make judgments and estimates affecting the application of those accounting policies. In applying our accounting policies, different business conditions or the use of different assumptions may result in materially different amounts reported in our Financial Statements.

We have identified the most critical accounting policies that affect our financial condition and the results of our operations. Those critical accounting policies were determined by considering the accounting policies that involve the most complex or subjective decisions or assessments. The most critical accounting policies identified relate to: (i) revenue recognition; (ii) allowance for doubtful accounts receivable; (iii) impairment assessments of goodwill and other long-lived assets; (iv) income taxes; and (v) business combinations and asset purchases. These critical accounting policies, as well as our other significant accounting policies, are discussed in greater detail in our 2009 10-K.

Results of Operations

Total Revenues. Total revenues for the first quarter of 2010 increased 5.4% to $130.3 million, from $123.5 million for the first quarter of 2009. This increase is entirely a result of organic growth factors.

The components of total revenues are discussed in more detail below.

Processing and related services revenues. Processing and related services revenues for the first quarter of 2010 increased 6.4% to $122.0 million, from $114.7 million for the first quarter of 2009. The quarterly increase in processing and related services revenues can be entirely attributed to organic growth resulting from: (i) conversions of customer accounts onto our solutions during the second half of 2009; and to a lesser degree, (ii) continued adoption and use of our advanced customer interaction management solutions.

Additional information related to processing and related services revenues is as follows:

•

Amortization of our client contracts intangible assets (reflected as a reduction of processing and related services revenues) for the first quarter of 2010 and 2009 was $1.6 million and $1.0 million, respectively.

•

Total customer accounts processed on our solutions as of March 31, 2010, were 49.0 million, compared to 45.4 million as of March 31, 2009, and 48.6 million as of December 31, 2009. The year-over-year increase is attributed to the 3.1 million customer accounts we converted onto our solutions during the second half of 2009.

Software, Maintenance and Services Revenues. Software, maintenance and services revenues for the first quarter of 2010 decreased 6.8% to $8.2 million, from $8.8 million for the first quarter of 2009. The decrease in software, maintenance and services revenues is due to lower professional services revenue as a result of the completion of certain consulting projects in 2009.

Total Expenses. Our operating expenses for the first quarter of 2010 were $113.9 million, up 11.7% when compared to $102.0 million for the same period in 2009. This year-over-year increase can be attributed to the following items:

•

Approximately one-half of this year-over-year increase can be attributed to the $6.3 million increase in our data center transition expenses. During the first quarter of 2010, we incurred $7.7 million of costs related to our data center transition efforts, as compared to $1.4 million of expense in the first quarter of 2009. See the Data Center Transition Expenses section for a further discussion of these efforts.

•

Approximately one-third of this year-over-year increase can be attributed to increased employee-related expense.

The components of total expenses are discussed in more detail below.

Cost of Revenues. See our 2009 10-K for a description of the types of costs that are included in the individual line items for cost of revenues.

Cost of Processing and Related Services. The cost of processing and related services for the first quarter of 2010 increased 11.2% to $67.0 million, from $60.3 million for the first quarter of 2009. Of this $6.7 million increase, $6.3 million is attributed to the data center transition efforts.

Total processing and related services cost of revenues as a percentage of our processing and related services revenues for the first quarter of 2010 and 2009 was 54.9% and 52.5%, respectively. The increase in processing and related services cost of revenues as a percentage of our processing and related services revenues is attributed to the increased data center transition expenses, which had a negative impact for the first quarter of 2010 and 2009 of 5.2 percentage points and 1.2 percentage points, respectively.

Cost of Software, Maintenance and Services. The cost of software, maintenance and services for the first quarter of 2010 decreased 6.8% to $6.0 million, from $6.4 million for the first quarter of 2009. This decrease is a result of a reduction in personnel and related costs assigned internally to software maintenance and consulting projects.

Total cost of software, maintenance and services as a percentage of our software, maintenance and services revenues for the first quarter of 2010 and 2009 were 72.6%. Variability in quarterly revenues and operating results are inherent characteristics of companies that sell software licenses, and perform professional services. Our quarterly revenues for software licenses and professional services may fluctuate, depending on various factors, including the timing of executed contracts and revenue recognition, and the delivery of solutions. However, the costs associated with software and professional services revenues are not subject to the same degree of variability (e.g., these costs are generally fixed in nature within a relatively short period of time), and thus, fluctuations in our cost of software and maintenance, professional services as a percentage of our software, maintenance and services revenues will likely occur between periods.

R&D Expense . R&D expense for the first quarter of 2010 increased 7.9% to $18.5 million, from $17.2 million for the first quarter of 2009. As a percentage of total revenues, R&D expense was 14.2% for the first quarter of 2010, compared to 13.9% for the first quarter of 2009. We did not capitalize any internal software development costs during the first quarter ended March 31, 2010 and 2009.

Over the past few years, our R&D efforts have been focused on the continued evolution of our solutions, both functionally and architecturally, in response to market demands that our solutions have certain functional features and capabilities, as well as architectural flexibilities (such as service oriented architecture, or SOA). This evolution will result in the modularization of certain functionality that historically has been tightly integrated within our solution suite, which will allow us to respond more quickly to required changes to our solutions and provide greater interoperability with other computer systems. Although our primary value proposition to our clients will continue to be the breadth and depth of our integrated solutions, these R&D efforts will also allow us to separate certain product components so as to allow such components to be marketed on a stand-alone basis where a specific client requirement and/or business need dictates, including the use of certain solutions across non-CSG customer care and billing solutions. Additionally, our R&D efforts include creating an integrated suite of customer interaction management solutions that provide additional customer insight, communications channels, and an enhanced customer experience across all delivery vehicles, whether that be more traditional methods like print or more interactive means like electronic and digital communications. Our customer interaction management solutions are aimed at both of our core cable/DBS market as well as new verticals such as utilities, healthcare, home security, financial services, and content distribution.

At this time, we expect our future R&D efforts to continue to focus on similar tasks as noted above. Additionally, we expect that the percentage of our total revenues invested in R&D to be relatively consistent with the most recent quarters, with the level of our R&D spend highly dependent upon the opportunities that we see in our markets.

Selling, General and Administrative (“SG&A”) Expense . SG&A expense for the first quarter of 2010 increased 19.7% to $16.5 million, from $13.8 million for the first quarter of 2009. This increase in SG&A expense is attributed primarily to: (i) increased employee-related expense as a result of certain management changes; and (ii) additional outside consulting costs. As a percentage of total revenues, SG&A expense was 12.7% for the first quarter of 2010, compared to 11.2% for the first quarter of 2009. SG&A expense for the third and fourth quarters of 2009 were 12.1% and 12.2%, respectively, more in-line with the current quarter. Going forward, we expect that our SG&A expense will be relatively consistent with the second half of 2009.

Depreciation Expense . Depreciation expense for the first quarter of 2010 increased 32.6% to $5.6 million, from $4.2 million for the first quarter of 2009. Included in the first quarter of 2010 amount is $1.3 million of depreciation expense related to our data center transition efforts, discussed earlier, which accounts for nearly all of the year-over-year increase.

Operating Income. Operating income and operating income margin for the first quarter of 2010 was $16.4 million, or 12.6% of total revenues, compared to $21.6 million, or 17.5% of total revenues for the first quarter of 2009. The decrease in operating income and operating income margin between years can be attributed to the data center transition expenses, which had a negative impact of 5.9 percentage points and 1.1 percentage points, respectively, on our operating income margin percentage for the first quarter of 2010 and 2009. Absent this impact, operating income margin would have been relatively consistent between years.

Gain (loss) on Repurchase of Convertible Debt Securities. As discussed earlier, in the first quarter of 2010, we repurchased $119.9 million (par value) of our 2004 Convertible Debt Securities for a total purchase price of $125.8 million, which included accrued interest of $0.8 million. As a result of this transaction, we recognized a non-cash loss on the repurchase of $11.0 million (pretax impact), or $0.20 per diluted share. In the first quarter of 2009, we repurchased $15.0 million (par value) of our Convertible Debt Securities for $13.2 million, which resulted in a non-cash gain of $1.5 million (pretax impact), or $0.03 per diluted share.

Income Tax Provision . The effective income tax rates for the first quarter of 2010 and 2009 were 38% and 35%, respectively. The higher effective income tax rate for the first quarter of 2010 is due to a delay in the recognition of certain anticipated tax credits. We expect to realize these tax benefits in later quarters, so for the full year 2010 we estimate that our overall effective tax rate will be approximately 35%.

During 2009, the Internal Revenue Service (“IRS”) commenced an examination with respect to our Federal income tax returns filed for fiscal years 2006 and 2007. We regularly assess the likelihood of outcomes resulting from these types of examinations to determine the adequacy of our income tax provision and believe that we are adequately reserved for any potential adjustment that may result from the current examination, and therefore do not expect the results of the examination to have a significant negative impact to our results of operations. Should any of the factors considered in determining the adequacy of this liability change significantly, an adjustment to the liability may be necessary. Because of the potential significance of these issues, such an adjustment could be material.

Liquidity

Cash and Liquidity

As of March 31, 2010, our principal sources of liquidity included cash, cash equivalents, and short-term investments of $210.7 million, compared to $198.4 million as of December 31, 2009. We generally invest our excess cash balances in low-risk, short-term investments to limit our exposure to market risks. We have ready access to essentially all of our cash, cash equivalents, and short-term investment balances.

Cash Flows From Operating Activities

We calculate our cash flows from operating activities in accordance with GAAP, beginning with net income, adding back the impact of non-cash items (e.g., depreciation, amortization, amortization of OID, deferred income taxes, stock-based compensation, etc.), and then factoring in the impact of changes in operating assets and liabilities. See our 2009 10-K for a description of the primary uses and sources of our cash flows from operating activities.

Our net cash flows from operating activities, broken out between operations and changes in operating assets and liabilities, for the indicated periods are as follows (in thousands):


	Operations		Changes in Operating Assets and Liabilities			Net Cash Provided by Operating Activities – Quarter Totals
Cash Flows from Operating Activities:
2009:
March 31	$	30,449	$	(14,436	)	$	16,013
June 30		29,658		13,895			43,553
September 30		30,593		7,289			37,882
December 31		24,320		31,291			55,611
2010:
March 31		27,376		3,948			31,324

We believe the above table illustrates our ability to consistently generate strong quarterly and annual cash flows, and the importance of managing our working capital items. As the table above illustrates, the operations portion of our cash flows from operating activities remains relatively consistent between periods. The variations in our net cash provided by operating activities are related mostly to the changes in our operating assets and liabilities (related mostly to normal fluctuations in timing at quarter-end for such things as client payments and changes in accrued expenses), and generally over longer periods of time, do not significantly impact our cash flows from operations.

Significant fluctuations in the balances of key operating assets and liabilities between March 31, 2010, and December 31, 2009, that impacted our cash flows from operating activities, are as follows:

Billed Trade Accounts Receivable

Management of our billed accounts receivable is one of the primary factors in maintaining strong quarterly cash flows from operating activities. Our billed trade accounts receivable balance includes billings for several non-revenue items (primarily postage, sales tax, and deferred revenue items). As a result, we evaluate our performance in collecting our accounts receivable through our calculation of days billings outstanding (“DBO”) rather than a typical days sales outstanding (“DSO”) calculation. DBO is calculated based on the billings for the period (including non-revenue items) divided by the average monthly net trade accounts receivable balance for the period.

Our gross and net billed trade accounts receivable and related allowance for doubtful accounts receivable (“Allowance”) as of the end of the indicated quarterly periods, and the related DBOs for the quarters then ended, are as follows (in thousands, except DBOs):


Quarter Ended	Gross		Allowance			Net Billed			DBOs
2009:
March 31	$	133,041	$	(2,831	)	$	130,210	58
June 30		112,612		(2,148	)		110,464	58
September 30 114		114,403		(2,079	)		112,324	54
December 31		109,846		(2,036	)		107,810	50
2010:
March 31		109,456		(2,289	)		107,167	51

The changes in our gross and net billed trade accounts receivable shown in the table above reflect the normal fluctuations in the timing of client payments made at quarter-end, evidenced by our consistent DBO metric over the past several quarters.

Accrued Employee Compensation

Accrued employee compensation decreased $5.0 million, from $26.6 million as of December 31, 2009 to $21.6 million as of March 31, 2010 primarily as a result of the payment of the 2009 management incentive bonuses in March 2010, offset to a certain extent by the accrual of one-fourth of the estimated 2010 management incentive bonuses and the increase in accrued salaries as a result of the timing of payroll.

Deferred Revenue

Total deferred revenue (current and non-current) increased $5.3 million, from $46.8 million as of December 31, 2009 to $52.1 million as of March 31, 2010, mainly as a result of annual facility management and software maintenance billings.

Cash Flows From Investing Activities

Our typical investing activities consist of purchases/sales of short-term investments, purchases of property and equipment, and investments in client contracts, which are discussed below. During the first quarter of 2010 and 2009, our cash flows from investing activities also included cash payments related to our prior year acquisition activities.

Purchases/Sales of Short-term Investments. During the first quarter of 2010 and 2009, we purchased $41.9 million and $2.9 million, respectively, and sold (or had mature) $31.4 million and $24.4 million, respectively, of short-term investments. We continually evaluate the appropriate mix of our investment of excess cash balances between cash equivalents and short-term investments in order to maximize our investment returns and will likely purchase and sell additional short-term investments in the future.

Property and Equipment/Client Contracts. Our capital expenditures for the first quarter of 2010 and 2009, for property and equipment, and investments in client contracts were as follows (in thousands):


	Quarters Ended March 31,
	2010		2009
Property and equipment	$	4,048	$	10,024
Client contracts		1,280		1,489

Of the $4.0 million spent on capital expenditures during the first quarter of 2010, approximately $1 million was related to our data center transition efforts. The remaining expenditures consisted principally of investments in: (i) statement production equipment; and (ii) computer hardware, software, and related equipment.

The investments in client contracts for the first quarter of 2010 and 2009 relate to client incentive payments ($0.6 million and $0.4 million, respectively) and the deferral of costs related to conversion/set-up services provided under long-term processing contracts ($0.7 million and $1.1 million, respectively).

Cash Flows From Financing Activities

Our financing activities typically consist of activities with our common stock and our convertible debt.

Repurchase of Common Stock. During the first quarter of 2010 and 2009 we repurchased 1.5 million and 250,000 shares of our common stock under the guidelines of our Stock Repurchase Program for $29.3 million and $3.8 million, respectively. In addition, outside of our Stock Repurchase Program, during the first quarter of 2010 and 2009, we repurchased from our employees and then cancelled approximately 204,000 shares and 161,000 shares of our common stock for $4.2 million and $2.3 million, respectively, in connection with minimum tax withholding requirements resulting from the vesting of restricted common stock under our stock incentive plans.

Long-term debt. In March 2010, we completed an offering of our 2010 Convertible Notes, as discussed in greater detail in Note 6 to our Financial Statements. We used a portion of the $145 million net proceeds from the offering to repurchase $119.9 million (par value) of our 2004 Convertible Debt Securities for $125.0 million. In connection with the issuance of the convertible notes, we incurred debt issuance costs of $4.1 million.

Capital Resources

The following are the key items to consider in assessing our sources and uses of capital resources:

Current Sources of Capital Resources.

•

Cash, Cash Equivalents and Short-term Investments. As of March 31, 2010, we had cash, cash equivalents, and short-term investments of $210.7 million.

•

Operating Cash Flows. As described in the “Liquidity” section above, we believe we have the ability to consistently generate strong cash flows to fund our operating activities.

Uses of Capital Resources. Below are the key items to consider in assessing our uses of capital resources:

•

Common Stock Repurchases. We have made significant repurchases of our common stock in the past. During the first quarter of 2010, and in conjunction with the issuance of our 2010 Convertible Notes, we repurchased 1.5 million shares of our common stock for $29.3 million ($19.56 per share). As of March 31, 2010, we have 4.2 million shares authorized for repurchase remaining under our Stock Repurchase Program. We continue to evaluate the best use of our capital going forward, which from time-to-time, may include additional share repurchases as market and business conditions warrant.

•

Acquisitions. We have made five acquisitions in the last five years. Besides the cash paid at the date the acquisition closes, some acquisitions may include the payment of additional cash related to contingent purchase price payments. During the first quarter of 2010, we made contingent purchase price payments of $2.3 million that we had accrued as of December 31, 2009. As of March 31, 2010, we have accrued $0.5 million for contingent purchase price payments related to the first quarter of 2010 to be made in the second quarter of 2010. In addition, in the future, we could potentially be paying up to $1.5 million in contingent purchase price payments related to 2010 in connection with the Quaero acquisition.

•

Capital Expenditures. In the first quarter of 2010, we spent $4.0 million on capital expenditures. At this time, we expect our total 2010 capital expenditures to be approximately $16 million, with approximately $3 million related to the data center transition to Infocrossing. The remainder of our expected capital expenditures will consist principally of hardware and software infrastructure to support our clients’ expanding business needs, and statement production equipment to continue to offer enhanced functionalities to our clients.

•

Investments in Client Contracts. In the past, we have provided incentives to new or existing clients to convert their customer accounts to, or retain their customer’s accounts on, our customer care and billing solutions. During the first quarter of 2010, we made client incentive payments of $1.3 million. As of March 31, 2010, we have made commitments for investments in client contracts which are payable by us only upon the successful conversion of certain additional customer accounts to our processing solutions.

•

Long-Term Debt. As of March 31, 2010, our long-term debt consisted of our 2004 Convertible Debt Securities with a par value of $50.4 million and our 2010 Convertible Notes with a par value of $150.0 million.

Refer to Note 6 to our Financial Statements for details of the call and put options of our 2004 Convertible Debt Securities, as well as their conversion triggers. During the next twelve months, there are no call or put options available related to our 2004 Convertible Debt Securities, and we do not expect the occurrence of any conversion triggers. As a result, during the next twelve months and based upon the March 31, 2010 par value, we expect our required debt service cash outlay related to the 2004 Convertible Debt Securities to be limited to interest payments of $1.3 million.

During 2009 and the first quarter of 2010, we voluntarily repurchased a total of $149.9 million (par value) of our 2004 Convertible Debt Securities for $151.5 million. As a result of the repurchases, beginning in 2014, we will have to pay cash of approximately $26 million ratably over five years related to the deferred tax liabilities associated with the repurchased securities. In addition, if the remaining 2004 Convertible Debt Securities are put back to us on June 15, 2011, we will have to settle the following obligations in cash during 2011: (i) $50.4 million par value; and (ii) approximately $12 million of deferred tax liabilities associated with the outstanding securities. We will continue to track and evaluate the trading activity and valuations around our 2004 Convertible Debt Securities for possible future buying opportunities.

Refer to Note 6 to our Financial Statements for details of the conversion triggers of our 2010 Convertible Notes. During the next twelve months, we do not expect the occurrence of any conversion triggers. As a result, during the next twelve months and based upon the March 31, 2010 par value, we expect our required debt service cash outlay related to the 2010 Convertible Notes to be limited to interest payments of $4.5 million.

In summary, we expect to continue to make material investments in client contracts, capital equipment, and R&D. We expect to continue to evaluate the possibility of 2004 Convertible Debt Securities and equity repurchases in the future. In addition, as part of our growth strategy, we are continually evaluating potential business and/or asset acquisitions, and investments in market share expansion with our existing and potential new clients. We believe that our current cash and short-term investments balance, together with cash expected to be generated from future operating activities, will be sufficient to meet our anticipated cash requirements for at least the next 12 months. We also believe we could obtain additional capital through other debt sources which may be available to us if deemed appropriate.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential loss arising from adverse changes in market rates and prices. As of March 31, 2010, we are exposed to market risks related to fluctuations and changes in the market value of our cash equivalents and short-term investments. We have not historically entered into derivatives or other financial instruments for trading or speculative purposes.

Market Risk Related to Long-Term Debt. The interest rate on our 2004 Convertible Debt Securities and 2010 Convertible Notes are fixed, and thus, as it relates to our long-term debt, we are not exposed to changes in interest rates.

Market Risk Related to Cash Equivalents and Short-term Investments. Our cash and cash equivalents as of March 31, 2010 and December 31, 2009 were $165.3 million and $163.5 million, respectively. Our cash balances are typically “swept” into overnight money market accounts on a daily basis, and at times, any excess funds are invested in low-risk, somewhat longer term, cash equivalent instruments and short-term investments. We have minimal market risk for our cash and cash equivalents due to the relatively short maturities of the instruments.

Our short-term investments as of March 31, 2010 and December 31, 2009 were $45.5 million and $34.9 million, respectively. The day-to-day management of our cash equivalents and short-term investments is performed by a large financial institution in the U.S., using strict and formal investment guidelines approved by our Board of Directors. Under these guidelines, short-term investments are limited to certain acceptable investments with: (i) a maximum maturity, (ii) a maximum concentration and diversification; and (iii) a minimum acceptable credit quality. At this time, we believe we have minimal market risk associated with the short-term investments included in our portfolio.

We do not utilize any derivative financial instruments for purposes of managing our market risks related to interest rate risk.

Item 4.

Controls and Procedures

(a) Disclosure Controls and Procedures

As required by Rule 13a-15(b), our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), conducted an evaluation as of the end of the period covered by this report of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e). Based on that evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

(b) Internal Control Over Financial Reporting

As required by Rule 13a-15(d), our management, including the CEO and CFO, also conducted an evaluation of our internal control over financial reporting, as defined by Rule 13a-15(f), to determine whether any changes occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, the CEO and CFO concluded that there has been no such change during the quarter covered by this report.

CSG SYSTEMS INTERNATIONAL, INC.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

From time-to-time, we are involved in litigation relating to claims arising out of our operations in the normal course of business. We are not presently a party to any material pending or threatened legal proceedings.

Item 1A.

Risk Factors

We or our representatives from time-to-time may make or may have made certain forward-looking statements, whether orally or in writing, including without limitation, any such statements made or to be made in MD&A contained in our various SEC filings or orally in conferences or teleconferences. We wish to ensure that such statements are accompanied by meaningful cautionary statements, so as to ensure, to the fullest extent possible, the protections of the safe harbor established in the Private Securities Litigation Reform Act of 1995.

Accordingly, the forward-looking statements are qualified in their entirety by reference to and are accompanied by the following meaningful cautionary statements identifying certain important risk factors that could cause actual results to differ materially from those in such forward-looking statements. This list of risk factors is likely not exhaustive. We operate in a rapidly changing and evolving market involving the North American communications industry (e.g., bundled multi-channel video, Internet, voice and IP-based services), and new risk factors will likely emerge. Further, as we enter new markets such as healthcare and financial services, we are subject to new regulatory requirements that increase the risk of non-compliance and the potential for economic harm to us and our clients. Management cannot predict all of the important risk factors, nor can it assess the impact, if any, of such risk factors on our business or the extent to which any risk factor, or combination of risk factors, may cause actual results to differ materially from those in any forward-looking statements. Accordingly, there can be no assurance that forward-looking statements will be accurate indicators of future actual results, and it is likely that actual results will differ from results projected in forward-looking statements and that such differences may be material.

We Derive a Significant Portion of Our Revenues From a Limited Number of Clients, and the Loss of the Business of a Significant Client Could Have a Material Adverse Effect on Our Financial Condition and Results of Operations.

Over the past decade, the North American communications industry has experienced significant consolidation, resulting in a large percentage of the market being served by a limited number of service providers with greater size and scale. Consistent with this market concentration, approximately two-thirds of our revenues are generated from our four largest clients, which are (in order of size) Comcast, DISH, Time Warner, and Charter. See the Significant Client Relationships section of MD&A in our 2009 10-K for key renewal dates and a brief summary of our business relationship with these clients.

There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of clients. One such risk is that a significant client could: (i) undergo a formalized process to evaluate alternative providers for services we provide; (ii) terminate or fail to renew their contracts with us, in whole or in part for any reason; (iii) significantly reduce the number of customer accounts processed on our solutions, the price paid for our services, or the scope of services that we provide; or (iv) experience significant financial or operating difficulties. Any such development could have a material adverse effect on our financial condition and results of operations and/or trading price of our common stock.

Our industry is highly competitive, and while we recently have succeeded in gaining customers at the expense of competitors, there is no guarantee that this success will continue. It is possible that a competitor could increase its footprint and share of customers processed at our expense or a provider could develop their own internal solutions. While our clients may incur some costs in switching to our competitors or their own internally-developed solutions, they may do so for a variety of reasons, including: (i) price; (ii) if we do not provide satisfactory solutions; or (iii) if we do not maintain favorable relationships.

The Delivery of Our Solutions is Dependent on a Variety of Computing Environments and Communications Networks Which May Not Be Available or May Be Subject to Security Attacks.

Our solutions are generally delivered through a variety of computing environments operated by us, which we will collectively refer to herein as “Systems.” We provide such computing environments through both outsourced arrangements, such as our current data processing arrangements with FDC and Infocrossing, as well as internally operating numerous distributed servers in geographically dispersed environments. The end users are connected to our Systems through a variety of public and private communications networks, which we will collectively refer to herein as “Networks.” Our solutions are generally considered to be mission critical customer management systems by our clients. As a result, our clients are highly dependent upon the high availability and uncompromised security of our Networks and Systems to conduct their business operations.

Our Networks and Systems are subject to the risk of an extended interruption or outage due to many factors such as: (i) planned changes to our Systems and Networks for such things as scheduled maintenance and technology upgrades, or migrations to other technologies, service providers, or physical location of hardware; (ii) human and machine error; (iii) acts of nature; and (iv) intentional, unauthorized attacks from computer “hackers.” As noted above, we began the transition of our data center services currently provided by FDC to Infocrossing during 2009, and expect to substantially complete the transition of such services in mid-2010. Because of the magnitude of the Systems and Networks that will be impacted by this transition, the above risks of an extended interruption or outage will be significantly heightened during the transition period.

In addition, we continue to expand our use of the Internet with our product offerings thereby permitting, for example, our clients’ customers to use the Internet to review account balances, order services or execute similar account management functions. Allowing access to our Networks and Systems via the Internet has the potential to increase their vulnerability to unauthorized access and corruption, as well as increasing the dependency of our Systems’ reliability on the availability and performance of the Internet and end users’ infrastructure they obtain through other third party providers.

The method, manner, cause and timing of an extended interruption or outage in our Networks or Systems are impossible to predict. As a result, there can be no assurances that our Networks and Systems will not fail, or that our business continuity plans will adequately mitigate the negative effects of a disruption to our Networks or Systems. Further, our property and business interruption insurance may not adequately compensate us for losses that we incur as a result of such interruptions. Should our Networks or Systems: (i) experience an extended interruption or outage, (ii) have their security breached, or (iii) have their data lost, corrupted or otherwise compromised, it would impede our ability to meet product and service delivery obligations, and likely have an immediate impact to the business operations of our clients. This would most likely result in an immediate loss to us of revenue or increase in expense, as well as damaging our reputation. An information breach in our Systems or Networks and loss of confidential information such as credit card numbers and related information could have a longer and more significant impact on our business operations than a hardware-related failure. The loss of confidential information could result in losing the customers’ confidence, as well as imposition of fines and damages. Any of these events could have both an immediate, negative impact upon our financial condition and our short-term revenue and profit expectations, as well as our long-term ability to attract and retain new clients.

The Occurrence or Perception of a Security Breach or Disclosure of Confidential Personally Identifiable Information Could Harm Our Business.

In providing solutions to our customers, we process, transmit, and store confidential and personally identifiable information, including social security numbers and financial and health information. Our treatment of such information is subject to contractual restrictions and federal, state, and foreign data privacy laws and regulations. While we take measures to protect against unauthorized access to such information and comply with these laws and regulations, these measures may be inadequate, and any failure on our part to protect the privacy of personally identifiable information or comply with data privacy laws and regulations may subject us to contractual liability and damages, loss of business, damages from individual claimants, fines, penalties, criminal prosecution, and unfavorable publicity. Even the mere perception of a security breach or inadvertent disclosure of personally identifiable information could inhibit market acceptance of our solutions. In addition, third party vendors that we engage to perform services for us may unintentionally release personally identifiable information or otherwise fail to comply with applicable laws and regulations. The occurrence of any of these events could have an adverse effect on our business, financial condition, and results of operations.

We May Not Be Able to Respond to Rapid Technological Changes.

The market for customer interaction management solutions, such as customer care and billing solutions, is characterized by rapid changes in technology and is highly competitive with respect to the need for timely product innovations and new product introductions. As a result, we believe that our future success in sustaining and growing our revenues depends upon: (i) our ability to continuously adapt, modify, maintain, and operate our solutions to address the increasingly complex and evolving needs of our clients, without sacrificing the reliability or quality of the solutions; and (ii) the integration of our recently acquired technologies such as interactive messaging and customer intelligence with ACP, as well as creating an integrated suite of customer interaction management solutions that also include e-care and printing/mailing capabilities, which are portable to new verticals such as utilities, healthcare, home security, financial services, and content distribution. In addition, the market is demanding that our solutions have greater architectural flexibility and interoperability, and that we are able to meet the demands for technological advancements to our solutions at a greater pace. Attempts to meet these demands subjects our R&D efforts to greater risks.

As a result, substantial R&D will be required to maintain the competitiveness of our solutions in the market. Technical problems may arise in developing, maintaining and operating our solutions as the complexities are increased. Development projects can be lengthy and costly, and may be subject to changing requirements, programming difficulties, a shortage of qualified personnel, and/or unforeseen factors which can result in delays. In addition, we may be responsible for the implementation of new solutions and/or the migration of clients to new solutions, and depending upon the specific solution, we may also be responsible for operations of the solution.

There is an inherent risk in the successful development, implementation, migration, and operations of our solutions as the technological complexities, and the pace at which we must deliver these solutions to market, continue to increase. The risk of making an error that causes significant operational disruption to a client, or results in incorrect customer or vendor billing calculations we perform on behalf of our clients, increases proportionately with the frequency and complexity of changes to our solutions. There can be no assurance: (i) of continued market acceptance of our solutions; (ii) that we will be successful in the development of enhancements or new solutions that respond to technological advances or changing client needs at the pace the market demands; or (iii) that we will be successful in supporting the implementation, migration and/or operations of enhancements or new solutions.

Our Use of Open Source Software May Subject Our Software to General Release or Require Us to Re-Engineer Our Software, Which Could Harm Our Business.

We use open source software in connection with our solutions, processes, and technology. Companies that incorporate open source software into their products have, from time to time, faced claims challenging the ownership of open source software. As a result, we could be subject to suits by parties claiming ownership of what we believe to be open source software. Some open source software licenses require users who distribute open source software as part of their software to publicly disclose all or part of the source code in their software and make any derivative works of the open source code available on unfavorable terms or at no cost. In addition to risks related to license requirements, use of open source software can lead to greater risks than use of third party commercial software, as open source licensors generally do not provide warranties or controls with respect to origin of the software. While we take measures to protect our use of open source software in our solutions, open source license terms may be ambiguous, and many of the risks associated with usage of open source software cannot be eliminated. If we were found to have inappropriately used open source software, we may be required to release our proprietary source code, re-engineer our software, discontinue the sale of certain solutions in the event re-engineering cannot be accomplished on a timely basis, or take other remedial action that may divert resources away from our development efforts, any of which could adversely affect our business, financial condition, and results of operations.

The Current Macroeconomic Environment Could Adversely Impact Our Business.

Over the past few years, the U.S. has experienced a significant economic downturn and difficulties within the financial and credit markets. The timing, duration, and degree of an economic turnaround are uncertain and thus, these adverse economic conditions may continue into the foreseeable future. The possible adverse impacts to companies during these times include a reduction in revenues, decreasing profits and cash flows, distressed or default debt conditions, and/or difficulties in obtaining necessary operating capital. All companies are likely to be impacted by the current economic downturn to a certain degree, including CSG, our clients, and/or key vendors in our supply chain. There can be no assurances regarding the performance of our business, and the potential impact to our clients and key vendors, resulting from the current economic conditions.

A Reduction in Demand for Our Key Customer Care and Billing Solutions Could Have a Material Adverse Effect on Our Financial Condition and Results of Operations.

Historically, a substantial percentage of our total revenues have been generated from our core outsourced processing product, ACP, and related solutions. These solutions are expected to continue to provide a large percentage of our total revenues in the foreseeable future. Any significant reduction in demand for ACP and related solutions could have a material adverse effect on our financial condition and results of operations.

We May Not Be Able to Efficiently and Effectively Implement New Solutions or Convert Clients onto Our Solutions.

Our continued growth plans include the implementation of new solutions, as well as converting both new and existing clients to our solutions. Such implementations or conversions, whether they involve new solutions or new customers, have become increasingly more difficult because of the sophistication, complexity and interdependencies of the various computing and network environments impacted, combined with the increasing complexity of the underlying business processes. For these reasons, there is a risk that we may experience delays or unexpected costs associated with a particular implementation or conversion, and our inability to complete implementation or conversion projects in an efficient and effective manner could have a material adverse effect on our results of operations.

Our Business is Highly Dependent on the North American Cable and DBS Industries.

We have historically generated a significant portion of our revenues by providing solutions to clients in the North American cable and DBS industries. A decrease in the number of customers served by our clients, an adverse change in the economic condition of these industries, and/or changing consumer demand for services could have a material adverse effect on our results of operations. Additionally, a significant portion of our historical growth has come from our support of clients’ expansion into new lines of business, such as HSD and VoIP. There can be no assurance that our current and potential clients will be successful in expanding into new segments of the converging North American communications industry. Even if major forays into new markets by our current or potential clients are successful, we may be unable to meet the special billing and customer interaction management needs of those markets.

Our clients operate in a highly competitive environment. Traditional wireline and wireless telephone service providers, and others, will continue their aggressive pursuit of providing convergent services, including residential video, a market historically dominated by our clients. In addition, content disintermediaries like Hulu, YouTube, and FloTV are trying to capture consumer attention by providing content on different devices over different networks. Should these alternative service providers be successful in their video strategies, it could threaten our clients’ market share, and thus our source of revenues, as generally speaking these companies do not use our core solutions and there can be no assurance that new entrants will become our clients.

Further Consolidation of the North American Cable and DBS Industries May Have a Material Adverse Effect on Our Results of Operations.

The North American cable and DBS industries may continue to be subject to significant ownership changes. One facet of these changes is that consolidation by and among our core client base, the cable and DBS providers, as well as new entrants such as the traditional wireline and wireless carriers, will decrease the potential number of buyers for our solutions. Should these consolidations result in a concentration of customer accounts being owned by companies with whom we do not have a relationship, or with whom competitors are entrenched, we could be subject to the risk that subscribers will be moved off of our solutions and onto a competitor’s system, thereby having a material adverse effect on our results of operations. Furthermore, movement of our clients’ customers from our solutions to a competitor’s system or an internally-developed solution as a result of regionalization strategies by our clients could have a material adverse affect on our operations. Finally, as the result of the consolidations, our current and potential clients may choose to use their size and scale to exercise more severe pressure on pricing negotiations.

We Face Significant Competition in Our Industry.

The market for our solutions is highly competitive. We directly compete with both independent providers and in-house solutions developed by existing and potential clients. In addition, some independent providers are entering into strategic alliances with other independent providers, resulting in either new competitors, or competitors with greater resources. Many of our current and potential competitors have significantly greater financial, marketing, technical, and other competitive resources than our company, many with significant and well-established domestic and international operations. There can be no assurance that we will be able to compete successfully with our existing competitors or with new competitors.

Client Bankruptcies Could Adversely Affect Our Business.

In the past, certain of our clients have filed for bankruptcy protection. As a result of the current economic conditions and the additional financial stress this may place on companies, the risk of client bankruptcies is significantly heightened. Companies involved in bankruptcy proceedings pose greater financial risks to us, consisting principally of the following: (i) a financial loss related to possible claims of preferential payments for certain amounts paid to us prior to the bankruptcy filing date, as well as increased collectibility risk for accounts receivable, particularly those accounts receivable that relate to periods prior to the bankruptcy filing date; and/or (ii) the possibility of a contract being unilaterally rejected as part of the bankruptcy proceedings, or a client in bankruptcy may attempt to renegotiate more favorable terms as a result of their deteriorated financial condition, thus, negatively impacting our rights to future revenues subsequent to the bankruptcy filing. We consider these risks in assessing our revenue recognition and the collectibility of accounts receivable related to our clients that have filed for bankruptcy protection, and for those clients that are seriously threatened with a possible bankruptcy filing. We establish accounting reserves for our estimated exposure on these items which can materially impact the results of our operations in the period such reserves are established. There can be no assurance that our accounting reserves related to this exposure will be adequate. Should any of the factors considered in determining the adequacy of the overall reserves change adversely, an adjustment to the accounting reserves may be necessary. Because of the potential significance of this exposure, such an adjustment could be material.

We May Incur Material Restructuring Charges in the Future.

In the past, we have recorded restructuring charges related to involuntary employee terminations, various facility abandonments, and various other restructuring activities. We continually evaluate ways to reduce our operating expenses through new restructuring opportunities, including more effective utilization of our assets, workforce and operating facilities. As a result, there is a risk, which is inherently greater during economic downturns, that we may incur material restructuring charges in the future.

Failure to Attract and Retain Our Key Management and Other Highly Skilled Personnel Could Have a Material Adverse Effect on Our Business.

Our future success depends in large part on the continued service of our key management, sales, product development, and operational personnel. We believe that our future success also depends on our ability to attract and retain highly skilled technical, managerial, operational, and marketing personnel, including, in particular, personnel in the areas of R&D and technical support. Competition for qualified personnel at times can be intense, particularly in the areas of R&D, conversions, software implementations, and technical support. For these reasons, we may not be successful in attracting and retaining the personnel we require, which could have a material adverse effect on our ability to meet our commitments and new product delivery objectives.

We May Not Be Successful in the Integration of Our Acquisitions.

As part of our growth strategy, we seek to acquire assets, technology, and businesses which will provide the technology and technical personnel to expedite our product development efforts, provide complementary solutions, or provide access to new markets and clients.

Acquisitions involve a number of risks and difficulties, including: (i) expansion into new markets and business ventures; (ii) the requirement to understand local business practices; (iii) the diversion of management’s attention to the assimilation of acquired operations and personnel; (iv) being bound by client or vendor contracts with unfavorable terms; and (v) potential adverse effects on a company’s operating results for various reasons, including, but not limited to, the following items: (a) the inability to achieve financial targets; (b) the inability to achieve certain operating goals and synergies; (c) charges related to purchased in-process R&D projects; (d) costs incurred to exit current or acquired contracts or activities; (e) costs incurred to service any acquisition debt; and (f) the amortization or impairment of intangible assets.

Due to the multiple risks and difficulties associated with any acquisition, there can be no assurance that we will be successful in achieving our expected strategic, operating, and financial goals for any such acquisition.

Failure to Protect Our Intellectual Property Rights or Claims by Others That We Infringe Their Intellectual Property Rights Could Substantially Harm Our Business, Financial Condition and Results of Operations.

We rely on a combination of trade secret, copyright, trademark, and patent laws in the United States and similar laws in other countries, and non-disclosure, confidentiality, and other types of contractual arrangements to establish, maintain, and enforce our intellectual property rights in our solutions. Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented, or misappropriated. Further, our contractual arrangements may not effectively prevent disclosure of our confidential information or provide an adequate remedy in the event of unauthorized disclosure of our confidential information. Others may independently discover trade secrets and proprietary information, and in such cases we could not assert any trade secret rights against such parties. Costly and time consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position. In addition, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the United States. Therefore, in certain jurisdictions, we may be unable to protect our proprietary technology adequately against unauthorized third party copying or use, which could adversely affect our competitive position.

Although we hold a limited number of patents and patent applications on some of our newer solutions, we do not rely upon patents as a primary means of protecting our rights in our intellectual property. In any event, there can be no assurance that our patent applications will be approved, that any issued patents will adequately protect our intellectual property, or that such patents will not be challenged by third parties. Also, much of our business and many of our solutions rely on key technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties at all or on reasonable terms.

Finally, third parties may claim that we, our customers, licensees or other parties indemnified by us are infringing upon their intellectual property rights. Even if we believe that such claims are without merit, they can be time consuming and costly to defend and distract management’s and technical staff’s attention and resources. Claims of intellectual property infringement also might require us to redesign affected solutions, enter into costly settlement or license agreements or pay costly damage awards, or face a temporary or permanent injunction prohibiting us from marketing or selling certain of our solutions. Even if we have an agreement to indemnify us against such costs, the indemnifying party may be unable to uphold its contractual obligations. If we cannot or do not license the infringed technology on reasonable pricing terms or at all, or substitute similar technology from another source, our business, financial condition, and results of operations could be adversely impacted.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

The following table presents information with respect to purchases of company common stock made during the first quarter of 2010 by CSG Systems International, Inc. or any “affiliated purchaser” of CSG Systems International, Inc., as defined in Rule 10b-18(a)(3) under the Exchange Act.


Period	Total Number of Shares Purchased ¹	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plan or Programs
January 1 – January 31	33,614	$	18.47	—	5,704,096
February 1 – February 28	161,664		20.74	—	5,704,096
March 1 – March 31	1,508,980		19.57	1,500,000	4,204,096

Total	1,704,258	$	19.66	1,500,000

¹	The total number of shares purchased that are not part of the Stock Repurchase Program represents shares purchased and cancelled in connection with stock incentive plans.

Item 3.

Defaults Upon Senior Securities

None

Item 4.

(Removed and Reserved)

None

Item 5.

Other Information

None

Item 6.

Exhibits

The Exhibits filed or incorporated by reference herewith are as specified in the Exhibit Index.

SIGNATURES

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

Dated: May 10, 2010

CSG SYSTEMS INTERNATIONAL, INC.

/s/ Peter E. Kalan

Peter E. Kalan

Chief Executive Officer and President

(Principal Executive Officer)

/s/ Randy R. Wiese

Randy R. Wiese

Executive Vice President, Chief Financial Officer, and

Chief Accounting Officer

(Principal Financial Officer and

Principal Accounting Officer)

CSG SYSTEMS INTERNATIONAL, INC.

INDEX TO EXHIBITS


Exhibit Number		Description

4.25 (1)		Letter agreement dated March 18, 2010 by and between CSG Systems International, Inc. and Quantum Partners Ltd. regarding $119,896,000 aggregate principal amount of CSG’s 2.5% Senior Subordinated Convertible Contingent Debt Securities due 2024

4.30 (2)		Purchase Agreement dated February 24, 2010, by and between CSG Systems International, Inc., and Barclays Capital Inc., J.P. Morgan Securities Inc., and UBS Securities LLC

4.40 (2)		Indenture dated March 1, 2010, between CSG Systems International, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee

10.15		Form of Indemnification Agreement between CSG Systems International, Inc. and Directors and Executive Officers

10.23A*		Third Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and Dish Network, L.L.C.

31.01		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.02		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.01		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1)	Incorporated by reference to the exhibit of the same number to the Registrant’s Current Report on Form 8-K for the event dated March 18, 2010.

(2)	Incorporated by reference to the exhibit of the same number to the Registrant’s Current Report on Form 8-K for the event dated February 24, 2010.

*	Portions of the exhibit have been omitted pursuant to an application for confidential treatment, and the omitted portions have been filed separately with the Commission.

EXHIBIT 10.15

CSG SYSTEMS INTERNATIONAL, INC.

INDEMNIFICATION AGREEMENT

This Indemnification Agreement (“Agreement”) is made and entered into as of the day of , , by and between CSG SYSTEMS INTERNATIONAL, INC., a Delaware corporation, and its wholly-owned subsidiary CSG SYSTEMS, INC., a Delaware corporation (such two corporations being collectively referred to in this Agreement as the “Company”), and (“Indemnitee”).

RECITALS:

A. The Company and Indemnitee recognize the potential difficulty on the part of the Company in obtaining adequate and appropriate amounts of liability insurance for the Company’s directors, officers, employees, agents, and fiduciaries, the significant cost of increased amounts of such insurance, and the limited scope of the coverages provided by such insurance.

B. The Company and Indemnitee further recognize the frequency of corporate litigation in general, subjecting directors, officers, employees, agents, and fiduciaries to extensive litigation risks at the same time as the availability and coverage of liability insurance for persons serving in such capacities may be reduced.

C. Indemnitee does not regard the current liability insurance protection provided by the Company as being adequate, and Indemnitee and other directors, officers, employees, agents, and fiduciaries of the Company may not be willing to continue to serve in such capacities without additional protection.

D. The Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve the Company and, to induce Indemnitee to continue to provide services to the Company, wishes to provide for the indemnification and advancing of expenses to Indemnitee to the maximum extent permitted by applicable law.

E. In view of the considerations set forth above, the Company and Indemnitee desire that Indemnitee be indemnified by the Company as set forth in this Agreement.

NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:

1. Indemnification .

(a) Indemnification of Expenses . If Indemnitee was or is or becomes a party to or a witness or other participant in, or is threatened to be made a party to or witness or other participant in, any threatened, pending, or completed action, suit, proceeding, or alternative dispute resolution method or process (each and all of which are referred to in this Agreement as a “Proceeding”), or in any hearing, inquiry, or investigation that Indemnitee in good faith believes might lead to the institution of any Proceeding (an “Investigative Activity”), whether civil, criminal, administrative, investigative, or another type, by reason of or arising in whole or in part out of (i) the fact that Indemnitee is or was a director, officer, employee, agent, or fiduciary of the Company, or any subsidiary of the Company, (ii) the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee, agent, manager, or fiduciary of another corporation, partnership, limited liability company, joint venture, trust, or other enterprise or entity, or (iii) any action or inaction on the part of Indemnitee while serving in any of the capacities referred to in the preceding clauses (i) and (ii), then the Company shall indemnify Indemnitee to the fullest extent permitted by applicable law against (1) any and all expenses, obligations, and liabilities of any kind (including but not limited to attorneys’ fees and costs) actually incurred by Indemnitee in connection with or as a result of Indemnitee’s investigating, defending, being a witness in, participating in (including on appeal), or preparing to defend, be a witness in, or participate in any such Proceeding or Investigative Activity, (2) judgments, fines, penalties, and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) actually incurred by Indemnitee or for which Indemnitee becomes liable in connection with or as a result of any such Proceeding or Investigative Activity, and (3) any federal, state, local, or foreign taxes imposed on Indemnitee as a result of Indemnitee’s actual or deemed receipt of any payments under this Agreement (the items referred to in the preceding clauses (1), (2), and (3) being collectively referred to in this Agreement as “Expenses”), including all interest, assessments, and other charges paid or payable in connection with or in respect of the Expenses. Such payment of Expenses shall be made by the Company as soon as practicable but in any event no later than five (5) days after written demand for such payment is presented to the Company by or on behalf of Indemnitee.

(b) Reviewing Party . Notwithstanding the provisions of Section 1(a), (i) the obligations of the Company under Section 1(a) shall be subject to the condition that the Reviewing Party (as described in Section 10(e)) shall not have determined (in a written opinion, in any case in which the Independent Legal Counsel referred to in Section 1(c) is involved) that Indemnitee would not be permitted to be indemnified under applicable law and (ii) the obligation of the Company to make an advance payment of Expenses to Indemnitee pursuant to Section 2(a) (an “Expense Advance”) shall be subject to the condition that, if, when, and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be indemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all such Expense Advances to which such determination applies; provided, that if Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee would be permitted to be indemnified under applicable law, then any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding, and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect to such matter (and as to which all rights of appeal from such judicial determination have been exhausted or lapsed). Indemnitee’s obligation to reimburse the Company for any Expense Advance shall be unsecured, and no interest shall be charged thereon. If there has not been a Change in Control (as defined in Section 10(c)), then the Reviewing Party shall be selected by the Board of Directors; and if there has been such a Change in Control (other than a Change in Control which has been approved by a majority of the Company’s Board of Directors who were directors immediately prior to such Change in Control), then the Reviewing Party shall be the Independent Legal Counsel referred to in Section 1(c). If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, then Indemnitee shall have the right to commence litigation seeking a determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, including the legal or factual bases therefor, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee.

(c) Change in Control . The Company agrees that if there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Company’s Board of Directors who were directors immediately prior to such Change in Control) then, with respect to all matters thereafter arising concerning the rights of Indemnitee to payments of Expenses and to Expense Advances under this Agreement or under the Company’s Certificate of Incorporation or Bylaws as now or hereafter in effect, Independent Legal Counsel (as defined in Section 10(d)) shall be selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld). Such Independent Legal Counsel, among other things, shall render such counsel’s written opinion to the Company and Indemnitee as to whether and to what extent Indemnitee would be permitted to be indemnified under applicable law, and the Company agrees to abide by such opinion. The Company agrees to pay the reasonable fees of any such Independent Legal Counsel and to fully indemnify such counsel against any and all expenses (including attorneys’ fees), claims, and liabilities arising out of or relating to this Agreement or such counsel’s engagement pursuant to this Agreement.

(d) Mandatory Payment of Expenses . Notwithstanding any other provision of this Agreement except Section 9, to the extent that Indemnitee has been successful on the merits or otherwise, including, without limitation, the dismissal of a Proceeding without prejudice, in the defense of any Proceeding or in the defense of any claim, issue, or matter arising in any Proceeding, the Company shall indemnify Indemnitee against all Expenses incurred by Indemnitee in connection with such Proceeding.

2. Expenses; Indemnification Procedure .

(a) Advancement of Expenses . The Company shall advance all Expenses incurred by Indemnitee. The Expense Advances to be made under this Agreement shall be paid by the Company to Indemnitee or at Indemnitee’s direction as soon as practicable but in any event no later than five (5) days after Indemnitee has made written demand to the Company for such payment.

(b) Notice/Cooperation by Indemnitee . Indemnitee shall, as a condition precedent to Indemnitee’s right to be indemnified under this Agreement, give the Company notice in writing as soon as practicable after the commencement of any Proceeding or Investigative Activity with respect to which Indemnitee will or could seek indemnification under this Agreement. In addition, Indemnitee shall provide the Company with such information and cooperation within Indemnitee’s power as the Company reasonably may require with respect to such matter.

(c) No Presumptions; Burden of Proof . For purposes of this Agreement, the termination of any Proceeding by judgment, order, settlement (whether with or without court approval), or conviction, or upon a plea of nolo contendere , or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. In addition, neither the failure of the Reviewing Party to have made a determination as to whether Indemnitee has met any particular standard of conduct or had any particular belief nor an actual determination by the Reviewing Party that Indemnitee has not met such standard of conduct or did not have such belief prior to the commencement of legal proceedings by Indemnitee to secure a judicial determination that Indemnitee would be permitted to be indemnified under applicable law shall be a defense to Indemnitee’s claim for indemnification or create a presumption that Indemnitee has not met any particular standard of conduct or did not have any particular belief. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified under this Agreement, the burden of proof shall be on the Company to establish that Indemnitee is not so entitled.

(d) Notice to Insurers . If, at the time of the receipt by the Company of a notice from Indemnitee of a Proceeding or Investigative Activity pursuant to Section 2(b), the Company has liability insurance in effect which may be applicable to such Proceeding or Investigative Activity, then the Company shall give prompt notice of the commencement of such Proceeding or Investigative Activity to the insurers in accordance with the procedures set forth in the respective policies. The Company thereafter shall take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable in connection with or as a result of such Proceeding or Investigative Activity in accordance with the terms of such policies.

(e) Selection of Counsel . If the Company is obligated under this Agreement to pay the Expenses of Indemnitee in connection with any Proceeding or Investigative Activity, then the Company, if appropriate, shall be entitled to assume the defense of Indemnitee in such Proceeding or to represent Indemnitee in such Investigative Activity with counsel approved by Indemnitee, upon the Company’s delivery to Indemnitee of written notice of the Company’s election so to do. After delivery of such notice, approval of such counsel by Indemnitee, and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same Proceeding or Investigative Activity; provided, that (i) Indemnitee shall have the right to employ Indemnitee’s counsel in any such Proceeding or Investigative Activity at Indemnitee’s expense and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense or other representation, or (C) the Company shall not continue to retain counsel to defend Indemnitee in such Proceeding or Investigative Activity, then the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company.

3. Additional Indemnification Rights; Nonexclusivity .

(a) Scope . The Company agrees to indemnify Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company’s Certificate of Incorporation, the Company’s Bylaws, or by statute. In the event of any change after the date of this Agreement in any applicable law, statute, or rule which expands the right of a Delaware corporation to indemnify a member of its Board of Directors or an officer, employee, agent, or fiduciary, Indemnitee and the Company intend that Indemnitee shall enjoy by this Agreement the greater benefits afforded by such change. In the event of any change in any applicable law, statute, or rule which narrows the right of a Delaware corporation to indemnify a member of its Board of Directors or an officer, employee, agent, or fiduciary, such change, to the extent not required by such law, statute, or rule to be applied to this Agreement, shall have no effect on this Agreement or the rights and obligations of Indemnitee and the Company under this Agreement except as set forth in Section 8(a).

(b) Nonexclusivity . The indemnification provided by this Agreement shall be in addition to any rights to which Indemnitee may be entitled under the Company’s Certificate of Incorporation or Bylaws, any other agreement, any vote of stockholders or disinterested directors, the General Corporation Law of the State of Delaware, or otherwise. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken by Indemnitee while serving in an indemnified capacity even though Indemnitee may have ceased to serve in such capacity.

4. No Duplication of Payments . The Company shall not be liable under this Agreement to make any payment in connection with any Proceeding or Investigative Action to the extent that Indemnitee has otherwise actually received payment (whether under any insurance policy maintained by the Company under Section 7, the Company’s Certificate of Incorporation or Bylaws, or otherwise) of the amounts otherwise indemnifiable under this Agreement.

5. Partial Indemnification . If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses incurred in connection with a Proceeding or Investigative Activity but not for the total amount of such Expenses, then the Company nevertheless shall indemnify Indemnitee for the portion of such Expenses to which Indemnitee is entitled.

6. Mutual Acknowledgment . Both the Company and Indemnitee acknowledge that in certain instances Federal law or applicable public policy may prohibit the Company from indemnifying its directors, officers, employees, agents, or fiduciaries under this Agreement or otherwise. Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the Securities and Exchange Commission in certain circumstances to submit to a court the question of whether indemnification of Indemnitee is against public policy and to be governed by the final adjudication of such issue, and Indemnitee agrees to be bound by such final adjudication.

7. Liability Insurance . To the extent the Company maintains liability insurance policies applicable to its directors, officers, employees, agents, or fiduciaries, Indemnitee shall be covered by such policies in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured (i) of the Company’s directors, if Indemnitee is a director or (ii) of the Company’s officers, if Indemnitee is not a director of the Company but is an officer of the Company or (iii) of the Company’s key employees, agents, or fiduciaries, if Indemnitee is not an officer or director of the Company but is a key employee, agent, or fiduciary of the Company. The Company promptly shall notify Indemnitee in advance of (i) any proposed cancellation of a policy referred to in this Section 7 as a result of a breach by the Company or (ii) the Company’s intent not to procure a reasonable amount of liability insurance that covers Indemnitee.

8. Exceptions . Notwithstanding any other provision in this Agreement to the contrary, the Company shall not be obligated pursuant to the terms of this Agreement:

(a) Excluded Action or Omissions . To indemnify Indemnitee for acts, omissions, or transactions from which Indemnitee may not be relieved of liability under applicable law;

(b) Claims Initiated by Indemnitee . To indemnify or advance expenses to Indemnitee in connection with an action or proceeding initiated or brought voluntarily by Indemnitee and not by way of defense, except (i) with respect to actions or proceedings brought to establish or enforce Indemnitee’s right to indemnification under this Agreement, any other agreement, any insurance policy, or the Company’s Certificate of Incorporation or Bylaws as now or hereafter in effect relating to Indemnitee’s right to indemnification, (ii) in specific cases if the Board of Directors has approved the initiation or bringing of such action or proceeding, or (iii) as otherwise required under Section 145 of the General Corporation Law of Delaware, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses, or insurance recovery, as the case may be;

(c) Lack of Good Faith . To indemnify Indemnitee for any expenses incurred by Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by Indemnitee in such proceeding was not made in good faith or was frivolous; or

(d) Claims Under Section 16(b) . To indemnify Indemnitee for expenses and the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute.

9. Period of Limitations . No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against Indemnitee or against Indemnitee’s estate, spouse, heirs, executors, or personal or legal representatives after the expiration of two (2) years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, that if any shorter period of limitations is otherwise applicable to any such cause of action, then such shorter period shall govern.

10.	Construction of Certain Phrases .

(a) For purposes of this Agreement, references to the “Company” shall include, in addition to the resulting or surviving corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees, agents, or fiduciaries, so that if Indemnitee is or was a director, officer, employee, agent, or fiduciary of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee, agent, manager, or fiduciary of another corporation, partnership, limited liability company, joint venture, employee benefit plan, trust, or other enterprise or entity, then Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have stood with respect to such constituent corporation if its separate existence had continued.

(b) For purposes of this Agreement, references to “other enterprise” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; and references to “serving at the request of the Company” shall include any service as a director, officer, employee, agent, or fiduciary of the Company which imposes duties on, or involves services by, such director, officer, employee, agent, or fiduciary with respect to an employee benefit plan or its participants or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the interests of the participants and beneficiaries of an employee benefit plan, then Indemnitee shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

(c) For purposes of this Agreement, a “Change of Control” shall be deemed to have occurred upon the happening of any of the following events:

(i)

The Company is merged or consolidated into another corporation or entity, and immediately after such merger or consolidation becomes effective the holders of a majority of the outstanding shares of voting capital stock of the Company immediately prior to the effectiveness of such merger or consolidation do not own (directly or indirectly) a majority of the outstanding shares of voting capital stock or other equity interests having voting rights of the surviving or resulting corporation or other entity in such merger or consolidation;

(ii)

any person, entity, or group of persons within the meaning of Sections 13(d) or 14(d) of the Securities Exchange Act of 1934 (the “1934 Act”) and the rules promulgated thereunder becomes the beneficial owner (within the meaning of Rule 13d-3 under the 1934 Act) of thirty percent (30%) or more of the outstanding voting capital stock of the Company;

(iii)

the Common Stock of the Company ceases to be publicly traded because of an issuer tender offer or other “going private” transaction (other than a transaction sponsored by the then current management of the Company);

(iv)

the Company dissolves or sells or otherwise disposes of all or substantially all of its property and assets (other than to an entity or group of entities which is then under common majority ownership (directly or indirectly) with the Company);

(v)

in one or more substantially concurrent transactions or in a series of related transactions, the Company directly or indirectly disposes of a portion or portions of its business operations (collectively, the “Sold Business”) other than by ceasing to conduct the Sold Business without its being acquired by a third party (regardless of the entity or entities through which the Company conducted the Sold Business and regardless of whether such disposition is accomplished through a sale of assets, the transfer of ownership of an entity or entities, a merger, or in some other manner) and either (1) the fair market value of the consideration received or to be received by the Company for the Sold Business is equal to at least fifty percent (50%) of the market value of the outstanding Common Stock of the Company determined by multiplying the average of the closing prices for the Common Stock of the Company on the thirty (30) trading days immediately preceding the date of the first public announcement of the proposed disposition of the Sold Business by the average of the numbers of outstanding shares of Common Stock on such thirty (30) trading days or (2) the revenues of the Sold Business during the most recent four (4) calendar quarters ended prior to the first public announcement of the proposed disposition of the Sold Business represented fifty percent (50%) or more of the total consolidated revenues of the Company during such four (4) calendar quarters; or

(vi)

during any period of two (2) consecutive years or less, individuals who at the beginning of such period constituted the Board of Directors of the Company cease, for any reason, to constitute at least a majority of the Board of Directors of the Company, unless the election or nomination for election of each new director of the Company who took office during such period was approved by a vote of at least seventy-five percent (75%) of the directors of the Company still in office at the time of such election or nomination for election who were directors of the Company at the beginning of such period.

(d) For purposes of this Agreement, “Independent Legal Counsel” shall mean an attorney or firm of attorneys, selected in accordance with the provisions of Section 1(c), who shall not have otherwise performed services for the Company or Indemnitee within the last three years (other than with respect to matters concerning the rights of Indemnitee under this Agreement or of other indemnitees under similar indemnity agreements).

(e) For purposes of this Agreement, a “Reviewing Party” shall mean (i) an appropriate person or body consisting of a member or members of the Company’s Board of Directors or any other person or body appointed by the Board of Directors who is not a party to the particular Proceeding or Investigative Activity with respect to which Indemnitee is seeking indemnification or (ii) Independent Legal Counsel.

11. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall constitute an original.

12. Binding Effect; Successors and Assigns . This Agreement shall be binding upon, inure to the benefit of, and be enforceable by Indemnitee and the Company and their respective successors (including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation, or otherwise) to all, substantially all, or a substantial part of the business or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as a director, officer, employee, agent, or fiduciary of the Company or of any other enterprise at the Company’s request.

13. Attorney’s Fees . If any action is instituted by Indemnitee under this Agreement or under any liability insurance policies maintained by the Company to enforce or interpret any of the terms of this Agreement or of such insurance policies, then Indemnitee shall be entitled to be reimbursed by the Company for all Expenses actually incurred by Indemnitee with respect to such action, regardless of whether Indemnitee is ultimately successful in such action, and shall be entitled to the advancement of Expenses with respect to such action, unless, as a part of such action, a court of competent jurisdiction over such action determines that each of the material assertions made by Indemnitee as a basis for such action was not made in good faith or was frivolous. In the case of an action instituted by or in the name of the Company under this Agreement to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be reimbursed by the Company for all Expenses incurred by Indemnitee in defense of such action (including costs and expenses incurred with respect to Indemnitee’s counterclaims and cross-claims made in such action) and shall be entitled to the advancement of Expenses with respect to such action, unless, as a part of such action, a court having jurisdiction over such action determines that each of Indemnitee’s material defenses to such action was made in bad faith or was frivolous.

14. Notice . All notices and other communications required or permitted under this Agreement shall be in writing, shall be effective when given, and shall in any event be deemed to have been given (i) five (5) days after deposit with the U.S. Postal Service or other applicable postal service, if sent by regular first-class or certified mail, (ii) upon delivery, if delivered by hand, (iii) one (1) business day after the business day of deposit with a national overnight express delivery service for next-business-day delivery, or (iv) one (1) day after the business day of delivery by facsimile transmission, if delivered by facsimile transmission, with a copy by first-class mail postage-prepaid, and shall be addressed if to Indemnitee at Indemnitee’s address as set forth beneath Indemnitee’s signature to this Agreement and if to the Company at the address of its principal corporate office (Attention: General Counsel) or at such other address as such party may designate by ten (10) days’ advance written notice to the other party to this Agreement.

15. Consent to Jurisdiction . The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the State of Delaware for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be commenced, prosecuted, and continued only in the Court of Chancery of the State of Delaware in and for New Castle County, which shall be the exclusive and only proper forum for adjudicating such a claim.

16. Severability . The provisions of this Agreement shall be severable in the event that any of the provisions of this Agreement (including any provision within a single section, paragraph, or sentence) are held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable; and the remaining provisions of this Agreement shall remain enforceable to the fullest extent permitted by law. Furthermore, to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of this Agreement containing any provision held to be invalid, void, or otherwise unenforceable that is not itself invalid, void, or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal, or unenforceable.

17. Choice of Law . This Agreement shall be governed by and its provisions construed and enforced in accordance with the laws of the State of Delaware, as applied to contracts between Delaware residents entered into and to be performed entirely within the State of Delaware, without regard to the conflict of laws principles.

18. Subrogation . In the event of payment by the Company to Indemnitee under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and perform all acts that reasonably may be necessary to secure such subrogation rights and to enable the Company effectively to bring suit to enforce such rights.

19. Amendment and Termination . No amendment, modification, termination, or cancellation of this Agreement shall be effective unless it is in writing signed by both the Company and Indemitee. No waiver of any of the provisions of this Agreement shall be deemed to be or shall constitute a waiver of any other provisions of this Agreement (whether or not similar) nor shall such waiver constitute a continuing waiver.

20. Integration and Entire Agreement . This Agreement sets forth the entire understanding between the Company and Indemnitee with respect to the subject matter of this Agreement and supersedes and merges all previous written and oral negotiations, commitments, understandings, and agreements between the Company and Indemnitee relating to the subject matter of this Agreement.

21. No Construction as Employment Agreement . Nothing contained in this Agreement shall be construed to give Indemnitee any right to be retained in the employ of the Company or any of its subsidiaries or to serve on the Board of Directors of the Company or any of its subsidiaries or to hold any other position as a representative or designee of the Company or any of its subsidiaries.


CSG SYSTEMS INTERNATIONAL, INC., a Delaware corporation

By:
		President and Chief Executive Officer


Address:		9555 Maroon Circle
		Englewood, CO 80112



CSG SYSTEMS, INC., a Delaware corporation

By:
		President and Chief Executive Officer


Address:		9555 Maroon Circle
		Englewood, CO 80112

AGREED TO AND ACCEPTED BY :

INDEMNITEE

(Signature)

(Typed or Printed Name)

(Address)

EXHIBIT 10.23A

Pages where confidential treatment has been requested are stamped “Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission,” and places where information has been redacted have been marked with (***).

THIRD AMENDMENT

TO THE

CSG MASTER SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT

BETWEEN

CSG SYSTEMS, INC.

AND

DISH NETWORK, L.L.C.

This AMENDMENT TO THE CSG MASTER SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT BETWEEN CSG SYSTEMS, INC. AND DISH NETWORK, L.L.C. (this “ Amendment ”) entered into and made effective as of March 25, 2010 is made by and between CSG Systems, Inc ., a Delaware corporation (“ CSG ”) and DISH Network, L.L.C. a Colorado limited liability company (“ Customer ”). CSG and Customer entered into a certain CSG Master Subscriber Management System Agreement (Document #2301656) dated effective as of January 1, 2010 (the “ Agreement ”), and Customer and CSG now desire to amend the Agreement to, among other things, provide for the Extended Agreement Option (as defined in the Agreement). If the terms and conditions set forth in this Amendment shall be in conflict with the Agreement, the terms and conditions of this Amendment shall control. Any terms in initial capital letters or all capital letters used as a defined term but not defined in this Amendment shall have the meaning set forth in the Agreement. Upon the effectiveness of this Amendment, any subsequent reference to the Agreement between the parties shall mean the Agreement as amended by this Amendment.

WHEREAS , under Section 18(d) of the Agreement, the parties have agreed to negotiate in good faith to provide Customer the Extended Agreement Option;

WHEREAS , the parties have agreed that the Extended Agreement Option shall be in the form and have the terms set forth in this Amendment;

NOW THEREFORE , in consideration of the mutual promises set forth in the Agreement and in this Amendment, CSG and Customer agree as follows:

1. Section 18(d) of the Agreement shall be deleted in its entirety and replaced with the following:

(d)

Extended Option . Customer shall have the option (“ Extended Agreement Option ”), exercisable on or prior to April 30, 2011 to extend the Processing Term and Print and Mail Term for an additional period through December 31, 2015 (the “ Extended Term ”) and to amend this Agreement pursuant to the terms of the amendment set forth in Schedule L (the “ Extended Agreement Option Amendment ”). Customer agrees to use commercially reasonable efforts to provide CSG with no less than *****-**** **** **** prior written notice of its intent to exercise the Extended Agreement Option Amendment. ** *** ***** ******** **** *** ******* *** ********* ****** ** ***** *** ****** ** ****** ********’* ***** ** ******** *** ******** ********* ******. Customer may exercise the Extended Agreement Option by executing and delivering to CSG the Extended Agreement Option Amendment in the form attached hereto as Schedule L. For the avoidance of doubt, the parties agree that the Extended Agreement Option Amendment shall not become effective until a version executed by Customer is delivered to CSG. Upon receiving the Extended Agreement Option Amendment executed by Customer, CSG shall execute such amendment and return a fully executed original to Customer; provided, however, that the parties agree that CSG’s execution shall not be required for such amendment to become effective.

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

2. Schedule L of the Agreement is deleted in its entirety and replaced with the Schedule L attached hereto as Attachment A.

3. The following language shall be inserted after the third “whereas” clause in the introductory language to the Agreement:

WHEREAS , the Customer and CSG have agreed to amend this Agreement in accordance with the Third Amendment to the CSG Master Subscriber Management System Agreement Between CSG Systems, Inc. and Dish Network, L.L.C. (the “ Amendment ”).

4. Development Pursuant to ****** *******:

(a)

(b)

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(c)

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***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

(d)

** ** ******* ************ *** ****** **** *** *** *********** ** *** *** ********, *** *********** ** ********’* ******** ********** *********** *** *** ****** *** ***** ** *** **** *** ****** **** **** ** **** ********* *** **** ** **** ********* ** *** ******** ****** ** ********’* *** ***’* **********, *** **** **** **** ******* *** ****** *** ***** ** *** ****** ******* *********** **** *** ********* *** ****** ******* *********** ***** *** ****** ******* *********** *****. *** ******* ********* ***** **** ********* ** *** ********* ****, ***** ********* *************** ***** **** ** * **** *** ***** ******** ****** ****, *** ** **** ********** **** **** ***** ***** ******, ** ********, ***** ***** ******, *** ******* ** *** ****** ******* **** *** ********* ** ******* ******* ** *** ****** ******* ***********, *********, *** *** ******* **, *** ********* ******* ** *** *********** ** *** ****** ******* *********** ****, ****** ******* *********** *****, *** ****** ******* *********** ***** *************, * ****** ******* ******* **. **, ********* *** **** *******, **** *************** ** ****** ***** ********** **** **** ****** ******* ******* *** ************ *********, ****, ****** * ********** ****** ********* **** *******, **** *************** ***** ******* ******* * ******* ******** ** * ****** ******* ****** ******** ** **** ***** ********* ***** *** **** ****** ******* *******. *** *** ********* ** *****, ****** ******* *********** ***** ***** ******* *** *********-***** ******** ***** ** *** ******** ****** ****.

(e)

**** ****** ******* ****** ******** ***** ** ******** ** *** ******** ******** ********* *** **** ******’* *********** ** ***, ***** ***** ** ** ********* ******* ** *** **** *** ********* ** ******* ********** ** **** ********* **** * *** ******** ********* *, *** ******** **** *** ******** ******** *********, *** * ******** ********** **. ** *** ******** ********** *****, ***** ********* ***** *** ** ************ ********, **** *** ****** ******* ******* ******** ** *** ****** ******* ****** ******** ****** ** ****, ** **** ***** ****** ******* ******* ****** ** ****, **** **** ******* ***** ** ********* ** ** ********* ** *** ****** *******, ***** ********* ***** ** ******** ** *** *******. ** *** ***** **** *** ******* ** *** ***** ** ******** ******, ****** ***** *** ******* *** ********** ******* ******** ** ******* ** ******** ************. ** *** ***** *** ********** ******* ** **** *** *** ******* ** *********** *** **** *** ** ********* ** * ****** ** * ****** ******* ****** ********, *** ********** ******* ***** ** ********* ** ***** **** ****** **** **** **** *** ************. ****** *** ******* *** ** **** ** ***** ********* ***** ********** *** ********** ******* ******** ** *** *********, *** ******* ***** ***** **** ** ********* ********* *** ************ ** *** ****** ******* ****** ********, ******** ** ***** *** ***** ******* *** ******** *** ******* *** ******** ** ***** ***** ******** ********** ******* *** *** ******* ***** ** *** *** *** ********** ********* **** **** *** ********* ** *** ***** ** *** ****** ******* ****** ********, ***** **** ** ********* *** ************, *** *** ***** *** ******* ***** **** ************** ** *******:

**** * - ** ** ****,*** *** ***** ** ****** *********** *** *** ****;

**** * - ****,*** ** **,***,*** *** ********** ******* ***** **** ***, *** ******* ***** ***** *** **** ******; ***

**** * - **,***,*** ** **** ********** ******* ******** ***** ** ****** *********** *** *** ****.

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

** *** ** *******, ** *** ******* ****** ******* * ****** ******* ****** ******** *** **.* ******* ** **** ****** ** **** *** *** ********** *******, **** *** ******* **** ** ******* ** *******: *** ************** *** *** ***** ****,*** ***** ** ***** ** ***; **** ************** *** *** **** ** ******* ***** ** ***** ****** ******* *** *** ********; *** ***** *** **** ****,*** ** ** **** ** ********; ***** **** *******, ***** ****** *** ***** **** ***** ***** ** *********** ***** ** ** *******. *** ********** **** ******** ******** ** **** ****** ******* ****** ******** **** ** **** ** ********. ** *** ***** **** *** ******* ****** ***** ********* ***** ********** *** ********** ******* ******** ** *** ********* *** ******* ****** ******* ****** ********, *** ******* ***** **** ***** ******* ******** ** **** *********, ****** ***’* ** ******* ********** ***** **** ******* *** *** ********** **** ***. *************** *** ********* ********, ** ** ********** ** ******** **** ***’* ********** ********* ************** ***** **** ******* *** ******* *** **** ** **** ********* ***** ** **,***,*** **** ******* *.*. ********.

(f)

** ** ** ******* *, ****, ******* **** ******** **** ******* ** *** *********** ** *** *** ********, ********’* ******** ********** *********** *** *** ****** *** ***** ** *** **** *** **** ******* **** *** **** ********* ** *** ********* ** **** ********* ** *** ****** ******* ******** ** ********** *** ** **** ******* *, **** *** ******** ** ****** ******* ***** **** ********* ** **** *********** *** ******* ***** ** ****** ** ******** ******** ** *** ********** **** *** *** ***** *** ***** ** ******** * ** ** ********* ****** ******* *** ******* ******** ** * ********* ** **** ** *********. ******** ************ **** ********** ******* ***** ****** ** ********* ** ******** ********* ** *** ****** ******* ********** ****** ** ** *** *******.

5. Except as amended by this Amendment, the terms and conditions set forth in the Agreement shall continue in full force and effect according to their terms.

IN WITNESS WHEREOF the parties hereto have caused this Amendment to be executed by their duly authorized representatives.


DISH NETWORK, L.L.C. (“CUSTOMER”)		CSG SYSTEMS, INC. (“CSG”)

By:	/s/ Michael McClaskey	By:	/s/ Joseph T. Ruble
Name:	Michael McClaskey	Name:	Joseph T. Ruble
Title:	CIO	Title:	EVP, CAO & General Counsel

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

ATTACHMENT A

SCHEDULE L

EXTENDED AGREEMENT OPTION AMENDMENT

TO THE

CSG MaSTER SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT

BETWEEN

csg SYSTEMS, INC.

AND

DISH NETWORK, L.L.C.

This EXTENDED AGREEMENT OPTION AMENDMENT (this “ Amendment ”) is made by and between CSG Systems, Inc ., a Delaware corporation (“ CSG ”) and DISH Network, L.L.C. a Colorado limited liability company (“ Customer ”). CSG and Customer entered into a certain CSG Master Subscriber Management System Agreement (Document #2301656) dated effective as of January 1, 2010 (the “ Agreement ”), and Customer now desires to exercise its Extended Agreement Option (as defined in the Agreement) in accordance with the Agreement. The effective date of this Amendment (the “ Extended Option Date ”) shall be the date on which this Amendment is executed by Customer and delivered to CSG in accordance with the terms and conditions of the Agreement. Upon receiving this Amendment, CSG shall execute it and return a fully executed original to Customer; provided, however, that CSG’s execution shall not be required for this Amendment to become effective. If the terms and conditions set forth in this Amendment shall be in conflict with the Agreement, the terms and conditions of this Amendment shall control. Any terms in initial capital letters or all capital letters used as a defined term but not defined in this Amendment shall have the meaning set forth in the Agreement. Upon the effectiveness of this Amendment, any subsequent reference to the Agreement between the parties shall mean the Agreement as amended by this Amendment. Section references shall refer to Section references in the Agreement except as otherwise set forth herein or as the context otherwise indicates. Except as amended by this Amendment, the terms and conditions set forth in the Agreement shall continue in full force and effect according to their terms.

WHEREAS , under the terms of the Agreement, Customer has a right to exercise the Extended Agreement Option in accordance with the terms identified in Schedule L as amended by the Third Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and Dish Network, L.L.C. dated March 25th, 2010 (the “ Amendment ”);

WHEREAS , pursuant to the Amendment and the terms of the Extended Agreement Option, Customer has the right to effect this Amendment by its exercise of the Extended Agreement Option; and

WHEREAS , Customer upon signing this Amendment hereby exercises its Extended Agreement Option;

NOW THEREFORE , in consideration of the mutual promises set forth in the Agreement and in the Amendment, upon Customer execution and delivery of this Amendment in accordance with the Agreement, CSG and Customer agree to the following amendment of the Agreement effective as of the Extended Option Date:

Section 2, entitled INVOICES AND PAYMENT: Subsection 2(e) is deleted in its entirety and replaced with the following:

(e)

Invoice . CSG shall invoice the ******* ****** ********** ****** *** ******* ** ******* *.*. ***** *** ******** ** ******** ** ** *******. *** *******, *** ***** ******* ******** ** ******* **** ***** *, **** *** *** ******* ****** ********** ****** ******** ** ***** ****. ****** *** *** ******* ****** ********** ******, all other Products and Services provided by CSG under this Agreement shall be invoiced in accordance with Schedule F .

A - 1

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

Commencing with the next invoice submitted to Customer by CSG following the Extended Option Date, the ********** ******* *** ******* ** *** ********* ***** ** *** ************* ** **** ********** ***** ** ******* ******* ******* **** ***** ************. *** ********** ******* ********* **** *********** ** **** ********* ***** ** ******** ******** ** ******** ***** ****** **** ******* *** ********** ******* *** ** ***.

Any invoices for M****** ********** **** *** ******* ** *** ********* ***** ** *** ************* ** **** ********** that were invoiced prior to, and due on a date following, the Extended Option Date **** * ****** ******** ** ***** ** ****** ** ** **** *** **** *** *** ***** **** ** ******** ** ******* ******* ***** ** ******* ***** ** *** *********** ******* **** *** *** ******* ** ******** ** *** *** ****, ***** ** *** *********** ** ***** **** *** ********** *******, ** **** ********** ******* ****** ** *** ** ******** ***** **** ******* *** ************.

** ** ********** *** ****** **** *** **** ***** *********** ******** *** *** ******* *** ***** *** ****** ******** **** ****** **** ******* ****** ********** ****** ****** ********* *** *** ********** *******, *** **** **** *********** ******** **** ** ****** *** ******* ** ********** **** *** ********* ** ******* ** **** *********. **** *********** ******** **** ******* ******* ***** **** *** ******* ****** ********** ****** ** ******** ** ******** * *** ******* ** **** **********. ** *** ** ******* *** *** **********, ** *** ******** ****** **** ****** ** ***** **, ****, *** **, ** ********** **** ******* **** ** *** ********* *** **** ****** ****** *** ******** ****** ***** *** ******** *** ******* ********** **** *** **** ****** **** *** ***** ** *** * *** **** * ** ****, ************, **** **** ******** ***** ** ****** **** *** **** *** *** **** ******* **** ******** ** ********** **** *** ********* ********** ** **** ******* *, *** ** *** ** ******* *** ******* ********** **** *** **** ****** **** * *** **** ** ***** *, ****, **** **** ******* ***** ***** ** ********** *** ****** *** *** ******* ** ********** **** *** ********* ** ** ******* ***** ** *** ******** ****** ****.

Section 4, entitled INCREASE IN FEES, is deleted in its entirety and replaced with the following:

INCREASE IN FEES. *** ***** *** ******** *** ** *** **** ********* ** **** ********* ***** ** *** ***** *********** **** ** *** ********* ****. **********, **** ****** **** ******** ****’ ***** ******* ******, *** *** ******** **** ******** ** ** ****** ***** ** ***** *** ***-**** ******* **.***. In the event CSG’s respective vendors increase the cost for paper, envelopes or Non-Embedded Third-Party Software ** **** **** ***** *** ***-**** ******* **.*** ***** *** ***** paid by CSG as of the latter of the Effective Date or the date of the most recent fee increase for such product pursuant to this Section 4 (in either case, the “ Prior Price ”), CSG agrees to provide Customer with ** **** **** ****** **** ******** **** written notice prior to each anniversary date of the Effective Date and shall increase corresponding fees to Customer by the ******** ********** ******* *** **** ******** ** *** *** * **** ******** ** ***** *** ***-**** ******* **.*** ***** *** ***** *****. Furthermore, the parties agree that the fees for postage are dependent upon the postage rates set by the United States Postal Service and CSG may increase the fees it charges to Customer for postage at any time upon written notice to Customer to account for variations in such rates. For the avoidance of doubt, the amount ** *** ******* ****** ********** ****** shall be as specified in Schedule F and is subject to an annual increase in fees as described above.

A - 2

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

Section 6, entitled EQUIPMENT PURCHASE, is deleted in its entirety and replaced with the following:

EQUIPMENT PURCHASE.

(a)

Customer is fully responsible for obtaining and installing all computer hardware, software, peripherals and necessary communications facilities, including, but not limited to servers, power supply, workstations, printers, concentrators, communications equipment and routers (“ Required Equipment ”) that are necessary at Customer’s place of business in order for Customer to utilize the Services and the Products. Customer shall bear responsibility for the Required Equipment, including, but not limited to, the costs of procuring, installing, operating and maintaining such Required Equipment. At Customer’s request and subject to the terms and conditions of a statement of work, CSG will consult with, assist and advise Customer regarding Customer’s discharge of its responsibilities with respect to the Required Equipment, and Customer may purchase from CSG any Required Equipment on terms and conditions set forth in a separately executed purchase agreement. As of the Effective Date, the parties agree that (i) the Services and Products are functioning in an acceptable manner in relation to the Required Equipment identified in this section, and (ii) CSG is not aware of any necessary changes or modifications to the Required Equipment that it has not already communicated to Customer as provided in Schedule M.

(b)

If necessary for Customer to receive the Products and/or Services, CSG may provide, at Customer’s option and expense, the required data communications line from CSG’s data processing center to each of Customer’s system site locations (the “ System Sites ”), which Customer may amend from time to time, as appropriate. Customer shall pay all fees and charges in connection with the installation and use of any peripheral equipment related to the data communications line in accordance with the fees set forth in Schedule F .

A - 3

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

Section 11, entitled Designated Environment, is deleted in its entirety and replaced with the following:

11.

DESIGNATED ENVIRONMENT . “ Designated Environment ,” means the then-current combination of other computer programs and hardware equipment that CSG specifies for use by all of its customers with the Products and Services as set forth on CSG’s customer extranet website (https://my.csgsupport.com) or succeeding site, which can be accessed by Customer upon request, or otherwise approved by CSG in writing for Customer’s use of the Products and Services at the System Sites. Customer (or any third parties permitted access in accordance with Section 12(d)(ii) below) may use the Products only in the then-current Designated Environment; provided, however, that CSG will provide to Customer no less than ****** **** ****** prior written notice for any changes to the hardware and/or software in the Designated Environment solely related to (a) the operating system, or (b) CSG’s Products or Services that are under CSG’s sole and exclusive control, and to the extent applicable, CSG will provide to Customer prior written notice as soon as reasonably practicable for any other changes to the hardware and/or software in the Designated Environment. With respect to any other hardware and/or software identified in the Designated Environment that is licensed by CSG from a third party, CSG shall continue to include such hardware and/or software in the Designated Environment until such products are no longer supported by such third party. CSG shall promptly notify Customer upon learning that a third party vendor will cease supporting any particular hardware or software. CSG shall give ****** **** ******** **** prior written notice to Customer of changes to the Designated Environment that do not require Customer or its Subscribers to upgrade its computer programs or hardware equipment, and will notify Customer in writing of changes that would necessitate training of Customer’s customer service representatives at least ****** *** **** prior to the implementation of the change. In cases where CSG becomes aware that Customer is not operating its hardware or software in conformance with the Designated Environment, CSG will notify Customer of its knowledge of such nonconformance and support the Products within the non-compliant environment; however, the Parties agree that: (i) any support offered with respect to hardware or software operating outside the Designated Environment will be limited to the extent that the manufacturer or vendor of the hardware or software continues to provide general support for such hardware or software versions; and (ii) although CSG shall use commercially reasonable efforts to provide Support Services, CSG shall not be subject to damages that are directly related to malfunctions of the Products caused by Customer’s use of the Products in such noncompliant environment. Customer further agrees that CSG will not have any responsibility or liability in connection with malfunctions or any damage resulting from any modifications to the Products not authorized by CSG. If Customer questions the necessity of upgrading to any new Designated Environment as requested by CSG, CSG shall meet with Customer to discuss the proposed changes in an effort to reach mutual agreement on the minimal level of changes to Customer’s equipment that are necessary. It is understood and agreed that Customer’s failure to keep its environment in compliance with the Designated Environment (a “ DEG Failure ”) shall not be deemed to be a material breach of this Agreement or the license granted hereunder; provided, however, that to the extent that CSG’s performance under this Agreement is hindered due to such DEG Failure, such reduced level of performance shall not be deemed a material breach of this Agreement. *************** ******** ** **** ******* ** ** ********* ** *** ********* ** *** ********, *** ***** *** **** ******* ** *** ********** *********** ****** *** ******* **** *** ********** ******* ** *** *********** ** ********* *********** ** *** ******** *** ********, ******** ** ***** ***** ******* ** *********, ** ** *** ** ********* ** ******** *** ******** ** ***.

Section 17, entitled NO CONSEQUENTIAL DAMAGES/LIMITATION OF LIABILITY, is deleted in its entirety and replaced with the following:

17.

NO CONSEQUENTIAL DAMAGES/LIMITATION OF LIABILITY. UNDER NO CIRCUMSTANCES WILL EITHER PARTY OR THEIR AFFILIATES BE LIABLE FOR ANY DAMAGES OTHER THAN THE FOLLOWING UNDER A AND B BELOW (COLLECTIVELY “CLAIMS”):

DIRECT DAMAGES, OR

******** ******* ********** **** ** ******* **** *** ** ***’* ************ ********** ** ********’* ******** ***** ** **** ************ ********** *** **** ****** ** ***.

A - 4

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

****** ** *** ***** ** ****** * *****, NEITHER PARTY SHALL BE LIABLE FOR DAMAGES SUCH AS CONSEQUENTIAL, INDIRECT, SPECIAL, PUNITIVE OR INCIDENTAL DAMAGES OR OTHER LOST PROFITS, WHETHER FORESEEABLE OR UNFORESEEABLE, BASED ON THE OTHER PARTY’S CLAIMS OR THOSE OF THEIR AFFILIATES (INCLUDING, BUT NOT LIMITED TO, CLAIMS FOR LOSS OF DATA, GOODWILL, USE OF MONEY OR USE OF THE PRODUCTS, DELIVERABLES, OR SERVICES, THIRD-PARTY SOFTWARE, RESULTING REPORTS, THEIR ACCURACY OR THEIR INTERPRETATION, INTERRUPTION IN USE OR AVAILABILITY OF DATA, STOPPAGE OF OTHER WORK OR IMPAIRMENT OF OTHER ASSETS), ARISING OUT OF BREACH OR FAILURE OF EXPRESS OR IMPLIED WARRANTY, BREACH OF CONTRACT, MISREPRESENTATION, NEGLIGENCE, STRICT LIABILITY IN TORT OR OTHERWISE. *** ********* ********* **** *** *** *** **********, ** *** *** ****, *** ******** *** *** **********, ** *** ***** ****, *** ***** **** ******* ** *** ****** ***** *** ****** *** ****** ******** **** ** ******** ********* ** *** ******** ******* ** ******* ******** **** ******** ****** *** ****** **** * *** **.

DESPITE THE FOREGOING EXCLUSIONS AND LIMITATIONS, THIS SECTION 17, INCLUDING, BUT NOT LIMITED TO, THE CAP, SHALL NOT (I) APPLY TO THE EXTENT THAT APPLICABLE LAW SPECIFICALLY REQUIRES LIABILITY, (II) APPLY TO THE EXTENT THAT THE LIABILITY ARISES OR RESULTS FROM FRAUD OR (III) BE CONSTRUED OR APPLIED SO AS TO LIMIT OR REDUCE:

****** *****’* *********** ** *** ***** *** ********* ** ******** ** *** ***** *********;

****** *****’* ********* ** ********** **** ******* ********* **** ********* ** ******** ******** ****** ** ******** ******; **

*** ***** *************** ***********, *********, *** *** ******* **, *** *************** *********** *** ***** ** ******* ** *********** ** ******* ** *****************.

****** *** ****** ******** ***** ******* ** *********** ** ******* ** *****************, NEITHER PARTY MAY BRING A CLAIM AGAINST THE OTHER MORE THAN ****** **** ****** FOLLOWING THE END OF: (X) THE PROCESSING TERM IF SUCH CLAIM PERTAINS SOLELY TO THE PROCESSING SERVICES OR FEES THEREFOR; OR (Y) THE PRINT AND MAIL TERM IF SUCH CLAIM PERTAINS SOLELY TO THE PRINT AND MAIL SERVICES OR PRINT-AND-MAIL-RELATED PRODUCTS, OR FEES THEREFOR.

Section 18, entitled TERM, is deleted in its entirety and replaced with the following:

18.

TERM.

(a)

Term . This Agreement shall remain in effect until the latest to occur of the expiration or earlier termination of (i) the Print and Mail Term, or (ii) the Processing Term (each as defined below).

(b)

Print and Mail Term . CSG’s obligation to provide, and Customer’s agreement to purchase, the Print and Mail Services described in Exhibit A-3 (the “ Print and Mail Services ”) shall remain in effect until December 31, 2015 (the “ Print and Mail Term ”) unless earlier terminated pursuant to Sections 19 or 24, 28 or 29 of the Agreement. The term for any specific license for any Products related to the Print and Mail Services shall expire or terminate upon the expiration or termination of any period during which CSG is required to provide Termination Assistance (as defined in Section 20 below) with respect to the Print and Mail Services including, but not limited to, any such period that may occur following the Print and Mail Term.

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Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

(c)

Processing Term . Except for the Print and Mail Services, CSG’s obligation to provide, and Customer’s agreement to purchase, the Services and Products described in Schedules A and B (collectively “ Processing Services ”) shall remain in effect until December 31, 2015 (the “ Processing Term ”), unless terminated earlier in accordance with Section 19, 28 or 29 of this Agreement or Section 25 of the Extended Agreement Option Amendment. The term for any specific license for any Products related to the Processing Term shall expire or terminate upon the expiration or termination of any period during which CSG is required to provide Termination Assistance with respect to the Processing Services, including, but not limited to, any such period that may occur following the Processing Term.

10.

All references to the Extended Term shall be deleted, including, but not limited to, the entire parenthetical references thereto in Sections 2(b), 19(j), and in Section III.A under CSG SERVICES in Schedule F.

11.

Section 19, entitled TERMINATION, is deleted in its entirety and replaced with the following:

19.

TERMINATION. This Agreement or any one or more of the Schedules attached hereto may be terminated as follows:

(a)

If either party materially or repeatedly breaches any material term or condition of this Agreement, except for Customer’s obligation to pay fees, and fails either to substantially cure such breach within ****** **** ******** **** after receiving written notice specifying the breach or, for those breaches which cannot reasonably be cured within ****** **** ******** ****, promptly commence curing such breach and thereafter proceed with all due diligence to substantially cure such breach within ***** **** ******** **** after receiving such written notice, then the party not in breach may, by giving written notice to the breaching party, terminate this Agreement, in its entirety or as it pertains to the particular Product or Service with respect to which the material breach occurred, in accordance with Section 19(l) below.

(b)

If Customer fails to pay when due any Undisputed amounts owed hereunder and which in the aggregate exceed *** ******* ******* ***,***,***.*** on or before the date that is ****** **** ******** **** after Customer has received written notice that such payment is past due, then CSG may, by giving written notice thereof to Customer in accordance with Section 19(l), terminate this Agreement or at CSG’s option, CSG may terminate this Agreement in accordance with Section 19(l) below as it pertains to the particular Product or Service for which such Undisputed amounts are due.

(c)

In the event that either party hereto becomes or is declared insolvent or bankrupt, is the subject of any proceedings related to its liquidation, insolvency or for the appointment of a receiver or similar officer for it, makes an assignment for the benefit of all or substantially all of its creditors, or enters into an agreement for the composition, extension or readjustment of all or substantially all of its obligations, then the other party hereto may, by giving written notice thereof to such party, terminate this Agreement in accordance with Section 19(l) below.

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Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

(d)

If Customer materially breaches any material term or condition of Section 12, entitled “License Grant” and fails to cure such breach within ****** **** ******** **** following Customer’s receipt of written notice specifying the breach, then CSG may, at CSG’s option, terminate this Agreement in its entirety or as it pertains to the particular Product or Service for which Customer is in material breach, in accordance with Section 19(l) below. The foregoing sentence shall only apply, however, with respect to intentional or willful acts by Customer.

(e)

Reserved.

(f)

Upon not less than ****** **** ******** ****’ prior written notice to CSG, Customer may, in its sole discretion, terminate this Agreement and the Schedules hereto and any related statements of works and letters of authorization at any time upon the occurrence of a Change in Control (a “ Change of Control Termination ”). “ Change of Control ” means an event in which; (i) the Customer directly or indirectly, sells, disposes of or otherwise transfers all or substantially all of its assets to an unaffiliated purchaser(s) or (ii) a Controlling Interest in Customer is sold, disposed of or otherwise transferred to one or more persons that do not control Customer as of the Effective Date of the Agreement, including, but not limited to, any such sale, disposition or other transfer by way of a merger, consolidation or reorganization or similar transaction, in one or a series of transactions. “ Controlling Interest ” shall mean (i) the ownership, direct or indirect, of more than fifty percent of the voting securities or other ownership interests of a party; or (ii) the possession, direct or indirect, of the power to direct or cause the direction of the management or policies of a party, whether through the ownership of voting securities or other ownership interest, by contract, or otherwise. To compensate CSG for losses arising from a Change of Control Termination prior to the natural expiration of the term of this Agreement, Customer agrees that prior to or upon the effectiveness of any such termination, and in addition to all other amounts then due and owing to CSG for the Services and Products previously provided to Customer hereunder, Customer will pay to CSG, ** * ******** ************** *** *** *** ** * *******, ** ****** ***** ** *** ********** ****, *** ***** *** **** ********, ** **********, ** ******** ** ******** *. The parties understand and agree that this provision constitutes a critical element in the economic bargained for exchange of this Agreement and that CSG would not have entered into this Agreement without the benefits and protections hereunder.

(g)

In addition to the termination rights set forth in this Section 19, either party may terminate this Agreement pursuant to Section 28, and Customer may terminate this Agreement pursuant to Section 29.

(h)

Upon the termination or expiration of this Agreement or any portion thereof for any reason and the expiration or termination of any period during which CSG is required to provide Termination Assistance with respect to such termination, all rights granted to Customer under this Agreement with respect to the terminated Product or Service will cease, and Customer will promptly; (i) remove all the Affected Products from the Designated Environment and all of Customer’s other computer systems, storage media and other files; (ii) at Customer’s option either destroy or return to CSG the Affected Products and all copies thereof; (iii) deliver to CSG an affidavit which certifies that Customer has complied with these termination obligations; and (iv) pay to CSG all Undisputed fees that are due pursuant to the terminated portion of this Agreement, including, but not limited to, the fees otherwise due and payable by Customer (including the Guaranteed Fees and Print and Mail Minimums, each as applicable), as set forth in Schedule F . For purposes of this subsection, “ Affected Products ” shall mean those Products which as a result of termination of Products or Services as provided in this Section 19, Customer is no longer provided a license. During any period during which CSG is required to provide Termination Assistance, the parties agree that each shall continue to perform their respective obligations under this Agreement.

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Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.


		(i)		(i)		Upon termination of the Processing Term as provided in this section, neither party shall have any further obligations under this Agreement, except for Section 2, Section 25, Section 31, Section 35, Section 14, Customer’s obligations under Section 19(h) and CSG’s obligations under Section 19(j), Processing Termination Assistance as provided in Section 20, Customer’s audit rights provided in Section 26, CSG’s inspection rights provided in Section 27, and either party’s obligations set forth in Sections 13 and 21 of this Agreement and any obligations that continue with respect to the Print and Mail Term and Print and Mail Services or pursuant to the operation of Section 22. Each party agrees to execute a mutually acceptable release with respect to claims arising in connection with the Processing Services in substantially the form attached hereto as Schedule K on the one (1) year anniversary of the effective date of termination or expiration of the Processing Term.

(ii)

Upon termination of the Print and Mail Term as provided in this section, neither party shall have any further obligations under this Agreement, except for Section 2, Section 25, Section 31, Section 35, Section 14, Customer’s obligations under Section 19(h) and CSG’s obligations under Section 19(j), Print and Mail Termination Assistance as provided in Section 20, Customer’s audit rights provided in Section 26, CSG’s inspection rights provided in Section 27, and either party’s obligations set forth in Sections 13 and 21 of this Agreement and any obligations that continue with respect to the Processing Term and Processing Services or pursuant to the operation of Section 22. Each party agrees to execute a mutually acceptable release with respect to claims arising in connection with the Print and Mail Services in substantially the form attached hereto as Schedule K on the one (1) year anniversary of the effective date of termination or expiration of the Print and Mail Term.

(j)

Except as necessary to provide or receive the Processing Termination Assistance as defined in Section 20(a) as amended pursuant to the Extended Agreement Option Amendment and as otherwise required by applicable law, upon the expiration or earlier termination of the Processing Term, the receiving party shall destroy all of the Confidential Information of the disclosing party pertaining to the provision of Processing Services. Notwithstanding the foregoing sentence, it is understood and acknowledged that if for any reason the Print and Mail Term extends beyond the termination of the Processing Term, the disclosing party will continue to provide certain Confidential Information to the receiving party. During any portion of the Print and Mail Term during which the Processing Term has expired or been terminated, the receiving party shall be permitted to retain so much, but only so much, of the disclosing party’s Confidential Information as is reasonably required to provide or receive the Print and Mail Services and Print and Mail Termination Assistance as defined in Section 20; and the receiving party shall destroy all other such Confidential Information. Promptly following the termination or expiration of both the Processing and Print and Mail Terms and the expiration or termination of any period during which CSG is required to provide Termination Assistance with respect to such termination, the receiving party shall destroy all of the Confidential Information of the disclosing party. Any time during the Processing Term or the Print and Mail Term, and upon the expiration or earlier termination of each such term, each receiving party shall provide, promptly upon the reasonable request of the disclosing party, a certification, executed by the receiving party’s Chief Operations Officer, of any destruction of Confidential Information required under this Agreement.

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Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

(k)

If CSG terminates substantially all Processing Services as provided in this subsection (a), (b), (c) or (d), and Customer is Fully De-converted, Customer shall pay CSG the Guaranteed Fees; provided however if (i) CSG terminates Processing Services other than as a result of Customer’s breach of its obligations pursuant to these Sections 19(a), (b), (c) or (d), or (ii) Customer terminates Processing Services pursuant to Section 19(a) or Customer’s termination rights set forth in Sections 28 or 29 of this Agreement, then Customer shall not be required to pay the Guaranteed Fees (as defined in Schedule F ). If CSG terminates all Print and Mail Services as provided in this subsection (a), (b), (c) or (d) Customer shall pay CSG the Print and Mail Minimums; provided, however, that if (A) CSG terminates Print and Mail Services other than as a result of Customer’s breach of its obligations pursuant to these Sections 19(a), (b), (c) or (d), or (B) Customer terminates Print and Mail Services pursuant to Section 19(a), or Customer’s termination rights set forth in Sections 24, 28 or 29 of this Agreement, then Customer shall not be required to pay the Print and Mail Minimums (as defined in Schedule F ). The parties further agree that without the certainty, consideration and terms provided in this Section 19, neither party would have been willing to enter into this Agreement nor would CSG have been willing to provide the Products and Services at the fees set forth in the Agreement or Schedule F .

(l)

If a party is permitted pursuant to this Section 19 to terminate this Agreement in whole or in part, then, except as expressly set forth above in this Section 19, the terminating party shall provide written notice of such termination to the other party and such termination shall become effective as of the date set forth in such notice (the “ Termination Date ”); provided , however , in the event of a termination by CSG pursuant to subsections (a) through (d) that would effect a termination of the Processing Services or Print and Mail Services, then such Termination Date shall be a date no earlier than the date that is *** ******* ****** ***** ******** **** following the date of such notice and the following conditions shall apply:

(i)

If CSG delivers a termination notice pursuant to 19(a) or 19(d), Customer shall be required to cure the breach that is the subject of the termination in advance of provision of Termination Assistance;

(ii)

If CSG delivers a termination notice pursuant to Section 19(b), then Customer shall be required to promptly pay any and all Undisputed fees and expenses due and payable hereunder; and

(iii)

During such *** ******* ****** ***** ******** **** period, CSG shall not be required to provide warranties or remedies under Section 7 entitled “Products, Warranties and Remedies”.

(m)

If either party delivers a notice to the other party that is notice of a circumstance or fact that could, if not resolved, result in termination of all or a portion of this Agreement, then such notice shall expressly state that the notified party’s failure to correct such circumstance or fact could result in such termination. If such notice does not expressly discuss termination, then the notifying party shall be required to provide further notice that does expressly discuss such termination and the notified party shall have no less than the applicable cure period specified for such circumstance or fact from its receipt of such notice to cure such circumstance or fact before any such termination can become effective. Notwithstanding any provision in this Agreement to the contrary, in the event that following any such notice a party intends to terminate all or a portion of this Agreement, such party shall provide further notice of such intent to the other party, which notice shall state the basis of termination in reasonable detail, and if such basis is susceptible to cure, then the other party shall have not less than *** **** ******** **** to address and cure the circumstance or fact that forms the basis of such termination, and if (i) such party cures such circumstances or fact within such ** *** period, or (ii) such circumstance or fact cannot be cured within such **-*** period and such party commences a cure therefore within such **-*** period and thereafter diligently pursues such cure, then the notifying party shall not terminate this Agreement pursuant to such notice. A party exercising its termination rights as provided in this Agreement cannot claim termination was not affected solely as a result of the terminating party not providing the foregoing *** **** ******** *** notice. Further, in the event a terminating party does not provide the foregoing *** **** ******** *** notice to cure, if it has provided all other termination notices applicable under this Agreement, it may subsequently provide a *** **** ******** *** notice of termination in accordance with this section.

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Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

12.

Section 20 entitled TERMINATION ASSISTANCE is deleted in its entirety and replaced with the following:

20.

TERMINATION ASSISTANCE. The term “ Termination Assistance ” shall mean reasonable termination assistance relating to the transition to another vendor or system as further described in Schedule E .

(a)

Processing Termination Assistance . Upon expiration or earlier termination of the Processing Term by either party for any reason or prior to any such termination or expiration as requested by Customer, and provided that Customer has paid CSG any and all Undisputed fees and expenses due hereunder, CSG will provide Customer reasonable Termination Assistance in connection with the Processing Services (“ Processing Termination Assistance ”) for up to *** ******* ****** ***** ******** ****. Processing Termination Assistance shall be limited to the services specifically described in Schedule E under the section entitled “ Processing Termination Assistance ”. The parties agree that unless extended pursuant to an amendment to this Agreement, CSG shall cease all Processing Termination Assistance when Customer is Fully De-converted. For purposes of this Section 20, Fully De-converted shall have the same meaning as provided in Schedule F , section entitled Guaranteed Fees.

(b)

Print and Mail Termination Assistance . Upon expiration or earlier termination of the Print and Mail Term by either party for any reason or prior to any such termination or expiration as requested by Customer, CSG will provide Customer reasonable Termination Assistance in connection with the Print and Mail Services (“ Print and Mail Termination Assistance ”) for up to *** ******* ****** ***** ******** ****, provided that Customer has paid CSG any and all Undisputed fees and expenses due hereunder. Print and Mail Termination Assistance shall include such services as may be reasonably required to accomplish a transition to another vendor, which shall include the services described in Schedule E under the section entitled “Print and Mail Termination Assistance”.

13.

The first sentence of Section 23, entitled Escalation, is deleted in its entirety and replaced with the following:

If (a) if either party believes that the other party is not assigning an adequate number of properly trained and qualified personnel to fulfill its responsibilities under the Agreement, or (b) a disagreement regarding a disputed payment or a Custom Roadmap Change (as defined in the Amendment) is not resolved within ****** **** ******** **** of CSG’s receipt of written notice of the disputed amount, then the parties agree that upon **** *** ******** **** notice the parties shall escalate the matter within their respective organizations to be heard on the matter and reach a resolution.

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Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

14.

Section 24, entitled NATURE OF RELATIONSHIP is deleted in its entirety and replaced with the following:

24.

EXCLUSIVITY.

(a)

****** *** **** ** **** *********, *** ******* ***** ****, ****** ** ********* ******** ** **** *********, *** ***** ** ********’* **** *** ********* ******** ** *** ********** ******** *** *** ***** *** **** ******** *************, *** * ********* ******** ** *** *** ****** ** ****** *********** *** ***** *** ********* ******** ********* ******** ** ** *** ******** ****** ****. ** ****** *** **** ** **** ********* ** *** ********* *******, *** ****** ********* ********* ***** *********** ********* ***** ******** ** *** ****** ****** ***** *** ***** ******** ** ********** ***** *** ***** ** ********’* ********** ****, ***** **** ********* *********** *** ******* ******, **** *********** ***** **** ***** ********* ******** ******** ** *** ******** ** *** ***** ** **** *********. ** ******** *****, ******* ** ********* ********* ****** *********** ** * ***** ***** **** ** *** ** ********* ** ********, *** ******* ***** **** *** ***** ** *** **** *** ********* ******** ** ********* ******** *** **** *********** ****** ***********. * ********* *********** * ***** ** ******* ** ***** *********** ********* ** ******** **** * ***** ***** **** ** *** ** ********* ** ******** *** ***** ******** *********** ********** *** ******* ******* ******** ***/** ***** *** **** ******** *** ***** ******** ** * ***** ***** **** ** *** ** ********* ** ******** ** *** **** ** **** ***********. ****** ******** *** ********* ******** *** ********* ***********, **** ***** ** ********** ****** *********** ******* ** *** ***** ** **** *********. *** *** ********* ** *****, *** *********** ********** ** **** ********* ***** *** ***** **** ******* ** ********’* ****-**** *********** *** ******* ****** *** ******** ***** *** ** ******** ** *** *** ********* ********, ** *** ***** *** ******** ** ********** **** *** **** ***********. * ****-**** *********** * ***** ** ******* ** ***** *********** ********* ***** ** ******** ****** ******** ** ****, ****** ******* ********-***** *************, *** *** ******* ** ** *********** **** ****-***-*** ********* ********* *************.

(b)

** *** ***** ** * ****** ** **** *******, ******** ****** ** ***, ** ******** ** *** ***** ******* **** *** *** ***** ** ***, ** ****** ***** ** *** ********** ******* **** *** ***** **** **** ******** ** ******* ***** **** ********* *** ******** *** ******** ** ******** **** *******, *** ******** ***** *** *** ************ ********** ******* ** **** **** ********* ** ****** ** **** ** ** ***********. ** ********, ******** ****** ** ****** *** ****** * ************ ********** **** ** ********’* ********* **** ** ** *** ** ********** **** *** ***** ** **** ******* **. *********** ** **** *********. **** ****** ***** ******* *** ****** ** ********** *********** *** *** **** **** **** **** ******** ** ********. *******, *** ******* ***** **** *** ***** *** ********* **** ********* *** * ****** ** **** *******, ****** ******** *** *** **** ******* ** ********** **** ******* *. *** *******; ****** ** **** ********* ****** * ************ ********** ****** ** ****.

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Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

(c)

*************** ******** ** *** ******** ** ********** ***, ** ******* **** ******** **, **** *** ** **** ***** **** **** ***** *** ***** **********, *** *** ******** ***** **** ** ********’* **** *** ******** **********, ******** *** *******, **** ****** **** ******** ****’ ******* ******, **** *** *** ******** *** ********** ******* ** **-********* ** **** *****, *** ****, ******** *** ******* *************, ** **********, *** ***** ** ******** * *** ***** *** **** ********; ********, *******, **** *** ********, ** **** *****, ******** *** **** * ******* *** **** ** ***** *** *** ***** ***** *** **** ******** ******* * ******* ** * *** ******* ***** ********* ** **** ** ********** ******** ************* ******** ** *** ******* *** ************* ******** ** *** ***** **** ********* ***** ** * *****; **** **** ******* *** ** ***** ** ******* ******** ***** *** ********** **** ******* ** *** ********* ******* **** * ******** ***** **: *** ***** *** ********** ********* *** ***** *** **** ********, *** ****** ** **********/********** *****, *** ******* ***** **********, *** **** ** *********, *** ******* ********** ******* *** **** ******** *** ********, *** **** ***** ********** **** **** ** ******** ** ********* ***’* ********** ** *** **** ** **** ********* ****, *** ***** *******, *** *** ********* *******; *** ***** *** ******* ******** *****, ***** ********* ***** *** ** ************ ********, *********** ** *******, **** **** *** ******** **** *** ************ *** ***** ** **** ********* ** *** ** **** **** ** ******** ***** ** ******** ** ** * * ********* *** **. ** *** ***** *** ******* ****** ***** ******* *** ******* *** ** * ********* ***, *** ******* ***** **** **** ***** ******** ********* ** ********** **** *** ********** ** ******* ***** ** **** ********* ** ********* ** *** ******* *** ****** ** ****** * ********* ***. ******** ***** **** *** ******* *** **** ******* ** *** ****** *** ******** ** *** *********** ******** ******, *************** **** *********, *** ******* ****** ***** ** ** ******* *** *** ** ******** ** * ********** ***. ** **** ** *****, *** *********** ***** ** ********** ** ********* *******, ** *** ** ***** ********, **** *** ** * ********** ***. *** ***** ******* **** **** ******** ** ******** ** *** *********** ***** **** *** ******* *** **** ******* ** *** ****** *** ******** ** *** *********** ********. **** ***** ***** **** *** *** ***** *** ******** ** ************* ** *** **** *********, *********, *** *** ******* **, *** ******* ** *** ********’* ****, ** ***.

(d)

****** ******* **** ******** **** ** ***’* ******* ** * ********* *** **** ********, *** ***** ****** ******** ******* *** ******* ** ****** * ******** **** ** ********** ** *** ********* *** **** ******* ** *** ******** *****. ** *** ***** *** **** *** ******* **** ****** ** ******** ****** **** ******** ****, ******** ***** **** *** ***** ** ********* ***’* ****** ** ** ********* ******** ** ***** *** **** ******** **** *** *** ******’ ******* ******* ******. ** *** ******** ******** ****** ******* **** ******** **** ** *** ****** ** ****** ** ***** **** ** ********** ** *** ********* *** **** ******* ** *** ******** *****, **** *** ***** **** ** ********** *** **** ******** **** ** ****** **** ********** ***** ** ********, ***** ***** **** ******* ***** ********* ** **** ***** ** ***** *** ***** ** **** ********* ** **** ******* ** ***** *** **** ********. **, ********* **** ************, *** ******** ** **** ** ***** **** ***** ******* ******** **** *** ******* ** *** ******** ***** ** *** ***** ** *** ********* ***, ** ** *** ******* *** ********* ************ ** ******** **** ** ********* ** **** ********* **** ***** ******* ******** **** *** ******* ** *** ******** ***** ** *** ***** ** *** ********* ***, **** ******** ***** **** *** *****, **** *** *** ******’ ***** ******* ******, ** ********* ***’* ****** ** *** ********* ******** ** ***** *** **** ******** ***** **** *********. **, ******** ** *** ********* ********, ******** ******* ** ********* ***** *** **** ******** ***** **** *********, **** *** ***** ******* *********** ********** ** ******** ** ******* ** **** ******* ** *** ******* ** *********** **** ******** ****** ** **** ** ******* ******’* ******** *** ***** *** **** ********. *******, ** *** ** ** ****** *** ********* ******** ** ***** *** **** ******** ** * ****** ** *** ***** ******** ** **** ******* ** ******** *************, *** *********** *** ******* ** ***** *** **** ******** ** ******** ***** ** **** *** ****, ****** *** ***** *** ** *********** ** *** ********* ******** ** ***** *** **** ******** ******** ** ******* *****.

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Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

(e)

** *** *** ******** ***** *** ***** ** **** ********* ** ******* ******** **** *** ******* ** *** ******** ***** ** *** ***** ** *** ********* *** ** ******** *** ** ********** ***, ******** ****** ** ****** ***’* ********* ** ***** *** **** ******** ** ******** *** *** *** ********** **** ******** ** **** ******* *****, *** ***** ******* ** *** ** *** ********** ** **** *******; ********, *******, **** **** ********* ***** *** ***** ** *** ********** ********.

(f)

** ******** ****** **** * ********** ********* **** * ***** ***** ******** ** * ********* ***, **** ******** ****** **** ** ********* ******* ** ******** ***** ******* ** *** * ******* *************, ****** ****** **** ******** **** ** ********’* ******* ** ***’* ******* ********, **** *** ***** ********* **** ******** ** ********** ** *** ********* *** **** ******* ** *** ******** *****. ** *** ******** ** ****** ** ******* **** ************* *** *** ****** *****-**** **** ******** **** ***** *** *** ** **** **-*** ****** *** ******** ******** **** *** ****** ** *** ****** ** ** ********** ** ********’* ********* ******** ** ***** *** **** ********, *** **** *** **** ** ***** *** ***** ** **** ** ****** *** ********* ** ********* ***** *** **** ******** **** * ***** **** **, ***** ***** **** ***** ** ** ***** **** ****** **** ******** **** ********* *** **** ** **** ******, **** ******** ***** ********* ***’* ****** ** *** ********* ******** ** ***** *** **** ******** *** ***** ******* *** ***** *** **** ******** ** **** ** ************ **********, *** ** *** ***** ** ******* **** *** ***** **** *** ** ***** **** ***** *** ****** ***** *** ***** ****. **** ******** ********* ** *** *** ** *** ********* ******** ** ***** *** **** ******** ******** ** *** **** *************, *** ***** ** **** ********* ** ** ****** ***** ** **** *********** ** *********** **** ******; ********, *******, **** **** ******* ** *** **** ****** ***** *** *** *** ********’* ********* ******** ** ***** *** **** ******** ******** ** ******* *****, ******** ***** *** ** ********* ** *** *** **** ** ******* ** *** **** **** ******* ** ***** *** **** ********, ********* *** *** ******* **, *** ***** *** **** ******** ** ****** ***** *** **** ******* ******, ***** **** **** *** ******* **** *** ***** ** ********** **** ******** * *** ***** *** **** ******** ******** ******** ** *** ** ********.

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Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

15.

Section 26, entitled AUDIT.

(a)

The first sentence is deleted in its entirety and replaced with the following:

No more than once in any ****** **** ***** period during the term of this Agreement and for ****** **** ****** after its termination for any reason or expiration and upon not less than ****** **** ******** **** prior written notice to CSG, and during normal business hours, Customer may conduct an audit of CSG’s records regarding Reimbursable Expenses and all other payments made by Customer to CSG to verify that Customer has paid the correct amounts during the preceding ******** **** ***** ******.

(b)

The last sentence is deleted in its entirety and replaced with the following:

It is understood and agreed that amounts payable pursuant to this Section 26 shall not be included under the Cap.

16.

Section 27 entitled INSPECTION, the first sentence is deleted in its entirety and replaced with the following:

(a)

No more than once in any ****** **** ***** ****** during the term of this Agreement and for ****** **** ****** after its termination or expiration for any reason, CSG or its representative (who shall execute a confidentiality agreement with Customer, in form reasonably acceptable to Customer) may, upon not less than ****** **** ******** **** prior written notice to Customer, and during normal business hours, inspect the files, computer processors, equipment and facilities of Customer that are relevant to this Agreement during Customer’s normal business hours for the sole purpose of verifying Customer’s compliance with this Agreement.

(b)

The following shall be added:

It is understood and agreed that amounts payable pursuant to this Section 27 shall not be included under the Cap.

17.

Section 31, entitled APPLICABLE LAW, INJUNCTIVE RELIEF, MEDIATION, subsection (b) is deleted in its entirety and replaced with the following:

(b)

Injunctive Relief . In the event Customer applies for and receives injunctive relief obligating CSG to continue providing any Products, Services, or Deliverables beyond the termination of this Agreement, Customer shall **** * **** *** ** ****** ***** ** *** *** ******* ******* ******* ******** ** ******** ***** **** ********* *** *** *** **** ****** *** *** ***** ******, **, ** *** **** **** **** **** ** ****** ** **** **** ****** **** ****** ***** *** ******** ****** **** *** ******* ** ******** **, **** *** *** **** ****** ******-***** ******, ********** ** **** *** ****** ** ****** ******** ******** *** ******** ** ******* ********, ******** ** ************ beyond termination.

18.

Section 31, entitled APPLICABLE LAW, INJUNCTIVE RELIEF, MEDIATION, the first sentence of subsection (c) is deleted in its entirety and replaced with the following:

(c)

Any disputes arising under Sections 2(b) or 24(c) of this Agreement that is not resolved by the escalation procedures set forth in Section 23, the parties agree that they will then attempt to resolve such dispute by submitting such dispute to neutral, non-binding mediation.

A - 14

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

19.

Exhibit A-1, Section 7, entitled ANNUAL SUPPORT HOURS (“ASH”), subsection (a) shall be deleted in its entirety and replaced with the following:

(a)

During the Processing Term, CSG shall make available to Customer five thousand (5,000) ASH hours per month as part of the Monthly Active Subscriber Charge. Any unused ASH will be lost and Customer shall not be entitled to a refund of fees or credit in hours for any subsequent month.

20.

Customer desires to use and CSG hereby grants to Customer a perpetual (except as limited by Section 18 of the Agreement) non-exclusive, royalty-free license to use CSG Workforce Management ^® with access for up to ****** ******** ***,**** ********** technicians along with a ratio of *** *** Workforce Management license to **** *** CSG TechNet ^® licenses in accordance with the Agreement, subject to the parties executing a mutually agreed upon Statement of Work. For clarification purposes, Customer is only licensed to use, on a concurrent basis, up to the number of Customer dispatchers and Customer technicians per licensed in the Agreement on a monthly basis. Based upon the number of concurrent user licenses referenced above and in accordance with the applicable concurrent user license fees provided in this Amendment, CSG would invoice Customer in the amount of ****,***.** ******* in advance. Pursuant to the foregoing the parties agree to amend the Agreement as provided herein.

Accordingly:

(a)

Exhibit B-1, CSG PRODUCTS AND WORKSTATIONS, is amended by adding the following Products, which shall, upon implementation under a mutually agreed upon statement of work, be included in the license granted to Customer under Section 12 of the Agreement:

CSG Expanded License Software

CSG Workforce Management®

CSG TechNet®


		CSG Products		Quantity
		CSG Workforce Management®		,** dispatchers
		CSG TechNet®		,* technicians (concurrent use)

(b)

Exhibit B-1(a), CSG PRODUCT DESCRIPTION, is amended by adding the following:

CSG Workforce Management®: CSG Workforce Management® is a client-server application for routing and dispatching activities that receives and updates work orders from CSG’s CCS billing systems and assigns work orders to technicians based on each technician’s skills, location and availability.

CSG TechNet®: CSG TechNet integrates with CSG Workforce Management to allow field technicians to receive and manage work orders on a wireless device without dispatcher assistance.

A - 15

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

(c)

Schedule F , Section I under CSG LICENSED PRODUCTS, is amended by adding the following Section C, CSG Workforce Management and CSG TechNet, as follows:

CSG Workforce Management and CSG TechNet


Description of Item/Unit of Measure	Frequency	Fee

1. Workforce Management (Note 1) (Note 2)	*******	**,.*

2. Incremental Workforce Management and/or TechNet Licenses
A. Workforce Management
1) ******* **** *** **********	* *****	*,.*
2) ****** ******* **********	********	,.*
3) ******** ****** **** *********	*******	*.
B. ******* * ***** ******
1)******* *** *** *********	* *****	**.
2)**** ******* *********	********	**.
3. * *** ***** ********
1) ******* **** *** ******** **** **** ***** ******	* *****	,.*
2) ****** ******* ******** **** **** ***** ******	********	**.
3) ******** ****** **** **********	********	**.
4) ********** ******** **** ,***	* *****	**.
4. Installation (per server) (Note 4)	* *****	*****

**** *: *** ********* ********** ****** *** ** ********* ***** ***** ******* ****** *** ** ** ****** ******** ***,**** ********** *********** ***** **** * ***** ** *** *** ********* ********** ******* ** **** *** ******* ********. ******* * ***** ***** ********* ********** ***/** ******* ******* *** *********** ** ****** ** *** ******** ***** ******* *** ****** ***** **,**** ********* ********** ******** *** ****** ******** ***,**** ******* ********. *** ************* ********, *** ********* ********** ****** *** **** *** ******* *** ******* ********* ********** ********, ** *** ******* ** ********; *** *** ******* *** ******* ********* ********** ******** ** ***’* **** ******* *****.

**** *: ** ** ****** *****, *** **** **** ******* ** ***, ******** **** ****** ** *** *** ****** ** ********* ********** ******* *** ******* ******** ** ** *****.

**** *: *** ************ ******** *** ********* ********** *** *** ********** **** ***** ** *** ***** ** * ******** ****** **** ********* ** ****. ************ ******** *** **********. *** ****** ** ***** *** ************ *** *** *** ***** *** *** ******** ************* ** *** ********* **********®, ******** **** *** ****** ** **** ****** *** **** ******** ************ ***** *** ****** **** ******* ****** ******** ******* *****,***.*** *** ********** ** *** *** ******** ************* ***** ** ****** ****** ***** ****** ********* **** *** ************ **** ********** ** *** ********** *** *** *** ******** ************, *** ** ***** **** ** ********* ****** **** ******.

21.

Upon completion of migration of Active Subscribers to ACP, the following amendments to the Agreement shall become effective:

(a)

Schedule A, under Additional Services, CSG Smartlink®, shall be deleted and replaced with CSG Smartlink BOS®.

A - 16

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

(b)

Schedule A-5, entitled Additional Services, the first paragraph providing the description for CSG Smartlink® shall be deleted in its entirety and replaced with the following:

CSG SmartLink® BOS. CSG SmartLink BOS is an upstream XML interface that enables Customer to integrate its applications to ACP. The interface utilizes business logic technology to route transactions, make business decisions based on input and response data, and helps to expedite requests and responses. Message based XML is used for communicating upstream from Customer’s application to ACP. The data communications method for the CSG SmartLink BOS interface is TCP/IP. Customer can use either CSG’s External Integration Protocol (EIP) or HTTP to organize request and reply records on the TCP/IP data stream. CSG provides Customer with the CSG SmartLink BOS Interface Developers Guide and the XML schemas for the business functions supported by the interface. XML requests sent by Customer must use the schemas as supplied by CSG and validate successfully against those schemas.

(c)

Upon commencement of Customer’s migration to ACP, CSG shall provide to Customer SmartLink® BOS capacity of up to ***** ******* ***** ************ *** ****** (“Base Transaction Volume”) at no additional cost to Customer as a replacement for current Cycle E SmartLink volumes. However, if Customer exceeds or is projected to exceed an amount greater than ****** ******* ***** of the Transaction Volume whichever is greater (“Excess Transaction Volume”) in a ****** **** *** ******, then CSG shall use reasonable efforts to provide Customer with prior written notice, which may be provided via e-mail, stating the amount of the Excess Transaction Volume and any estimated costs to be incurred to support such Excess Transaction Volume. Upon provision of the foregoing notice, CSG and Customer shall execute a Statement of Work and necessary amendments which shall include, but not be limited to, commercially reasonable amounts for hardware, software, related maintenance, and resources necessary for operating, maintaining, developing, supporting and testing the environment and the amount of additional SmartLink® BOS capacity, presented as transactions per second, Customer is purchasing. Transaction Volume shall mean the Base Transaction Volume plus any additional transactions per second provided pursuant to any subsequently executed Statements of Work.

Customer agrees to notify CSG by the ***** ***** ******** *** of each calendar month in writing of its estimated Transaction Volume whichever is greater for the subsequent ****** **** ******** **** in order for CSG to support any material increase in Transaction Volume. Customer acknowledges that failure to provide a reasonable estimate of Transaction Volume or purchase additional SmartLink® BOS capacity could have an impact on the response time of the system.

22.

On the ***** *** of the calendar month following the Extended Option Date, the following amendments to Schedule F shall become effective:

(a)

All occurrences of the term ******** ********** **** that occur in Schedule A , including all Exhibits thereto, and Schedule F shall be deleted and replaced with the term ******** ****** ********** ******.*

A - 17

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

(b)

Schedule F , CSG SERVICES, Section I.B entitled ********** ****, is deleted in its entirety and replaced with the following:

********** ****

*** ******** ** **** *********, * ***** **-********* * ***** **** ******** ** *** ********* ***** ***’* ******** *** ******** ** ***** *******-******* ******** *** ****** *********** *** ** ******** ******** *** **** **** ***’* ******. *** ******** ** *************, ***** **-********* ***** ******* *** *** **** *** ** *** ******** ***** ****-**** **-**** ******, *** ***** ******** **** ** ******* ********** ***** ******* *.*.*.* ***** *** ******** , *** **** *** **** *** ** ********** **** *** ********** ** ******** ***** **** ******** ** * ********* ****** ***** **** *** ***** ** *** ****** *** *** ********* ** ***** *** **** ********.

****** *** ********** ****, **** ***** ******** ***** ** *********** *** ****** *** *** ******* ****** ********** ****** *** ******** *** ******** ******** ****** **** ***** *** ***** ** **** ******** * **** * ******* ****** ********** ****** **. *** ******* **** ******** ****** **** *** ******* ****** ********** ****** ** ** ******** ********* ***** **** ******* ******* ******* ** ********** ********, *** *** ********** ****.

******** ************ *** ****** **** *** **** ******** ** **** ******* *.*. ******** ********** ****, **** * ********** **** ** *** ***** **** * ********** ********** ** *** ****** ******* **** *** ***** ****** ** *** **** ** **** ** ******* *** ****** ** ******** ************ ** **** *********. ******** ************ *** ****** ****, ******* *** ********* ** ******* ******** ** *** *********** *** ***** ** **** ********* *** ******** *-* *** *-* ** **********, *** ***** **** **** ********* ** ******* *** ******** *** ******** ** *** **** *** ***** ** *** *********, *********, *** *** ******* **, **** ******** *. ***** **** *** *********, ******** ****** ****, ****** ** ********* ******** ** *** *********, **** ******** ***** ***** **-*********, *** ** ******** ** *** ***** ********** ******* **** *** *** ***** ** ***, ******** **** *** ** ***, ** * ******** ************** *** *** *** ** * *******, *** *********: *** *** ****, ******* **** ******** ***** *** ******* ******* ****** ** *** ******* ****** ********** ****** *** ******** *** ******** **** ***** **** ******* ******* *** *** ** ****; *** *** **** *** **** ******** *****’ *******-**** ******* ***** ** *** ******* ****** ********** ****** **** ***** **** ******* **** **** ** *** *** ** ****; *** *** ******** **** **** *** *** ********* ********** ****, ***** ******* ***** ** *** ******* ****** ********** ****** **** ***** **** ******* ******* *** ********* ** *** ********** **** ** ****** ***** *** **** ** *********** ** ******. *** ******** ** *********** *** ********** ****, ** *** ***** ******** *** **** **** ****** ******* ***,***,**** ****** ***********, ******** ****** **** *** ****** ** ****** *********** ***** *** ** **** **** ****** ******* ***,***,****. *********, ** *** ***** ** *********** ** *** ********** ******** ** *** ***** ******** ***** ******* *** ** ** ******** ***** ******* *****, ******** ***** *** ** *** ** * ************** *** *** *** ** * *******, *** ********** ****. *** *** ********* ** *****, ********** **** ***** ** ********** ** ** *** **** ** *********** ******* *** ********* ********** ****.

A - 18

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

(c)

Schedule F , CSG SERVICES, Section I.A. entitled ******* ********** *** *** ***-***** ***** *** ***-***** ****-***** **** ******** ***** ******** ** ** *** ******* ********** **** shall be deleted in its entirety and replaced with the following:

******* ****** ********** ****** *** ***-***** ***** *** ***-***** ****-***** **** ******** **** ****** ***********


Description of Item/Unit of Measure	Frequency	2010 Fees	2011 Fees
***** ** *********
• ,, ,, ** *********	*******	.**	* .***
• ,, ,, ** *********	*******	.**	* .***
• ,, ,, ** *********	*******	.**	* .***
• ,, ,, ** *********	*******	.**	* .***
• ,, ,, ** *********	*******	.**	* .***
• ,, ,, ** *********	*******	.**	* .***
• ,, ,, ** *********	*******	.**	* .***

**** *: *** ******* ****** ********** ****** *****, ** *** ***** ** *** ***** *****, *** ******** ** ** ********** *** *** ***********. *** *******, ** ******** *** **,***,*** ****** *********** ** *** ******* ******* ***** *** ******** **** ****, *** ******* ****** ********** ****** ** *** **,***,*** ****** *********** ***** ** **.**** *** ****** **********.

**** *: *** ******* ****** ********** ****** ***** ** ********** *** * ***** ** ****** ******* ***,***,**** ** ******** ******* ***,***,**** ******* ****** ***********. ****** ********’* ******* ****** ********** ***** **** ***** ****** ******* ***,***,**** ******* ****** *********** *** * ****** ** ***** *** *********** ******* ****** ** *** **** ****** *** ********** ****, ******** ****** ** ******** ** *** *** *** ******* ****** ********** ****** ** ****** ***** **** ****** ******* ***,***,**** ******* ****** *********** ******* *** *** ** *** ********** ****. ** *** *****, ***** *** ***** **** ****** ******* ***,***,**** ******* ****** *********** ********* ***** ******** ***** *** ***** ******** ***** ** ********** ***** *** ** * **** ** * ******* ** **** *********** ** * ***** ***** **** ** *** ** ********* ** ******** ****** **** *** ********** * ****** ** ******* ** ******* ** ******* ***, ********* ** ******* ****** *********** ** *** ****** ****** ** ******** ** ****** *** ****** ** ****** *********** ********* ***** ******** ***** *** ***** ******** ** ********** ***** ****** ******** ******* ***,***,**** *** * ****** ** ***** *** *********** ******* ****** *** ******* ******* *** ***** ** **-********* *** ******* ****** ********** ****** *** ******** *** ********, *** ** *** ***** ****** ******** **** ***** ****** ******* ***,***,**** ******* ****** *********** ******** ***** ******** ** *** *** *** ******* ****** ********** ****** ** ****** ***** **** ****** ******* ***,***,**** ******* ****** *********** ***** *** ******* ******* ** ********* **** *** ****.

A - 19

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

**** *: ******* *- ******** ** **** ** *** ********* ***** ***** ** *** ******* ****** ********** ******.

(d)

Note 3 in Schedule F , Section I.C under CSG SERVICES, shall be deleted in its entirety and replaced with the following:

*** ***** **** ********* ** ******** **** ******** **,**** ******* *** ***** ******** ** *** ***** *** ***** ** ******* * ** ******* *-* ** **** **********.

(e)

Upon commencement of migration of Active Subscribers to ACP, the following Section shall be added as II.D, entitled CSG SmartLink BOS to Schedule F:

**. *. *** ********* ***

** *** ***** ********’* ************ *** ****** ****** ****** ******* ***** ** *** *********** ******, **** *** ***** *** ********** ******* ** ******* ******** **** ***** ******* ******, ***** *** ** ******** *** *-****, ******* *** ****** ** *** ****** *********** ****** *** *** ********* ***** ** ** ******** ** ******* **** ****** *********** ****** **** *** *** ******** ***** ******* * ********* ** **** *** ***** ***** *******, *** *** ** ******* **, ************ ********** ******* *** ********, ********, ******* ***********, *** ********* ********* *** *********, ***********, **********, ********** *** ******* *** *********** *** *** ****** ** ********** *********® *** ********, ********* ** ************ *** ******, ******** ** **********.

(f)

Upon completion of migration of Active Subscribers to ACP, CSG Smartlink in Schedule F, Section II. C under CSG SERVICES shall be deleted in its entirety and any other references in Schedule F to CSG Smartlink shall be replaced with CSG SmartLink BOS.

(g)

The ****** ***** *** **** ******* table listed in Schedule F , Section III.A under CSG SERVICES shall be amended by adding the following:


Year		**** * * ** *****
****		*,,.

(h)

Any references to Section 19(f) in the ***** *** **** ******** listed in Schedule F, Section III.A under CSG SERVICES shall be deleted.

A - 20

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

(i)

*** **** ******* ******* ******* ***, ****** ** ******** *, ******* ***.* ***** *** ******** ***** *** ** ******** ** ******** ** * ******** *******, ******* **** ** ****** ****** ******** *, ******* *.* ******* ** ******** *** ******** ******** ** *** ******* ****** ********** ******. *********, ******* ***.* ***** *** ******** ***** ** ******* ** *** ******** *** ******** **** ********** *** ******* *.* ***** *** ******** ***** ** ******** ** ****** *** *********:

**.

**** ******* ******* ******* *** **** ** ** *** *** ******* *********

***

*** ******** ******* ******* ******* ***, ****** ** ******** * , ******* ***.*.* ***** *** ******** ***** *** ** ******** ** ******** ** * ******** *******, ******* **** ** ****** ****** ******** * , ******* *.* ******* ** ******** *** ******** ******** ** *** ******* ****** ********** ******. *********, ******* ***.*.* ***** *** ******** ***** ** ******* ** *** ******** *** ******* *.* ***** *** ******** ***** ** ******** ** ****** *** *********:

**.

******** ******* ******* ******* ***. ***** ** ******* ***.* ***** *** ******** *** ******** **** **** **** ** ****** **********.

***

*** *** ******/*** **** ****** ******* ***** ****, ****** ** ******** *, ******* *.* ***** *** ******** ***** ** ******* ** *** ******** *** ******** **** *** *********:

*********** ** ****/**** ** ******* ********* ***

3. ****** ******* ***** ***** **** ******, *** ***** *** ******* ***.**

23.

Upon execution of the CSG MASTER SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT, with an Effective Date of January 1, 2010, in accordance with Note 3 in Schedule F , Section I.A under CSG LICENSED PRODUCTS, ******** ****** ** *** *** **,***,***.** *** ******** ******* *** *********** **** *** ****** *********** ** ****** ** **,***,*** *** **** **** **,***,***, *** **** *** ********** *******. **** ********* ** **** *********, ** *** ***** ******** *** **** **** ******* ** **,***,***.** *** **** ********** *******, *** ***** ***** **** ******* *** **** ********** ******* ** * ****** ******* ******* ******** ***** *** ****** ** *********.

24.

The timeframes and deliverables provided in this Amendment are contingent upon Customer providing, input, feedback and participation in connection with the Custom Roadmap and CSG’s related development work prior to execution of this Amendment.

25.

Upon execution of this Amendment, the parties agree the following shall occur and become effective:

*** *** ******** ***** ******** ***** **** *** ********* ***** *** ******** ** ******* ** *** *** **** ***** ***** ******* ** **** **** ******-**** **** ****** **** ********* ** **** ********* *** ** ***** **** ******** **, ****. ** *** ***** ******** *** ******* ********* *** ***** *** ****** *********** ** *** ** ******** **, ****, *** ****** ** ****** *** **** ** ********* *** ************ ** ***** * ** ***** **, ****; ********, *******, **** ** ******** ** *** ***** ******** ** ** ***** **, **** *** ** ***’* ******* ** ******* ******** ********* *** ****** ******* *********** ** ******** ********’* ********* ** ***, **** *** ******** ***** **** *** ***** ** ********* *** ********** ******** *** **** ********* ** ** ******** ******* **** ******* ****** ** ***, ***** ****** ***** ***** *** ********* **** ** **** ***********, *** **** *** **** *********** ** ********* **** ****** ** ********’* *******, *** **** ******* *********** ********** ** ********** **** *** ********** ******** ** ********** **** ******* **, *** *** **** ******** ** ******* ************ ** ***** * ***** ******* **, ****, **** ** ********** ********* *** ******** ** ***** ******* ** ******* ******* ******, *** ***** ****** *** **** ** ************ ** ***** * ******* *** *** ** *** ********** **** ** ****** ******** ** ********** **** *********, ***** ******** ***** *** ** ******** ** *** *** ********** **** *** ******* ** ******** ** ** ********** **** * *********** ***** **** *******; *******, ** ***** **** ** ********** ** *** ****** **** ***** *** ******** ** ***** **-********* ** * ****** ** ***’* ******* ** *** *** ** *** ********** ****, *** **** ** ** *** **** ** ********’* ******* ****** ** *** ** ********** **** ****** *** ** **** ******* **, ********’* *********** ***** ******* **. *********** ***** ********* *** **** ** ******* ***** ** ******. *** ******* ***** **** *** ****** ******** ** ******* ****, ***** *** **** ** **** ******* ** ***** ** ********’* **** *** ********* ****** *** ***’* ********* ** ******* ******** ** *** ** ******** ** **** ******** *. *** ******* ***** **** ** *** ***** ** *** ********* *** ***** *** *** ** ******** ** **** *** ******** ************* ** ************ ** ***** *, ***** **** *********** ******** ** *** ** *** ****** ****** ** ******** ** ** ****** ** ** *** ******* ******** ** * ********* ** ****.

A - 21

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

26.

******* ** ********** ** *****, *** ******* ***** *** ********* **** ***** * ***** *** ** ********* ***** ******** **, ****, ********* ******** **** ******* ** ***’* *** ******** ***, **** ********** ********* *** ***** *, *** ********* **** ** ******** **** **** *** ********** ** ***’* ************** ******* ****** ** *** ****** **** ** **** ******** ********* ****** ********* *** ** *** ****** ******* *** *** ******** ** ***** ** ******* *** ******** **** ***’* ******** ********** ******** ** ***. *************** *** ********** ********* ** *** ********* ********, ****** *** ****** ****** ***** ******** *** *********** ** **** *** *** ***, *** ********** ** *** *****, ** **********, ** ****** ** ***** ** **** *** *** *** *** ********’* ******** ** *** *** *** ******* ******** *** ******** ***** ****** ** ******, *** **** ******** *** ******** ***** ******** ** ** ****** ** ** ******** ****** *** ******* ** *** ***** ********** *** ********** ** **** ** *** ********* ** *******.

IN WITNESS WHEREOF Customer has caused this Amendment to be executed by its duly authorized representatives.


DISH Network, l.l.c. (“CUSTOMER”)

By:

Name:

Title:

ACKNOWLEDGED AND AGREED:

CSG SYSTEMS, INC. (“CSG”)

A - 22

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.


By:

Name:

Title:

A - 23

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

ATTACHMENT B

****** *******

1.	******** : ******** * ****** *****, * ***** ******* ***** * ******* ******* ********:

(a)

******* ******* ***** * *********** ******** *** ************ **** ***, ***** *********** ******** *** ************ *** ******** *****:

(i)

*********** ** ******* ** *** *** ********-******** ************* ******** ** *** ** ** *** ******** ****** **** ** ******** ** ******** * *** ** **** ******** ** ******* ******* ** ****** ********* ** *** *******.

(ii)

*********** *** ****** *** ******** *** ************* ** ******* ******** *****.

(iii)

******* **** *************** ******* ** ******* ******** ************* ******* ** ******** ******** *************.

(b)

******* ********’* ********** ******** ** *** *** ****** **** ****:

(i)

******* ******* *********** ******.

(ii)

******** ******* ******** *** ********* ******** ************.

(iii)

********* ********** ****/******** *********** *** ********** ***********.

(iv)

******** ****** *** ******** *******.

(v)

******* ****** ******** ****** ** ********** *** **** *****.

(vi)

***, **** *** ******** *** **** *********.

(c)

****** *** ******** ********** *** ******* ********* ************:

(i)

******* *** *********** ************ ** *********.

(d)

**** : ******* **** ** ********* *****:

(i)

*** ********* **** **** ** ******** ** ********* ** *** ******* ******* *********** ********:

****** ******** *****: *** ******** ****-********* ******* *****.

****: *** ******** ******** *** ***** **** ***’* ********* *** *** *** ***’*.

******** ******: ****** **** **** ******** ** *** ****** **** ****.

******** ***** ** ********: *** ******** ******** ***** ** ********.

********* *********: ******** ** ********** *********.

(ii)

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****** ********** *****: ****** ** **** ********* ********** ***** ****** ***** *.

******/****** ** *** **** *********: ******* ** *** ******* ********** ** * ********** *** ***** ********.

****** ****** ******: ****** *** **** ***** **** ********** ****** ****** *** ***** *** **********.

******* ************* ** ******* */* *** */*: ***** *********** **** ***** **** **** * ******* ******** ********** ******* ****** ****.

******* ********** **********: ****** ******* *** ********** ***** *** ******* **** ******* ********** *******.

2.	**** *** ********* :

(a)

** ******* **** ********* **** ** ********* ***** ******** ********* ** ********.

(b)

**** **** *************** *** *** ********* **** ** **** ** ********.

(c)

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(d)

*** *********** ** ***’* *** ******** ** ********** ********** **** *** *********** ** ******** ** ** *** ********* ****.

A - 24

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

3.	* ************** :

(a)

******* ** **** **** *** *** ********* **** **** ******** *** ** ** ******-**** **** ****** ** * ******* ************** ******* *** ****:

(i)

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(ii)

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(iii)

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(iv)

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(v)

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(vi)

*********** ** ******** *** ***** ********.

(vii)

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(b)

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(i)

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(ii)

********* ************* ************.

(iii)

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(c)

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(i)

******** *** ******* ************* ** *** ^® /*** *** ********’* ******** *** ********** ******* *** ********** ***********.

(ii)

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(iii)

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(iv)

****** *********** ********** *** *** **********

(v)

****** ** *** ****** **** ********** ***** ** ********** *********

(vi)

****, ******** *** ******* **********

(d)

******* ** **** **** ***** *** **** **** ********* ** * **** ** ****** **** ******* *********** *** ** ** ******-**** **** ****** * ******** **** ***** ****:

(i)

***** *** ********’* ****** ******** *** ***, ***** ***** *** ****** ******* **** *********.

(ii)

*** ******** ***** ******* **:

********** ******* ******** ** ******

**** ****** ******** ******** **-** ******

******* ******** *** ************ ********** ** ********* ***** ****-*** ******, *** *** ******* *********** ** **** *** *-* ***** ****-*** ******, *** *** ******* ******* ****** **-* ***** ****** ********* ** ** ****** ** **-** ****** *** ***** *********** ********* ******* ***** **** ******** ********** *****-**** ******.

********* ******** ******** *** ************ ** ******

(e)

*** ********* ******** **** *******, ******* ********’* *** ** *** ****:

(i)

******* ********** ******* ******* ** ********.

(ii)

****** ******** ********** ** ******* ********’* *** ********.

(iii)

**** **** ******** *** ******** *** ***** ** ********* ******** ********* ****** ********** **********.

(iv)

******* ******** ******* ***** ************** *** ********.

4.	****** ************** :

(a)

****** *** ***** ***** *******, **********, ****** ******, ******* *** ********** ******* ** ********** *** ******** ** ******* ** ************ ***’* *** ********.

A - 25

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

(b)

******* ******** ******* ******** *** ************ ********* ** ********* *************, ******** ****** *********.

(c)

****** ********* ** ** ********* ** ******* *** **************, ***** ******** ********** ** ** ********* *******, ******* *******, ******** ******* ****** *** ***** ******* ****** ******* ** *********.

(d)

****** ******* ****** ******** *** ******* ******* **** ***** **********.

(e)

****** ******* ********.

(f)

******** *********** ******** ********, ********* *** ********.

(g)

******* **** ********* ** ****** *** ******* *** ************ ** *** ************* ** * ****** ******.

(h)

******** *** ******** ******* ** ******** ******** ******* *** **********.

(i)

******** ****** *******/******* *** ******* ******* ******* ********* *** ******.

(j)

******* ******* ************.

(k)

******* ************ *** ********* ********.

(l)

******* **** ********* ** ********* ***.

(m)

******* ******** ********* ** **** *** **************** *** *** ****** ******* ***********.

5.	********* :

(a)

************ ****: *** ******** ****** ****

(b)

********* ********** ****: ********* ********* ******* ******** **** ** ******-**** **** ****** ***** *** ************ ****

6.	**** *** *** :

(a)

******* ** ***-******** ***** *** *****:

(i)

*** ***** ******** ** **** **********, ******* ** *** ********** ******** ** ****** *** *** ***** **** *** ****** ******* *********** *** ******** ********** *** **************** ********** ** *** ******* ******** ********* *****************.

(ii)

*** *********** ***** ********* *** *** ******** ** *** ***** ****** ** ******** *.

(iii)

*** ********** ** ***’* ********** ** ******* *. *** *** *** ****. *** *********** ***** *** ********* ** *** *** ** ********** *** ****** *** ****** ******* *********** **.*., ****** ******* *********** ****** **** *** ** ******* ** ******** *** ******** ** **** ** ***.

(iv)

*** ******, **** ** *** ***** *** *** ******* ********* ************ **** **** ********** ******** ** ***** *, ***** *** ********** ** * *** ******* ****** ***** ** ******* *, **** *** ****** **** **** ******** ***** *** ******** *** ************ ******** ** *** ****** ******* *********** **** ** ********* ** **** ****** ******* *** ******** * ******, **** **** ************ ***** ** ******** ** ** ********** **** ** ********.

(b)

******* ** ******** ***** *** *****:

********* ********* ********

(i)

*** ********* *** – ******* ** *** *** ********* *** **** ********** ** ******** * *** ********.

(ii)

*** *** ******** ********* ********* *** ******** ****** **** **** ** *********** **** **** ***** * *** ***, *** *** **** ******** *** ***** ***** ******** *** **** ******. ** ** *********** **** *** ************** **** **** **** ***** **** *******, ** *******, * ***** ******* ***** ******** ** ********* ***** **** ************** **** * ****** **** **** *** *** ******* ***** **** *** **** ******** ********** ** *** **** ** ******** *** ******* *** *** ** ***. *** ********** *** ************ ********* ** **** ****** ******* *** *********** **** ******** ******* *** **************** ** *** ***** *****.

A - 26

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

(iii)

******* ** **** ********, ******* * ** ******* *-* ** *** ********* *** ******* * ** ******* *-* ** *** *** ****** ********** ********** ****** ********* ******* **** ******* *** *** ******** ********* ******** *, ****, *** *** ******** ********* ***** ******* *, **** *** ***** ** *** ******** ****** ****.

(c)

*** ******* ***** **** *** ****** ******* ***** ********** ****** *** ***** **** *** ********* ********** ***********:

(i)

********-******** ******* *** ********* ** *** ***** ** *** ****** ******* *********** **** ***** ** ******* ** ****** ******* *********** *********** **** *** *** ********* ** **** ****** *******, *** ******* ****** *** ************* *** *** ************ ** *** ******** ** ****** *********** ***** *** *** ****** ** ********** **** ** ***** ******** ** * ******** *********, ***, ** *** ** ***, ***** **** ** ****** *** ****** ** * **** *** ********* ***** ******* *** *** ******** ***** ** *** ***** *** ***** ** ******** * ** *** *********.

(ii)

A - 27

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.

Schedule 1

** ***

****** *******


***** ********

***
	********	***
	********	* * ******
	********	* * - **** ****
	********	* ** * **
	********	******* * ********* / *********
	********	* **
	********	********* ******
	********	* * ****** *****
	********	* ******** ***** * ***********
	********	* ** ***********
	********	* ****
	********	*- * *********
	********	* ******** *** * ********
	********	*-, ********, * *** ****
	********	****** * ****
	********	******** *
	********	* ******** ** *************
	********	* ** ***********
	********	*- ******** * ***********
	********	************
	********	* ** ** * *
	********	* *** *****
	********	** ****** ***** **
	********	***** *****
	********	***** /* * **********
	********	**** * * * * ** * *****
	********	**** * * ******** **
	********	******** ** * ***
	********	**** * - * * ****
	********	* ** *********
	********	* *** *********
	********	** ***********
	********	* ******
	********	***** *** *
	********	* * **
	********	** * ****** * ********** ********

A - 28

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.


	****** **** **** ******	** **** * ***** * ** ******** ** ** ****** * ****/****** *****

***** ********

***** *******
	********	** ***
	********	**** **** *** *** ***** * ** ********

******* * **********

** *********
	********	**** -**
	********	* *** ** ***** *******
	********	**** ** *** ***
	********	********** ******
	********	**-* * */-* * **-* *** *****
	********	**-* **** ** ***
	****** **** **** **** **** **** ***** **** **** **** **** **** **** ******	****** ** ***** -* ** *** *** *** ***** * ***-* ********* * *** * ********* * ***** * ****** **** * * ***** ** * *** **** ** *** * / *** -* *** ***** -* ***** ****** *** * ***** ***** *** *** ******* * *** ***** *** ****** * *-***** ******** **** ** *****

* *********
	********	** ** * ****** * **
	********	***** *********
	********	********* ****
	********	********* ** *
	********	*** *
	****** **** ******	* ** * * ** ** * * ****** ****** *** ** *** ******* ..**

****** *****
	********	**** - **** *** **** * ****** ***

A - 29

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.


******* * ***********
	********	** *** ***
	********	*- **** * ******** *********
	********	**-/ ****** *********
	****** **** **** **** ******	*+ * ******** *** * ***** * *** *** * ****** ****** * *** * **** ******** * ****** ***** ******* * **-***

**********

***********
	********	*/* ** ******
	********	* ** *****
	********	**** ***** * ** ****
	********	******* **** - * *
	********	****** *****
	********	*- ********* * ***** ********
	****** ******	** *** - * *** **** * **********
	********	******** **** *****
	********	***** *** ********
	********	** ****** ***
	********	** ******* * ***** *****
	********	*** * ***** * ** *** *
	********	*** * ***** * - * ***
	********	****** * * ****** ***
	****** **** **** ******	*/* ***** * ***** * *** * ***** * - *** * ** *** ****** *******

***** ********

**** **
	********	**** ** ***
	********	** - ***
	********	****** *** ***** ** – * ******
	****** **** ******	******** ***** *** *** ** ** ** ***** ******** **

***** ***
	****** **** **** ******	* * **** - */****/ **** * *** **** * ***** * * * ********

A - 30

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.


********
	********	***** *** * * ********* *****
	********	***** *****
		** *** *****

*******
	********	***** ** *** ****
	****** ******	***** ** *** *** ******* * *, * **, * * ********

***
	****** **** ******	* * * ** * ***** /* *** ******** * * ********

****** **

***** ***
	********	* *** *** * * *******

***
	********	*********** **********
	********	*- ***********
	********	***** ** *****
	********	* *** **

* / *
	********	* ****** ***** **
	********	*/* **** *****

*********
	********	******* ***** * * ****** *****
	********	*/* **** ********
	********	* * *****
	****** ******	******** ** ****** *** *** ***** ******** ******

****** *****
	********	* ****** **** * * **********
	********	******* **** ** *****
	********	*** **** * ****** ********* ******

***
	********	* ****** ****, ******* * - * *****

A - 31

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.


	****** **** ******	**** * * ***/* *** ******* * ******* ** * ****** *********

****** *
	********	* *** * ****** *
	********	* *** * ****** - *******

**********

**************
	****** **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** ******	** *** * ***** -*** * ************ *** *** , *, *** * * *** ***** * **** * * ** **** ***** * ***** **** ******* ******, *** * ******* *** ** * * **** ******* ** * ***** * ****** ******* *** *** * * ** * ********** * * *** * *** ****** * *********** * **** ******* -***** ^ * *** ** ***** * * *** ** *** * * * ********

*********
	********	*******- * * ** ********
	********	* * *********
	********	******* ****** * * ********
	********	* *** * * * * *********
	****** **** **** ******	*******- **** ** * **** #* ***** / ***** ******* ** ******* *************** ******

***
	****** **** **** ******	******** ** * * ***** *** * ***** *** * * **** / ***

* ***
	********	* *********
	********	* *******-**** *

A - 32

***

Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission.


	********	****** * ***
	********	***** **** *
	****** **** *******	**** * **** ****** - * **** * * ***** *** * *** * * ********

** *******
		* ******** *** * * * *****
		** ***** **** ********

*********** ********

*************
	********	****** **********

	********	* * ******
	********	*** ******
	********	*** ***
	********	** **********
		****** ** -****
	* ****** **** **** **** **** **** **** **** **** **** **** **** **** **** **** ******	** ***** **** * ******** ******* * ******** ** ** ********* * *** *** -****** ** ******* * ********** **** * **** ** * ******** ** **** * ***** **** **** * . * ** * ** ** ******* * * , , * */******* *** * ***** *** **** ******* * ** ********* *****

A - 33

EXHIBIT 31.01

CERTIFICATIONS PURSUANT TO

SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Peter E. Kalan, certify that:

1.	I have reviewed this report on Form 10-Q of CSG Systems International, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

(a)

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

(b)

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

EXHIBIT 31.02

CERTIFICATIONS PURSUANT TO

SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Randy R. Wiese, certify that:

1.	I have reviewed this report on Form 10-Q of CSG Systems International, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)

(d)

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

(a)

(b)

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

EXHIBIT 32.01

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The certification set forth below is being submitted in connection with the Quarterly Report on Form 10-Q (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

Peter E. Kalan, the Chief Executive Officer and Randy R. Wiese, the Chief Financial Officer of CSG Systems International Inc., each certifies that, to the best of his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of CSG Systems International, Inc.

May 10, 2010

/s/ Peter E. Kalan

Peter E. Kalan

Chief Executive Officer and President

May 10, 2010

/s/ Randy R. Wiese

Randy R. Wiese

Executive Vice President and Chief Financial Officer

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company