Exhibit 10.6


 


THIS FOURTH
AMENDED AND RESTATED SECURED PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW. THIS FOURTH
AMENDED AND RESTATED SECURED PROMISSORY NOTE HAS BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE AND NEITHER THIS FOURTH AMENDED
AND RESTATED SECURED PROMISSORY NOTE NOR ANY INTEREST HEREIN MAY BE SOLD OR
OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION AND
QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR
APPLICABLE EXEMPTIONS THEREFROM.


 


THIS FOURTH
AMENDED AND RESTATED SECURED PROMISSORY NOTE IS SUBJECT TO THE TERMS OF AN
INTERCREDITOR AND SUBORDINATION AGREEMENT, DATED AS OF JANUARY 26, 2004
AND REFERRED TO BELOW IN FURTHER DETAIL.


 


FOURTH AMENDED AND RESTATED SECURED PROMISSORY NOTE


 


	
  $9,288,081.81

  	
   

  	
  November 22,
  2004

  



 


For value received, the
undersigned, Aegis Communications Group, Inc., a Delaware corporation (the “Company”),
hereby PROMISES TO PAY to the order of Deutsche Bank AG London acting through
DB Alternative Trading, Inc. (formerly known as DB Advisors, LLC) (the “Investor”
and in its capacity as administrative agent for each of its assignees
hereunder, the “Administrative Agent”), the principal sum of
$9,288,081.81 together with interest in arrears from and including the date
hereof on the unpaid principal balance until such principal balance is paid in
full. The Company agrees to make all payments under this Fourth Amended and
Restated Secured Promissory Note to the order of the Investor, in lawful money
of the United States of America and in immediately available funds, to such
account or place as the Investor may request in writing ten (10) Business Days
(as defined herein) prior to any such payment. The Investor, together with its
assignees hereunder are collectively referred to as the “Noteholders”.
Terms used and not defined in the text of this Fourth Amended and Restated
Secured Promissory Note (this “Secured Promissory Note”) have the
meaning specified in Annex II to this Secured Promissory Note or in the
Purchase Agreement referred to below.


 


This Secured Promissory Note
amends and restates in its entirety that certain Secured Promissory Note, dated
November 5, 2003, made by the Company to the order of the Investor in the
amount of $14,087,352.00, restated in that certain Amended and Restated Secured
Promissory Note, dated January 28, 2004, restated in that certain Second
Amended and Restated Secured Promissory Note, dated March 30, 2004, and
restated in that certain Third Amended and Restated Secured Promissory Note,
dated August 23, 2004 (the “Original Note”) and shall be deemed for
purposes of the Loan Documents (defined herein) to be the same as the Original
Note.


 


The Company agrees to pay interest
on the unpaid principal amount of this Secured Promissory Note until such
principal amount shall be paid in full, compounded quarterly, at a rate per
annum equal to 0.50% per annum above the rate of interest per annum (the “Eurodollar
Rate”) (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or


 





















 


any successor page) as the
London interbank offered rate for deposits in U.S. dollars at 11:00 A.M.
(London time) two Business Days before the first day of each Interest Period
(as defined below) for an amount substantially equal to such unpaid amount and
for a period equal to such Interest Period (provided that, if for any
reason such rate is not available, the term “Eurodollar Rate” shall mean, for
any Interest Period, the rate of interest per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in U.S. dollars at approximately
11:00 A.M. (London time) two Business Days prior to the first day of each
Interest Period for a term comparable to such Interest Period; provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates). Each interest period shall be a period
having a duration of three months (an “Interest Period”). The initial
Interest Period shall begin on the date hereof and each subsequent Interest
Period shall begin on the last day of the immediately preceding Interest Period.
Interest shall be payable in arrears at the end of each Interest Period as set
forth in the relevant provision below and shall be calculated on the basis of
actual number of days elapsed and a year of 360 days. Notwithstanding any other
provision of this Secured Promissory Note, the Investor does not intend to
charge, and the Company shall not be required to pay, any interest or other
fees or charges in excess of the maximum permitted by applicable law; any
payments in excess of such maximum shall be credited to reduce principal
hereunder. Except as otherwise provided herein or in the Security Agreement (as
defined below), all payments received by the Administrative Agent hereunder
will be applied first to costs of collection, if any, then to accrued but
unpaid interest and the balance to principal (in each case, pro rata to each
Noteholder according to the interests of each Noteholder in and to the
principal outstanding at such time under this Secured Promissory Note).


 


The Company shall pay
interest on the amount of any principal, interest or other amount payable
hereunder that is not paid when due, from the date such amount shall be due
until such amount shall be paid in full, payable on demand, at a rate per annum
equal at all times to two percent (2%) per annum above the rate per annum of
interest set forth in the immediately preceding paragraph (the “Default Rate”).


 


Principal
hereunder shall be payable in installments as follows:


 


(a)                                  In
an initial installment of $1,159,489.00 (the “Initial Principal Payment”)
payable from time to time on or before January 3, 2005; provided, however,
that upon the election of Investor in writing, delivered to Company no later
than December 31, 2004, the due date for this initial installment will be
extended to on or before June 3, 2005; and


 


(b)                                 the balance of the
outstanding principal amount hereof shall be payable on April 26, 2007.


 


Each installment of
principal shall be paid to the Administrative Agent for distribution to the
Noteholders by 11:00 A.M. (New York City time) on the date due. Interest
hereunder shall be payable to the Administrative Agent for distribution to the
Noteholders on the last day of each Interest Period in arrears commencing on November 23,
2004 (each such date being an “Interest Payment Date”) with a final
payment of all unpaid interest on the date principal is paid in full hereunder.
The Company shall have the option to pay such interest in cash or to cause such
interest to be capitalized on any such Interest Payment Date and added to the principal
amount of this Secured Promissory Note, which additional amount shall bear
interest and otherwise be payable in accordance with the terms and conditions
of this Secured Promissory Note.


 


2





















 


The Administrative Agent
shall have the right at any time to request that any or all capitalized
interest added to the principal amount of this Secured Promissory Note be
evidenced by a separate promissory note or notes in substantially the form of
this Secured Promissory Note.


 


If any day on which a
payment is due pursuant to the terms of this Secured Promissory Note is not a
Business Day, such payment shall be due on the next Business Day following such
date and interest shall accrue on the accrued and unpaid interest during such
extension of time; provided, that any such interest accruing for such
extension of time shall be due and payable on the immediately succeeding
Interest Payment Date.


 


This Secured Promissory Note
may be prepaid at any time, without premium or penalty, in whole or in part,
together with accrued interest to the date of such prepayment on the portion
prepaid. All prepayments made shall be recorded by the Administrative Agent
and, prior to any transfer hereof, indorsed on the grid attached as Annex I
hereto, which is part of this Secured Promissory Note; provided, that
the failure of the Administrative Agent to make any such recordation shall not
affect the obligations of the Company under this Secured Promissory Note.


 


 This Secured Promissory Note will be entitled
to the benefits of and will be secured by the pledge, liens, security, title,
rights and security interests granted under (a) the General Security Agreement,
dated as of January 26, 2004 (the “Security Agreement”), made by
the Company and its Subsidiaries party thereto in favor of Wilmington Trust
Company, as collateral trustee for the Noteholders (together with its
successors and assigns, the “Collateral Trustee”) pursuant to the
Collateral Trustee Agreement, dated as of January 26, 2004 (the “Collateral
Trustee Agreement”), among the Collateral Trustee, the Company, the
Guarantors and the Administrative Agents, (b) the Trademark Collateral
Assignment and Security Agreement, dated as of January 26, 2004 (the “Trademark
Security Agreement”), made by the Company and its Subsidiaries party
thereto in favor of the Collateral Trustee, (c) the Copyright Collateral
Assignment and Security Agreement, dated as of January 26, 2004 (the “Copyright
Security Agreement”), made by the Company and its Subsidiaries party
thereto in favor of the Collateral Trustee and (d) the Stock Pledge Agreement,
dated as of January 26, 2004 (the “Pledge Agreement”), made by the
Company and its Subsidiaries party thereto in favor of the Collateral Trustee (the Security Agreement, together with each
of the Trademark Security Agreement, the Copyright Security Agreement and the
Pledge Agreement, are collectively referred to as the “Collateral Documents”).
This Secured Promissory Note is subject to the terms of the Intercreditor and
Subordination Agreement, dated as of January 26, 2004 (the “Intercreditor
Agreement”) among WFF, the Collateral Trustee and the Noteholders. The
Intercreditor Agreement, together with this Secured Promissory Note, each other
Secured Promissory Note, the Collateral Documents, the Collateral Trustee
Agreement and the Subsidiary Guaranty made by each of the Subsidiaries of the
Company and dated as of November 5, 2003, as amended by the Amendment No.
1 to Subsidiary Guaranty dated as of January 26, 2004 (the “Guaranty”),
as each of the same may be amended, supplemented or renewed from time to time,
are collectively referred to as the “Loan Documents.”


 


So long as any Obligation
under this Secured Promissory Note or any other Loan Document shall remain
unpaid, the Company will comply with the affirmative and negative covenants set
forth in Annex II to this Secured Promissory Note in accordance with the terms
of those covenants.


 


Subject to the terms of the
Intercreditor Agreement, upon the occurrence and during the continuation of any
Event of Default (as defined in Annex II hereto), (i) the Administrative Agent,
at the direction of the Required DB Noteholders, may by notice to the Company,
declare this Secured Promissory Note, all interest thereon and all other
amounts payable hereunder to be


 


3





















 


forthwith due and payable,
whereupon this Secured Promissory Note, all such interest and all such other
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby
expressly waived by the Company and (ii) the Administrative Agent may pursue
all remedies available to it under the Loan Documents and applicable law
against the Company and the personal property that secures the Obligations,
from time to time and in such order as the Administrative Agent shall
determine.


 


The Company agrees that,
upon the acceleration of this Secured Promissory Note following the occurrence
of an Event of Default that is not cured within the applicable cure period, the
Company shall pay to the Administrative Agent, in addition to principal and
accrued interest thereon, all out-of-pocket costs of collection of the
principal and accrued interest, including, but not limited to, all reasonable
out-of-pocket attorneys’ fees, court costs, and other reasonable out-of-pocket
costs and expenses of each Noteholder Party related to the enforcement of
payment of this Secured Promissory Note. Such amounts which are not paid within
10 days after Administrative Agent’s written demand therefor shall be added to
the principal of this Secured Promissory Note and will bear interest at the
Default Rate.


 


Each
Noteholder Party hereby appoints and authorizes the Administrative Agent and
the Collateral Trustee (each, an “Agent”) to take such action as agent
on its behalf and to exercise such powers and discretion under this Secured
Promissory Note and the other Loan Documents as are delegated to such Agent by
the terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for by
the Loan Documents (including, without limitation, enforcement or collection of
this Secured Promissory Note), no Agent shall be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required DB Noteholders, in the case of the
Administrative Agent, and the Required Noteholders, in the case of the
Collateral Trustee, and such instructions shall be binding upon all Noteholder
Parties; provided, however, that no Agent shall be required to
take any action that exposes such Agent to personal liability or that is
contrary to this Agreement or applicable law.


 


Neither any Agent nor any of
their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with the Loan Documents, except for its or their own gross negligence or
willful misconduct. Without limitation of the generality of the foregoing, each
Agent: (a) may consult with legal counsel (including counsel for any Loan
Party), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith
by it in accordance with the advice of such counsel, accountants or experts;
(b) makes no warranty or representation to any Noteholder Party and shall not
be responsible to any Noteholder Party for any statements, warranties or
representations (whether written or oral) made in or in connection with the
Loan Documents; (c) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
any Loan Document on the part of any Loan Party or to inspect the property
(including the books and records) of any Loan Party; (d) shall not be
responsible to any Noteholder Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Loan Document or any other instrument or
document furnished pursuant thereto; and (e) shall incur no liability under or
in respect of any Loan Document by acting upon any notice, consent, certificate
or other instrument or writing (which may be by telegram, telecopy or telex)
believed by it to be genuine and signed or sent by the proper party or parties.


 


4





















 


All notices and other
communications provided for under this Secured Promissory Note shall be in
writing (including by facsimile transmission) and mailed, faxed or delivered,
in accordance with the terms of the Secured Promissory Note and Warrant
Purchase Agreement, dated as of November 5, 2003, by and between the
Company and the Noteholders (the “Purchase Agreement”), in the case of
the Company, to: 7880 Bent Branch Drive, Suite 150, Irving, Texas 75063
Attention: Chief Financial Officer, with copy to Chief Executive Officer at
7880 Bent Branch Drive, Suite 150, Irving, Texas 75063), and, in the case of
the Investor or Administrative Agent, to: DB Alternative Trading, Inc.
(formerly known as DB Advisors, LLC), 280 Park Avenue, New York, New York
10017, Attention: Roger Ehrenberg 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.


 


No amendment, waiver,
modification or supplement of any provision of this Secured Promissory Note,
nor consent to any departure by the Company therefrom, shall in any event be
effective unless the same shall be in writing signed by the Company and
accepted and agreed to by the Required Lenders and then such amendment, waiver,
modification, supplement or consent shall be effective only in the specific
instance and for the specific purpose for which given.


 


This Secured Promissory Note
is governed by and construed in accordance with, the laws of the State of New
York.


 


This Secured Promissory Note
may be assigned, in whole or in part, from time to time, by the Investor
without the prior written consent of the Company.


 


This Secured Promissory Note
and the rights and obligations under this Secured Promissory Note are not
assignable or delegable, directly or indirectly, in whole or in part, by the
Company, without the prior written consent of the Investor; provided, however,
that the Company may transfer this Secured Promissory Note and the rights and
obligations under this Secured Promissory Note to any third party that has
acquired all or substantially all of the capital stock or ownership interest in
and to the Company (including by way of merger or consolidation) or to any
third party that has acquired all or substantially all of the assets of the
Company; provided that the Collateral (as defined in the Security Agreement) is
included in any such sale. This Secured Promissory Note shall be binding upon
the Company, its permitted successors and its assigns, and, in addition, shall
inure to the benefit of and be enforceable by each Noteholder and its
successors and assigns. Whenever possible this Secured Promissory Note and each
provision hereof shall be interpreted in such manner as to be effective, valid
and enforceable under applicable law. If and to the extent that any such
provision of this Secured Promissory Note shall be held invalid or unenforceable
by any court of competent jurisdiction, such holding shall not invalidate or
render unenforceable any other provisions hereof, and any determination that
the application of any provision hereof to any person or under any circumstance
is illegal and unenforceable shall not affect the legality, validity and
enforceability of such provision as it may be applied to any other person or in
any other circumstance. All rights and remedies provided in this Secured
Promissory Note, the Guarantee, the Security Agreement or any law shall be
available to the Investor and shall be cumulative.


 


The Company hereby expressly
waives presentment, demand, and protest, notice of demand, dishonor and
nonpayment of this Secured Promissory Note, and all other notices or demands of
any kind in connection with the delivery, acceptance, performance, default or
enforcement hereof, and hereby consents to any delays, extensions of time,
renewals, waivers or modifications that may be granted or consented to by the
Noteholders with respect to the time of payment or any other provision hereof
or of the Security Agreement.


 


5





















 


No course of dealing between
the Company and the Investor or any other Noteholder or Noteholder Party and no
delay or failure in exercising any rights hereunder in respect thereof shall
operate as a waiver of any rights of any Noteholder Party.


 


This Secured Promissory
Note, and the indebtedness of the Company to the Investor evidenced hereby,
shall not be subject to any set-off, recoupment or counterclaim, each of which
is hereby expressly waived by the Company with respect to this Secured
Promissory Note and such indebtedness.


 


The Company hereby
irrevocably submits to the non-exclusive jurisdiction of any United States Federal
or New York State court sitting in New York City in any action or proceeding
arising out of or relating to this Secured Promissory Note and hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in any such court and irrevocably waives any objection
it may now or hereafter have as to the venue of any such suit, action or
proceeding brought in such a court or that such court is an inconvenient forum.
Nothing herein shall limit the right of the Investor or any other Noteholder
Party to bring proceedings against the Company in the courts of any other
jurisdiction.


 


6





















 


THE COMPANY
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 SECURED PROMISSORY
NOTE.


 


	
   

  	
   

  	
  COMPANY:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AEGIS COMMUNICATIONS
  GROUP, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard Ferry

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard Ferry

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President and CEO

  	
   

  
								



 


7





















 


Annex
I 


 


PREPAYMENTS


 


	
  Date

  	
   

  	
  Amount Prepaid

  	
   

  	
  Unpaid Balance

  	
   

  	
  Notation Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


2





















 


Annex
II


 


Covenants, Events of Default and Related Definitions


 


1. Definitions and Interpretations


 


1.1 Definitions  As used in this Annex II, the
following terms shall have the following definitions:


 


“Account”
means an account (as that term is defined in the Code), and any and all
supporting obligations in respect thereof.


 


“Account
Debtor” means any Person who is obligated under, with respect to, or on
account of, an Account, chattel paper, or a General Intangible.


 


“Advances”
means the principal amounts outstanding and unpaid from time to time evidenced
by the Secured Promissory Note to which this Annex II is attached and any other
secured promissory note having the same terms as this secured promissory note
and issued simultaneously with the Secured Promissory Note to which this Annex
II is attached.


 


“Affiliate”
means, as applied to any Person, any other Person who, directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, such Person. For purposes of this definition, “control”
means the possession, directly or indirectly through one or more
intermediaries, of the power to direct the management and policies of a Person,
whether through the ownership of Stock, by contract, or otherwise.


 


“ATC”
means Advanced Telemarketing Corporation, a Nevada corporation.


 


“Bankruptcy
Code” means title 11 of the United States Code, as in effect from time to
time.


 


“Board
of Directors” means the board of directors (or comparable managers) of the
Company or any committee thereof duly authorized to act on behalf of the board
of directors (or comparable managers).


 


“Books”
means all of Company’s and its Subsidiaries’ now owned or hereafter acquired
books and records (including all of their Records indicating, summarizing, or
evidencing their assets (including the Collateral) or liabilities, all of
Company’s and its Subsidiaries’ Records relating to their business operations
or financial condition, and all of their goods or General Intangibles related
to such information).


 


“Business
Day” means any day that is not a Saturday, Sunday, or other day on which
banks are authorized or required to close in the state of New York or for
purposes of determining the interest rate hereunder, London.


 


“Capital
Expenditures” means, with respect to any Person for any period, the sum of
(a) the aggregate of all expenditures by such Person and its Subsidiaries
during such period that are capital expenditures as determined in accordance
with GAAP, whether such expenditures are paid in cash or financed, and (b) to
the extent not covered by clause (a), the aggregate of all expenditures by such
Person and its Subsidiaries during such period to acquire by purchase or
otherwise the business or capitalized assets of, or the Capital Stock of, any other
Person.


 


3





















 


“Capital
Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.


 


“Capitalized
Lease Obligation” means that portion of the obligations under a Capital
Lease that is required to be capitalized in accordance with GAAP.


 


“Cash
Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof,
(b) marketable direct obligations issued by any state of the United States
or any political subdivision of any such state or any public instrumentality
thereof maturing within 1 year from the date of acquisition thereof and, at the
time of acquisition, having one of the two highest ratings obtainable from
either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors
Service, Inc. (“Moody’s”), (c) commercial paper maturing no more than 270
days from the date of creation thereof and, at the time of acquisition, having
a rating of at least A-1 from S&P or at least P-1 from Moody’s,
(d) certificates of deposit or bankers’ acceptances maturing within 1 year
from the date of acquisition thereof issued by any bank organized under the
laws of the United States or any state thereof having at the date of
acquisition thereof combined capital and surplus of not less than $250,000,000,
(e) demand Deposit Accounts maintained with any bank organized under the laws
of the United States or any state thereof so long as the amount maintained with
any individual bank is less than or equal to $100,000 and is insured by the
Federal Deposit Insurance Corporation, and (f) Investments in money market
funds substantially all of whose assets are invested in the types of assets
described in clauses (a) through (e) above.


 


“Change
of Control” means that (a) any “person” or “group” (within the meaning of
Sections 13(d) and 14(d) of the Exchange Act), other than Permitted Holders,
becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 25%, or more, of the Stock of the Company having the
right to vote for the election of members of the Board of Directors, or (b) the
Investors cease to own, directly or indirectly, and control Stock and Warrants
(as defined in the Purchase Agreement) of the Company representing (if such
warrants were exercised) in the aggregate 65% of the outstanding Stock of the
Company, or (c) a majority of the members of the Board of Directors do not
constitute Continuing Directors, or (d) the Company or its Subsidiaries cease
to own, directly or indirectly, and control 98.76 % of the outstanding Stock of
ATC and the Company or its Subsidiaries cease to own, directly or indirectly,
and control 100% of the outstanding Stock of each of their Subsidiaries (other
than ATC) extant as of the Closing Date.


 


“Closing
Date” means the date of this Secured Promissory Note.


 


“Code”
means the New York Uniform Commercial Code, as in effect from time to time.


 


“Collateral”
means all assets and interests in assets and proceeds thereof now owned or
hereafter acquired by the Company or its Subsidiaries in or upon which a Lien
is granted under any of the Loan Documents.


 


“Collateral
Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or
interests in Company’s or its Subsidiaries’ Books or Equipment, in each case,
in form and substance satisfactory to Collateral Trustee.


 


4





















 


“Compliance
Certificate” means a certificate in a form to be agreed by the Company and
the Administrative Agent delivered by the chief financial officer of the
Company to Administrative Agent.


 


“Continuing
Director” means (a) any member of the Board of Directors who was a director
(or comparable manager) of the Company on the date of execution of the Secured
Promissory Notes, and (b) any individual who becomes a member of the Board of
Directors after the date of execution of the Secured Promissory Notes if such
individual was appointed or nominated for election to the Board of Directors by
a majority of the Continuing Directors, but excluding any such individual
originally proposed for election in opposition to the Board of Directors in
office on the date of execution of the Secured Promissory Notes in an actual or
threatened election contest relating to the election of the directors (or
comparable managers) of the Company and whose initial assumption of office
resulted from such contest or the settlement thereof.


 


“Control
Agreement” means a control agreement, in form and substance satisfactory to
Collateral Trustee, executed and delivered by the Company or one of its
Subsidiaries, Collateral Trustee and, so long as the WFF Facility remains
outstanding, WFF as Collateral Trustee under the WFF Facility (in which case such
Control Agreement shall provide that the Collateral Trustee shall replace WFF
as secured party thereunder upon termination and payment in full of the WFF
Facility), and the applicable securities intermediary (with respect to a
Securities Account) or a bank (with respect to a Deposit Account).


 


“Default”
means an event, condition, or default that, with the giving of notice, the
passage of time, or both, would be an Event of Default.


 


“Deposit
Account” means any deposit account (as that term is defined in the Code)
other than the payroll account of the Company or any of its Subsidiaries or any
account maintained by the Company or any of its Subsidiaries out of which
payroll or related taxes (but not other operating expenses) are payable.


 


“EBITDA”
means, with respect to any fiscal period, the Company’s and its Subsidiaries’
consolidated net earnings (or loss), minus extraordinary gains and interest
income, plus interest expense, income taxes, depreciation and amortization and
extraordinary non-cash losses for such period, as determined in accordance with
GAAP.


 


“Environmental
Actions” means any complaint, summons, citation, notice, directive, order,
claim, litigation, investigation, judicial or administrative proceeding,
judgment, letter, or other communication from any Governmental Authority, or
any third party involving violations of Environmental Laws or releases of
Hazardous Materials from (a) any assets, properties, or businesses of the
Company or any of its Subsidiaries, or any of their predecessors in interest,
(b) from adjoining properties or businesses, or (c) from or onto any facilities
which received Hazardous Materials generated by the Company or any of its
Subsidiaries, or any of their predecessors in interest.


 


“Environmental
Law” means any applicable federal, state, provincial, foreign or local
statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy or rule of common law now or
hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on the Company or any
of its Subsidiaries, relating to the environment, employee health and safety
(to the extent it regulates


 


5





















 


occupational
exposure to Hazardous Materials), or Hazardous Materials, including CERCLA;
RCRA; the Federal Water Pollution Control Act, 33 USC § 1251 et  seq;
the Toxic Substances Control Act, 15 USC § 2601 et  seq; the
Clean Air Act, 42 USC § 7401 et  seq.; the Safe Drinking
Water Act, 42 USC § 3803 et  seq.; the Oil Pollution Act of
1990, 33 USC § 2701 et  seq.; the Emergency Planning and the
Community Right-to-Know Act of 1986, 42 USC § 11001 et  seq.;
the Hazardous Material Transportation Act, 49 USC § 1801 et  seq.;
and the Occupational Safety and Health Act, 29 USC §651 et  seq.
(to the extent it regulates occupational exposure to Hazardous Materials); any
state and local or foreign counterparts or equivalents, in each case as amended
from time to time.


 


“Environmental
Liabilities and Costs” means all liabilities, monetary obligations,
Remedial Actions, losses, damages, punitive damages, consequential damages,
treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts, or consultants, and costs of
investigation and feasibility studies), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand by any Governmental
Authority or any third party, and which relate to any Environmental Action.


 


“Environmental
Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities and Costs.


 


“Equipment”
means equipment (as that term is defined in the Code), and includes machinery,
machine tools, motors, furniture, furnishings, fixtures, vehicles (including
motor vehicles), computer hardware, tools, parts, and goods (other than
consumer goods, farm products, or Inventory), wherever located, including all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing.


 


“Event
of Default” has the meaning set forth in Section 4 of this
Annex II.


 


“Exchange
Act” means the Securities Exchange Act of 1934, as in effect from time to
time.


 


“Excluded
Subsidiary” means any Subsidiary of the Company or a Guarantor that (i) has
an aggregate book value, for all of its assets, of less than $25,000, (ii) owns
no registered intellectual property, (iii) has annual revenues of less than
$25,000, and (iv) has been designated an “Excluded Subsidiary” by the Company
with the consent of the Administrative Agent in its Permitted Discretion. The
Company may withdraw such designation at any time in its discretion. As of the
Closing Date, EBA Direct, Inc., a Canadian corporation and wholly owned
Subsidiary of IQI, Inc., is the sole Excluded Subsidiary.


 


“Financed
Capital Expenditures” means Capital Expenditures permitted under Section 3.16(b)(ii)
without the incorporation by reference of Section 3.16(b)(i) set forth
therein.


 


“FEIN”
means Federal Employer Identification Number.


 


“Funded
Capital Expenditures” means Capital Expenditures permitted under Section 3.16(b)(i)
without the incorporation by reference of Section 3.16(b)(ii) set forth
therein.


 


“GAAP”
means generally accepted accounting principles as in effect from time to time
in the United States, consistently applied.


 


6





















 


“General
Intangibles” means general intangibles (as that term is defined in the
Code), including payment intangibles, contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trade secrets, trademarks, servicemarks,
copyrights, blueprints, drawings, purchase orders, customer lists, monies due
or recoverable from pension funds, route lists, rights to payment and other
rights under any royalty or licensing agreements, infringement claims, computer
programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, insurance premium rebates, tax refunds, and tax
refund claims, and any and all supporting obligations in respect thereof, and
any other personal property other than Accounts, Deposit Accounts, goods,
Investment Property, and Negotiable Collateral.


 


“Governmental
Authority” means any federal, state, local, or other governmental or
administrative body, instrumentality, department, or agency or any court,
tribunal, administrative hearing body, arbitration panel, commission, or other
similar dispute-resolving panel or body.


 


“Guarantor”
means each Material Subsidiary of the Company.


 


“Hazardous
Materials” means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as “hazardous
substances,” “hazardous materials,” “hazardous wastes,” “toxic substances,” or
any other formulation intended to define, list, or classify substances by
reason of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil, petroleum,
or petroleum derived substances, natural gas, natural gas liquids, synthetic
gas, drilling fluids, produced waters, and other wastes associated with the
exploration, development, or production of crude oil, natural gas, or
geothermal resources, (c) any flammable substances or explosives or any
radioactive materials, and (d) asbestos in any form or electrical equipment
that contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of 50 parts per million.


 


“Hedge
Agreement” means any and all agreements, or documents now existing or
hereafter entered into by Company or its Subsidiaries that provide for an
interest rate, credit, commodity or equity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross currency rate swap, currency
option, or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging Company’s or its Subsidiaries’
exposure to fluctuations in interest or exchange rates, loan, credit exchange,
security or currency valuations or commodity prices.


 


“Initial
Noteholders” means Deutsche Bank AG London acting through DB Alternative
Trading, Inc. (formerly known as DB Advisors, LLC) and Essar Global Limited.


 


“Indebtedness”
means (a) all obligations for borrowed money, (b) all obligations evidenced by
bonds, debentures, notes, or other similar instruments and all reimbursement or
other obligations in respect of letters of credit, bankers acceptances,
interest rate swaps, or other financial products, (c) all obligations as a
lessee under Capital Leases, (d) all obligations or liabilities of others
secured by a Lien on any asset of a Person or its Subsidiaries, irrespective of
whether such obligation or liability is assumed, (e) all obligations to pay the
deferred purchase price of assets (other than trade payables incurred in the
ordinary course of business and repayable in accordance with customary trade
practices), (f) all obligations owing under Hedge Agreements, and (g) any
obligation guaranteeing or intended to guarantee (whether directly or
indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse)
any obligation of any other Person that constitutes Indebtedness under any of
clauses (a) through (f) above.


 


7





















 


“Insolvency
Proceeding” means any proceeding commenced by or against any Person under
any provision of the Bankruptcy Code or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.


 


“Interest
Expense” means, for any period, the aggregate of the interest expense of
the Company and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP.


 


“Inventory”
means inventory (as that term is defined in the Code).


 


“Investment”
means, with respect to any Person, any investment by such Person in any other
Person (including Affiliates) in the form of loans, guarantees, advances, or
capital contributions (excluding (a) commission, travel, and similar advances
to officers and employees of such Person made in the ordinary course of
business, and (b) bona fide
Accounts arising in the ordinary course of business consistent with past
practice), purchases or other acquisitions of Indebtedness, Stock, or all or
substantially all of the assets of such other Person (or of any division or
business line of such other Person), and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.


 


“Investment
Property” means investment property (as that term is defined in the Code),
and any and all supporting obligations in respect thereof.


 


“Lien”
means any interest in an asset securing an obligation owed to, or a claim by,
any Person other than the owner of the asset, irrespective of whether (a) such
interest is based on the common law, statute, or contract, (b) such interest is
recorded or perfected, and (c) such interest is contingent upon the occurrence
of some future event or events or the existence of some future circumstance or
circumstances. Without limiting the generality of the foregoing, the term “Lien”
includes the lien or security interest arising from a mortgage, deed of trust,
encumbrance, pledge, hypothecation, assignment, deposit arrangement, security
agreement, conditional sale or trust receipt, or from a lease, consignment, or
bailment for security purposes and also includes reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases, and other title exceptions and encumbrances affecting Real Property.


 


“Material
Adverse Change” means (a) a material adverse change in the business,
prospects, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole,
(b) a material impairment of the Company’s or a Subsidiary of the Company’s
ability to perform its obligations under the Loan Documents to which it is a
party or of the Noteholder Parties’ ability to enforce the Obligations or
realize upon the Collateral, or (c) a material impairment of the
enforceability or priority of the Collateral Trustee’s Liens with respect to
the Collateral as a result of an action or failure to act on the part of the
Company or a Subsidiary of the Company.


 


“Material
Subsidiary” means any Subsidiary of the Company or a Guarantor that is not
an Excluded Subsidiary.


 


“Negotiable
Collateral” means letters of credit, letter of credit rights, instruments,
promissory notes, drafts, documents, and chattel paper (including electronic
chattel paper and tangible chattel paper), and any and all supporting
obligations in respect thereof.


 


8





















 


“Noteholder”
or “Noteholders” means the Investor and each Person that becomes a
holder of the Secured Promissory Note to which this Annex II is attached or to
the owner of an undivided interest in the Secured Promissory Note to which this
Annex II is attached pursuant to the terms hereof for so long as the Investor
or such Person, as the case may be, shall be a holder hereof.


 


“Noteholder
Party” or “Noteholder Parties” means any or all of the Noteholders
and Agents, as the case may be.


 


 “Obligations” means all loans,
Advances, debts, principal, interest (including any interest that, but for the
commencement of an Insolvency Proceeding, would have accrued), premiums,
liabilities, obligations (including indemnification obligations), fees,
charges, costs, expenses of any of the Noteholders or the Agents payable by the
Company to any Noteholder Party under the Loan Documents and (including any
fees or expenses that, but for the commencement of an Insolvency Proceeding,
would have accrued), guaranties, covenants, and duties of any kind and
description owing by the Company to any of the Noteholder Parties pursuant to
or evidenced by the Loan Documents and irrespective of whether for the payment
of money, whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, and including all interest not paid
when due and all costs and expenses of the Noteholder Parties payable by the
Company under the Loan Documents, by law, or otherwise. Any reference herein to
the Obligations shall include all extensions, modifications, renewals, or
alterations thereof, both prior and subsequent to any Insolvency Proceeding.


 


 “Permitted Discretion” means a
determination made in good faith and in the exercise of reasonable (from the
perspective of a secured asset-based lender) business judgment.


 


“Permitted
Dispositions” means (a) sales or other dispositions of Equipment that is
substantially worn, damaged, or obsolete in the ordinary course of business,
(b) sales of Inventory to buyers in the ordinary course of business, (c) the
use or transfer of money or Cash Equivalents in a manner that is not prohibited
by the terms of this Agreement or the other Loan Documents, and (d) the
licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and
other intellectual property rights in the ordinary course of business and (d)
the sale of assets having an aggregate book value on the Books of the “Borrowers”
(as such term is defined in the WWF Facility) not exceeding $100,000 in any
twelve-month period.


 


“Permitted
Holders” means the Initial Noteholders and the Prior Stockholders.


 


“Permitted
Investments” means (a) Investments in cash and Cash Equivalents, (b)
Investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) Investments received in settlement of amounts due to the Company
or any Material Subsidiary of the Company effected in the ordinary course of
business or owing to the Company or any Material Subsidiary of the Company as a
result of Insolvency Proceedings involving an Account Debtor or upon the
foreclosure or enforcement of any Lien in favor of the Company or any Material
Subsidiary of the Company, and (e) Investments in de minimis amounts in Excluded Subsidiaries that are
necessary to maintain the corporate existence of such Excluded Subsidiaries
under applicable law.


 


“Permitted
Liens” means (a) Liens held by Collateral Trustee, (b) Liens for
unpaid taxes that either (i) are not yet delinquent, or (ii) do not
constitute an Event of Default hereunder and are the subject of Permitted
Protests, (c) Liens set forth on Schedule 3.2 to this Annex II, (d)
the interests of lessors under operating leases, (e) purchase money Liens or
the interests of lessors 


 


9





















 


under
Capital Leases to the extent that such Liens or interests secure Permitted
Purchase Money Indebtedness and so long as such Lien attaches only to the asset
purchased or acquired and the proceeds thereof, (f) Liens arising by operation
of law in favor of warehousemen, landlords, carriers, mechanics, materialmen,
laborers, or suppliers, incurred in the ordinary course of the Company and its
Subsidiaries’ business and not in connection with the borrowing of money, and
which Liens either (i) are for sums not yet delinquent, or (ii) are
the subject of Permitted Protests, (g) Liens arising from deposits made in
connection with obtaining worker’s compensation or other unemployment
insurance, (h) Liens or deposits to secure performance of bids, tenders, or
leases incurred in the ordinary course of business and not in connection with
the borrowing of money, (i) Liens granted as security for surety or appeal
bonds in connection with obtaining such bonds in the ordinary course of
business, (j) Liens resulting from any judgment or award that is not an Event
of Default hereunder, (k) with respect to any Real Property, easements, rights
of way, and zoning restrictions that do not materially interfere with or impair
the use or operation thereof and (l) any and all Liens granted in, created by
or arising out of any WFF Loan Documents, which Liens may be senior and prior
to any Lien in favor of the Collateral Trustee or Noteholders to secure the
repayment and performance of the Obligations.


 


“Permitted
Protest” means the right of Company or any of its Subsidiaries to protest
any Lien (other than any Lien that secures the Obligations), taxes (other than
payroll taxes or taxes that are the subject of a United States federal tax
lien), or rental payment, provided that (a) a reserve with respect to such
obligation is established on the Books in such amount as is required under
GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by Company or any of its Subsidiaries, as applicable, in good faith,
and (c) while any such protest is pending, there will be no impairment of
the enforceability, validity, or priority of any of the Collateral Trustee’s
Liens.


 


“Permitted
Purchase Money Indebtedness” means, as of any date of determination,
Purchase Money Indebtedness incurred after the date of execution of the Secured
Promissory Notes in an aggregate amount outstanding at any one time not in
excess of $10,000,000.


 


“Person”
means natural persons, corporations, limited liability companies, limited partnerships,
general partnerships, limited liability partnerships, statutory trusts, joint
ventures, trusts, land trusts, business trusts, statutory trusts or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.


 


“Prior
Stockholders” means Questor Partners Fund II, L.P.; Questor Side-by-Side
Partners II, L.P.; Questor Side-by-Side Partners II 3(c)(1), L.P.; TC
Co-Investors, LLC; and Thayer Equity Investors III, L.P.


 


“Projections”
means the Company’s forecasted (a) balance sheets, (b) profit and loss
statements, and (c) cash flow statements, all prepared on a consistent basis
with the Company’s historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.


 


“Purchase
Money Indebtedness” means Indebtedness (other than the Obligations, but
including Capitalized Lease Obligations), incurred at the time of, or within 20
days after, the acquisition of any fixed assets for the purpose of financing
all or any part of the acquisition cost thereof.


 


“Real
Property” means any estates or interests in real property now owned or
hereafter acquired by the Company or a Subsidiary of the Company and the
improvements thereto.


 


10





















 


“Record”
means information that is inscribed on a tangible medium or which is stored in
an electronic or other medium and is retrievable in perceivable form.


 


“Remedial
Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (d) conduct any other
actions authorized by 42 USC § 9601.


 


“Required
Essar Noteholders” means, at any time, Noteholders owed or holding at least
a majority in interest of the aggregate principal amount of the Advances
outstanding at such time under this Secured Promissory Note.


 


“Required
Noteholders” means the Noteholders holding at least a majority in interest
of the aggregate principal amount of the Advances (as defined in each Secured
Promissory Note) outstanding at such time under each of the Secured Promissory
Notes.


 


“SEC”
means the United States Securities and Exchange Commission and any successor
thereto.


 


“Secured
Promissory Note” means this Secured Promissory Note and each other secured
promissory note issued by the Company as of the date hereof.


 


“Securities
Account” means a “securities account” as that term is defined in the Code.


 


“Solvent”
means, with respect to any Person on a particular date, that, at fair
valuations, the sum of such Person’s assets is greater than all of such Person’s
debts.


 


“Stock”
means all shares, options, warrants, interests, participations, or other
equivalents (regardless of how designated) of or in a Person, whether voting or
nonvoting, including common stock, preferred stock, or any other “equity
security” (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).


 


“Subsidiary”
of a Person means a corporation, partnership, limited liability company, or
other entity in which that Person directly or indirectly owns or controls the
shares of Stock having ordinary voting power to elect a majority of the board
of directors (or appoint other comparable managers) of such corporation,
partnership, limited liability company, or other entity.


 


“Surviving
Preferred Shares” means, collectively, the Surviving Series B Shares and
the Surviving Series F Shares.


 


“Surviving
Series B Shares” means 29,778 shares of the Series B Preferred Stock, par
value $.01 per share, of Parent.


 


“Surviving
Series F Shares” means 23,875 shares of the Series F Preferred Stock, par
value $.01 per share, of Parent.


 


11





















 


“United
States” means the United States of America.


 


“WFF” means
Wells Fargo Foothill.


 


“WFF Facility”
means the Loan and Security Agreement, dated as of January 26, 2004, by
and among the Company, each of its subsidiaries signatories thereto, each of
the lenders signatories thereto and WFF as the arranger and administrative
agent thereunder.


 


“WFF Loan
Documents” means the WFF Facility and each other “Loan Document” as defined
therein.


 


1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term “financial
statements” shall include the notes and schedules thereto. Whenever the term “the
Company and its Subsidiaries” or the term “Company” is used in respect of a
financial covenant or a related definition, it shall be understood to mean the
Company and its Subsidiaries on a consolidated basis unless the context clearly
requires otherwise.


 


1.3 Code. Any terms used in this Annex II that are
defined in the Code shall be construed and defined as set forth in the Code
unless otherwise defined herein.


 


2.                   Affirmative Covenants


 


The
Company covenants and agrees that, until the payment in full of the Obligations,
the Company and its Subsidiaries shall and shall cause each of their respective
Subsidiaries to do all of the following:


 


2.1 Accounting System. Maintain a system of accounting that enables
the Company and its Subsidiaries to produce financial statements in accordance
with GAAP and maintain records pertaining to the Collateral that contain
information as from time to time reasonably may be requested by Collateral
Trustee.


 


2.2 Financial Statements, Reports, Certificates. Deliver to Administrative Agent, with
copies to each Noteholder:


 


(a)
as soon as available, but in any event within 30 days (45 days in the case of a
month that is the end of one of the Company’s fiscal quarters) after the end of
each month during each of the Company’s fiscal years,


 


(i) a company prepared consolidated balance sheet,
income statement, and statement of cash flow covering the Company’s and its
Subsidiaries’ operations during such period,


 


(ii) a certificate signed by the chief financial
officer of the Company to the effect that:


 


A.                                   the financial statements delivered hereunder
have been prepared in accordance with GAAP (except for the lack of footnotes
and being subject to year-end audit adjustments) and fairly present in all
material respects the financial condition of the Company and its Subsidiaries,


 


12





















 


B.                                     there does not exist any condition or event
that constitutes a Default or Event of Default (or, to the extent of any
non-compliance, describing such non-compliance as to which he or she may have
knowledge and what action the Company and its Subsidiaries have taken, are
taking, or propose to take with respect thereto), and


 


(iii) for each month, quarter or year that is a
month, quarter or year as to which a financial covenant in Section 3.17
is to be tested, a Compliance Certificate demonstrating, in reasonable detail,
compliance at the end of such period with the applicable financial covenants
contained in Section 3.17,


 


(b)
as soon as available, but in any event within 90 days after the end of each of
the Company’s fiscal years,


 


(i) financial statements of the Company and its
Subsidiaries for each such fiscal year, audited by the Company’s independent
certified public accountants as of the original issuance date of the Secured
Promissory Notes or such other independent certified public accountants
reasonably acceptable to Administrative Agent and certified, without any
qualifications, by such accountants to have been prepared in accordance with
GAAP (such audited financial statements to include a balance sheet, income
statement, and statement of cash flow and, if prepared, such accountants’
letter to management), and


 


(ii) a certificate of such accountants addressed to
Administrative Agent and the Lenders stating that such accountants do not have
knowledge of the existence of any Default or Event of Default under Section 3.17,


 


(c)
as soon as available, but in any event within 30 days prior to the start of
each of the Company’s fiscal years, copies of the Company’s Projections, in
form and substance (including as to scope and underlying assumptions)
satisfactory to Administrative Agent, in its sole discretion, for the
forthcoming three years, year by year, and for the forthcoming fiscal year,
month by month, certified by the chief financial officer of the Company as
being such officer’s good faith best estimate of the financial performance of
the Company and its Subsidiaries during the period covered thereby,


 


(d)
if and when filed by the Company with the SEC,


 


(i) the Company’s quarterly reports on Form 10-Q,
annual reports on Form 10-K and current reports on Form 8-K,


 


(ii) any other filings made by the Company with the
SEC,


 


(iii) copies of the Company and its Subsidiaries’
federal income tax returns, and any amendments thereto, filed with the Internal
Revenue Service, and


 


(iv) any other information that is provided by the
Company to its shareholders generally,


 


(e)
if and when filed by the Company or any Subsidiary of the Company and as
requested by Administrative Agent, satisfactory evidence of payment of
applicable excise taxes in each jurisdiction in which (i) the Company or any
Subsidiary of the Company conducts


 


13





















 


business
or is required to pay any such excise tax, (ii) where the Company’s or any
Subsidiary of the Company’s failure to pay any such applicable excise tax would
result in a Lien on the properties or assets of the Company or such Subsidiary,
or (iii) where the Company’s or any Subsidiary of the Company’s failure to pay
any such applicable excise tax reasonably could be expected to result in a
Material Adverse Change,


 


(f)
as soon as the Company has knowledge of any event or condition that constitutes
a Default or an Event of Default, notice thereof and a statement of the
curative action that the Company and its Subsidiaries propose to take with
respect thereto,


 


(g)
promptly after the commencement thereof, but in any event within five days
after the service of process with respect thereto on the Company or any Subsidiary
of the Company, notice of all actions, suits, or proceedings brought by or
against the Company or any Subsidiary of the Company before any Governmental
Authority which, if determined adversely to such Borrower or such Subsidiary,
reasonably could be expected to result in a Material Adverse Change, and


 


(h)
upon the request of Administrative Agent, any other report reasonably requested
relating to the financial condition of the Company or its Subsidiaries.


 


In
addition to the financial statements referred to above, the Company and its
Subsidiaries agree that no Subsidiary of the Company will have a fiscal year
different from that of the Company. the Company and its Subsidiaries agree to
cooperate with Administrative Agent to allow Administrative Agent to consult
with their independent certified public accountants if Administrative Agent
reasonably requests the right to do so and that, in such connection, their
independent certified public accountants are authorized to communicate with
Administrative Agent and to release to Administrative Agent whatever financial
information concerning the Company and its Subsidiaries or their Subsidiaries
that Administrative Agent reasonably may request.


 


2.3 Returns. Cause returns and allowances as between the
Company and its Subsidiaries and their Subsidiaries and their Account Debtors,
to be on the same basis and in accordance with the usual customary practices of
the Company and its Subsidiaries and their Subsidiaries, as they exist at the
time of the execution and delivery of this Agreement.


 


2.4 Maintenance of Properties. Maintain and preserve all of their
properties which are necessary or useful in the proper conduct to their
business and not obsolete in good working order and condition, ordinary wear
and tear excepted, and comply at all times with the provisions of all leases to
which it is a party as lessee, so as to prevent any loss or forfeiture thereof
or thereunder.


 


2.5 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against the
Company and its Subsidiaries, their Subsidiaries, or any of their respective
assets to be paid in full, before delinquency or before the expiration of any
extension period, except to the extent that the validity of such assessment or
tax shall be the subject of a Permitted Protest. The Company and its
Subsidiaries will and will cause their Subsidiaries to make timely payment or
deposit of all tax payments and withholding taxes required of them by applicable
laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and
local, state, and federal income taxes, and will, upon request, furnish
Administrative Agent with proof satisfactory to Administrative Agent indicating
that the Company or the Subsidiary of the Company, as the case may be, has made
such payments or deposits.


 


14





















 


2.6 Insurance. (a) At the Company and its Subsidiaries’ expense,
maintain insurance respecting the Company’s and its Subsidiaries’ assets
wherever located, covering loss or damage by fire, theft, explosion, and all
other hazards and risks as ordinarily are insured against by other Persons
engaged in the same or similar businesses. The Company and its Subsidiaries
also shall maintain business interruption, public liability, and product
liability insurance. All such policies of insurance shall be in such amounts
and with such insurance companies as are reasonably satisfactory to Collateral
Trustee. The Company and its Subsidiaries shall deliver copies of all such
policies to Collateral Trustee with a satisfactory lender’s loss payable
endorsement naming Collateral Trustee as sole loss payee or additional insured,
as appropriate, with respect to any losses of the Collateral. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Collateral Trustee in the event
of cancellation of the policy for any reason whatsoever.


 


(b)
The Company shall give Collateral Trustee prompt notice of any loss covered by
such insurance. Collateral Trustee shall have the exclusive right to adjust any
losses claimed under any such insurance policies with respect to Collateral in
excess of $50,000 (or in any amount after the occurrence and during the
continuation of an Event of Default), without any liability to the Company and
its Subsidiaries whatsoever in respect of such adjustments, except to the
extent the Company or any of its Subsidiaries suffers any loss or damage as a
direct result of the gross negligence or willful malfeasance of the Collateral
Trustee. Any monies received as payment for any loss of any of the Collateral
under any insurance policy mentioned above (other than liability insurance
policies) or as payment of any award or compensation for condemnation or taking
by eminent domain of any of the Collateral, shall be paid over to Collateral
Trustee to be applied at the option of the Required Noteholders either to the
prepayment of the Obligations under each of the Secured Promissory Notes (pro
rata according to the interests of each Noteholder in and to the principal
outstanding at such time under the Secured Promissory Notes) or shall be
disbursed to the Company under staged payment terms reasonably satisfactory to
the Required Noteholders for application to the cost of repairs, replacements,
or restorations. Any such repairs, replacements, or restorations shall be
effected with reasonable promptness and shall be of a value at least equal to
the value of the items or property destroyed prior to such damage or
destruction.


 


(c)
The Company and its Subsidiaries shall not, and shall not suffer or permit
their Subsidiaries to, take out separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained under
this Section 2.7, unless Collateral Trustee is included thereon as
named insured with the loss payable to Collateral Trustee under a lender’s loss
payable endorsement or its equivalent. The Company immediately shall notify
Collateral Trustee whenever such separate insurance is taken out, specifying
the insurer thereunder and full particulars as to the policies evidencing the
same, and copies of such policies promptly shall be provided to Collateral
Trustee.


 


2.7 Location of Inventory and Equipment. Keep the Company and its Subsidiaries’ and
their Subsidiaries’ Equipment only at the locations identified on Schedule 2.7
to this Annex II and their chief executive offices only at the locations
identified on said Schedule 2.7; provided, however, that
Company may amend Schedule 2.7 so long as such amendment occurs by
written notice to Collateral Trustee not less than 30 days prior to the date on
which such Equipment is moved to such new location or such chief executive
office is relocated, so long as such new location is within the continental
United States, and so long as, at the time of such written notification, the
Company or its Subsidiary provides Collateral Trustee a Collateral Access
Agreement with respect thereto.


 


15





















 


2.8 Compliance with Laws. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Change.


 


2.9 Leases. Pay when due all rents and other amounts
payable under any leases to which the Company or any Subsidiary of the Company
is a party or by which the Company’s or any Subsidiary of the Company’s
properties and assets are bound, unless such payments are the subject of a
Permitted Protest.


 


2.10. Existence. Except as permitted under the WFF Facility,
at all times preserve and keep in full force and effect the Company’s and each
Subsidiary of the Company’s valid existence and good standing and any rights
and franchises material to their businesses.


 


2.11 Environmental. (a) Keep any property either owned or
operated by the Company or any Subsidiary of the Company free of any
Environmental Liens or post bonds or other financial assurances sufficient to
satisfy the obligations or liability evidenced by such Environmental Liens, (b)
comply, in all material respects, with Environmental Laws and provide to
Administrative Agent documentation of such compliance which Administrative
Agent reasonably requests, (c) promptly notify Administrative Agent of any
release of a Hazardous Material of any reportable quantity from or onto
property owned or operated by the Company or any Subsidiary of the Company and
take any Remedial Actions required to abate said release or otherwise to come
into compliance with applicable Environmental Law, and (d) promptly, but in any
event within five days of its receipt thereof, provide Administrative Agent
with written notice of any of the following: (i) notice that an Environmental
Lien has been filed against any of the real or personal property of the Company
or any Subsidiary of the Company, (ii) commencement of any Environmental Action
or notice that an Environmental Action will be filed against the Company or any
Subsidiary of the Company, and (iii) notice of a violation, citation, or other
administrative order which reasonably could be expected to result in a Material
Adverse Change.


 


2.12 Disclosure Updates. Promptly and in no event later than five
Business Days after obtaining knowledge thereof, notify Administrative Agent if
any written information, exhibit, or report furnished to the Noteholders
contained any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which made. The foregoing to the contrary
notwithstanding, any notification pursuant to the foregoing provision will not
cure or remedy the effect of the prior untrue statement of a material fact or
omission of any material fact nor shall any such notification have the affect
of amending or modifying this Agreement or any of the Schedules hereto.


 


2.13 Formation of Subsidiaries. At the time that the Company or any
Subsidiary of the Company forms any direct or indirect Subsidiary or acquires
any direct or indirect Subsidiary after the Closing Date, the Company or such
existing Subsidiary shall, subject to the terms of the Intercreditor Agreement,
(a) if such new Subsidiary is a Material Subsidiary, cause such new Subsidiary
to provide to Administrative Agent a Guaranty Supplement (as defined in the
Guaranty) and joinder to the Security Agreement, together with such other
security documents as well as appropriate UCC-1 financing statements, all in
form and substance satisfactory to Collateral Trustee (including being
sufficient to grant Collateral Trustee a first priority Lien (subject to
Permitted Liens) in and to the assets of such newly formed or acquired
Subsidiary), (b) provide to Collateral Trustee a pledge agreement and
appropriate certificates and powers or UCC-1 financing statements,
hypothecating all of the direct or beneficial ownership interest in such new
Subsidiary, in form and


 


16





















 


substance
satisfactory to Collateral Trustee, and (c) provide to Collateral Trustee all
other documentation, including one or more opinions of counsel satisfactory to
Collateral Trustee, which in its opinion is appropriate with respect to the
execution and delivery of the applicable documentation referred to above
(including policies of title insurance or other documentation with respect to
all property subject to a Mortgage). Any document, agreement, or instrument
executed or issued pursuant to this Section 2.13 shall be a Loan Document.


 


Notwithstanding
anything to the contrary in this Section 2 of this Annex II, in no event
shall the Company or any Subsidiary of the Company be required to make any
disclosure of information or provide any information, including any financial
statements, to the Administrative Agent or any Noteholder if, pursuant to
Regulation FD promulgated under the Securities Act of 1933, as amended, the
Company would be required to make any disclosure of that information in a
circumstance in which, or at a time at which, the Company reasonably determines
such disclosure would be adverse to the best interest of the Company and its
Subsidiaries or the best interest of its stockholders or if the disclosure of
that information would include the disclosure of non-GAAP financial measures as
contemplated by Regulation G of the SEC.


 


2.14                        Conversion of Excluded
Subsidiaries. At the
time that any Excluded Subsidiary becomes a Material Subsidiary, the Company
shall, subject to the terms of the Intercreditor Agreement, (a) cause such
Subsidiary to provide to Collateral Trustee a Guaranty Supplement and joinder
to the Security Agreement, together with such other security documents
(including Mortgages with respect to any Real Property of such Subsidiary), as
well as appropriate UCC-1 financing statements (and with respect to all
property subject to a Mortgage, fixture filings), all in form and substance
satisfactory to Collateral Trustee (including being sufficient to grant
Collateral Trustee a second priority Lien (subject to Permitted Liens) in and
to the assets of such Subsidiary), and (b) provide to Collateral Trustee all
other documentation, including one or more opinions of counsel satisfactory to
Collateral Trustee, which in its opinion is appropriate with respect to the
execution and delivery of the applicable documentation referred to above
(including policies of title insurance or other documentation with respect to
all property subject to a Mortgage). Any document, agreement, or instrument
executed or issued pursuant to this Section 2.14 shall be a Loan Document.


 


2.15                        Surviving Preferred Shares. Cause the Surviving Series F Shares to be
either converted to common Stock or cancelled as soon as practicable after the
Closing Date but in any event not later than the later to occur of (a) March 31,
2004 and (b) the date occurring thirty (30) days after the SEC approves the
Company’s registration statement or other filings in respect of such conversion
or cancellation.


 


3. Negative Covenants.


 


The
Company covenants and agrees that, until the payment in full of the Obligations,
but subject to the terms of the Intercreditor Agreement and to the obligation
and rights of the Company to perform its obligations and covenants and
discharge its obligations under the WFF Loan Documents, the Company and its
Subsidiaries will not and will not permit any of their respective Material
Subsidiaries to do any of the following:


 


3.1 Indebtedness. Create, incur, assume, suffer to exist,
guarantee, or otherwise become or remain, directly or indirectly, liable with
respect to any Indebtedness withouth the written consent of the Required DB
Noteholders, except:


 


(a)
Indebtedness evidenced by the Secured Promissory Notes;


 


17





















 


(b)
Indebtedness set forth on Schedule 3.1 to this Annex II;


 


(c)
Permitted Purchase Money Indebtedness;


 


(d)
refinancings, renewals, or extensions of Indebtedness permitted under clauses
(b) and (c) of this Section 3.1 (and continuance or renewal of any
Permitted Liens associated therewith) so long as: (i) the terms and conditions
of such refinancings, renewals, or extensions do not, in Administrative Agent’s
judgment, materially impair the prospects of repayment of the Obligations by
the Company and its Subsidiaries or materially impair the Company and its
Subsidiaries’ creditworthiness, (ii) such refinancings, renewals, or extensions
do not result in an increase in the then extant principal amount of, or
interest rate with respect to, the Indebtedness so refinanced, renewed, or
extended or add one or more borrowers as liable with respect thereto if such
additional borrowers were not liable with respect to the original Indebtedness,
(iii) such refinancings, renewals, or extensions do not result in a shortening
of the average weighted maturity of the Indebtedness so refinanced, renewed, or
extended, nor are they on terms or conditions, that, taken as a whole, are
materially more burdensome or restrictive to the Company or any of its
Subsidiaries, (iv) if the Indebtedness that is refinanced, renewed, or extended
was subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension Indebtedness must be
include subordination terms and conditions that are at least as favorable to
the Noteholders as those that were applicable to the refinanced, renewed, or
extended Indebtedness, and (v) the Indebtedness that is refinanced, renewed, or
extended is not recourse to any Person that is liable on account of the
Obligations other than those Persons which were obligated with respect to the Indebtedness
that was refinanced, renewed, or extended;


 


(e)          Indebtedness
under the WFF Loan Documents;


 


(f)            endorsement
of instruments or other payment items for deposit; and


 


(g)
Indebtedness composing Permitted Investments.


 


3.2 Liens. Create, incur, assume, or suffer to exist, directly or indirectly,
any Lien on or with respect to any of its assets, of any kind (expressly
including, without limitation, Real Property), whether now owned or hereafter
acquired, or any income or profits therefrom, except for Permitted Liens
(including Liens that are replacements of Permitted Liens to the extent that
the original Indebtedness is refinanced, renewed, or extended under Section 3.1(d)
of this Annex II and so long as the replacement Liens only encumber those assets
that secured the refinanced, renewed, or extended Indebtedness).


 


3.3 Restrictions on Fundamental Changes.


 


(a)
Enter into any merger, consolidation, reorganization or recapitalization, or
reclassify its Stock; provided,
that (i) the Company may be merged with or into or consolidated into a
wholly-owned direct or indirect Subsidiary of the Company if the Company is the
surviving entity; (ii) any Guarantor may be merged with or into or consolidated
into a wholly-owned direct or indirect Subsidiary of the Company if the
surviving entity is a Guarantor; (iii) any Material Subsidiary may be merged
with or into or consolidated into an Excluded Subsidiary if the surviving
entity is a Material Subsidiary; and (iv) any Subsidiary may be merged into the
Company.


 


(b)
Liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution).


 


18





















 


(c)
Other than in Permitted Dispositions, convey, sell, lease, license, assign,
transfer, or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its assets.


 


3.4 Disposal of Assets. Other than in Permitted Dispositions or, in
any twelve month period in the ordinary course of business consistent with past
practices, assets having a book value on the Books of the Company of up to
$100,000 in the aggregate, convey, sell, lease, license, assign, transfer, or
otherwise dispose of any of the assets of the Company or any Subsidiary of the
Company.


 


3.5 Change Name. Change the Company’s or any Subsidiary of
the Company’s name, FEIN, organizational identification number, state of
organization, or organizational identity; provided, however, that
the Company or a Subsidiary of the Company may change its name upon at least 30
days prior written notice by Company to Collateral Trustee of such change and
so long as, at the time of such written notification, such Borrower or such
Subsidiary provides any financing statements necessary to perfect and continue
perfected Collateral Trustee’s Liens.


 


3.6 Nature of Business. Make any change in the principal nature of
their business.


 


3.7 Prepayments and Amendments. Except in connection with a refinancing
permitted by Section 3.1(d) of this Annex II,


 


(a)
prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of the
Company or any Subsidiary of the Company, other than the Obligations in
accordance with this Agreement, or


 


(b)
directly or indirectly, amend, modify, alter, increase, or change any of the
terms or conditions of any agreement, instrument, document, indenture, or other
writing evidencing or concerning Indebtedness permitted under Section 3.1(b)
or (c) of this Annex II.


 


3.8 Change of Control. Cause, permit, or suffer, directly or
indirectly, any Change of Control.


 


3.9 Distributions. Other than distributions or declaration and
payment of dividends by the Company to another Borrower or by a Subsidiary of
the Company to the Company, make any distribution or declare or pay any
dividends (in cash or other property, other than common Stock) on, or purchase,
acquire, redeem, or retire any of the Company’s Stock, of any class, whether
now or hereafter outstanding.


 


3.10 Accounting Methods. Modify or change their fiscal year or their
method of accounting (other than as may be required to conform to GAAP or to
conform to more commonly used principles that are a part of GAAP) or as
required by applicable law or enter into, modify, or terminate any agreement
currently existing, or at any time hereafter entered into with any third party
accounting firm or service bureau for the preparation or storage of the Company
and its Subsidiaries’ or their Subsidiaries’ accounting records without said
accounting firm or service bureau agreeing to provide Administrative Agent
information regarding the Company and its Subsidiaries’ and their Subsidiaries’
financial condition.


 


3.11 Investments. Except for Permitted Investments, directly
or indirectly, make or acquire any Investment, or incur any liabilities
(including contingent obligations) for or in connection with any Investment; provided, that the Company and its
Subsidiaries shall not have


 


19





















 


Permitted
Investments (other than in the Cash Management Accounts (as defined in the WFF
Facility)) in Deposit Accounts or Securities Accounts in an aggregate amount in
excess of $100,000 outstanding at any one time unless the Company or its
Subsidiary, as applicable, and the applicable securities intermediary or bank
have entered into Control Agreements or similar arrangements governing such
Permitted Investments in order to perfect (and further establish) the
Collateral Trustee’s Liens in such Permitted Investments (subject in all
respects to the terms of the Intercreditor Agreement). Subject to the foregoing
proviso, the Company shall not, and shall not permit its Subsidiaries to,
establish or maintain any Deposit Account or Securities Account unless
Collateral Trustee or WFF, as agent under the WFF Facilities, shall have
received a Control Agreement in respect of such Deposit Account or Securities
Account.


 


3.12 Transactions with Affiliates. Directly or indirectly enter into or permit
to exist any transaction with any Affiliate of the Company, other than one of
the Company’s wholly owned Subsidiaries, except for transactions that are in
the ordinary course of the Company and its Subsidiaries’ business, upon fair
and reasonable terms, that are fully disclosed to Administrative Agent, and
that are no less favorable to the Company and its Subsidiaries than would be
obtained in an arm’s length transaction with a non-Affiliate.


 


3.13 Suspension. Suspend or go out of a substantial portion
of their business.


 


3.14 Compensation. Increase the annual fee or per-meeting fees
paid to the members of its Board of Directors during any year by more than 15%
over the prior year; pay or accrue total cash compensation, during any year, to
its officers and senior management employees in an aggregate amount in excess
of 115% of that paid or accrued in the prior year.


 


3.15 Equipment with Bailees. Store the Equipment of the Company and its
Subsidiaries or their Subsidiaries at any time now or hereafter with a bailee,
warehouseman, or similar party without Collateral Trustee’s prior written
consent.


 


3.16 Financial Covenants.


 


(a) Minimum of EBITDA.  Fail
to maintain or achieve  at least the required amount set forth in the
following table for the applicable period ending in the month set forth
opposite thereto:


 


	
  Applicable Amount

  	
   

  	
  Applicable Period (Month-end)

  
	
  $

  	
  (9,880,000)

  	
   

  	
   

  	
  October 2004

  
	
  $

  	
  (10,800,000)

  	
   

  	
   

  	
  November 2004

  
	
  $

  	
  (11,500,000)

  	
   

  	
   

  	
  December 2004

  



 


EBITDA
shall be calculated on a cumulative twelve-month basis building through the
first twelve calendar months occurring ending after the Closing Date
(commencing with January of 2004) and thereafter on a rolling twelve-month
basis. EBITDA shall be measured on a quarter-end basis. Administrative Agent
and the Company shall establish required minimum EBITDA amounts for quarter
occurring after December 31, 2004 on the basis of projections and business
plans for such periods prepared and delivered by the Company and its
Subsidiaries and accepted by Administrative Agent in its Permitted Discretion,
but in any event in amounts not less than the amount required for the quarter
ending December 31, 2004.


 


20





















 


(b)
Make


 


(i)                                     Funded Capital Expenditures. Except as permitted under 3.16(b)(ii), make
capital expenditures in any period in excess of the amount set forth in the
following table for the applicable period:


 


	
  Fiscal
  Year 2004

  
	
  $

  	
  1,750,000

  



 


(ii)                                  Financed Capital
Expenditures. Except as
permitted under Section 3.16(b)(i), capital expenditures in any period in
excess of the amount set forth in the following table for the applicable
period:


 


	
  Fiscal Year 2004

  	
   

  	
  Fiscal Year 2005

  	
   

  
	
  $

  	
  7,000,000

  	
   

  	
  $

  	
  7,000,000

  	
   

  
						



 


Administrative
Agent shall establish required maximum Funded Capital Expenditure amounts for
periods ending after December 31, 2004 and required maximum Financed
Capital Expenditure amounts for periods ending after December 31, 2005 in
accordance with the amounts established by WFF under the WFF Facility or, if
the WFF Facility is no longer in effect, on the basis of projections and
business plans for such periods prepared and delivered by the Company and
accepted by Administrative Agent in its Permitted Discretion


 


3.17 Billing Practices. Modify or change their billing practices.


 


3.18 Change of Officers. 
Permit any change in the holders of the offices of President and Chief
Executive Officer and Chief Financial Officer unless the individual named to
any such office is satisfactory to Administrative Agent in its Permitted
Discretion.


 


3.19 Limitations on other Subordinated Indebtedness. Directly or indirectly, incur any
Indebtedness that is subordinate in right of payment to any other Indebtedness
of the Company or such Material Subsidiary, as the case may be, unless such
Indebtedness is either (a) pari passu
in right of payment with the Advances or such Material Subsidiary’s Guaranty,
as the case may be or (b) subordinated in right of payment to the Advances, or
such Material Subsidiary’s Guaranty, as the case may be.


 


3.20 Excluded Subsidiaries. Except as permitted under Section 3.12,
transfer any capital or assets to an Excluded Subsidiary or incur any
Indebtedness to an Excluded Subsidiary


 


4. EVENTS OF DEFAULT.


 


Any
one or more of the following events shall constitute an event of default (each,
an “Event of Default”) under the Secured Promissory Notes:


 


4.1
If the Company and its Subsidiaries fail to pay within 5 calendar days of the
date when due and payable or when declared due and payable, all or any portion
of the Obligations other than the principal amount payable under the Secured
Promissory Notes (whether of interest (including any interest which, but for
the provisions of the Bankruptcy Code, would have accrued on such 


 


21





















 


amounts),
fees, charges and expense reimbursements due the Noteholders or other amounts
constituting Obligations);


 


4.2
If the Company and its Subsidiaries fail to pay when due and payable or when
declared due and payable, all or any portion of the principal amount payable
under the Secured Promissory Notes;


 


4.3
If the Company and its Subsidiaries fail to perform, keep, or observe any term,
provision, covenant or agreement contained in any of the Loan Documents and,
except for those covenants set forth in Sections 2.7 or 2.11 or Section 3,
such failure continues for a period of 30 days or more after the earlier of (a)
the date on which the Company first receives notice of such failure from the
Administrative Agent or a Noteholder and (b) the first date on which an
executive officer of the Company has actual awareness of such failure.


 


4.4
If any material portion of the Company’s or any Subsidiary of the Company’s
assets is attached, seized, subjected to a writ or distress warrant, levied
upon, or comes into the possession and control of any third Person;


 


4.5
If an Insolvency Proceeding is commenced by the Company or any Subsidiary of
the Company;


 


4.6
If an Insolvency Proceeding is commenced against the Company or any Subsidiary
of the Company, and any of the following events occur: (a) the applicable
Borrower or Subsidiary consents to the institution of the Insolvency Proceeding
against it, (b) the petition commencing the Insolvency Proceeding is not
timely controverted, (c) the petition commencing the Insolvency Proceeding
is not dismissed within 60 calendar days of the date of the filing thereof,
(d) an interim trustee is appointed to take possession of all or any
substantial portion of the properties or assets of, or to operate all or any
substantial portion of the business of, the Company or any Subsidiary of the
Company, or (e) an order for relief shall have been entered therein;


 


4.7
If the Company or any Subsidiary of the Company is enjoined, restrained, or in
any way prevented by court order from continuing to conduct all or any material
part of its business affairs;


 


4.8
If a notice of Lien, levy, or assessment is filed of record with respect to the
Company’s or any Subsidiary of the Company’s assets by the United States, or
any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, or if any taxes or debts owing at any time
hereafter to any one or more of such entities becomes a Lien, whether choate or
otherwise, upon the Company’s or any Subsidiary of the Company’s assets and the
same is not paid before such payment is delinquent or the same is not subject
to a Permitted Protest;


 


4.9
If a judgment or other claim becomes a Lien (other than a Permitted Lien) upon
any material portion of the Company’s or any Subsidiary of the Company’s
properties or assets ;


 


4.10
If there is a default in the WFF Loan Documents, any other Secured Promissory
Note or any material agreement to which the Company or any Subsidiary of the
Company is a party (other than any customer contract) and such default (a)
occurs at the final maturity of the obligations thereunder, or (b) results in a
right by the other party thereto, irrespective of whether exercised, to
accelerate the maturity of the applicable Borrower’s or Subsidiary’s
obligations thereunder, or to terminate such agreement, which termination is
reasonably likely to have a Material Adverse Change;


 


22





















 


4.11
If the Company or any Subsidiary of the Company makes any payment on account of
Indebtedness that has been contractually subordinated in right of payment to
the payment of the Obligations, except to the extent such payment is permitted
by the terms of the subordination provisions applicable to such Indebtedness;


 


4.12
If any representation, warranty, statement or Record fails to be true and
accurate in all material respects on the date as of which such information is
dated or certified and or omits to state any fact necessary to make such
representation, warranty, statement or Record (taken as a whole) not misleading
in any material respect at such time in light of the circumstances in which it
was made to the Noteholders or any Agent by the Company, any Subsidiary of the
Company, or any officer, employee, agent, or director of the Company or any
Subsidiary of the Company;


 


4.13
If any of the Loan Documents that purports to create a Lien, shall, for any
reason, fail or cease to create a valid and perfected and, except to the extent
permitted by the terms hereof or thereof, first priority Lien on or security
interest in the Collateral covered hereby or thereby; or


 


4.14
Any material provision of any Loan Document shall at any time for any reason be
declared to be null and void, or the validity or enforceability thereof shall
be contested by the Company or any Subsidiary of the Company, or a proceeding
shall be commenced by the Company or any Subsidiary of the Company, or by any
Governmental Authority having jurisdiction over the Company or any Subsidiary
of the Company, seeking to establish the invalidity or unenforceability
thereof, or the Company or any Subsidiary of the Company shall deny that it has
any liability or obligation purported to be created under any Loan Document.


 


23





















 


Schedule 2.7


 


Locations of Equipment


 


The Equipment is located at the offices and facilities of the Company
located in the following cities.


 


1.                                       Sierra
Vista, Arizona


2.                                       El
Segundo, California


3.                                       Los
Angeles, California


4.                                       Port
St. Lucie, Florida


5.                                       Atlanta,
Georgia


6.                                       Terra
Haute, Indiana


7.                                       Joplin,
Missouri


8.                                       St.
Joseph, Missouri


9.                                       Rocky
Mount, North Carolina


10.                                 Arlington,
Texas


11.                                 Irving,
Texas (2 facilities)


12.                                 Elkins,
West Virginia


13.                                 Fairmont,
West Virginia


 


Address
of Chief Executive Office of the Company


 


7880 Bent Branch Drive, Suite 150


Irving, Texas 75063


 


24





















 


Schedule 3.1


 


Scheduled Indebtedness


 


1.                                       Indebtedness relating to outstanding Letters
of Credit as to which the Company or one of its Subsidiaries is the account
party and any reimbursement and other obligations of the Company or any of its
Subsidiaries with respect thereto.


 


25





















 


Schedule 3.2


 


Permitted Liens


 


The following table describes the existing Liens to which assets of the
Company and its Subsidiaries are subject.


 


	
  Debtor

  	
   

  	
  Secured Party

  	
   

  	
  Delaware

  UCC file

  number and

  date of

  filing

  	
   

  	
  Collateral

  
	
  Aegis
  Communications Group, Inc.

  	
   

  	
  Dell Financial
  Services, L.P.

  	
   

  	
  10855903 8/2/01

  	
   

  	
  equipment

  
	
  Aegis
  Communications Group, Inc.

  	
   

  	
  Heller Financial
  Leasing, Inc., Commercial Equipment Finance

  	
   

  	
  11140669 10/2/01

  	
   

  	
  equipment

  
	
  Aegis
  Communications Group, Inc.

  	
   

  	
  Heller Financial
  Leasing, Inc., Commercial Equipment Finance

  	
   

  	
  11369516 11/1/01

  	
   

  	
  equipment

  
	
  Aegis
  Communications Group, Inc.

  	
   

  	
  De Lage Landen
  Financial Services, Inc.

  	
   

  	
  21931223 7/12/02

  	
   

  	
  equipment

  
	
  Aegis
  Communications Group, Inc.

  	
   

  	
  De Lage Landen
  Financial Services, Inc.

  	
   

  	
  22246365 9/3/02

  	
   

  	
  equipment

  
	
  Aegis
  Communications Group, Inc.

  	
   

  	
  De Lage Landen
  Financial Services, Inc.

  	
   

  	
  22246373 9/3/02

  	
   

  	
  equipment

  
	
  Aegis
  Communications Group, Inc.

  	
   

  	
  Dell Financial
  Services, L.P.

  	
   

  	
  22754962
  10/31/02

  	
   

  	
  equipment

  
	
  Aegis
  Communications Group, Inc.

  	
   

  	
  IOS Capital, LLC

  	
   

  	
  22826158 11/8/02

  	
   

  	
  equipment

  
	
  Aegis
  Communications Group, Inc.

  	
   

  	
  Dell Financial
  Services, L.P.

  	
   

  	
  23098211
  12/11/02

  	
   

  	
  equipment

  



 


26





















 


	
  Debtor

  	
   

  	
  Secured Party

  	
   

  	
  File number

  and date

  	
   

  	
  Collateral

  
	
  Aegis
  Communications Group, Inc.

  	
   

  	
  General Electric
  Credit Corporation

  	
   

  	
  30942212 4/3/03

  	
   

  	
  equipment

  
	
  Aegis
  Communications Group, Inc.

  	
   

  	
  IOS Capital, LLC

  	
   

  	
  31045957 4/23/03

  	
   

  	
  equipment

  
	
  InterServ
  Services Corporation

  	
   

  	
  Inter-Tel
  Leasing, Inc.

  	
   

  	
  20911010 4/11/02

  	
   

  	
  equipment

  
	
  InterServ
  Services Corporation

  	
   

  	
  Inter-Tel
  Leasing, Inc.

  	
   

  	
  20911051 4/11/02

  	
   

  	
  equipment

  
	
  InterServ
  Services Corporation

  	
   

  	
  Inter-Tel
  Leasing, Inc.

  	
   

  	
  20911093 4/11/02

  	
   

  	
  equipment

  
	
  InterServ
  Services Corporation

  	
   

  	
  Inter-Tel
  Leasing, Inc.

  	
   

  	
  20911135 4/11/02

  	
   

  	
  equipment

  
	
  InterServ
  Services Corporation

  	
   

  	
  Inter-Tel
  Leasing, Inc.

  	
   

  	
  20911200 4/11/02

  	
   

  	
  equipment

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ontario Personal Property Security
  Registration System

  	
   

  	
  none

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EBA Direct, Inc.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


27