exv4w1



 



EXHIBIT 4.1


QUADRAMED CORPORATION



as Issuer



$71,000,000



Senior Secured Notes due 2008

Initial Interest Rate 10%



and



Common Stock Warrants



Purchase Agreement



April 17, 2003



 


CENTURY NATIONAL INSURANCE COMPANY

GLENBROOK CONVERTIBLE PARTNERS, L.P.

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURG, PA

GENE T. PRETTI

QWEST OCCUPATIONAL HEALTH TRUST

QWEST PENSION TRUST

SAN DIEGO COUNTY EMPLOYEES RETIREMENT ASSOCIATION

STARVEST CONVERTIBLE SECURITIES FUND, LTD.

ZAZOVE AGGRESSIVE GROWTH FUND, L.P.

ZAZOVE HIGH YIELD CONVERTIBLE SECURITIES FUND, L.P.

ALLIANZ OF AMERICA, INC.

TRIAGE CAPITAL MANAGEMENT, LP

TRIAGE OFFSHORE FUND LTD

OTC, LLC

HBV MASTER MULTI-STRATEGY FUND LP

MELLON HBV SPECIAL SITUATIONS FUND LP

LONESTAR PARTNERS

LAMPE CONWAY & CO., L.L.C.

(continued)


 






 


ARKANSAS PUBLIC

AMERICAN KENNEL CLUB CORE BOND

AVAYA INC MASTER PENSION TRUST

BRIGGS & STRATTON RETIREMENT PLAN-HIGH YIELD

MACKAY SHIELDS LONG/SHORT FUND

401 SAVINGS PLAN OF THE CHASE MANHATTAN BANK

AND CERTAIN AFFILIATED COS.

CITY OF MONTREAL HIGH YIELD

MACKAY SHIELDS MASTER LONG/SHORT FUND BEAR STEARNS

MACKAY SHIELDS TRUST HIGH YIELD CORPORATE BOND

PARK EMPLOYEE’S ANNUITY AND BENEFIT FUND CORE PLUS HIGH YIELD

FEDERAL INSURANCE COMPANY (CHUBB) HIGH YIELD

THE PENSION PLAN OF CONSTELLATION ENERGY GROUP HIGH YIELD

CARNEGIE MELLON UNIVERSITY HIGH YIELD

ECLIPSE CORE BOND PLUS FUND HIGH YIELD

FAIRFAX COUNTY EMPLOYEES RETIREMENT SYSTEM HIGH YIELD

FONDATION LUCIE ET ANDRE CHAGNON HIGH YIELD

EMPLOYEES RETIREMENT SYSTEM OF THE CITY OF FORT WORTH HIGH YIELD

MLG-NYL US HIGH YIELD

HONG KONG HOSPITAL AUTHORITY HIGH YIELD

ILLINOIS MUNICIPAL RETIREMENT FUND HIGH YIELD

INGRAM INDUSTRIES EMPLOYEE

POLICEMEN’S AND FIREFIGHTERS’ RETIREMENT FUND OF LEXINGTON-FAYETTE

URBAN COUNTY GOVERNMENT

THE 1199 HEALTH CARE EMPLOYEES PENSION FUND HIGH YIELD

NEW YORK DISTRICT COUNCIL OF CARPENTERS PENSION FUND

OHIO POLICE & FIRE PENSION FUND HIGH YIELD

PENNSYLVANIA PUBLIC SCHOOLS EMPLOYEES’ RETIREMENT SYSTEM

STICHTING PHILIPS PENSIOENFONDS HIGH YIELD

STICHTING PHILIPS PENSIOENFONDS

RHODE ISLAND EMPLOYEES RETIREMENT SYSTEM

NEW YORK LIFE CORE BOND PLUS FUND SEPARATE ACCOUNT # 38 HIGH YIELD

POLICE OFFICERS PENSION SYSTEM OF THE CITY OF HOUSTON

THE CITY OF MEMPHIS RETIREMENT SYSTEM HIGH YIELD

NISOURCE CORP. SERVICES COMPANY HIGH YIELD

NATIONS MASTER INVESTMENT HIGH YIELD

NATIONS ANNUITY FUND HIGH YIELD

LOS ANGELES FIRE AND POLICE HIGH YIELD

VULCAN MATERIALS COMPANY HIGH YIELD

NY LIFE SEPARATE ACCOUNT GOA/BB/HIGH YIELD

THE MAINSTAY FUNDS, INC;

ON BEHALF OF ITS HIGH YIELD CORPORATE BOND FUND SERIES

THE MAINSTAY FUNDS, INC;

ON BEHALF OF ITS STRATEGIC VALUE FUND

(continued)



 






 





MAINSTAY VP SERIES FUND, INC.,

ON BEHALF OF ITS HIGH YIELD CORPORATE BOND PORTFOLIO

RIYAD BANK HIGH YIELD

SAN ANTONIO FIREMAN & POLICE PENSION FUND HIGH YIELD

TENNESSEE VALLEY AUTHORITY RETIREMENT SYSTEM HIGH YIELD

SCOTTISH WIDOWS FUND & LIFE ASSURANCE SOCIETY HIGH YIELD

WRITERS’ GUILD INDUSTRY HEALTH FUND

RIYAD BANK HYB LIQ RIY13

RIYAD BANK HYB LIQ RIY04




 






 





$71,000,000



Senior Secured Notes due 2008

Initial Interest Rate 10%



and



Common Stock Warrants



of



QUADRAMED CORPORATION



Purchase Agreement



April 17, 2003


The Purchasers listed on

Schedule B attached hereto



Ladies and Gentlemen:


QuadraMed Corporation, a Delaware corporation (the “Company”), proposes to
issue and sell to the investors listed on the signature pages hereto (each a
“Purchaser” and, collectively, the “Purchasers”) an aggregate of $71,000,000 in
principal amount of its Senior Secured Notes due 2008 at an initial interest
rate of 10% (the “Notes”), and warrants to purchase up to a total of 11,303,842
shares of the common stock, par value $0.01 per share (the “Common Stock”), of
the Company (the “Warrants” and, collectively with the Notes, the “Securities”)
subject to the terms and conditions set forth herein. The Notes are to be
issued pursuant to the provisions of an indenture, to be dated as of April 17,
2003 (the “Indenture”), among the Company and The Bank of New York, as trustee
(the “Trustee”). Each Note, whether in global or certificated form, shall be
in the form set out in Exhibit A. The Warrants are to be issued pursuant to
the provisions of a warrant agreement, to be dated as of April 17, 2003 (the
“Warrant Agreement”) among the Company and The Bank of New York, as warrant
agent. The Notes and Warrants shall be issued together in units but
immediately after issuance the Warrants shall be detachable from the Notes and
separately transferable. Each such unit shall consist of an aggregate of
159.209042 Warrants for each $1000 principal amount of Notes. Warrants
representing an additional 2,047,978 shares of the Company’s outstanding Common
Stock (the “Penalty Warrants”) may be separately issued to the Purchasers in
the event that (a) the Company receives, on or after the date that is 270 days
after the date hereof, a written request from Holders (as defined in the
Registration Rights Agreement) in compliance with the terms of Section 2 of the
Registration Rights Agreement (other than the requirement that the request be
from and after 30 days after the Company is current with respect to its filings
required to be made with the Securities and Exchange Commission (the
“Commission”) under the Securities Exchange Act of 1934) that the Company
register Registrable Securities (as defined in the Registration Rights
Agreement) held by the Holders and (b)


1






 




the Company does not file a Registration Statement as required by the
Registration Rights Agreement. Such additional Warrants, if issued, shall be
allocated on a pro rata basis according to each Purchaser’s share of units
originally purchased under this Purchase Agreement, as reflected on Schedule A
hereto. Any Warrant may be exercised at any time on or after its date of
issuance and on or before the close of business on April 17, 2008 (the
“Expiration Date”). Each Warrant not exercised at or before the Expiration
Date shall become void, and all rights of the holder pursuant to such Warrant
shall cease. Each Warrant shall be in the form set out in Exhibit B.



	 	 	 
	1.	 	
Restricted Securities; Legends.




	 	 	 
	 	 	
(a) The Securities will be offered and sold to the Purchasers pursuant to
one or more exemptions from the registration requirements of the
Securities Act of 1933, as amended (the “Act”). The Purchasers
acknowledge that the Securities (and the securities issuable upon
exercise of the Warrant) may not be resold by them in the absence of
registration under the Act or a valid exemption from registration.
	 
	 	 	
(b) Upon issuance thereof, the following legend shall be placed on the
Securities and all securities or certificates representing Common Stock,
if any, issued in exchange therefor, in substitution thereof, or upon the
exercise of a Warrant:




	 	 	 
	 	 	
“THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
THE UNITED STATES SECURITIES ACT OF 1933 (THE “ACT”),
AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER STATING THAT SUCH
OFFER, SALE OR TRANSFER IS BEING MADE IN COMPLIANCE
WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
	 	 	 
	 	 	
THE HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, IS DEEMED
TO HAVE AGREED TO BE BOUND BY THE PROVISIONS OF THE
REGISTRATION RIGHTS AGREEMENT, DATED AS OF APRIL 17,
2003, BY AND AMONG THE COMPANY AND THE PERSONS LISTED
ON THE SIGNATURE PAGES THERETO (THE “REGISTRATION
RIGHTS AGREEMENT”).”




	 	 	 
	 	 	
The offer, resale, pledge or other transfer will be permitted upon an
effective registration of the Securities or the receipt by the Company of
an opinion of counsel that such further transfer may be effected pursuant
to an applicable exemption from registration.

	 
	 	 	
(c)  The Global Note (as defined below) shall also bear the following
legend:




2






 




	 	 	 
	 	 	
THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF
THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF
A DEPOSITARY. THIS NOTE IS EXCHANGEABLE FOR NOTES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS
NOTE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY
BE REGISTERED EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
	 	 	 
	 	 	
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55
WATER STREET, NEW YORK, NEW YORK) TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.,
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.




	 	 	 
	 	 	
(d)  The Global Warrant (as defined below) shall also bear the following
legend:





	 	 	 
	 	 	
UNLESS THIS WARRANT IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (THE
“DEPOSITARY”) TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
WARRANT ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY OR SUCH
OTHER REPRESENTATIVE OF THE DEPOSITARY OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY, ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY



3






 




	 	 	 
	 	 	
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
	 	 	 
	 	 	
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF
CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION
ARTICLE 4 OF THE WARRANT AGREEMENT.




	 	 	 
	2.	 	Collateral and Ranking. As security for the repayment of the Notes, the
Company shall grant to the Purchasers liens and security interests on, in
and to the collateral (the “Collateral”) as set forth in the Indenture and
the Security Agreement. As provided in the Indenture, the Notes shall be
senior in right of repayment to any future Indebtedness (as defined in the
Indenture).
	 	 	 
	3.	 	Agreements to Sell and Purchase. On the basis of the representations,
warranties and covenants contained in this Agreement, and subject to the
terms and conditions contained herein, the Company agrees to issue and
sell to the Purchasers, and each Purchaser agrees, severally and not
jointly, to purchase from the Company, the amount of units set forth
opposite the name of such Purchaser on Schedule A hereto at a purchase
price equal to 100% of the original principal amount of the Notes
contained in such amount of purchased units (the “Purchase
Price”).
	 	 	 
	4. 	 	Issuance as Compensation. The Company shall also issue to Philadelphia
Brokerage Corporation (“PBC”), as compensation and in addition to the
reimbursement of its reasonable and documented out-of-pocket expenses
(including legal fees incurred by PBC), Warrants to purchase 282,596
shares of Common Stock.
	 	 	 
	5.	 	Terms of Investment.
	 	 	 
	 	 	(a) Holders of the Notes and Common Stock issuable upon exercise of the
Warrants (the “Warrant Shares”) will have the registration rights set
forth in the registration rights agreement (the “Registration Rights
Agreement”), to be dated as of the Closing Date, in substantially the
form of Exhibit C hereto, for so long as such Warrants constitute
“Transfer Restricted Securities” (as defined in the Registration Rights
Agreement). This Agreement, the Indenture, the Warrant Agreement, the
Security Agreement, the Securities and the Registration Rights Agreement
are hereinafter sometimes referred to collectively as the “Operative
Documents.”
	 	 	 
	 	 	(b) The Notes shall bear an initial interest rate of 10%, which shall
automatically be reduced to 9% immediately following the next Interest
Payment Date upon the (i) listing of the Common Stock for trading on a
U.S. national securities exchange, or (ii) approval for trading on the
Nasdaq Stock Market, including the Nasdaq Small Cap Market. The inter-



4






 




	 	 	 
	 	 	est shall be compounded semiannually on April 1 and October 1 of each
year beginning on October 1, 2003 (each an “Interest
Payment Date”).
	 	 	 
	 	 	(c) On the October 1, 2003 and April 1, 2004 Interest Payment Dates, the
Company shall pay the interest due on the Notes on each such date with a
combination of cash and additional Notes as follows: (i) in cash
equivalent to 6% per annum of the principal amount thereof; and (ii) in
additional Notes having a principal amount equal to the remainder of the
cash interest that would have been otherwise payable in the absence of
this sentence. The allocation described in this Section 5(c) shall apply
regardless of whether the initial interest rate of the Notes has been
reduced pursuant to Section 5(b)
	 	 	 
	6.	 	Delivery and Payment.
	 	 	 
	 	 	(a) Delivery of, and payment of the Purchase Price for, the Securities
shall be made at the offices of Akin Gump Strauss Hauer & Feld LLP, 1333
New Hampshire Avenue, N.W., Washington, D.C. 20036, or such other
location as may be mutually acceptable. Such delivery and payment shall
be made at 9:00 a.m. New York City time, on April 17, 2003 or at such
other time on the same date or such other date as shall be agreed upon by
the Purchasers and the Company in writing. The date of such delivery and
the payment for the Securities herein called the “Closing Date.”
	 	 	 
	 	 	(b) One or more of each of the Notes and Warrants in definitive global
form, each registered in the name of Cede & Co., as nominee of the
Depository Trust Company (“DTC”), such Note(s) having an aggregate
principal amount corresponding to the aggregate principal amount of Notes
issued (collectively, the “Global Note”) and such Warrant(s) representing
an entitlement to purchase initially an aggregate of 11,303,842 Warrant
Shares (collectively, the “Global Warrant”), shall be delivered by the
Company to the Purchasers (or as the Purchasers direct) in each case with
any transfer taxes thereon duly paid by the Company against payment by
the Purchasers of the Purchase Price thereof by wire transfer in same day
funds to the order of the Company. The Global Note and Global Warrant
shall be made available to the Purchasers for inspection not later than
9:30 a.m., New York City time, on the business day immediately preceding
the Closing Date.
	 	 	 
	7.	 	Agreements of the Company. The Company hereby agrees with the Purchasers
as follows:
	 	 	 
	 	 	(a) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid
all expenses incident to the performance of the obligations of the
Company under this Agreement, including:
	 	 	 




	 	 	 
	 	 	
(i) the fees, disbursements and expenses of counsel to the Company
in connection with the sale and delivery of the Securities to the
Purchasers,
	 	 	 
	 	 	
(ii) all costs and expenses related to the transfer and delivery of
the Securities to the Purchasers, including any transfer or other
taxes payable thereon,



5






 




	 	 	 
	 	 	 
	 	 	
(iii) all costs of printing or producing this Agreement, the other
Operative Documents and any other agreements or documents in
connection with the offering, purchase, sale or delivery of the
Securities,
	 	 	 
	 	 	
(iv) the cost of printing certificates representing the Securities,
	 	 	 
	 	 	
(v) the fees and expenses of the Trustee and the Trustee’s counsel
in connection with the Indenture and the Notes,
	 	 	 
	 	 	
(vi) the costs and charges of any transfer agent, warrant agent,
registrar and/or depositary (including DTC),
	 	 	 
	 	 	
(vii) all costs and expenses of any Registration Statement, as set
forth in the Registration Rights Agreement, and
	 	 	 
	 	 	
(viii) all other costs and expenses incident to the performance of
the obligations of the Company hereunder for which provision is not
otherwise made in this Section;




	 	 	 
	 	 	 
	 	 	
(b) To obtain the approval of DTC for “book-entry” transfer of the
Securities, and to comply with all of its agreements set forth in the
representation letters of the Company to DTC relating to the approval of
the Securities by DTC for “book-entry” transfer;
	 	 	 
	 	 	
(c) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would
be integrated with the sale of the Securities to the Purchasers in a
manner that would require the registration of any such sale of the
Securities under the Act;
	 	 	 
	 	 	
(d) Not to voluntarily claim, and to actively resist any attempts to
claim, the benefit of any usury laws against the holders of any Notes;
	 	 	 
	 	 	
(e) To comply with all of its agreements set forth in the Registration
Rights Agreement;
	 	 	 
	 	 	
(f) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by it prior to
the Closing Date and to satisfy all conditions precedent to the delivery
of the Securities; and
	 	 	 
	 	 	
(g) Following the Closing Date, to apply the proceeds from the issuance
and sale of the Securities to: (i) fund the repurchase or redemption of
the Company’s outstanding 5.25% Subordinated Convertible Debentures due
2005, pursuant to the repurchase and/or redemption provisions, as
applicable, of the Subordinated Indenture dated May 1, 1998 between the
Company, as Issuer, and the Bank of New York, as Trustee, as amended and
supplemented by the Officer’s Certificate dated May 1, 1998; and (ii) for
general corporate purposes.




	 	 	 
	8.	 	
Representations, Warranties and Agreements of the Company. As of the
date hereof, the Company represents and warrants to, and agrees with, the
Purchasers as to the following:



6






 




	 	 	 
	 	 	
(a) The Company, a Delaware corporation, has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
State of Delaware, and has the corporate power and authority to carry on
its businesses and to own, lease and operate its properties, and is duly
qualified and is in good standing as a corporation authorized to do
business in each jurisdiction in which the nature of its businesses or
its ownership or leasing of property requires such qualification, except
where the failure to be so qualified could reasonably be expected not to
have a material adverse effect on the business, financial condition or
results of operations of the Company (a “Material Adverse Effect”).
	 	 	 
	 	 	
(b) All of the issued and outstanding shares of capital stock of the
Company have been duly and validly authorized and issued and are fully
paid and nonassessable, and were issued and sold in compliance with all
applicable Federal and state securities laws; each Warrant Share will be,
prior to its issuance, duly authorized and reserved for issuance and,
when issued and delivered upon exercise of the Warrants, will be validly
issued, fully paid and nonassessable and free of any preemptive or
similar rights that entitle or will entitle any person to acquire any
Common Stock upon the issuance of the Warrants and the Warrant Shares and
the authorized capital stock of the Company will be sufficient to honor
the exercise in full of all Warrants.
	 	 	 
	 	 	
(c) This Agreement has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding obligation of the
Company, enforceable in accordance with its terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors’ rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
	 	 	 
	 	 	
(d) The Indenture has been duly authorized by the Company and, on the
Closing Date, will have been validly executed and delivered by the
Company and will be a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as
(i) the enforceability thereof may be limited by bankruptcy, insolvency
or similar laws affecting creditors’ rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
	 	 	 
	 	 	
(e) The Warrant Agreement has been duly authorized by the Company and, on
the Closing Date, will have been validly executed and delivered by the
Company and will be a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as
(i) the enforceability thereof may be limited by bankruptcy, insolvency
or similar laws affecting creditors’ rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
	 	 	 
	 	 	
(f) The Securities have been duly authorized and, on the Closing Date,
will have been validly executed and delivered by the Company. When the
Notes have been issued, executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the
Purchasers in accordance with the terms of this Agreement, the Notes will
be entitled to the benefits of the Indenture and will be valid and
binding obli-



7






 




	 	 	 
	 	 	
gations of the Company, enforceable in accordance with their terms,
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors’ rights generally and (ii)
with respect to the Notes, rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability.
	 	 	 
	 	 	
(g) The Registration Rights Agreement has been duly authorized by the
Company and, on the Closing Date, will have been duly executed and
delivered by the Company. When the Registration Rights Agreement has
been duly executed and delivered, the Registration Rights Agreement will
be a valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as (i) the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors’ rights generally and (ii) rights of acceleration and
the availability of equitable remedies may be limited by equitable
principles of general applicability.
	 	 	 
	 	 	
(h) The Company has such permits, licenses, consents, exemptions,
franchises, authorizations and other approvals (each, an “Authorization”)
of, and, except as set forth on Schedule 8(h), has made all filings with
and notices to, all governmental or regulatory authorities and all courts
and other tribunals, as are necessary to own, lease, license and operate
its respective properties and to conduct its businesses, except where the
failure to have any such Authorization or to make any such filing or
notice could, singly or in the aggregate, reasonably be expected not to
have a Material Adverse Effect. Each such Authorization is valid and in
full force and effect and the Company is in compliance with all the terms
and conditions thereof and with the rules and regulations of the
authorities and governing bodies having jurisdiction with respect
thereto; and, except as set forth on Schedule 8(h), no event has occurred
which allows or, after notice or lapse of time or both, would allow,
revocation, suspension or termination of any such Authorization, except
where such failure to be valid and in full force and effect or to be in
compliance, the occurrence of any such event or the presence of any such
restriction could, singly or in the aggregate, reasonably be expected not
to have a Material Adverse Effect.
	 	 	 
	 	 	
(i) The Company owns or leases all such properties as are necessary to
the conduct of its operations as presently conducted, except where the
lack of ownership or leasing would not, individually or in the aggregate,
have a Material Adverse Effect.
	 	 	 
	 	 	
(j) The Company is not, nor after giving effect to the offering and sale
of the Securities and the application of the proceeds thereof as
described in Section 7(g) hereof will be, an “investment company,” as
such term is defined in the Investment Company Act of 1940, as amended,
or a “holding company” within the meaning of, or subject to regulation
under, the Public Utility Holding Company Act of 1935, as amended, and
the rules and regulations promulgated by the Commission thereunder.
	 	 	 
	 	 	
(k) There are no contracts, agreements or understandings between the
Company, on the one hand, and any person, on the other hand, granting
such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company.



8






 




	 	 	 
	 	 	
(l) Upon execution and delivery by the parties thereto, the Indenture
will comply as to form in all material respects with the requirements of
the Trust Indenture Act of 1939, as amended (the “TIA”), and the rules
and regulations of the Commission applicable to an indenture that is
qualified thereunder. It is not necessary in connection with the offer,
sale and delivery of the Securities to the Purchasers in the manner
contemplated by this Agreement to qualify the Indenture under the TIA.
	 	 	 
	 	 	
(m) No form of general solicitation or general advertising (as defined in
Regulation D under the Act) was used by the Company or any of its
representatives (other than the Purchasers, as to whom the Company makes
no representation) in connection with the offer and sale of the
Securities contemplated hereby, including, but not limited to, articles,
notices or other communications published in any newspaper, magazine, or
similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or
general advertising. No securities of the same class as the Securities
have been issued and sold by the Company within the six-month period
immediately prior to the date hereof.
	 	 	 
	 	 	
(n) None of the Company, its respective affiliates or any person acting
on its or their behalf (other than the Purchasers, as to whom the Company
makes no representation) has engaged or will engage in any directed
selling efforts within the meaning of Regulation S under the Act
(“Regulation S”) with respect to the Securities.
	 	 	 
	 	 	
(o) No registration under the Act of the Securities is required for the
sale of the Securities to the Purchasers as contemplated hereby assuming
the accuracy of the Purchasers’ representations and warranties and
agreements set forth in Section 9 hereof.
	 	 	 
	 	 	
(p) The Company owns or possesses adequate rights or licenses to use all
trademarks, trademark applications, trade names and service marks,
whether or not registered, and all patents, patent applications,
copyrights, inventions, licenses, approvals, governmental authorizations,
trade secrets and intellectual property rights (collectively,
“Intellectual Property Rights”) that are necessary for use in connection
with its business as now conducted. Except as set forth on Schedule
8(p), none of the Intellectual Property Rights of the Company has expired
or terminated, or is expected to expire or terminate within two (2) years
from the date of this Agreement. The Company has not infringed nor is
it infringing on any of the Intellectual Property Rights of any other
Person and, except as set forth on Schedule 8(p), there is no claim,
action or proceeding that has been made or brought or alleged against, or
to the knowledge of the Company, is being made, brought or threatened
against, the Company regarding the infringement of any of the
Intellectual Property Rights of the Company, and the Company is unaware
of any facts or circumstances that might give rise to any of the
foregoing, except where any of the foregoing would not have a Material
Adverse Effect. The Company has taken reasonable security measures to
protect the secrecy, confidentiality and value of all of its Intellectual
Property Rights.
	 	 	 
	 	 	
(q) Except as and to the extent set forth in this Agreement, the Company
makes no representations or warranties whatsoever to any Purchaser and
hereby disclaims all liability and responsibility for any representation,
warranty, statement, or information not in-



9






 




	 	 	 
	 	 	
cluded herein that was made, communicated, or furnished (orally or in
writing) to any Purchaser or its representatives (including any opinion,
information, projection, or advice that may have been or may be provided
to any Purchaser by any director, officer, employee, agent, consultant,
or representative of the Company).
	 	 	 
	9.	 	
Purchasers’ Representations and Warranties. Each of the Purchasers,
severally and not jointly, represents and warrants to the Company, and
agrees that:
	 	 	 
	 	 	
(a) Such Purchaser has full power, authority and capacity to enter into
this Purchase Agreement and this Purchase Agreement constitutes a valid
and legally binding obligation of such Purchaser. At the time such
Purchaser was offered the Securities, and at the Closing Date, (i) such
Purchaser was and will be a “qualified institutional buyer” as such term
is defined in Rule 144A under the Securities Act, (ii) such Purchaser had
and will have such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment contemplated by this Agreement, and
(iii) such Purchaser is able to bear the substantial economic risk of its
investment in the Securities for an indefinite period of time, has
evaluated such risks, has no need for liquidity in such investment, and
is prepared to lose his entire investment in the Securities.
	 	 	 
	 	 	
(b) Such Purchaser understands and acknowledges that (i) the Securities
are being offered and sold to such Purchaser without registration under
the Securities Act in a private placement that is exempt from the
registration provisions of the Securities Act under Section 4(2) of the
Securities Act or Regulation D promulgated thereunder and (ii) the
availability of such exemption depends in part on, and the Company will
rely upon the accuracy and truthfulness of, the representations set forth
in this Section 9 and such Purchaser hereby consents to such reliance.
	 	 	 
	 	 	
(c) Such Purchaser and its advisors, if any:




	 	 	 
	 	 	
(i) have been furnished for a reasonable period of time with all
materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the
Securities that have been requested by such Purchaser or its
advisors (collectively with this Purchase Agreement, the
“Investment Materials”). Such Purchaser and its advisors, if any,
have carefully read the Investment Materials and understand and
have evaluated the risks involved in an investment in the Company
in general, and in the Securities in particular, and have relied
solely, except as provided below in subsections (ii) and (iii) of
this Section 9(c), on the information contained in the Investment
Materials;
	 	 	 
	 	 	
(ii) have been provided an opportunity for a reasonable period of
time prior to the date hereof to obtain additional information
concerning the offering of the Securities, the Company and all
other information to the extent the Company possesses such
information or can acquire it without unreasonable effort or
expense;
	 	 	 
	 	 	
(iii) have been afforded the opportunity for a reasonable period of
time prior to the date hereof to ask questions of, and receive
answers from, the Company or its



10






 




	 	 	 
	 	 	
representatives concerning the terms and conditions of the offering
of the Securities and other matters pertaining to this investment,
and have been given the opportunity for a reasonable period of time
prior to the date hereof to obtain such additional information
necessary to verify the accuracy of the information contained in
the Investment Materials or that which was otherwise provided in
order to evaluate the merits and risks of a purchase of the
Securities to the extent the Company possesses such information or
can acquire it without unreasonable effort or expense;
	 	 	 
	 	 	
(iv) have not been furnished with any oral representation or oral
information in connection with the offering of the Securities that
is not contained in the Investment Materials; and
	 	 	 
	 	 	
(v) have determined that the Securities are a suitable investment
for such Purchaser and that at this time such Purchaser could bear
a complete loss of such investment.




	 	 	 
	 	 	        
Neither such inquiries nor any other due diligence investigation
conducted by such Purchaser or any of its advisors or representatives
shall modify, amend or affect Purchaser’s right to rely on the Company’s
representations and warranties contained in Section 8 above or
representations and warranties of the Company contained in any other
Operative Document. Such Purchaser understands that its investment in
the Securities involves a significant degree of risk.
	 	 	 
	 	 	
(d) Each Purchaser is aware of, understands, and acknowledges the
following: (i) that due to the discovery of financial and accounting
reporting errors affecting its financial statements for the years ended
December 31, 2001, 2000 and 1999 and the quarter ended March 31, 2002,
the Company was engaged in a restatement of such financial statements and
is currently engaged in a restatement of its financial statements for the
quarter ended March 31, 2002; (ii) that the Company currently has no
audited financial statements to provide to the Purchasers other than the
audited financial statements for the years ended December 31, 2001, 2000
and 1999, and that each Purchaser has waived access to any other
statements as a component of its Investment Materials; (iii) that the
Company currently is not in compliance with the periodic reporting
requirements of Sections 13 or 15(d) of the Exchange Act; (iv) that the
most recent quarterly or annual reports filed by the Company on forms
10-Q or 10-K, respectively, were for the quarterly period ended March 31,
2002, and the annual period ended December 31, 2001; (v) that the Company
does not know when the remaining restatement and related auditing tasks
will be completed; (vi) that the Company’s Common Stock has been delisted
from the NASDAQ National Market, effective March 4, 2003 and is not
currently eligible to trade on the OTC Bulletin Board; and (vii) that the
Company is currently the subject of a formal non-public investigation by
the Securities and Exchange Commission.
	 	 	 
	 	 	
(e) Such Purchaser understands that no United States federal or state
agency or any other government or governmental agency or authority has
passed upon or made any recommendation or endorsement of the
Securities.



11






 




	 	 	 
	 	 	
(f) Such Purchaser is not acquiring the Securities with a view to any
distribution thereof or with any present intention of offering or selling
any of the Securities in a transaction that would violate the Act or the
securities laws of any state of the United States or any other applicable
jurisdiction.




          
        Each Purchaser acknowledges that the Company will rely upon the accuracy
and truth of the foregoing representations and the Purchasers hereby consent to
such reliance.



	 	 	 
	10.	 	
Indemnification.
	 	 	 
	 	 	
(a) The Company agrees to indemnify, defend and hold the Purchasers, and
their respective officers, employees, agents, directors, partners,
shareholders and each person, if any, who controls such Purchasers within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act
(collectively, “Indemnified Persons”) harmless from and against any and
all loss, liability, claim, damage, judgment, deficiency or reasonable
expense (including interest, penalties, reasonable attorneys’ fees and
amounts paid in settlement) incurred by or asserted against any
Indemnified Person arising out of, in any way connected with, or as a
result of any breach or alleged breach or other violation or alleged
violation of any representation, warranty, covenant or undertaking by the
Company contained in this Agreement, and the Company shall reimburse the
Purchaser for its reasonable legal and other expenses (including the cost
of any investigation and preparation, and including the reasonable fees
and expenses of counsel) incurred in connection therewith; provided that
such indemnity shall not apply to any such losses, claims, damages,
liabilities or related expenses that are determined by a court of
competent jurisdiction by final and nonappealable judgment to have
resulted from the negligence or misconduct of, or the willful violation
of this Agreement by, such Indemnified Person.
	 	 	 
	 	 	
(b) The Purchasers agree to severally indemnify and hold harmless the
Company and each officer, director, employee, agent of the Company, and
each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, against any and
all loss, liability, claim, damage, judgment, deficiency or reasonable
expense (including interest, penalties, reasonable attorneys’ fees and
amounts paid in settlement) incurred, arising out of, in any way
connected with, or as a result of any breach or alleged breach or other
violation or alleged violation of any representation, warranty, covenant
or undertaking by the Purchasers contained in this Agreement, and the
Purchasers shall reimburse (severally, in proportion to their purchases
hereunder) the Company for its reasonable legal and other expenses
(including the cost of any investigation and preparation, and including
the reasonable fees and expenses of counsel) incurred in connection
therewith.
	 	 	 
	 	 	
(c) If any action or proceeding (including any governmental investigation
or inquiry) shall be brought or asserted against an Indemnified Person in
respect of which indemnity may be sought from the Company, such
Indemnified Person shall promptly notify the Company in writing, and the
Company shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Person and the
payment of all reasonable expenses. Such Indemnified Person shall have
the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees



12






 




	 	 	 
	 	 	
and expenses of such counsel shall be the expense of such Indemnified
Person unless (a) the Company has agreed in writing to pay such fees and
expenses or (b) the Company shall have failed to assume the defense of
such action or proceeding and to employ counsel reasonably satisfactory
to such Indemnified Person in any such action or proceeding within a
reasonable time after notice of commencement of such action or proceeding
or (c) the named parties to any such action or proceeding (including any
impleaded parties) include both such Indemnified Person and the Company,
and such Indemnified Person shall have been advised in writing by counsel
that there may be one or more legal defenses available to such
Indemnified Person that are different from or additional to those
available to the Company (in which case, if such Indemnified Person
notifies the Company in writing that it elects to employ separate counsel
at the expense of the Company, the Company shall not have the right to
assume the defense of such action or proceeding on behalf of such
Indemnified Person; it being understood, however, that the Company shall
not, in substantially similar or related actions or proceedings in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys at any time for such Indemnified
Person and any other Indemnified Persons, which firm shall be designated
in writing by such Indemnified Persons and that all such fees and
expenses shall be reimbursed as they are incurred). The Company shall not
be liable for any settlement of any such action or proceeding effected
without its written consent, but if settled with its written consent, or
if there be final, unappealable judgment for the plaintiff in any such
action or proceeding, the Company agrees to indemnify and hold harmless
such Indemnified Persons from and against any loss or liability by reason
of such settlement or judgment. The Company shall not, without the prior
written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified
Person is a party and indemnity being sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are
the subject matter of such proceeding.
	 	 	 
	11.	 	
Miscellaneous.
	 	 	 
	 	 	
(a) Notices given pursuant to any provision of this Agreement shall be
addressed as follows:




	 	 	 
	 	(i) 	
if to the Company, to:
	 	 	 
	 	 	
QuadraMed Corporation
	 	 	
12110 Sunset Hills Road
	 	 	
Reston, VA 20190
	 	 	
Attention: General Counsel
	 	 	 
	 	 	
With a copy to (which shall not constitute notice):
	 	 	 
	 	 	
Akin Gump Strauss Hauer & Feld LLP
	 	 	
1333 New Hampshire Avenue, N.W.
	 	 	
Washington, D.C. 20036
	 	 	
Attention: Bruce S. Mendelsohn




	 	 	 



13






 




	 	 	 
	 	(ii)	
if to the Purchasers, to:
	 	 	 
	 	 	
Each applicable Purchaser at such
	 	 	
Purchaser’s address designated on
	 	 	
Schedule B attached hereto,




	 	 	 
	 	 	
or in any case to such other address as the person to be notified may
have requested in writing.
	 	 	 
	 	 	
(b) The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company and the Purchasers set
forth in or made pursuant to this Agreement shall remain operative and in
full force and effect, and will survive delivery of and payment for the
Securities for a period of six months, regardless of (i) any
investigation, or statement as to the results thereof, made by or on
behalf of the Purchasers, the officers or directors of the Purchasers,
any person controlling the Purchasers, the Company, the officers or
directors of the Company or any person controlling the Company, (ii)
acceptance of the Securities and payment for them hereunder and (iii)
termination of this Agreement.
	 	 	 
	 	 	
(c) Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company the
Purchasers’ affiliates, directors and officers, any controlling persons
referred to herein, the directors of the Company and their respective
successors and assigns, all as and to the extent provided in this
Agreement, and no other person shall acquire or have any right under or
by virtue of this Agreement. The term “successors and assigns” shall not
include a purchaser of any of the Securities from the Purchasers merely
because of such purchase.
	 	 	 
	 	 	
(d) This Agreement shall be governed and construed in accordance with the
laws of the State of New York without regard to principles of conflicts
of laws thereof.
	 	 	 
	 	 	
(e) This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.



[Signature Page Follows]



14






 





              Please confirm that the foregoing correctly sets forth the agreement among
the Company and the Purchasers.




	 
	Very truly yours,
	 
	Issuer:
	 
	QUADRAMED CORPORATION





	 	 	 
		By:
	


		Name: 
	 	Title:



15






 



     Purchasers:



	 	 	 	 
	 	MACKAY SHIELDS
	 
	 	
By:


	 
	 	
Name:	 
	 	
Title:	 
	 	 	 	 
	 	ZAZOVE ASSOCIATES, LLC
	 	 	 	 
	 
	 	
By:
	
*

	 	
 	


	 
	 	
Name:	 
	 	
Title:	 
	 	 	 	 
	 	ALLIANZ OF AMERICA, INC.
	 
	 	
By:


	 
	 	
Name:	 
	 	
Title:	 
	 	 	 	 
	 	MELLON HBV ALTERNATIVE STRATEGIES
	 
	 	
By:


	 
	 	
Name:	 
	 	
Title:	 
	 	 	 	 
	 	TRIAGE CAPITAL MANAGEMENT, LP
	 
	 	
By:


	 
	 	
Name:	 
	 	
Title:	 
	 	 	 	 







	*	 	See attached signature pages.


16






 



	 	 	 	 
	 	TRIAGE OFFSHORE FUND LTD
	 
	 	
By:


	 
	 	
Name:	 
	 	
Title:	 
	 	 	 	 
	 	
OTA, LLC
	 
	 	
By:


	 
	 	
Name:	 
	 	
Title:	 
	 	 	 	 




17






 



	 	 	 	 
	 	LONESTAR PARTNERS
	 
	 	
By:


	 
	 	
Name:	 
	 	
Title:	 
	 	 	 	 
	 	LAMPE CONWAY & CO. LLC
	 
	 	
By:


	 
	 	
Name:	 
	 	
Title:	 
	 	 	 	 
	 	CENTURY NATIONAL INSURANCE COMPANY
	 	 	 	 
	 	 	
By: Zazove Associates, LLC	 
	 
	 	
By:


	 
	 	
Name:	 
	 	
Title:	 
	 	 	 	 
	 	NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURG, PA
	 	 	 	 
	 	 	
By: Zazove Associates, LLC	 
	 
	 	
By:


	 
	 	
Name:	 
	 	
Title:	 
	 	 	 	 
	 	QWEST OCCUPATIONAL HEALTH TRUST
	 	 	 	 
	 	 	
By: Zazove Associates, LLC	 
	 
	 	
By:


	 
	 	
Name:	 
	 	
Title:	 
	 	 	 	 



18






 





	 	 	 	 
	 	
QWEST PENSION TRUST
	 	 	 	 
	 	 	
By: Zazove Associates, LLC	 
	 	 	 	 
	 	
By:


	 
	 	
Name:	 
	 	
Title:	 
	 	 	 	 
	 	
SAN DIEGO COUNTY EMPLOYEES

RETIREMENT ASSOCIATION
	 	 	 	 
	 	 	
By: Zazove Associates, LLC	 
	 	 	 	 
	 	
By:


	 
	 	
Name:	 
	 	
Title:	 
	 	 	 	 
	 	
HBV MASTER MULTI-STRATEGY FUND LP	 
	 	 	 	 
	 	
By:


	 
	 	
Name:	 
	 	
Title:	 



19









 




	 	 	 
	ARKANSAS PUBLIC	 	
MACKAY SHIELDS MASTER
	 	 	
LONG/SHORT FUND BEAR STEARNS
	By:
       *	 	
 
	
	 	
By:       *
	 	 	


	AMERICAN KENNEL CLUB CORE	 	
 
	BOND	 	
MACKAY SHIELDS TRUST HIGH
	 	 	
YIELD CORPORATE BOND
	By:        *	 	
 
	
	 	
By:       *
	 	 	


	AVAYA INC MASTER PENSION TRUST	 	 
	 	 	
PARK EMPLOYEE’S ANNUITY AND
	By:       *	 	
BENEFIT FUND CORE PLUS
	
	 	
HIGH YIELD
	BRIGGS & STRATTON RETIREMENT	 	
By:       *
	PLAN-HIGH YIELD	 	


	 	 	 
	By:       *	 	
FEDERAL INSURANCE COMPANY
	
	 	
(CHUBB) HIGH YIELD
	MACKAY SHIELDS LONG/SHORT	 	
By:       *
	FUND	 	


	By:       *	 	 
	
	 	 
	 	 	
THE PENSION PLAN OF
	 	 	
CONSTELLATION ENERGY GROUP
	401 SAVINGS PLAN OF THE CHASE	 	
HIGH YIELD
	MANHATTAN BANK AND CERTAIN	 	 
	AFFILIATED COS.	 	
By:       *
	 	 	


	By:       *	 	 
	
	 	 
	 	 	
CARNEGIE MELLON UNIVERSITY
	 	 	
HIGH YIELD
	CITY OF MONTREAL HIGH YIELD	 	
 
	 	 	
By:       *
	By:       *	 	


	
	 	 



      






			
	 	

*MACKAY SHIELDS



	 	
By:

	 
	 	 	



	 	
Name:  

Title:

	 














 




	 	 	 
	ECLIPSE CORE BOND PLUS FUND	 	
POLICEMEN’S AND FIREFIGHTERS’
	HIGH YIELD	 	
RETIREMENT FUND OF LEXINGTON-
	 	 	
FAYETTE URBAN COUNTY
	By:       *	 	
GOVERNMENT
	
	 	 
	 	 	
By:       *
	 	 	


	FAIRFAX COUNTY EMPLOYEES	 	
 
	RETIREMENT SYSTEM HIGH YIELD	 	
 
	FONDATION LUCIE ET ANDRE	 	
THE 1199 HEALTH CARE EMPLOYEES
	CHAGNON HIGH YIELD	 	
PENSION FUND HIGH YIELD
	By:       *	 	
By:       *
	
	 	


	EMPLOYEES RETIREMENT SYSTEM	 	
NEW YORK DISTRICT COUNCIL OF
	OF THE CITY OF FORT WORTH HIGH

YIELD	 	
CARPENTERS PENSION FUND
	 	 	
By:       *
	By:       *	 	


	
	 	 
	 	 	 
	 MLG-NYL
US HIGH YIELD	 	
OHIO POLICE & FIRE PENSION FUND

HIGH YIELD
	By:       *	 	 
	
	 	 
	 	 	 
	 	 	
PENNSYLVANIA PUBLIC SCHOOLS
	 	 	
EMPLOYEES’ RETIREMENT SYSTEM
	HONG KONG HOSPITAL AUTHORITY	 	 
	HIGH YIELD	 	
By:       *
	 	 	


	By:       *	 	 
	
	 	 
	 *	 	 
	 	 	
STICHTING PHILIPS PENSIOENFONDS

	ILLINOIS MUNICIPAL RETIREMENT	 	
HIGH YIELD 
	FUND HIGH YIELD
		 	
By:       *	


	By:       *	 	


	 
	
	 	 
	 	 	
STICHTING PHILIPS PENSIOENFONDS
	INGRAM INDUSTRIES EMPLOYEE	 	 
	 	 	
By:       *
	By:       *	 	


	
	 	 








	 	 	 	 	 
	 	 	
*MACKAY SHIELDS
	 	 	 	 	 
	 	 	
By:
	

	 	 	
Name:  	 	 
	 	 	
Title:	 	 



 






 





	 	 	 
	RHODE ISLAND EMPLOYEES	 	
LOS ANGELES FIRE AND POLICE
	RETIREMENT SYSTEM	 	
HIGH YIELD
	 	 	 
	By:       *	 	
By:       *
	
	 	


	 	 	 
	NEW YORK LIFE CORE BOND PLUS	 	
VULCAN MATERIALS COMPANY
	FUND SEPARATE ACCOUNT # 38 HIGH	 	
HIGH YIELD
	YIELD	 	 
	 	 	
By:       *
	By:       *	 	


	
	 	 
	 	 	
NY LIFE SEPARATE ACCOUNT
	POLICE OFFICERS PENSION SYSTEM	 	
GOA/BB/HIGH YIELD
	OF THE CITY OF HOUSTON	 	 
	 	 	
By:       *
	By:       *	 	


	
	 	 
	 	 	
THE MAINSTAY FUNDS, INC; ON
	THE CITY OF MEMPHIS RETIREMENT	 	
BEHALF OF ITS HIGH YIELD
	SYSTEM HIGH YIELD	 	
CORPORATE BOND FUND SERIES
	 	 	
 
	By:       *	 	
By:       *
	
	 	


	 	 	 
	NISOURCE CORP. SERVICES
COMPANY
 HIGH YIELD	 	
THE MAINSTAY FUNDS, INC; ON
BEHALF OF ITS STRATEGIC INCOME
FUND
	By:       *	 	 
	
	 	
By:       *
	 	 	


	NATIONS MASTER INVESTMENT

HIGH YIELD	 	 
	By:       *

	 	
	 	 	
THE MAINSTAY FUNDS, INC; ON

BEHALF OF ITS STRATEGIC VALUE
	NATIONS ANNUITY FUND HIGH

YIELD	 	
FUND
	 	 	 
	By:       *	 	
By:       *
	
	 	









	 	 	 	 	 
	 	 	
*MACKAY SHIELDS
	 	 	 	 	 
	 	 	
By:
	

	 	 	
Name:  	 	 
	 	 	
Title:	 	 



 






 




	 	 	 
	MAINSTAY VP SERIES FUND, INC., ON	 	
RIYAD BANK HYB LIQ RIY04
	BEHALF OF ITS HIGH YIELD	 	 
	CORPORATE BOND PORTFOLIO	 	
By:       *
	RIYAD BANK HIGH YIELD	 	


	 	 	 
	By:       *	 	 
	
	 	 
	 	 	 
	SAN ANTONIO FIREMAN & POLICE

PENSION FUND HIGH YIELD
	 	 	 
	By:       *	 	 
	
	 	 
	 	 	 
	TENNESSEE VALLEY AUTHORITY

RETIREMENT SYSTEM HIGH YIELD
	 	 	 
	By:       *	 	 
	
	 	 
	 	 	 
	SCOTTISH WIDOWS FUND & LIFE

ASSURANCE SOCIETY HIGH YIELD
	 	 	 
	By:       *	 	 
	
	 	 
	 	 	 
	WRITERS’ GUILD INDUSTRY HEALTH

FUND
	 	 	 
	By:       *	 	 
	
	 	 
	 	 	 
	RIYAD BANK HYB LIQ RIY13
	 	 	 
	By:       *	 
	
	 	 







	 	 	 	 	 
	 	 	
*MACKAY SHIELDS
	 	 	 	 	 
	 	 	
By:
	

	 	 	
Name:  	 	 
	 	 	
Title:	 	 



 






 



In lieu of the representations and warranties made in Section 9(a)
of this Agreement, each of the undersigned Purchasers, severally
and not jointly, as institutional “accredited investors” under
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act) hereby make the following representations and
warranties:



	 	 	Such Purchaser has full power, authority and capacity to enter
into this Purchase Agreement and this Purchase Agreement
constitutes a valid and legally binding obligation of such
Purchaser. At the time such Purchaser was offered the Securities,
and at the Closing Date, (i) such Purchaser was and will be an
institutional “accredited investor” as such term is defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act, (ii) such Purchaser had and will have such
knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of
the prospective investment contemplated by this Agreement, and
(iii) such Purchaser is able to bear the substantial economic risk
of its investment in the Securities for an indefinite period of
time, has evaluated such risks, has no need for liquidity in such
investment, and is prepared to lose his entire investment in the
Securities.




	 	 	 
	GLENBROOK CONVERTIBLE PARTNERS, L.P.	 	
ZAZOVE AGGRESSIVE GROWTH FUND, L.P.
	 	 	 
	       By: Zazove Associates, LLC	 	
       By: Zazove Associates, LLC
	 	 	 
	By: 
	 	
By: 

	Name:	 	
Name:
	Title:	 	
Title:
	 	 	 
	STARVEST CONVERTIBLE SECURITIES
FUND, INC.	 	
ZAZOVE HIGH YIELD CONVERTIBLE
 SECURITIES FUND, L.P.
	By: Zazove Associates, LLC	 	 
	 	 	
By: Zazove Associates, LLC
	By: 
	 	
By: 

	Name:	 	
Name:
	Title:	 	
Title:




 










 



          In lieu of the representations and warranties made in Section 9(a) of this
Agreement, the undersigned Purchaser, as an institutional “accredited investor”
(as such term is defined in Rule 501(a)(5) or (6) of Regulation D under the
Securities Act) hereby makes the following representations and warranties:




		
	 	Such Purchaser has full power, authority and capacity to enter
into this Purchase Agreement and this Purchase Agreement
constitutes a valid and legally binding obligation of such
Purchaser. At the time such Purchaser was offered the Securities,
and at the Closing Date, (i) such Purchaser was and will be an
“accredited investor” as such term is defined in Rule 501(a) of
Regulation D under the Securities Act, (ii) such Purchaser had and
will have such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment contemplated by
this Agreement, and (iii) such Purchaser is able to bear the
substantial economic risk of its investment in the Securities for
an indefinite period of time, has evaluated such risks, has no
need for liquidity in such investment, and is prepared to lose his
entire investment in the Securities.




	 	 	 
	By:	 	
Zazove Associates, LLC





	 	 	 
	 	By:



	 	Name:	 
	 	Title:	 




          The undersigned hereby confirms that it is a “qualified institutional
buyer” as represented in Section 9(a) of this Agreement, that it qualifies as a
“purchaser representative,” as defined in Rule 501(h) of Regulation D of the
Securities Act, for each of the Purchasers on whose behalf it is executing this
Agreement, and that it is fully authorized to sign this Agreement on behalf of
the Purchasers on whose behalf it is executing this Agreement.




	 
	ZAZOVE ASSOCIATES, LLC





	 	 	 
		By:



	 	Name:	 
	 	Title:	 




 






 



          In lieu of the representations and warranties made in Section 9(a) of this
Agreement, the undersigned Purchaser, as an individual “accredited investor”
(as such term is defined in Rule 501(a)(5) or (6) of Regulation D under the
Securities Act) hereby makes the following representations and warranties:




		
	 	Such Purchaser has full power, authority and capacity to enter
into this Purchase Agreement and this Purchase Agreement
constitutes a valid and legally binding obligation of such
Purchaser. At the time such Purchaser was offered the Securities,
and at the Closing Date, (i) such Purchaser was and will be an
“accredited investor” as such term is defined in Rule 501(a) of
Regulation D under the Securities Act, (ii) such Purchaser had and
will have such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment contemplated by
this Agreement, and (iii) such Purchaser is able to bear the
substantial economic risk of its investment in the Securities for
an indefinite period of time, has evaluated such risks, has no
need for liquidity in such investment, and is prepared to lose his
entire investment in the Securities.




	 
	MELLON HBV SPECIAL SITUATIONS
	FUND LP





	 	 	 
		 	
By: Mellon HBV II LLC




	 	 	 
	 	By:




	 	Name:	 
		Title:	 



          The undersigned hereby confirms that it is a “qualified institutional
buyer” as represented in Section 9(a) of this Agreement, that it qualifies as a
“purchaser representative,” as defined in Rule 501(h) of Regulation D of the
Securities Act, for each of the Purchasers on whose behalf it is executing this
Agreement on the immediately preceding page, and that it is fully authorized to
sign this Agreement on behalf of the Purchasers on whose behalf it is executing
this Agreement.




	 
	MELLON HBV II LLC





		
	 	By:
 

	 	Name:
	 	Title:



 






 






SCHEDULE A



UNITS PURCHASED



[Schedule A omitted]



 






 



SCHEDULE B



PURCHASER ADDRESSES



 






 



EXHIBIT A



Form of Note



[Filed as separate exhibit]



 






 





EXHIBIT B



Form of Warrant



[Filed as separate exhibit]



 






 





EXHIBIT C



Registration Rights Agreement



[Filed as separate exhibit]