Exhibit 10.2

 

EXECUTION COPY

 

 

 

NOTE AND WARRANT PURCHASE AGREEMENT

 

By and Among

 

AEGIS COMMUNICATIONS GROUP, INC.,

 

DEUTSCHE BANK AG – LONDON ACTING THROUGH
DB ADVISORS, LLC AS INVESTMENT ADVISOR

 

AND

 

ESSAR GLOBAL LIMITED

 

Dated as of November 5, 2003

 

 

 

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Table of Contents

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01

Definitions

 

 

 

ARTICLE II

 

 

PURCHASE AND SALE OF INTERESTS

 

 

SECTION 2.01

Sale and Issuance of Notes and Warrants

 

 

 

 

SECTION 2.02

Closing

 

 

 

 

SECTION 2.03

Closing Deliveries by the Company

 

 

 

 

SECTION 2.04

Closing Deliveries by the Purchasers

 

 

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES
OF THE COMPANY

 

SECTION 3.01

Organization, Authority and Qualification of the Company

 

 

 

 

SECTION 3.02

Subsidiaries

 

 

 

 

SECTION 3.03

Debt and Capitalization

 

 

 

 

SECTION 3.04

No Conflict

 

 

 

 

SECTION 3.05

Consents and Approvals

 

 

 

 

SECTION 3.06

Compliance with Laws

 

 

 

 

SECTION 3.07

Financial Information; Books and Records

 

 

 

 

SECTION 3.08

Litigation

 

 

 

 

SECTION 3.09

SEC Reports

 

 

 

 

SECTION 3.10

Valid Issuance of the Notes, Warrants and Warrant Shares

 

 

 

 

SECTION 3.11

Absence of Certain Changes or Events; Absence of Undisclosed Liabilities

 

 

 

 

SECTION 3.12

Material Contracts

 

 

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SECTION 3.13

Intellectual Property

 

 

 

 

SECTION 3.14

Taxes

 

 

 

 

SECTION 3.15

Properties; Encumbrances

 

 

 

 

SECTION 3.16

Insurance

 

 

 

 

SECTION 3.17

Environmental Matters

 

 

 

 

SECTION 3.18

Employee Benefit Plans; Labor Matters

 

 

 

 

SECTION 3.19

Labor

 

 

 

 

SECTION 3.20

Investment Company

 

 

 

 

SECTION 3.21

Brokers

 

 

 

 

SECTION 3.22

Indemnification

 

 

 

 

SECTION 3.23

Registration Rights

 

 

 

 

SECTION 3.24

Affiliate Agreements

 

 

 

 

SECTION 3.25

Existing Merger Agreement

 

 

 

 

SECTION 3.26

Fairness Opinion

 

 

 

ARTICLE IV

 

 

REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER

 

SECTION 4.01

Organization and Authority of Each of the Purchasers

 

 

 

 

SECTION 4.02

No Conflict

 

 

 

 

SECTION 4.03

Restricted Securities

 

 

 

 

SECTION 4.04

Accredited Investor

 

 

 

 

SECTION 4.05

Purchase Entirely For Own Account

 

 

 

 

SECTION 4.06

Investment Company

 

 

 

ARTICLE V

 

 

ADDITIONAL AGREEMENTS

 

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SECTION 5.01

Access to Information

 

 

 

 

SECTION 5.02

Information Statement

 

 

 

 

SECTION 5.03

Further Action

 

 

 

 

SECTION 5.04

Corporate Actions

 

 

 

 

SECTION 5.05

Affiliate Agreements

 

 

 

 

SECTION 5.06

Directors’ and Officers’ Insurance

 

 

 

 

SECTION 5.07

Use of Proceeds

 

 

 

 

SECTION 5.08

Preferred Stock Amendment

 

 

 

ARTICLE VI

 

 

CONDITIONS TO CLOSING

 

SECTION 6.01

Conditions to Obligations of the Purchasers

 

 

 

 

SECTION 6.02

Conditions to Obligations of the Company

 

 

 

ARTICLE VII

 

 

INDEMNIFICATION

 

SECTION 7.01

Survival of Representations and Warranties

 

 

 

 

SECTION 7.02

Indemnification by the Company

 

 

 

ARTICLE VIII

 

 

MISCELLANEOUS

 

SECTION 8.01

Amendment; Waiver

 

 

 

 

SECTION 8.02

Confidentiality

 

 

 

 

SECTION 8.03

Expenses

 

 

 

 

SECTION 8.04

Notices

 

 

 

 

SECTION 8.05

Severability

 

 

 

 

SECTION 8.06

Assignment

 

 

 

 

SECTION 8.07

Third Party Beneficiaries and Transfers

 

 

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SECTION 8.08

Governing Law; Consent to Jurisdiction

 

 

 

 

SECTION 8.09

Waiver of Jury Trial

 

 

 

 

SECTION 8.10

Entire Agreement

 

 

 

 

SECTION 8.11

Headings

 

 

 

 

SECTION 8.12

Counterparts

 

 

 

 

SECTION 8.13

Public Announcements

 

 

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NOTE AND WARRANT PURCHASE AGREEMENT, dated as of November 5, 2003 (the
“Agreement”), by and among AEGIS COMMUNICATIONS GROUP, INC. (the “Company”), a
Delaware corporation, Deutsche Bank AG – London acting through DB Advisors, LLC
as investment advisor and Essar Global Limited (collectively, the “Purchasers”).

 

WHEREAS, the Company desires to sell, and the Purchasers desire to buy, secured
promissory notes in the principal amount of $28,231,167 (the “Notes”), in the
form attached hereto as Exhibit A allocated between the Purchasers in accordance
with Schedule 1 hereto;

 

WHEREAS, the Company desires to sell, and the Purchasers desire to buy, warrants
to purchase 527,661,932 shares of Common Stock of the Company (the “Warrants”),
in the form attached hereto as Exhibit B allocated between the Purchasers in
accordance with Schedule 1 hereto;

 

WHEREAS, in connection with the acquisition of the Notes and the Warrants by the
Purchasers, and the sale of the Notes and the Warrants by the Company, the
Purchasers and the Company will enter into the Ancillary Agreements;

 

WHEREAS, simultaneously with the execution hereof, the Required Stockholder
Approvals have been obtained by execution of the Written Consent;

 

WHEREAS, simultaneously with the execution hereof, the holders of the Preferred
Stock (other than the holders of the Series B Preferred Stock) have agreed to
cancel or convert their Preferred Stock into Common Stock as of the Closing and
the Subsequent Closing Date; and

 

WHEREAS, simultaneously with the Closing, the Company shall use the proceeds of
the Notes in accordance with Schedule 2 hereto.

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements and
covenants hereinafter set forth, the Company and the Purchasers hereby agree as
follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01       Definitions.  As used in this Agreement, the following terms
shall have the following meanings:

 

“Action” means any claim, action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority.

 

“Affiliate” means, with respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.

 

“Affiliate Agreements” shall have the meaning set forth in Section 3.24.

 

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“Agreement” shall have the meaning set forth in the Preamble.

 

“Ancillary Agreements” means the Notes, the Registration Rights Agreement and
the Stockholders Agreement.

 

“Balance Sheet Date” shall have the meaning set forth in Section 3.15.

 

“Bank Debt” means an amount sufficient to extinguish all obligations of the
Company and its Subsidiaries under the Fourth Amended and Restated Credit
Agreement, dated April 14, 2003, among IQI, Inc., the Company (as a guarantor),
and various financial institutions, with the Bank of Nova Scotia as
documentation agent and administrative agent and Credit Suisse First Boston as a
syndication agent (not including any indebtedness for letters of credit issued
under this facility, for which the Purchasers and the Company will be
responsible), including but not limited to any pre-termination or other fees or
penalties imposed by the above-referenced financial institutions, and secure
appropriate releases thereunder.

 

“Business Day” means any day that is not a Saturday, a Sunday or other day on
which commercial banks are required or authorized by Law to be closed in the
State of New York.

 

“Claims” means any and all administrative, regulatory or judicial actions,
suits, petitions, appeals, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations, proceedings, consent orders or
consent agreements.

 

“Closing” shall have the meaning set forth in Section 2.02.

 

“Closing Date” shall have the meaning set forth in Section 2.02.

 

“Code” shall have the meaning set forth in Section 3.18(a).

 

“Commitment Fee” means the commitment fee in the amount of $150,000 in
accordance with the terms of the commitment letter provided by Wells Fargo
Foothill with regard to the Credit Facility.

 

“Common Stock” means the common stock, $0.01 par value per share, of the
Company.

 

“Common Stock Equivalents” means any issuance of any warrants, options or
subscription or purchase rights with respect to shares of Common Stock and the
issuance of any securities convertible into, or exchangeable for, shares of
Common Stock and the issuance of any warrants, options or subscription or
purchase rights with respect to such convertible or exchangeable securities.

 

“Company” shall have the meaning set forth in the Preamble.

 

“Company Balance Sheet” shall have the meaning set forth in Section 3.15.

 

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“Company Disclosure Letter” means the schedule that modifies the
representations, warranties or covenants of the Company contained herein and
which is an integral part of this Agreement.  The Company Disclosure Letter,
which shall identify the representation and warranty to which the exception
identified therein relates, will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in Article III.

 

“Company Employee Plan” shall have the meaning set forth in Section 3.18(a).

 

“Company Intellectual Property” shall have the meaning set forth in
Section 3.13(a).

 

“Company Property” means any real property and improvements at any time owned,
leased or operated by the Company or any of its Subsidiaries.

 

“Company Subsidiaries” shall have the meaning set forth in Section 3.02.

 

“Covered Person” shall have the meaning set forth in Section 3.22.

 

“Credit Facility” means a revolving credit facility in the amount of $30,000,000
to be entered into by the Company and Wells Fargo Foothill or another third
party on terms and conditions no less favorable to the Company than had
previously been negotiated with Wells Fargo Foothill.

 

“Deal Expenses” means the fees and expenses of the investment banker referenced
in Section 3.21, the Company’s legal fees and expenses (including those related
to completing the termination of warrants and options required by
Section 6.01(d)), accounting fees and expenses (not including any fees or
expenses payable to BDO Seidman), and other reasonable transaction-related fees
and expenses relating to the transactions contemplated by this Agreement and
incurred by the Company prior to Closing.

 

“Encumbrance” means any security interest, pledge, hypothecation, mortgage, lien
including, without limitation, Tax liens (other than (a) liens for Taxes not yet
due and payable or for Taxes that the taxpayer is contesting in good faith
through appropriate proceedings, (b) purchase money liens and liens securing
rental payments under capital lease arrangements, and (c) liens arising in the
ordinary course of business and not incurred in the borrowing of money), charge,
or encumbrance.

 

“Environmental Claims” means any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of noncompliance
or violation, investigations or proceedings under any Environmental Law or any
permit issued under any such Environmental Law (for purposes of this definition,
“Claims”), including, without limitation, (i) any and all Claims by governmental
or regulatory authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law and
(ii) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery,

 

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compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.

 

“Environmental Law” means any federal, state, foreign or local statute, law,
rule, regulation, ordinance, guideline, policy, code or rule of common law in
effect and in each case as amended as of the date hereof and the Closing Date,
and any judicial or administrative interpretation thereof applicable to the
Company or its operations or property as of the date hereof and the Closing
Date, including any judicial or administrative order, consent decree or
judgment, relating to the environment, health, safety or Hazardous Materials,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. § 9601 et seq.;
the Resource Conservation and Recovery Act, as amended, 42 U.S.C. § 6901 et
seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. § 1251 et
seq.; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; the Clean Air
Act, 42 U.S.C. § 7401 et seq.; Occupational Safety and Health Act, 29 U.S.C.
§ 651 et seq.; Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; the Safe
Drinking Water Act, 42 U.S.C. § 300f et seq.; and their state and local
counterparts and equivalents.

 

“ERISA” shall have the meaning set forth in Section 3.18(a).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and all
rules and regulations promulgated thereunder.

 

“Final Order” means action taken by the relevant regulatory authority relating
to this Agreement or the Ancillary Agreements or the transactions contemplated
hereby or thereby which has not been reversed, stayed, enjoined, set aside,
annulled or suspended, with respect to which any waiting period prescribed by
law before the transactions contemplated hereby or thereby may be consummated
has expired, and as to which all conditions to the consummation of such
transactions prescribed by Law, regulation or order have been satisfied.

 

“Financial Statements” means the audited consolidated balance sheet of each of
the Company and its consolidated Subsidiaries for each of the last three fiscal
years ended December 31, 2002, 2001 and 2000 and the related audited
consolidated statements of income, retained earnings, stockholders’ equity and
changes in financial position, together with the related notes and schedules
thereto, accompanied by the reports of accountants.

 

“Fixed Asset List” shall have the meaning set forth in Section 3.15.

 

“GAAP” means the generally accepted accounting principles applied in the United
States.

 

“Governmental Authority” means any United States or non-United States federal,
national, supranational, state, provincial, local, or similar government,
governmental, regulatory or administrative authority, agency or commission or
any court, tribunal, or

 

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judicial or arbitral body, including the SEC or the appropriate state public
utilities commissions.

 

“Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.

 

“Hazardous Materials” means (i) any petroleum or petroleum products, radioactive
materials, asbestos in any form that is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(ii) any chemicals, materials or substances defined as or included in the
definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,”
“extremely hazardous wastes,” “extremely hazardous substances,” “restricted
hazardous wastes,” “toxic substances,” “toxic pollutants,” or words of similar
import, under any applicable Environmental Law; and (iii) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any governmental authority.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and all rules and regulations promulgated thereunder.

 

“Indebtedness” of any Person means (a) all indebtedness of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) all obligations of such
Person to pay the deferred purchase price of property or services (other than
trade payables and accrued liabilities arising in the ordinary course of
business), (d) all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all capitalized lease obligations of such Person, (f) all
obligations, contingent or otherwise, of such Person under acceptance, letter of
credit or similar facilities securing Indebtedness, (g) all unconditional
obligations of such Person to purchase, redeem, retire, defease or otherwise
acquire for value any capital stock of such Person or any warrants, rights or
options to acquire such capital stock, (h) all Indebtedness of any other Person
of the type referred to in clauses (a) through (g) guaranteed by such Person or
for which such Person shall otherwise (including pursuant to any keepwell,
makewell or similar arrangement) become directly or indirectly liable (other
than indirectly as a result of a performance guarantee not entered into with
respect to Indebtedness), and (i) all third party Indebtedness of the type
referred to in clauses (a) through (h) above secured by any lien or security
interest on property (including accounts and contract rights) owned by the
Person whose Indebtedness is being measured, even though such Person has not
assumed or become liable for the payment of such third party Indebtedness.

 

“Indemnified Persons” shall have the meaning set forth in Section 5.06(a).

 

“Information Statement” shall have the meaning set forth in Section 5.02.

 

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“Initial Warrants” means the 68,084,517 Warrants to be issued to the Purchasers
in accordance with Schedule 1 hereto at the Closing.

 

“Interim Financial Statements” means the unaudited consolidated balance sheet of
the Company and its consolidated Subsidiaries as of March 31, 2003 and June 30,
2003 and related consolidated statements of income, retained earnings,
stockholders’ equity and changes in financial position together with the related
notes and schedules thereto.

 

“Investment Company Act” means the Investment Company Act of 1940, as amended,
and all rules and regulations promulgated thereunder.

 

“IRS” means the Internal Revenue Service of the United States.

 

“Largest Customers” shall have the meaning set forth in Section 3.12(b).

 

“Largest Suppliers” shall have the meaning set forth in Section 3.12(b).

 

“Law” means any United States or non-United States federal, national,
supranational, state, provincial, local or similar statute, law, ordinance,
regulation, rule, code, order, requirement or rule of law (including, without
limitation, common law).

 

“Liabilities” means any and all debts, liabilities and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured or determined or
determinable, including, without limitation, those arising under any Law, Action
or Governmental Order and those arising under any contract, agreement,
arrangement, commitment or undertaking.

 

“Loss” shall have the meaning set forth in Section 7.02(a).

 

“Majority Stockholders” means Questor Partners Fund II, L.P., a Delaware limited
partnership, Questor Side-by-Side Partners II, L.P., a Delaware limited
partnership, Questor Side-by-Side Partners II 3(c)(1), L.P., a Delaware limited
partnership, Thayer Equity Investors III, L.P., a Delaware limited partnership,
and TC Co-Investors, LLC, a Delaware limited liability company.

 

“Material Adverse Effect” means any circumstance, change in or effect on the
Company or its business that, individually or in the aggregate with all other
circumstances, changes in or effects on the Company is or is reasonably likely
to be materially adverse to the business, operations, assets or liabilities
(including, without limitation, contingent liabilities), results of operations
or the financial condition of the Company and its Subsidiaries taken as a whole;
provided, however, that the term “Material Adverse Effect” shall not include (a)
any circumstance, change or effect that arises out of or is attributable to (i)
general business or economic conditions affecting the United States economy
generally, or (ii) general business or economic conditions relating to any
industries in which the Company or any of its Subsidiaries participates, in each
case which does not affect the Company or any of its Subsidiaries in a
materially disproportionate manner relative to other Persons engaged in such
industry (including but not limited to any changes in regulation of the
telemarketing/telephone solicitation

 

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industry, such as “do not call lists” or otherwise, in any jurisdiction in which
the Company operates), or (b) any circumstance, change or effect arising from or
relating to any change in U.S. generally accepted accounting principles.

 

“Material Contracts” shall have the meaning set forth in Section 3.12.

 

“Merger Agreement” shall have the meaning set forth in Section 3.25.

 

“Multiemployer Plan” shall have the meaning set forth in Section 3.18(c).

 

“Notes” shall have the meaning set forth in the Recitals.

 

“Person” means any individual, partnership, firm, corporation, limited liability
company, association, trust, unincorporated organization or other entity, as
well as any syndicate or group that would be deemed to be a person under
Section 13(d)(3) of the Exchange Act.

 

“Preferred Stock” means the preferred stock, $0.01 par value per share, of the
Company.

 

“Preferred Stock Amendment” shall have the meaning set forth in Section 5.08.

 

“Purchase Price” shall have the meaning set forth in Section 2.01.

 

“Purchasers” shall have the meaning set forth in the Preamble.

 

“Purchasers’ Expenses” shall have the meaning set forth in Section 8.03.

 

“Purchaser Indemnified Party” shall have the meaning set forth in
Section 7.02(a).

 

“Registration Rights Agreement” means the Registration Rights Agreement in the
form attached hereto as Exhibit C to be entered into by the Purchasers and the
Company as of the Closing Date.

 

“Release” means disposing, discharging, injecting, spilling, leaking, leaching,
dumping, emitting, escaping, emptying or seeping into or upon any land or water
or air, or otherwise entering into the environment.

 

“Required Stockholder Approval” shall have the meaning set forth in
Section 3.01(b).

 

“SEC” means the Securities and Exchange Commission.

 

“SEC Reports” shall have the meaning set forth in Section 3.09.

 

“Securities Act” means the Securities Act of 1933, as amended, and all rules and
regulations promulgated thereunder.

 

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“Security Agreement” means the Guaranty and Security Agreement to be entered
into by the Purchasers, the Company and a collateral agent reasonably acceptable
to the Company and the Purchasers as soon as practical after the Closing Date.

 

“Series D Preferred” means the Series D Preferred Stock, par value $.01 per
share, of the Company.

 

“Series E Preferred” means the Series E Preferred Stock, par value $.01 per
share, of the Company.

 

“Series F Preferred” means the Series F Preferred Stock, par value $.01 per
share, of the Company.

 

“Solvent” and “Solvency” mean, with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person’s ability to pay such debts and
liabilities as they mature and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person’s property would constitute an unreasonably small capital.  The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

 

“Stockholders Agreement” means the Stockholders Agreement in the form attached
hereto as Exhibit D to be entered into by the Purchasers, the Company, certain
members of management of the Company and the Majority Stockholders as of the
Closing Date.

 

“Subordinated Debt” means the Amended and Restated Promissory Note, dated
April 11, 2003, in the original principal amount of $808,600, payable to the
order of Edward Blank, the Amended and Restated Promissory Note, dated April 11,
2003, in the original principal amount of $191,400, payable to the order of the
Edward Blank 1995 Grantor Retained Trust, the Amended and Restated Promissory
Note, dated April 11, 2003, in the original principal amount of $4,212,236,
payable to the order of Thayer Equity Investors III, L.P., and the Amended and
Restated Promissory Note, dated April 11, 2003, in the original principal amount
of $9,194,844, payable to the order of Thayer Equity Investors III, L.P.

 

“Subsequent Closing Date” shall have the meaning set forth in Section 2.02.

 

“Subsequent Warrants” means the 459,577,415 Warrants to be issued to the
Purchasers in accordance with Schedule 1 hereto on the Subsequent Closing Date.

 

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“Subsidiaries” means, with respect to any Person, any and all corporations,
partnerships, limited liability companies, joint ventures, associations and
other entities controlled by such Person directly or indirectly through one or
more intermediaries.

 

“Tax” or “Taxes” means any and all taxes, fees, levies, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any government or taxing authority, including, without limitation,
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers’ compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, or gains taxes; license, registration and
documentation fees; and customs’ duties, tariffs, and similar charges.

 

“Tax Returns” shall have the meaning set forth in Section 3.14.

 

“Thayer” means Thayer Equity Investors III, L.P., a Delaware limited
partnership, and TC Co-Investors, LLC, a Delaware limited liability company.

 

“Thayer Condition” shall have the meaning set forth in Section 6.01(c).

 

“Third Party Claims” shall have the meaning set forth in Section 7.02(c).

 

“Warrants” shall have the meaning set forth in the Recitals.

 

“Written Consent” means the written consent in form and substance acceptable to
the Purchasers evidencing the Required Stockholder Approvals.

 

ARTICLE II

 

PURCHASE AND SALE OF INTERESTS

 

SECTION 2.01       Sale and Issuance of Notes and Warrants.  Subject to the
terms and conditions of this Agreement, the Company hereby agrees to sell and
issue to the Purchasers, and the Purchasers, severally but not jointly, hereby
agree to purchase from the Company, the principal amount of Notes and the number
of Warrants set forth opposite such Purchaser’s name on Schedule 1 hereto in
exchange for cash in the aggregate amount of $28,231,167 (the “Purchase Price”).

 

SECTION 2.02       Closing.  Subject to the terms and conditions of this
Agreement, the issuance, sale and purchase of the Notes and the Initial Warrants
contemplated by this Agreement shall take place at a closing (the “Closing”) to
be held at the offices of Shearman & Sterling LLP, 599 Lexington Avenue, New
York, New York, 10022, on the date hereof following the satisfaction or waiver
of all other conditions to the obligations of the parties set forth in
Article VI (other than those conditions that by their nature are to be fulfilled
at Closing), or at such other place or at such other time or such other date as
the Purchasers and the

 

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Company shall mutually agree upon in writing (the date on which the Closing
takes place being the “Closing Date”).  The Subsequent Warrants shall be issued
to the Purchasers in accordance with Schedule 1 hereto on the first Business Day
after the expiration of the 20 calendar day waiting period required by
Regulation 14C of the Exchange Act (the “Subsequent Closing Date”).

 

SECTION 2.03       Closing Deliveries by the Company.  (a) At the Closing, the
Company shall deliver, or cause to be delivered, to the Purchaser:

 

(I)            THE NOTES EXECUTED BY THE COMPANY;

 

(II)           THE INITIAL WARRANTS EXECUTED BY THE COMPANY;

 

(III)          THE WRITTEN CONSENT EXECUTED BY THE MAJORITY STOCKHOLDERS;

 

(IV)          THE ANCILLARY AGREEMENTS EXECUTED BY THE COMPANY; AND

 

(V)           THE CERTIFICATES, OPINIONS AND OTHER DOCUMENTS REQUIRED TO BE
DELIVERED PURSUANT TO SECTION 6.01 AND ANY OTHER CERTIFICATES OR DOCUMENTS
REASONABLY REQUESTED BY THE PURCHASERS.

 

(B)           ON THE SUBSEQUENT CLOSING DATE, THE COMPANY SHALL DELIVER, OR
CAUSE TO BE DELIVERED, TO THE PURCHASERS:

 

(I)            THE SUBSEQUENT WARRANTS IN ACCORDANCE WITH SCHEDULE 1 HERETO; AND

 

(II)           EVIDENCE OF THE PREFERRED STOCK AMENDMENT AND THE CONVERSION OF
THE OUTSTANDING SERIES F PREFERRED.

 

SECTION 2.04       Closing Deliveries by the Purchasers.  At the Closing, the
Purchasers shall deliver, or cause to be delivered, to the Company:

 

(A)           THE PURCHASE PRICE BY WIRE TRANSFER IN IMMEDIATELY AVAILABLE FUNDS
TO AN ACCOUNT DESIGNATED IN WRITING BY THE COMPANY TO THE PURCHASERS PRIOR TO
THE CLOSING DATE;

 

(B)           THE ANCILLARY AGREEMENTS EXECUTED BY THE PURCHASERS; AND

 

(C)           THE CERTIFICATES, OPINIONS AND OTHER DOCUMENTS REQUIRED TO BE
DELIVERED PURSUANT TO SECTION 6.02 AND ANY OTHER CERTIFICATES OR DOCUMENTS
REASONABLY REQUESTED BY THE COMPANY.

 

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ARTICLE III

REPRESENTATIONS AND WARRANTIES
OF THE COMPANY

 

As an inducement to the Purchasers to enter into this Agreement, the Company
hereby represents and warrants to the Purchasers as follows, except as set forth
in the Company Disclosure Letter:

 

SECTION 3.01       Organization, Authority and Qualification of the Company. 
(a) Each of the Company and its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all necessary corporate power and authority to execute and
deliver this Agreement and the Ancillary Agreements, to carry out its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.  Each of the Company and its Subsidiaries has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted and is
qualified to do business in the jurisdictions listed in Section 3.01 of the
Company Disclosure Letter.  Each of the Company and its Subsidiaries is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary, other
than where the failure to be so duly qualified and in good standing would not
have a Material Adverse Effect.  The Company is Solvent.  The execution and
delivery of this Agreement and the Ancillary Agreements by the Company, the
performance by the Company of its respective obligations hereunder and
thereunder and the consummation by the Company of the transactions contemplated
hereby and thereby have been duly authorized by all requisite action on the part
of the Company and its stockholders, as the case may be.  This Agreement has
been, and upon their execution and delivery, the Ancillary Agreements, the Notes
and the Warrants shall have been, duly executed and delivered by the Company,
and (assuming in the case of this Agreement and the Ancillary Agreements, due
authorization, execution and delivery by the Purchasers) shall constitute,
legal, valid and binding obligations of the Company, except as may be limited by
any applicable bankruptcy, insolvency or other Laws affecting the rights of
creditors generally.

 

(b)           This Agreement and the Ancillary Agreements and the transactions
contemplated hereby and thereby have been unanimously approved by the Board of
Directors and the Board of Directors has recommended that the transactions
contemplated by this Agreement and the Ancillary Agreements be approved by the
Company’s stockholders.  Section 3.01(b) of the Company Disclosure Letter sets
forth the stockholder approvals required to be obtained under applicable Law and
the Company’s Certificate of Incorporation (including any certificates of
designation of classes or series of Preferred Stock) for (i) the issuance of the
Warrants and the Common Stock issuable upon exercise thereof, (ii) the amendment
of the Company’s Certificate of Incorporation to increase the number of
authorized shares of Common Stock to 800,000,000 and to effect the Preferred
Stock Amendment and (iii) stockholder approval of any other aspects of the
transactions contemplated by this Agreement, which the Board of Directors of the
Company may reasonably determine to be desirable or appropriate to submit to the
stockholders of the Company for approval (collectively, the “Required
Stockholder Approval”).  The Written Consent executed simultaneously with the
execution of this Agreement

 

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is the only action required to be taken by the Company’s stockholders to obtain
the Required Stockholder Approval.

 

SECTION 3.02       Subsidiaries.  Section 3.02 of the Company Disclosure Letter
sets forth the Subsidiaries of the Company (the “Company Subsidiaries”).  Each
of the Company Subsidiaries is wholly owned by the Company other than Advanced
Telemarketing Corporation.

 

SECTION 3.03       Debt and Capitalization.  (a)  Except for the Bank Debt, the
Subordinated Debt and except as disclosed in Section 3.03 of the Company
Disclosure Letter, the Company has no long-term debt.  Section 3.03 of the
Company Disclosure Letter sets forth the amounts outstanding under the Bank Debt
and the Subordinated Debt as of the date hereof.

 

(b)           The authorized capital stock of the Company consists of
200,000,000 shares of Common Stock and 2,000,000 shares of Preferred Stock.  As
of October 31, 2003, 52,171,168 shares of Common Stock were issued and
outstanding (not including 475,600 shares that were held in the Company’s
treasury), and the following shares of Preferred Stock were issued and
outstanding: (i) 29,778 shares of Series B Preferred Stock, which are not
convertible into shares of Common Stock, (ii) 144,493 shares of Series D
Preferred Stock, which are convertible into 7,224,669 shares of Common Stock,
(iii) 82,281 shares of Series E Preferred Stock, which are convertible into
3,464,457 shares of Common Stock, and (iv) 46,750 shares of Series F Preferred
Stock, which are convertible into 69,055,189 shares of Common Stock.  Assuming
conversion of all shares of Preferred Stock (other than the Series B Preferred
Stock) and the exercise of all outstanding options and warrants exercisable for
Common Stock, 131,915,483 shares of Common Stock would be outstanding as of the
date hereof.  Except as set forth in Section 3.03(b) of the Company Disclosure
Letter, each of the record owners of all shares of Company Common Stock and
Preferred Stock are set forth in Section 3.03(b) of the Company Disclosure
Letter and each of the outstanding shares of capital stock of the Company and
its Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, has been issued in accordance with the registration or
qualification provisions of the Securities Act, and any relevant state
securities Laws, or pursuant to valid exemptions therefrom, and has not been
issued in violation of (nor are any of the authorized shares of capital stock of
the Company subject to) any preemptive or similar rights created by Law, the
Certificate of Incorporation or Bylaws of the Company, or any agreement to which
the Company is a party or bound. Except as set forth in Section 3.03(b) of the
Company Disclosure Letter, the outstanding shares of capital stock of the
Company Subsidiaries are owned, of record and beneficially, by the Company or
another Company Subsidiary, free and clear of all Encumbrances.  Except as set
forth in Section 3.03(b) of the Company Disclosure Letter, no bonds, debentures,
notes or other indebtedness having the right to vote on any matters on which the
stockholders of the Company may vote are issued or outstanding.

 

(c)           Except as set forth in Section 3.03(c) of the Company Disclosure
Letter, there are no outstanding options, warrants, subscriptions, calls,
convertible securities, phantom equity, equity appreciation or similar rights,
or other rights, agreements, arrangements or commitments (contingent or
otherwise) (including, without limitation, any right of conversion or exchange
under any outstanding security, instrument or other agreement or any preemptive
right)

 

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obligating the Company or any of its Subsidiaries to deliver or sell, or cause
to be issued, delivered or sold, any shares of its capital stock or other
securities, instruments or rights which are, directly or indirectly, convertible
into or exercisable or exchangeable for any shares of its capital stock.  All
items listed in Section 3.03(c) of the Company Disclosure Letter will be
cancelled, terminated or released as of the Closing such that no liability will
continue to the Purchasers or the Company.

 

(d)           There are no outstanding contractual obligations, contingent or
otherwise, of the Company or any of its Subsidiaries to (i) repurchase, redeem
or otherwise acquire any shares of the capital stock of the Company or any of
its Subsidiaries or (ii) provide funds to, or make any investment in (in the
form of a loan, capital contribution or otherwise), or provide any guarantee
with respect to the obligations of, any Person, other than advances to the
Company Subsidiaries in the normal course of business.  Except as described in
Section 3.03(d) of the Company Disclosure Letter, neither the Company nor any of
its Subsidiaries (x) directly or indirectly owns, (y) has agreed to purchase or
otherwise acquire or (z) holds any interest convertible into or exchangeable or
exercisable for any material amount of capital stock (or equivalent equity
interest) of any Person (other than Company Subsidiaries).  There are no
agreements, arrangements or commitments of any character (contingent or
otherwise) pursuant to which any Person is or may be entitled to receive any
payment based on the revenues or earnings, or calculated in accordance
therewith, of the Company or any of its Subsidiaries.  Except as described in
Section 3.03(d) in the Company Disclosure Letter (and as will be terminated as
of the Closing), there are no shareholder agreements, voting trusts, proxies or
other material agreements or understandings in effect with respect to the voting
or transfer of any shares of capital stock of the Company or any of its
Subsidiaries to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound.

 

SECTION 3.04       No Conflict.  (a)  The execution, delivery and performance of
this Agreement and the Ancillary Agreements by the Company do not and will not
(i) violate, conflict with or result in the breach of any provision of the
Certificate of Incorporation and By-laws of the Company or any of its
Subsidiaries, (ii) conflict with or violate any Law or Governmental Order
applicable to the Company, any of its Subsidiaries or any of the assets,
properties or businesses of the Company or any of its Subsidiaries, or (iii)
conflict with, result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation of any Encumbrance on any of the shares of Common Stock or any of
the assets of the Company or its Subsidiaries pursuant to, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license, permit,
franchise or other instrument or arrangement to which the Company is a party or
by which any of the shares of Common Stock or any of the assets of the Company
or any of its Subsidiaries is bound or affected, other than such conflicts or
violations described in clauses (i) through (iii) above as would not reasonably
be expected to have a Material Adverse Effect.

 

SECTION 3.05       Consents and Approvals.  Other than as set forth in
Section 3.05 of the Company Disclosure Letter, the execution, delivery and
performance of this Agreement and the Ancillary Agreements by the Company do not
and will not require any

 

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material consent, approval, authorization or other order of, action by, filing
with or notification to, any Governmental Authority or other Person.

 

SECTION 3.06       Compliance with Laws.  (a)  The Company has conducted and
continues to conduct its business, in all material respects, in accordance with
all Laws and Governmental Orders applicable to the Company or its properties or
business, and the Company is not in violation in any material respect of any Law
or Governmental Order.

 

(B)           NO GOVERNMENTAL ORDER HAS OR, TO THE KNOWLEDGE OF THE COMPANY,
COULD AFFECT THE LEGALITY, VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT, ANY
ANCILLARY AGREEMENT OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY.

 

SECTION 3.07       Financial Information; Books and Records.  The Financial
Statements and the Interim Financial Statements (i) were prepared in accordance
with the books of account and other financial records of the Company and its
consolidated Subsidiaries, (ii) present fairly in all material respects the
consolidated financial condition and results of the consolidated operations and
cash flows and changes in stockholders’ equity of the Company and its
consolidated Subsidiaries as of the dates thereof or for the periods covered
thereby, (iii) have been prepared in accordance with GAAP applied on a basis
consistent with past practice (except as may be described in the notes thereto
and, in the case of the Interim Financial Statements, subject to normal year-end
adjustments), (iv) in the case of the Financial Statements, include all
adjustments that are necessary for a fair presentation of consolidated financial
condition and results of the operations as of the dates thereof or for the
periods covered thereby and (v) comply, in all material respects, with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto.  The books and records of the Company and its
Subsidiaries have been, and are being, maintained in accordance with GAAP,
applicable legal and regulatory requirements and reflect in all material
respects the substance of events and transactions that should be included
therein.

 

SECTION 3.08       Litigation.  Except as set forth in Section 3.08 of the
Company Disclosure Letter or SEC Reports, there are no material Actions by or
against the Company or any of its Subsidiaries, relating to the Company or any
of its Subsidiaries or affecting any of the assets or rights of the Company or
any of its Subsidiaries pending before any Governmental Authority (or, to the
knowledge of the Company, after reasonable inquiry, threatened to be brought by
or before any Governmental Authority) and neither the Company nor any of its
Subsidiaries nor any of their respective assets or properties is subject to any
material Governmental Order (nor, to the knowledge of the Company, after
reasonable inquiry, are there any such material Governmental Orders threatened
to be imposed by any Governmental Authority).

 

SECTION 3.09       SEC Reports.  The filings required to be made by the Company
under the Securities Act and the Exchange Act (the “SEC Reports”) have been
filed in a timely manner with the SEC, including all forms, statements, reports,
written agreements and all documents, exhibits, amendments and supplements
appertaining thereto, and the Company has complied in all material respects with
all applicable requirements of the appropriate act and the rules and regulations
thereunder.  As of their respective dates, the SEC Reports did not contain any
untrue statement of a material fact or omit to state a material fact required to
be

 

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stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.  None of the Company
Subsidiaries is required to file any form, report or other document with the
SEC.  The SEC has not initiated any proceeding or, to the Company’s knowledge,
investigation into the business or operations of the Company or any of its
Subsidiaries.  The Company has timely filed all certifications and statements
required by (a) Rule 13a-14 or Rule 15d-14 under the Exchange Act or (b) 18
U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002) with respect
to the SEC Reports filed after July 30, 2002.  Within 90 days preceding the date
of each applicable SEC Report, the Company has conducted an evaluation under the
supervision and with the participation of its management, including the
Company’s Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of its disclosure controls and
procedures, and has concluded that its disclosure controls and procedures are
effective to ensure that information required to be disclosed in the SEC Reports
is recorded, processed, summarized and reported, within the periods specified
in, and in accordance with the requirements of, the SEC’s rules, regulations and
forms.  Based on such evaluations, (i) there were no significant deficiencies in
the design or operation of internal controls which could adversely affect the
Company’s ability to record, process, summarize and report financial data or
material weaknesses in internal controls and (ii) there was no fraud, whether or
not material, that involved management or other employees of the Company or any
of its Subsidiaries who have a significant role in the Company’s internal
controls.  As used in this Section 3.09, the term “file” shall be broadly
construed to include any document or information “filed” or “furnished” to the
SEC.

 

SECTION 3.10       Valid Issuance of the Notes, Warrants and Warrant Shares.  At
the Closing, the Notes will be duly authorized by the Company and, when executed
and delivered by the Company, will be a valid and binding obligation of the
Company enforceable in accordance with its terms, except as may be limited by
any applicable bankruptcy, insolvency or other Laws affecting the rights of
creditors generally.  The Warrants, when issued in compliance with the
provisions of this Agreement, will be duly authorized and executed by the
Company and will be valid and binding obligations of the Company enforceable in
accordance with their terms.  The shares of Common Stock issuable upon exercise
of the Warrants will, upon necessary amendment to the Company’s Certificate of
Incorporation to increase the number of authorized shares of Common Stock, be
duly authorized and validly reserved for issuance and, upon issuance in
accordance with the terms of the Warrants for the consideration expressed
therein, will be duly and validly issued, fully paid, and nonassessable, and
will be free of restrictions on transfer other than restrictions on transfer
that result from applicable state and federal securities Laws.

 

SECTION 3.11       Absence of Certain Changes or Events; Absence of Undisclosed
Liabilities.  (a) Except as disclosed in the SEC Reports or as set forth in
Section 3.11(a) of the Company Disclosure Letter and except for the transactions
contemplated hereby, since December 31, 2002, the Company and its Subsidiaries,
taken as a whole, have conducted their businesses only in the ordinary course
and in a manner consistent with past practice and there has not been: (i) any
damage, destruction or loss (whether or not covered by insurance) with respect
to any assets of the Company or any of its Subsidiaries that has had or is
reasonably likely to have a Material Adverse Effect; (ii) any material change by
the Company or any of its Subsidiaries in their accounting methods, principles
or practices (except as may be required by

 

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applicable Law or GAAP); (iii) any declaration, setting aside or payment of any
dividends or distributions in respect of shares of the capital stock of the
Company or any of its Subsidiaries or any redemption, purchase or other
acquisition by the Company or any of its Subsidiaries of any of their
securities, except with respect to the Preferred Stock; (iv) any split,
combination or reclassification of any capital stock of the Company or any of
its Subsidiaries or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of
capital stock of the Company or any of its Subsidiaries; (v) any acquisition,
divestiture, or investment in the equity or debt securities of any Person
(including in any joint venture or similar arrangement) material to the Company
and its Subsidiaries, taken as a whole; (vi) any entry by the Company or any of
its Subsidiaries into any commitment or transaction material to the Company and
its Subsidiaries, taken as a whole, other than in the ordinary course of
business consistent with past practice; (vii) except for periodic adjustments in
the ordinary course of business consistent with past practice, any increase in
or establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan, or any other increase in the compensation payable or to
become payable to any directors, officers or employees of the Company or any of
its Subsidiaries, or any grant of severance or termination pay, or any contract
or arrangement entered into to make or grant any severance or termination pay,
any payment of any bonus, or the taking of any action not in the ordinary course
of business consistent with past practice with respect to the compensation or
employment of directors, officers or employees of the Company or any of its
Subsidiaries, (viii) any material election made by the Company or any of its
Subsidiaries for federal or state income Tax purposes, (ix) any material
acquisition or disposition of any assets or properties, or any contract for any
such acquisition or disposition entered into, (x) any material lease of real or
personal property entered into, other than in connection with foreclosed
property or in the ordinary course of business consistent with past practice, or
(xi) the occurrence of any event or the existence of any fact or circumstance
which could reasonably be expected to have a Material Adverse Effect.

 

(b)           As of the date hereof, except as and to the extent set forth in
Section 3.11(b) of the Company Disclosure Letter, in the Financial Statements or
in the SEC Reports, neither the Company nor any of its Subsidiaries has any
material Liabilities or obligations (whether absolute, accrued, contingent or
otherwise), other than Liabilities or obligations related to the transactions
contemplated by this Agreement.

 

SECTION 3.12       Material Contracts.  (a)  Section 3.12(a) of the Company
Disclosure Letter sets forth (i) any “material contracts” (as such term is
defined in Item 601(b)(10) of Regulation S-K); (ii) any material joint ventures,
partnerships, or similar arrangements; (iii) other agreements or arrangements
that give rise to a right of the other parties thereto to terminate such
material contract or to a right of first refusal or similar right thereunder as
a result of the execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby; (iv) any material employment, consulting, severance or termination
agreement with any director, officer, employee, agent or consultant of the
Company or any of its Subsidiaries; (v) any material severance programs,
policies, plans or arrangements to which the Company or any of its Subsidiaries
is obligated (except for any of such items that may be imposed by applicable
Law);

 

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or (vi) any agreements, licenses or other arrangements that could, after the
Closing, restrict the Purchasers, or any of their Affiliates, from engaging in
or competing with any line of business or in any geographic area to which or by
which either the Company or any of its Subsidiaries is a party or bound
(collectively, the “Material Contracts”).  All Material Contracts are valid and
in full force and effect except to the extent they have previously expired in
accordance with their terms and upon consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements shall continue in
full force and effect without penalty or other adverse consequence.  Neither the
Company nor any of its Subsidiaries has violated any provision of, or committed
or failed to perform any act that, with or without notice, lapse of time or
both, would constitute a default under the provisions of, any Material
Contract.  Neither the Company nor any of its Subsidiaries has received any
notice of termination, cancellation, breach or default under any Material
Contract, and, to the knowledge of the Company, no other party to any Material
Contract is in breach thereof or default thereunder.

 

(b)           Section 3.12(b) of the Company Disclosure Letter lists the ten
largest customers by approximate annual revenue to the Company and its
Subsidiaries (the “Largest Customers”) and the 25 largest suppliers (including
lessors) by approximate annual payments of the Company and its Subsidiaries (the
“Largest Suppliers”), with the amount of revenues or payments, as applicable,
attributable to each such customer and supplier for the Company’s 2002 fiscal
year and the first three months of its 2003 fiscal year.  Except as described in
Section 3.12(b) of the Company Disclosure Letter, none of the Largest Customers
or Largest Suppliers has terminated or materially altered its relationship with
the Company since the beginning of the Company’s 2003 fiscal year, or, to the
Company’s knowledge, threatened to do so or otherwise notified the Company of
any intention to do so, except for any such terminations or alterations as would
not have a Material Adverse Effect.

 

SECTION 3.13       Intellectual Property.  (a) The Company and its Subsidiaries
own, or have the right to use without infringing or violating the rights of any
third parties, except where such infringement or violation has not had, or would
not have, a Material Adverse Effect: (i) each trademark, trade name, brand name,
service mark or other trade designation owned or licensed by or to the Company
or any of its Subsidiaries, each patent, copyright and similar intellectual
property owned or licensed to or by the Company and each license, royalty,
assignment or other similar agreement and each registration and application
relating to the foregoing that is material to the conduct of the business of the
Company and its Subsidiaries taken as a whole; and (ii) each agreement relating
to technology, know-how or processes that the Company or its Subsidiaries is
licensed or authorized to use, or which it licenses or authorizes others to use,
that is material to the conduct of the business of the Company and its
Subsidiaries taken as a whole (collectively, the “Company Intellectual
Property”). No consent of third parties will be required for the use of the
Company Intellectual Property after the Closing, except as set forth in
Section 3.13(a) of the Company Disclosure Letter or where the failure to obtain
such consent would not have a Material Adverse Effect.  No claim has been
asserted by any person against the Company or any of its Subsidiaries regarding
the ownership of or the right to use any Company Intellectual Property or
challenging the rights of the Company or any of its Subsidiaries with respect to
any of the Company Intellectual Property which would have a Material Adverse
Effect.  Section 3.13(a) of the Company

 

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Disclosure Letter contains a list of all software developed by employees of the
Company in the scope of their employment.

 

(b)           Except as set forth in Section 3.13(b) of the Company Disclosure
Letter, to the Company’s knowledge, no person or entity has asserted any claim
that any product, activity or operation of the Company or any of its
Subsidiaries infringes upon or involves, or has resulted in the infringement of,
any proprietary right of such person or entity, except for such infringement
which has not had or would not have a Material Adverse Effect; and no
proceedings have been instituted, are pending or, to the Company’s knowledge,
are threatened which challenge the rights of the Company or any of its
Subsidiaries with respect thereto, which would have a Material Adverse Effect.

 

SECTION 3.14       Taxes.  Except for such matters as would not have a Material
Adverse Effect, (i) all returns and reports relating to Taxes (“Tax Returns”)
required to be filed by or with respect to the Company and each of its
Subsidiaries have been timely filed; (ii) the Company and each of its
Subsidiaries has paid all Taxes that are due from or with respect to it; (iii)
the Company and each of its Subsidiaries has withheld and paid all Taxes
required by all applicable Laws to be withheld or paid in connection with any
amounts paid or owing to any employee, creditor, independent contractor or other
third party; (iv) there are no outstanding agreements, waivers, or arrangements
extending the statutory period of limitation applicable to any claim for, or the
period for the collection or assessment of, Taxes due from or with respect to
the Company or any of its Subsidiaries for any taxable period; (v) no audit,
action, proceeding, investigation, dispute or claim by any court, governmental
or regulatory authority, or similar person is being conducted or is pending or,
to the Company’s knowledge, threatened in regard to any Taxes due from or with
respect to the Company or any of its Subsidiaries or any Tax Return filed by or
with respect to the Company or any of its Subsidiaries; (vi) no claim has been
made by a taxing authority in a jurisdiction in which the Company does not file
Tax Returns that the Company is required to file Tax Returns in such
jurisdiction; (vii) no assessment of any deficiency for Taxes is proposed
against the Company or any of its Subsidiaries or any of their assets; (viii)
there are no liens for Taxes (other than for current Taxes not yet due and
payable) upon the assets of the Company or any of its Subsidiaries; (ix) neither
the Company nor any of its Subsidiaries has any obligation or liability for the
payment of Taxes of any other person arising as a result of Treas. Reg.
§1.1502-6 (or any corresponding provision of state, local or foreign income tax
Laws) any obligation to indemnify another person or as a result of the Company
or any of its Subsidiaries assuming or succeeding to the Tax liability of any
other person as a successor, transferee or otherwise; (x) all Taxes accrued but
not yet due and all contingent liabilities for Taxes are adequately reflected in
the reserves for Taxes in the financial statements referred to in Section 3.07;
(xi) none of the Company or any of its Subsidiaries has been a party to any
distribution occurring during the last two years in which the parties to such
distribution treated the distribution as one to which Section 355 of the Code is
applicable; (xii) neither the Company nor any of its Subsidiaries has requested
any extension of time within which to file any Tax Return, which Tax Return has
not since been filed; (xiii) neither the Company nor any of its Subsidiaries is
a party to any contract that will result in a requirement to pay any “excess
parachute payment” within the meaning of Section 280G of the Code in connection
with the transactions contemplated by this Agreement and the Ancillary
Agreements; (xiv) neither the Company nor any of its Subsidiaries is a party to
a tax sharing or tax indemnity

 

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agreement or any other agreement of a similar nature that remains in effect;
(xv) neither the Company nor any of its Subsidiaries has filed a consent under
Section 341(f) of the Code concerning collapsible corporations; and (xvi) the
Company has not been a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Code during the period specified in
Section 897(c)(1)(A)(ii) of the Code. No cancellation of indebtedness income
will be incurred as a result of the transactions contemplated by this Agreement
and the Ancillary Agreements in excess of the net operating losses available to
the Company to shelter fully such cancellation of indebtedness income.

 

SECTION 3.15       Properties; Encumbrances.  Except as set forth in
Section 3.15 of the Company Disclosure Letter, each of the Company and its
Subsidiaries has good, valid and legal title to or, in the case of leased
properties and assets, a valid leasehold interest in, all the properties and
assets which it purports to own or lease (real, personal and mixed, tangible and
intangible), including, without limitation, all the properties and assets
reflected in the Company’s balance sheet as of September 30, 2003, which has
been previously provided to the Purchasers (the “Company Balance Sheet”), except
for personal property sold since the date of the Company Balance Sheet (the
“Balance Sheet Date”) in the ordinary course of business consistent with past
practices, and except where the failure to have such title or interest would not
have a Material Adverse Effect.  Section 3.15 of the Company Disclosure Letter
includes a fixed tangible and intangible asset list as of September 1, 2003 for
the Company and each subsidiary (the “Fixed Asset List”).  All properties and
assets reflected in the Company Balance Sheet and the Fixed Asset List are free
and clear of all title defects or objections, liens, claims, charges, security
interests or other encumbrances of any nature whatsoever, except for liens for
current taxes not yet due, and except as would not have a Material Adverse
Effect.  To the Company’s knowledge, all material tangible properties of the
Company are in a good state of maintenance and repair (ordinary wear and tear
excepted), conform in all material respects with all applicable ordinances,
regulations and zoning laws and are considered by the Company to be adequate for
the current business of the Company in all material respects.

 

SECTION 3.16       Insurance.  Section 3.16 of the Company Disclosure Letter
sets forth a list of all material policies of insurance of the Company and its
Subsidiaries currently in effect, which list is accurate and complete in all
material respects.  All of the policies relating to insurance maintained by the
Company or any of its Subsidiaries with respect to its material properties and
the conduct of its business in any material respect (or any comparable policies
entered into as a replacement therefor) are in full force and effect and neither
the Company nor any of its Subsidiaries has received any notice of cancellation
with respect thereto.

 

SECTION 3.17       Environmental Matters.  (i) To the Company’s knowledge, there
is no Release or threatened Release of any Hazardous Materials existing on,
beneath or from the surface, subsurface or ground water associated with Company
Property currently occurring, nor has any Release occurred at any time in the
past, which would require investigation, reporting, response, remediation or
other corrective action under any Environmental Law; (ii) to the Company’s
knowledge, the Company Property, and all uses and conditions of the Company
Property and all operations of the Company, have been and are in compliance, in
all material aspects, with all Environmental Laws; (iii) the Company has not
received any notice of violation of Environmental Laws or other similar
communication; (iv) to the Company’s knowledge, there are no facts or
circumstances relating to the Company Property

 

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or the business of the Company that would give rise to any material violation or
liability under any Environmental Law; (v) to the Company’s knowledge, the
Company Property and the operations of the Company comply, in all material
respects, with all terms and conditions of any permits issued under
Environmental Laws; and (vi) no Environmental Claims against the Company or any
of its Subsidiaries or any Company Property are pending or, to the Company’s
knowledge, threatened.

 

SECTION 3.18       Employee Benefit Plans; Labor Matters.  (a)  Set forth in
Section 3.18(a) of the Company Disclosure Letter is a complete and correct list
of all employee benefit plans, arrangements or agreements, including, but not
limited to, any employee benefit plan within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), all plans
or policies providing for “fringe benefits,” all other bonus, incentive
compensation, deferred compensation, profit sharing, severance, stock option,
stock purchase, stock appreciation right, supplemental unemployment, layoff,
consulting, or any other similar plan, agreement, policy or understanding, and
any trust, escrow or other agreement related thereto, which provides benefits,
or describes policies or procedures applicable, to any officer, employee,
director, consultant, former officer or former director of the Company, any of
its Subsidiaries, or any other ERISA Affiliate, or any dependent or beneficiary
thereof (each, a “Company Employee Plan,” and collectively, the “Company
Employee Plans”).  The term “Company ERISA Affiliate” means any corporation,
trade or business which together with the Company would be deemed to be a single
employer under the provisions of ERISA or Section 414 of the Internal Revenue
Code of 1986, as amended (the “Code”).  Except as set forth in the Company
Disclosure Letter or as otherwise contemplated pursuant to this Agreement,
neither the Company nor any of its Subsidiaries has communicated to any employee
of the Company or any of its Subsidiaries any intention or commitment to
materially modify any Company Employee Plan or to establish or implement any
other material benefit plan, program or arrangement.

 

(b)           With respect to each Company Employee Plan, the Company has made
available to the Purchasers true, correct and complete copies of (i) the plan
documents and summary plan descriptions and any amendments or modifications
thereto other than for any plans that are Multiemployer Plans (defined below);
(ii) the most recent determination letter, if applicable, received from the
Internal Revenue Service (the “IRS”) or a copy of or proof of filing of any
pending applications with the IRS; (iii) the annual reports required to be filed
for the plan years ended December 31, 2000 and December 31, 2001, including all
attachments, exhibits and schedules thereto; (iv) the two most recent actuarial
reports, if applicable; (v) all related trust agreements, insurance contracts or
other funding agreements; and (vi) all other documents, records or other
materials related thereto reasonably requested by the Purchasers.

 

(c)           Except as set forth in the Company Disclosure Letter, (i) each of
the Company Employee Plans has been operated and administered in all material
respects in compliance with applicable Law, including but not limited to ERISA
and the Code; (ii) each of the Company Employee Plans intended to be “qualified”
within the meaning of Section 401(a) of the Code has received a determination
letter from the IRS to such effect and the Company knows of no event that would
cause the disqualification of any such Employee Plan; (iii) with respect to each
Company Employee Plan that is subject to Title IV of ERISA, the present value of
such Company Employee Plan’s “accumulated benefit obligation,” based on
reasonable actuarial

 

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assumptions set forth in the actuarial statement for the Company Employee Plan,
did not, as of its then latest valuation date, exceed the fair value of the
assets of such Employee Plan allocable to such obligation in an amount that
would have a Material Adverse Effect; (iv) no Company Employee Plan provides
welfare benefits (whether or not insured) with respect to current or former
employees of the Company or any of its Subsidiaries beyond their retirement or
other termination of service, other than coverage mandated by applicable law;
(v) no liability under Title IV of ERISA or Section 412 of the Code has been
incurred (directly or indirectly) by the Company or a Company ERISA Affiliate
that has not been satisfied in full; (vi) no Company Employee Plan is a
“multiemployer pension plan,” as such term is defined in Section 3(37) of ERISA
(“Multiemployer Plan”), or a plan described in Section 4063 of ERISA; (vii) all
contributions or other amounts payable by the Company or any Company ERISA
Affiliate as of the Closing Date with respect to each Company Employee Plan in
respect of current or prior plan years have been paid or accrued in accordance
with GAAP and, if applicable, Section 412 of the Code; (viii) to the knowledge
of the Company, neither the Company, any subsidiary, nor any other Company ERISA
Affiliate has engaged in a transaction in connection with which the Company or
any of its Subsidiaries or any other Company ERISA Affiliate would be subject to
either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a
tax imposed pursuant to Section 4975 or 4976 of the Code; (ix) there are no
pending, anticipated or, to the knowledge of the Company, threatened claims
(other than routine claims for benefits) by, on behalf of or against any of the
Company Employee Plans or any trusts related thereto or against any employee
benefit plan formerly maintained by the Company or any of its Subsidiaries; (x)
the Company Employee Plans could be terminated as of the Closing Date without
any liability to the Purchasers, the Company or any of its Subsidiaries or any
other ERISA Affiliate that, individually or in the aggregate, would have a
Material Adverse Effect; (xi) each agreement, contract or other commitment,
obligation or arrangement relating to a Company Employee Plan or the assets of a
Company Employee Plan (or its related trust) including, but not limited to, each
administrative services agreement, insurance policy or annuity contract, may be
amended or terminated at any time without any liability, cost, or expense,
individually or in the aggregate, to the Company Employee Plan, the Company, or
any of its Subsidiaries that would have a Material Adverse Effect; (xii) neither
the Company, any of its Subsidiaries, nor any other Company ERISA Affiliate
maintains or has ever participated in a multiple employer welfare arrangement as
described in Section 3(40)(A) of ERISA; (xiii) no lien has been filed by any
person or entity and no lien exists by operation of law or otherwise on the
assets of the Company or any of its Subsidiaries relating to, or as a result of,
the operation or maintenance of any Company Employee Plan, and the Company has
no knowledge of the existence of facts or circumstances that would result in the
imposition of such lien; (xiv) neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (1)
result in any material payment becoming due to any director or any employee of
the Company or any of its Subsidiaries; (2) materially increase any benefits
otherwise payable under any Company Employee Plan; (3) result in any
acceleration of the time of payment or vesting of any benefits under any Company
Employee Plan to any material extent; or (4) result, separately or in the
aggregate, in an “excess parachute payment” within the meaning of Section 280G
of the Code; and (xv) no amounts payable under any Company Employee Plan or
other agreement or arrangement will fail to be deductible for United States
federal income tax purposes by virtue of Section 162(m) of the Code.

 

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(d)           To the knowledge of the Company, except as set forth in
Section 3.18(d) of the Company Disclosure Letter, each of the Company and its
Subsidiaries is in compliance with all applicable Laws respecting employment,
employment practices and wages and hours and with all provisions of each
collective bargaining agreement to which it is a party.  Except as set forth in
Section 3.18(d) of the Company Disclosure Letter, there is no pending or, to the
Company’s knowledge, threatened (i) labor dispute, strike or work stoppage
against the Company or any of its Subsidiaries which may materially interfere
with the respective business activities of the Company or any of its
Subsidiaries prior to or after the Closing or (ii) charge or complaint against
the Company or any of its Subsidiaries by the National Labor Relations Board or
any comparable state agency.

 

(e)           Since December 31, 2001, except as set forth in Section 3.18(e) of
the Company Disclosure Letter, there have not been any claims brought for
violations of any law, rule, code, regulation or requirement of the Occupational
Safety and Health Administration nor, to the Company’s knowledge, have there
been any violations of these laws, rules, codes, regulations or requirements.

 

SECTION 3.19       Labor.  No work stoppage involving the Company or any of its
Subsidiaries is pending or, to the knowledge of the Company, threatened. 
Neither the Company nor any of its Subsidiaries is involved in, or, to the
knowledge of the Company, threatened with or affected by, any dispute,
arbitration, lawsuit or administrative proceeding relating to labor or
employment matters which might reasonably be expected to interfere in any
material respect with the respective business activities of the Company or any
of its Subsidiaries.  No employees of the Company or any of its Subsidiaries are
represented by any labor union, and, to the knowledge of the Company, no labor
union is attempting to organize employees of the Company or any of its
Subsidiaries.

 

SECTION 3.20       Investment Company.  The Company is not, and immediately
after receipt of payment for the Notes and Warrants will not be, an “investment
company” or an entity “controlled” by an “investment company” within the meaning
of the Investment Company Act and shall conduct its business in a manner so that
it will not become subject to the Investment Company Act.

 

SECTION 3.21       Brokers.  No placement agent, broker, finder or investment
banker (other than SunTrust Robinson Humphrey Capital Markets, Inc.) is entitled
to any placement, brokerage, finder’s or other fee or commission in connection
with the transactions contemplated by this Agreement and the Ancillary
Agreements based upon arrangements made by or on behalf of the Company.

 

SECTION 3.22       Indemnification.  Except as disclosed in Section 3.22 of the
Company Disclosure Letter or in this Agreement, the Company is not a party to
any indemnification agreement with any of its directors, officers, employees,
agents or other persons who serve or served in any other capacity with any other
enterprise at the request of the Company (a “Covered Person”), and there are no
claims which have been or, to the knowledge of the Company, will be asserted for
which any Covered Person would be entitled to indemnification under the
Certificate of Incorporation or Bylaws of the Company, applicable Law,
regulation or any indemnification agreement. All indemnification or similar
agreements

 

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between the Company and the directors and officers of the Company are
substantially similar and are identified in Section 3.22 of the Company
Disclosure Letter.

 

SECTION 3.23       Registration Rights.  Except as disclosed in Section 3.23 of
the Company Disclosure Letter and except for the Registration Rights Agreement,
the Company is not under any obligation that will continue after the Closing,
whether contingent or otherwise, to register any of its securities under the
Securities Act.

 

SECTION 3.24       Affiliate Agreements.  Schedule 3.24 of the Company
Disclosure Letter sets forth all contracts, agreements, understandings or
obligations (oral or written) between the Company and its Affiliates (including
the Majority Stockholders but excluding the Company Subsidiaries) (the
“Affiliate Agreements”) as of the date hereof.

 

SECTION 3.25       Existing Merger Agreement.  The Company has the right to and
has terminated the Agreement and Plan of Merger, dated as of July 11, 2003, by
and among Allserve Systems plc, Allserve Systems, Inc. and the Company (the
“Merger Agreement”).  Other than payment of the Break-Up Fee (as defined in the
Merger Agreement), to the extent payable, in the amount of $1,137,500, the
Company has no material Liabilities arising from the Merger Agreement or the
Company’s termination thereof, although such Liabilities may be alleged or
asserted.

 

SECTION 3.26       Fairness Opinion.  The Company has received, and has provided
the Purchasers with a copy of, the opinion of SunTrust Robinson Humphrey Capital
Markets, Inc., to the effect that, as of the date of this Agreement, the
transactions contemplated by this Agreement and the Ancillary Agreements are
fair, from a financial point of view, to the Company’s stockholders.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER

 

As an inducement to the Company to enter into this Agreement, the Purchasers
severally but not jointly, hereby represent and warrant to the Company as
follows:

 

SECTION 4.01       Organization and Authority of Each of the Purchasers.  Each
of the Purchasers is duly organized, validly existing and in good standing under
the Laws of the jurisdiction of its organization and has all necessary power and
authority to enter into this Agreement and the Ancillary Agreements to which it
is a party, to carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated by this Agreement and thereunder.  The
execution and delivery by each of the Purchasers of this Agreement and the
Ancillary Agreements, the performance by each of the Purchasers of its
obligations hereunder and thereunder and the consummation by each of the
Purchasers of the transactions contemplated hereby and thereby have been duly
authorized by all requisite action on the part of each of the Purchasers.  This
Agreement has been, and upon their execution and delivery the Ancillary
Agreements shall be, duly executed and delivered by each of the Purchasers, and
(assuming due authorization, execution and delivery by the Company) this
Agreement and the Ancillary

 

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Agreements shall constitute legal, valid and binding obligations of the
Purchasers, enforceable against the Purchasers in accordance with their terms.

 

SECTION 4.02       No Conflict.  The execution, delivery and performance by each
of the Purchasers of this Agreement and the Ancillary Agreements do not and will
not (a) violate, conflict with or result in the breach of any provision of the
organizational documents of such Purchaser, (b) conflict with or violate any Law
or Governmental Order applicable to such Purchaser or (c) conflict with, or
result in any breach of, constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default) under, require any
consent under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation or cancellation of, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license, permit,
franchise or other instrument or arrangement to which such Purchaser is a party,
which would adversely affect the ability of such Purchaser to carry out its
obligations under, and to consummate the transactions contemplated by, this
Agreement or by the Ancillary Agreements, except in the case of any of the
foregoing that would not be reasonably expected to have a material adverse
effect.

 

SECTION 4.03       Restricted Securities.  Neither the offer nor the sale of the
Notes and the Warrants purchased hereunder will be registered under the
Securities Act, or any state securities Laws.  Each of the Purchasers
understands that the offering and sale of the Notes and the Warrants is intended
to be exempt from registration under the Securities Act, by virtue of
Section 4(2) thereof and the provisions of Regulation D promulgated thereunder,
based, in part, upon the representations, warranties and agreements of the
Purchasers contained in this Agreement.

 

SECTION 4.04       Accredited Investor.  Each of the Purchasers is an
“accredited investor” as such term is defined in Rule 501(a) of Regulation D
under the Securities Act.

 

SECTION 4.05       Purchase Entirely For Own Account.  Each of the Purchasers is
acquiring the Notes and the Warrants to be acquired hereunder (and will acquire
the Common Stock upon exercise of the Warrants) for its own account, for
investment and not with a view to the public resale or distribution thereof, in
violation of any securities Law.  None of the Purchasers has any contract,
agreement, understanding or arrangement with any Person to sell, grant or
transfer any portion of the Notes or the Warrants.

 

SECTION 4.06       Investment Company.  Neither of the Purchasers is an
“investment company” or an entity “controlled” by an “investment company” within
the meaning of the Investment Company Act.

 

ARTICLE V

 

ADDITIONAL AGREEMENTS

 

SECTION 5.01       Access to Information.  At the time of Closing and at any
time thereafter if the Purchasers (a) do not have a director designated to serve
on the Board of Directors of the Company actually serving on such Board of
Directors and (b) continue to hold at

 

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least 25% of the Warrants (or Common Stock received upon exercise of the
Warrants) initially purchased hereunder, upon reasonable prior notice, the
Company shall cause its officers, directors, employees, agents, representatives,
accountants and counsel to grant the Purchasers reasonable access during normal
business hours to the offices, properties, books, records and personnel of the
Company and such additional information concerning the business and properties
of the Company as the Purchasers and their representatives may reasonably
request.

 

SECTION 5.02       INFORMATION STATEMENT.  (A)   AS PROMPTLY AS REASONABLY
PRACTICAL, BUT IN NO EVENT LATER THAN 10 BUSINESS DAYS AFTER CLOSING, THE
COMPANY SHALL PREPARE AND FILE WITH THE SEC AN INFORMATION STATEMENT (AS SUCH
INFORMATION STATEMENT MAY BE AMENDED, THE “INFORMATION STATEMENT”) TO BE SENT TO
THE COMPANY’S STOCKHOLDERS IN ACCORDANCE WITH REGULATION 14C OF THE EXCHANGE
ACT.  PRIOR TO FILING THE INFORMATION STATEMENT WITH THE SEC, THE COMPANY SHALL
GIVE THE PURCHASERS THE OPPORTUNITY TO TIMELY REVIEW AND COMMENT UPON THE
INFORMATION STATEMENT.  THE COMPANY WILL PROMPTLY ADVISE, AND PROVIDE COPIES TO,
THE PURCHASERS OF ANY REQUEST BY THE SEC FOR ADDITIONAL INFORMATION, AMENDMENT
OF THE INFORMATION STATEMENT OR COMMENTS THEREON AND ALL RESPONSES BY THE
COMPANY THEREON.

 

(B)           THE COMPANY REPRESENTS THAT THE INFORMATION SUPPLIED BY THE
COMPANY FOR INCLUSION IN THE INFORMATION STATEMENT SHALL NOT CONTAIN ANY UNTRUE
STATEMENT OF A MATERIAL FACT OR FAIL TO STATE ANY MATERIAL FACT REQUIRED TO BE
STATED THEREIN OR NECESSARY IN ORDER TO MAKE THE STATEMENTS THEREIN, IN LIGHT OF
THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING.  THE INFORMATION
STATEMENT WILL COMPLY AS TO FORM AND SUBSTANCE IN ALL MATERIAL RESPECTS WITH THE
APPLICABLE REQUIREMENTS OF THE EXCHANGE ACT.

 

(C)           EACH OF THE PURCHASERS, SEVERALLY BUT NOT JOINTLY, REPRESENTS THAT
THE INFORMATION SUPPLIED IN WRITING BY SUCH PURCHASER FOR INCLUSION IN THE
INFORMATION STATEMENT SHALL NOT CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT
OR FAIL TO STATE ANY MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY IN
ORDER TO MAKE THE STATEMENTS THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH
THEY WERE MADE, NOT MISLEADING.

 

SECTION 5.03       Further Action.  (a)  Each party hereto shall use its
commercially reasonable efforts to take, or cause to be taken, all appropriate
action, do or cause to be done all things necessary, proper or advisable under
applicable Law, and execute and deliver such documents and other papers as may
be reasonably required to carry out the provisions of this Agreement and the
Ancillary Agreements and consummate and make effective the transactions
contemplated by this Agreement and the Ancillary Agreements.  The Company shall
use its commercially reasonable efforts to obtain the third party consents set
forth in Section 3.05 of the Company Disclosure Letter as soon as practical
after the Closing.  The Company shall cooperate with the Purchasers and use its
commercially reasonable efforts to enter into the Credit Facility as soon as
practical after the Closing.  No later than the first Business Day after the
date hereof, the Company shall pay the Commitment Fee to Wells Fargo Foothill
pursuant to Section 2.05(a).  The Company shall use its commercially reasonable
efforts to enter into the Security Agreement on terms and conditions reasonably
acceptable to the Company and the Purchasers as soon as practical after the
Closing.

 

(b)           Each party hereto shall cooperate and use its commercially
reasonable efforts to (i) promptly prepare and file with the appropriate
Governmental Authorities all

 

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necessary reports, applications, petitions, forms, notices or other applicable
documents required or advisable with respect to the transactions contemplated by
this Agreement and the Ancillary Agreements (except for necessary reports,
applications, petitions, forms, notices or other applicable documents required
or advisable solely with respect to the exercise of the Warrants which shall be
promptly prepared and filed upon the request of the Purchasers), (ii) comply, at
the earliest practicable date following the date of receipt by the Purchasers or
the Company, with any request for information or documents from a Governmental
Authority related to, and appropriate in the light of, matters within the
jurisdiction of such Governmental Authority, provided that (x) the parties shall
use their commercially reasonable efforts to keep any such information
confidential to the extent required by the party providing the information and
(y) each party may take, in its reasonable discretion, appropriate legal action
not to provide information relating to trade or business secrets, privileged
information or other information which reasonably should be treated as
confidential, (iii) take all actions necessary or advisable to obtain no later
than the Termination Date all necessary permits, consents, approvals and
authorizations of all Governmental Authorities necessary or advisable to
consummate the transactions contemplated by this Agreement and the Ancillary
Agreements (except for all necessary permits, consents, approvals and
authorizations of all Governmental Authorities necessary or advisable solely
with respect to the exercise of the Warrants for which each party shall take all
actions necessary or advisable to obtain upon the request of the Purchasers) and
(iv) oppose vigorously any litigation that would impede or delay the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, including, without limitation, promptly appealing any
adverse court order.

 

SECTION 5.04       Corporate Actions.  So long as any Warrants are outstanding,
the Company shall at all times have authorized and reserved for issuance a
sufficient number of shares of Common Stock to permit the full exercise of the
Warrants issued in connection with this Agreement.

 

SECTION 5.05       Affiliate Agreements.  The Company shall use its commercially
reasonable efforts to terminate each of the Affiliate Agreements as of the
Closing or as soon as practical thereafter.

 

SECTION 5.06       Directors’ and Officers’ Insurance.  (a) The Purchasers and
the Company shall cause the provisions of the Certificate of Incorporation of
the Company with respect to indemnification currently set forth in the Seventh
Article of the Certificate of Incorporation and the provisions of the Bylaws of
the Company with respect to indemnification currently set forth in Article VIII
of the Bylaws not to be amended, repealed or otherwise modified for a period of
six years from the Closing in any manner that would affect adversely the rights
thereunder of individuals who, at or prior to the Closing, were directors,
officers, employees, fiduciaries or agents of the Company (the “Indemnified
Persons”), unless such modification shall be required by Law.

 

(b)           At or prior to the Closing, the Company will purchase a
single-premium six-year policy of directors’ and officers’ liability insurance
covering current and former officers and directors of the Company and its
Subsidiaries in the same amounts and on terms and conditions, including limits,
as favorable to such officers and directors as the policies in effect as of the
date hereof (provided that the Purchasers may substitute for the policies
carried by the

 

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Company policies of at least the same coverage containing terms and conditions
which are not less advantageous to the beneficiaries thereof) with respect to
matters or events occurring prior to the Closing.

 

(c)           In the event the Company (i) consolidates with or merges into any
other Person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any Person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company shall
assume the obligations set forth in this Section 5.06.

 

(d)           The provisions of this Section 5.06 are intended to be for the
benefit of, and will be enforceable by, each of the Indemnified Persons, their
heirs and their representatives.

 

(e)           Nothing in this Agreement is intended to, will be construed to or
will release, waive or impair any rights to directors’ and officers’ insurance
claims under any policy that is or has been in existence with respect to the
Company or any of its directors or officers, it being understood and agreed that
the indemnification provided for in this Section 5.06 is supplemental and not
prior to or in substitution for any such claims under such policies.

 

SECTION 5.07       Use of Proceeds.  The Company shall use the proceeds from the
sale and issuance of the Notes and Warrants in accordance with, and in the order
of, Schedule 2 hereto.  If it is ultimately determined that all or any portion
of the Break-Up Fee (as defined in the Merger Agreement) is not owed and the
Break-Up Fee or any portion thereof is not paid to Allserve Systems plc or any
of its Affiliates pursuant to the Merger Agreement, the amount of the Break-Up
Fee included on Schedule 2 hereto (less (i) any expenses of the Company or the
Purchasers incurred in connection with the termination of the Merger Agreement
and opposing the Break-Up Fee, (ii) any payments by the Company to Allserve
Systems plc or any of its Affiliates and (iii) less any obligations owed to the
Company by Allserve Systems plc or any of its Affiliates) shall be distributed
reasonably promptly to the holders of the Subordinated Debt pro rata on the same
basis that such holders were initially paid pursuant to Schedule 2 hereto.

 

SECTION 5.08       Preferred Stock Amendment.  Prior to the Subsequent Closing
Date, the Company shall cause the Certificate of Incorporation and the
Certificate of Designation of the Series F Preferred to be amended (the
“Preferred Stock Amendment”) to adjust the conversion rate such that, following
such amendment, the 23,375 shares of Series F Preferred outstanding immediately
after the Closing shall be convertible into 46,910,503 shares of Common Stock on
the Subsequent Closing Date.

 

ARTICLE VI

 

CONDITIONS TO CLOSING

 

SECTION 6.01       Conditions to Obligations of the Purchasers.  The Purchasers’
obligation to purchase and to pay for the Notes and the Warrants on the Closing
Date shall be subject to the satisfaction or waiver of each of the following
conditions precedent on or prior to the Closing Date:

 

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(A)           ANCILLARY AGREEMENTS.  THE COMPANY SHALL HAVE EXECUTED AND
DELIVERED TO THE PURCHASERS EACH OF THE ANCILLARY AGREEMENTS TO WHICH IT IS A
PARTY;

 

(B)           ISSUANCE OF THE NOTES AND THE WARRANTS.  ALL ACTIONS REQUIRED BY
ANY APPLICABLE LAW OR NECESSARY IN THE REASONABLE OPINION OF THE PURCHASERS TO
ISSUE THE NOTES AND THE WARRANTS (OTHER THAN FURNISHING THE INFORMATION
STATEMENT TO THE COMPANY’S STOCKHOLDERS PURSUANT TO REGULATION 14C OF THE
EXCHANGE ACT AND AMENDING THE COMPANY’S CERTIFICATE OF INCORPORATION TO INCREASE
THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK) SHALL HAVE BEEN DULY TAKEN (OR
PROVISIONS THEREFOR SHALL HAVE BEEN MADE), INCLUDING, WITHOUT LIMITATION, THE
MAKING OF ALL REGISTRATIONS AND FILINGS, AND ALL NECESSARY CONSENTS SHALL HAVE
BEEN RECEIVED;

 

(C)           CONVERSION OF PREFERRED STOCK.  CONTEMPORANEOUSLY WITH THE
CLOSING, THAYER SHALL DELIVER ALL OF ITS SHARES OF SERIES D PREFERRED AND SERIES
E PREFERRED AND 2,572,364 SHARES OF COMMON STOCK TO THE COMPANY FOR CANCELLATION
(THE “THAYER CONDITION”).  CONTEMPORANEOUSLY WITH THE CLOSING, ALL OTHER HOLDERS
OF THE SERIES E PREFERRED SHALL CONVERT SUCH SHARES INTO COMMON STOCK IN
ACCORDANCE WITH THEIR RESPECTIVE TERMS.  CONTEMPORANEOUSLY WITH THE CLOSING,
23,375 SHARES OF SERIES F PREFERRED, REPRESENTING 50% OF THE OUTSTANDING SHARES
OF SERIES F PREFERRED AS OF THE CLOSING, SHALL BE CONVERTED INTO COMMON STOCK IN
ACCORDANCE WITH THEIR RESPECTIVE TERMS.  ON THE SUBSEQUENT CLOSING DATE, THE
REMAINING 23,375 OUTSTANDING SHARES OF SERIES F PREFERRED SHALL BE CONVERTED
SUBJECT TO THE COMPLETION AND EFFECTIVENESS OF THE THAYER CONDITION AND THE
PREFERRED STOCK AMENDMENT.

 

(D)           TERMINATION OF WARRANTS AND OPTIONS.  ALL ITEMS LISTED IN
SECTION 3.03(C) OF THE COMPANY DISCLOSURE LETTER WILL BE CANCELLED, TERMINATED
OR RELEASED BY THE CLOSING SUCH THAT NO LIABILITY WILL CONTINUE TO THE
PURCHASERS OR THE COMPANY.

 

(E)           EXISTING DEBT.  SIMULTANEOUSLY WITH THE CLOSING, THE COMPANY SHALL
HAVE OBTAINED RELEASES OF THE BANK DEBT AND THE SUBORDINATED DEBT AS OF THE
CLOSING ON SUBSTANTIALLY THE SAME TERMS AND CONDITIONS AS HAVE BEEN PREVIOUSLY
NEGOTIATED IN CONNECTION WITH THE MERGER AGREEMENT AND OTHERWISE IN FORM AND
SUBSTANCE SATISFACTORY TO THE PURCHASERS AND IN EXCHANGE FOR THE AMOUNTS SET
FORTH ON SCHEDULE 2;

 

(F)            BOARD COMPOSITION.  ALL OF THE CURRENT DIRECTORS OF THE COMPANY
(OTHER THAN THE CHIEF EXECUTIVE OFFICER) HERETO SHALL HAVE DELIVERED THEIR
WRITTEN RESIGNATIONS EFFECTIVE AS OF THE CLOSING AND THE INDIVIDUALS SET FORTH
ON SCHEDULE 3 HERETO, INCLUDING SIX INDIVIDUALS NAMED BY THE PURCHASERS AND
REASONABLY ACCEPTABLE TO THE COMPANY AND COMPRISING A MAJORITY OF THE BOARD,
SHALL HAVE BEEN APPOINTED TO THE BOARD OF DIRECTORS OF THE COMPANY EFFECTIVE AS
OF THE CLOSING; AND

 

(G)           OPINION OF COUNSEL.  THE PURCHASERS SHALL HAVE RECEIVED FROM
HUGHES & LUCE LLP, COUNSEL FOR THE COMPANY, A LEGAL OPINION DATED AS OF THE
CLOSING DATE IN FORM AND SUBSTANCE MUTUALLY AGREED UPON BY THE COMPANY AND THE
PURCHASERS.

 

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SECTION 6.02       Conditions to Obligations of the Company.  The obligation of
the Company to sell the Notes and the Warrants on the Closing Date shall be
subject to the satisfaction or waiver of the following conditions precedent on
or prior to the Closing Date:

 

(A)           ANCILLARY AGREEMENTS.  THE PURCHASERS SHALL HAVE EXECUTED AND
DELIVERED TO THE COMPANY EACH OF THE ANCILLARY AGREEMENTS TO WHICH ANY OF THEM
IS A PARTY; AND

 

(b)           Purchase Price.  The Purchasers shall have paid the Purchase Price
in immediately available funds.

 

ARTICLE VII

 

INDEMNIFICATION

 

SECTION 7.01       Survival of Representations and Warranties.  The
representations and warranties of the Company contained in this Agreement shall
survive the Closing until the first anniversary of the Closing Date, other than
the representations and warranties set forth in Sections 3.01, 3.03 and 3.10,
which shall survive indefinitely.  The liability of the Company with respect to
the Company’s representations and warranties shall not be reduced by any
investigation made at any time by or on behalf of the Purchasers.

 

SECTION 7.02       Indemnification by the Company.  (a)  To the greatest extent
permitted by applicable Law, the Company shall indemnify and hold harmless the
Purchasers and their Affiliates, officers, directors, employees, agents,
successors and assigns (each a “Purchaser Indemnified Party”) from and against
any and all Liabilities, losses, diminution in value, damages, claims, costs and
expenses, interest, awards, judgments and penalties (including, without
limitation, attorneys’ and consultants’ fees and expenses) suffered or incurred
by them (including, without limitation, any Action brought or otherwise
initiated by any of them) (hereinafter a “Loss”), arising out of or resulting
from:  (i) the breach of any representation or warranty of the Company contained
herein, or in any agreement, certificate or instrument delivered pursuant hereto
set forth therein) and (ii) the breach of any agreement or covenant of the
Company contained herein.

 

(B)           NOTWITHSTANDING THE PROVISIONS OF SECTION 7.02(A), (I) THE COMPANY
SHALL NOT BE LIABLE FOR ANY LOSS UNLESS THE AGGREGATE AMOUNT OF LOSSES EXCEEDS
$100,000 AND THEN ONLY TO THE EXTENT OF SUCH EXCESS AND (II) THE MAXIMUM
LIABILITY OF THE COMPANY UNDER THIS SECTION 7.02 SHALL NOT EXCEED THE PURCHASE
PRICE; PROVIDED, HOWEVER, THAT THE LIMITATIONS IN THIS SECTION 7.02(B) SHALL NOT
APPLY TO BREACHES BY THE COMPANY OF ITS REPRESENTATIONS AND WARRANTIES CONTAINED
IN SECTIONS 3.01, 3.03 AND 3.10 OR A BREACH OF THE COVENANTS IN SECTION 5.04.

 

(C)           A PURCHASER INDEMNIFIED PARTY SHALL GIVE THE COMPANY PROMPT
WRITTEN NOTICE OF ANY MATTER THAT A PURCHASER INDEMNIFIED PARTY HAS DETERMINED
HAS GIVEN OR COULD GIVE RISE TO A RIGHT OF INDEMNIFICATION UNDER THIS AGREEMENT
STATING IN REASONABLE DETAIL THE AMOUNT OF THE LOSS, IF KNOWN, AND METHOD OF
COMPUTATION THEREOF, AND CONTAINING A REFERENCE TO THE PROVISIONS OF THIS
AGREEMENT IN RESPECT OF WHICH SUCH RIGHT OF INDEMNIFICATION IS CLAIMED OR

 

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ARISES.  THE OBLIGATIONS AND LIABILITIES OF THE COMPANY UNDER THIS ARTICLE VII
WITH RESPECT TO LOSSES ARISING FROM CLAIMS OF ANY THIRD PARTY THAT ARE SUBJECT
TO THE INDEMNIFICATION PROVIDED FOR IN THIS ARTICLE VII (“THIRD PARTY CLAIMS”)
SHALL BE GOVERNED BY AND BE CONTINGENT UPON THE FOLLOWING ADDITIONAL TERMS AND
CONDITIONS:  IF A PURCHASER INDEMNIFIED PARTY SHALL RECEIVE NOTICE OF ANY THIRD
PARTY CLAIM, THE PURCHASER INDEMNIFIED PARTY SHALL GIVE THE COMPANY PROMPT
WRITTEN NOTICE OF SUCH THIRD PARTY CLAIM; PROVIDED, HOWEVER, THAT THE FAILURE TO
PROVIDE SUCH NOTICE SHALL NOT RELEASE THE COMPANY FROM ANY OF ITS OBLIGATIONS
UNDER THIS ARTICLE VII EXCEPT TO THE EXTENT THAT THE COMPANY IS MATERIALLY
PREJUDICED BY SUCH FAILURE AND SHALL NOT RELIEVE THE COMPANY FROM ANY OTHER
OBLIGATION OR LIABILITY THAT IT MAY HAVE TO ANY PURCHASER INDEMNIFIED PARTY
OTHERWISE THAN UNDER THIS ARTICLE VII.  IF THE COMPANY ACKNOWLEDGES IN WRITING
ITS OBLIGATION TO INDEMNIFY THE PURCHASER INDEMNIFIED PARTY HEREUNDER AGAINST
ANY LOSSES THAT MAY RESULT FROM SUCH THIRD PARTY CLAIM SUBJECT TO THE
LIMITATIONS OF SECTION 7.02(B), THEN THE COMPANY SHALL BE ENTITLED TO ASSUME AND
CONTROL THE DEFENSE OF SUCH THIRD PARTY CLAIM AT ITS EXPENSE AND THROUGH COUNSEL
OF ITS CHOICE IF IT GIVES NOTICE OF ITS INTENTION TO DO SO TO THE PURCHASER
INDEMNIFIED PARTY WITHIN FIVE DAYS OF THE RECEIPT OF SUCH NOTICE FROM THE
PURCHASER INDEMNIFIED PARTY; PROVIDED, HOWEVER, THAT IF THERE EXISTS OR IS
REASONABLY LIKELY TO EXIST A CONFLICT OF INTEREST THAT WOULD MAKE IT
INAPPROPRIATE IN THE JUDGMENT OF THE PURCHASER INDEMNIFIED PARTY IN ITS SOLE AND
ABSOLUTE DISCRETION FOR THE SAME COUNSEL TO REPRESENT BOTH THE PURCHASER
INDEMNIFIED PARTY, ON THE ONE HAND, AND THE COMPANY, ON THE OTHER HAND, THEN THE
PURCHASER INDEMNIFIED PARTY SHALL BE ENTITLED TO RETAIN ITS OWN COUNSEL IN
ADDITION TO ANY REQUISITE LOCAL COUNSEL FOR WHICH THE PURCHASER INDEMNIFIED
PARTY REASONABLY DETERMINES COUNSEL IS REQUIRED AT THE EXPENSE OF THE COMPANY. 
IN THE EVENT THAT THE COMPANY EXERCISES THE RIGHT TO UNDERTAKE ANY SUCH DEFENSE
AGAINST ANY SUCH THIRD PARTY CLAIM AS PROVIDED ABOVE, THE PURCHASER INDEMNIFIED
PARTY SHALL COOPERATE WITH THE COMPANY IN SUCH DEFENSE AND MAKE AVAILABLE TO THE
COMPANY, AT THE EXPENSE OF THE COMPANY, ALL WITNESSES, PERTINENT RECORDS,
MATERIALS AND INFORMATION IN THE PURCHASER INDEMNIFIED PARTY’S POSSESSION OR
UNDER THE PURCHASER INDEMNIFIED PARTY’S CONTROL RELATING THERETO AS IS
REASONABLY REQUIRED BY THE COMPANY.  SIMILARLY, IN THE EVENT THE PURCHASER
INDEMNIFIED PARTY IS, DIRECTLY OR INDIRECTLY, CONDUCTING THE DEFENSE AGAINST ANY
SUCH THIRD PARTY CLAIM, THE COMPANY SHALL COOPERATE WITH THE PURCHASER
INDEMNIFIED PARTY IN SUCH DEFENSE AND MAKE AVAILABLE TO THE PURCHASER
INDEMNIFIED PARTY, AT THE EXPENSE OF THE COMPANY, ALL SUCH WITNESSES, RECORDS,
MATERIALS AND INFORMATION IN THE COMPANY’S POSSESSION OR UNDER THE COMPANY’S
CONTROL RELATING THERETO AS IS REASONABLY REQUIRED BY THE PURCHASER INDEMNIFIED
PARTY.  NO SUCH THIRD PARTY CLAIM MAY BE SETTLED BY THE COMPANY WITHOUT THE
PRIOR WRITTEN CONSENT OF THE PURCHASER INDEMNIFIED PARTY, EXCEPT IF SUCH
SETTLEMENT CONSTITUTES A FULL AND UNCONDITIONAL RELEASE OF THE PURCHASER
INDEMNIFIED PARTY.

 

ARTICLE VIII

 

MISCELLANEOUS

 

SECTION 8.01       Amendment; Waiver.  This Agreement may not be amended,
supplemented, modified or restated except by an instrument in writing signed by,
or on behalf of, the parties hereto or by a waiver in accordance with this
Section 8.01.  The Company for its own behalf and the Purchasers for their own
behalf, respectively, may (a) extend the time for the performance of any of the
obligations or other acts of any other party, (b) waive any

 

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inaccuracies in the representations and warranties of any other party contained
herein or in any document delivered by any other party pursuant hereto or
(c) waive compliance with any of the agreements of any other party or conditions
to such party’s obligations contained herein.  Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party
to be bound thereby.  Any waiver of any term or condition shall not be construed
as a waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition of this Agreement.  The
failure of any party to assert any of its rights hereunder shall not constitute
a waiver of any of such rights.  All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

 

SECTION 8.02       Confidentiality.  The Purchasers and the Company covenant and
agree that they will not, and they will cause their principals, Affiliates,
officers and other personnel and authorized representatives not to, use
information concerning another party’s business, properties and personnel
received in the course of negotiating this Agreement and investigation in
connection with this transaction and will hold such information (and will cause
the aforesaid persons to hold such information) in confidence until such
information otherwise becomes publicly available or as may be required by
applicable law.  Notwithstanding anything in this Section 8.02 or otherwise set
forth in this Agreement, each party (and each employee, representative or other
agent of each party) hereto may disclose to any and all persons, without
limitation of any kind, any information with respect to the United States
federal income “tax treatment” and “tax structure” (in each case, within the
meaning of Treasury Regulation Section 1.6011-4) of the transaction contemplated
hereby and all materials of any kind (including opinions or other Tax analyses)
that are provided to such parties (or their representatives) relating to such
Tax treatment and Tax structure.

 

SECTION 8.03       Expenses.  Except as otherwise specified in this Agreement,
as soon as reasonably practicable after receipt of written request from the
Purchasers but in no event later than 90 days after the date hereof, the Company
shall pay to the Purchasers all reasonable documented out-of-pocket costs and
expenses (including, without limitation, reasonable documented fees and expenses
of counsel) incurred by the Purchasers and their Affiliates in connection with
the transactions contemplated by this Agreement and the Ancillary Agreements,
with respect to costs and expenses in connection with due diligence related to
the transactions contemplated hereby and thereby, the negotiation, execution and
delivery of this Agreement, the Ancillary Agreements, the Notes and the Warrants
and the consummation of the transactions contemplated hereby and thereby (the
“Purchasers’ Expenses”).

 

SECTION 8.04       Notices.  All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by an internationally recognized overnight courier service, by telecopy,
facsimile or registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 8.04):

 

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if to the Company:

 

(a)                                  Aegis Communications Group, Inc.

7880 Bent Branch Drive

Suite 150

Irving, Texas  75063

Facsimile:  (678) 433-6502

Attention:  Herman M. Schwarz

 

with a copy to:

 

Hughes & Luce, LLP

1717 Main Street

Suite 2800

Dallas, Texas  75201

Attn:  David G. Luther

Facsimile:  (214) 939-5849

 

(b)                                 if to the Purchasers:

 

DB Advisors LLC

280 Park Avenue

New York, New York  10017

Facsimile:  Counsel

Attention:  (212) 797-4562

 

Essar Global Limited

c/o Essar Group

145 East 48th Street (PH)

New York, New York 10017

Facsimile: (212) 758-5860

Attention:  Madhu Vuppuluri

 

with a copy to:

 

Shearman & Sterling LLP

599 Lexington Avenue

New York, New York  10022-6069

Facsimile:  (212) 848-7179

Attention:  Stephen M. Besen, Esq.

 

SECTION 8.05       Severability.  If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect for so long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party.  Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced,

 

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the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated by this Agreement
are consummated as originally contemplated to the greatest extent possible.

 

SECTION 8.06       Assignment.  This Agreement may not be assigned by the
Company, by operation of law or otherwise, without the express written consent
of the Purchasers (which consent may be granted or withheld in the sole
discretion of the Purchasers).  The Purchasers may assign this Agreement or any
of its rights and obligations hereunder to one or more Affiliates without the
consent of the Company or to a third party with the consent of the Company,
which consent shall not be unreasonably withheld.

 

SECTION 8.07       Third Party Beneficiaries and Transfers.  Except for the
provisions of Section 5.06 and Article VII relating to indemnified parties, this
Agreement shall be binding upon and inure solely to the benefit of the parties
hereto and their permitted assigns and nothing herein, express or implied, is
intended to or shall confer upon any other Person, any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

SECTION 8.08       Governing Law; Consent to Jurisdiction.  This Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Delaware.  The parties hereto hereby (a) submit to the exclusive jurisdiction of
any state or federal court sitting in the Borough of Manhattan of The City of
New York for the purpose of any action arising out of or relating to this
Agreement brought by any party hereto, and (b) irrevocably waive, and agree not
to assert by way of motion, defense, or otherwise, in any such action, any claim
that it is not subject personally to the jurisdiction of the above-named courts,
that its property is exempt or immune from attachment or execution, that the
action is brought in an inconvenient forum, that the venue of the action is
improper, or that this Agreement or the transactions contemplated by this
Agreement may not be enforced in or by any of the above-named courts.

 

SECTION 8.09       Waiver of Jury Trial.  EACH OF THE PARTIES HERETO HEREBY
WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.

 

SECTION 8.10       Entire Agreement.  This Agreement, the Notes, the Warrants
and the Ancillary Agreements constitute the entire agreement of the parties
hereto with respect to the subject matter hereof and thereof and supersede all
prior agreements and undertakings, both written and oral, between the Company
and the Purchasers with respect to the subject matter hereof and thereof.

 

SECTION 8.11       Headings.  The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.

 

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SECTION 8.12       Counterparts.  This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.

 

SECTION 8.13       Public Announcements.  Subject to its legal obligations
(including requirements of stock exchanges and other similar regulatory bodies
and the requirements of the Exchange Act), no party shall make any announcement
regarding the entering into of this Agreement or the Closing to the financial
community, governmental entities, employees, customers or the general public
without the prior consent of the other party, which shall not be unreasonably
withheld, and the parties shall cooperate with each other as to the timing and
contents of any such announcement.

 

[Remainder of page left blank intentionally]

 

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

 

 

AEGIS COMMUNICATIONS GROUP, INC.

 

 

 

 

 

By:

/s/ Herman M. Schwarz

 

 

 

Name:

Herman M. Schwarz

 

 

Title:

President & Chief Executive Officer

 

 

 

 

 

DEUTSCHE BANK AG LONDON

 

BY DB ADVISORS, LLC AS INVESTMENT
ADVISOR.

 

 

 

 

 

By:

/s/ Glen MacMullin

 

 

 

Name:

Glen MacMullin

 

 

Title:

Director

 

 

 

 

 

By:

/s/ Paul Bigler

 

 

 

Name:

Paul Bigler

 

 

Title:

Managing Director

 

 

 

 

 

ESSAR GLOBAL LIMITED

 

 

 

By:

/s/ Madhu S. Vuppuluri

 

 

Name:

Madhu S. Vuppuluri

 

 

Title:

Executive Director

 

 

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