Document:

Exhibit
4.8

 

THIS WARRANT AND THE
SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OR ANY STATE SECURITIES LAWS. 
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE
BEEN OR WILL BE ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR
RESALE, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE
WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND
STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.

 

AEGIS
COMMUNICATIONS GROUP, INC.

WARRANT TO PURCHASE SHARES

OF COMMON STOCK

 

	
  Date of Issuance:
  November 5, 2003

  	
   

  	
  Certificate No.
  W-6

  	
   

  

 

THIS CERTIFIES THAT, for
value received, Essar
Global Limited (the “Purchaser”) and its assigns are entitled to
subscribe for and purchase 34,110,343 shares (such number and such other number
as shall result, from time to time, from the adjustments specified in Section 6
hereof is herein referred to as the “Number of Warrant Shares”) of duly
authorized, validly issued, fully paid and nonassessable Common Stock (as
adjusted pursuant to Section 6 hereof, the “Shares”) of
AEGIS COMMUNICATIONS GROUP, INC., a Delaware corporation (the “Company”),
at the price of $0.01 per share (such price and such other price as shall result,
from time to time, from the adjustments specified in Section 6
hereof is herein referred to as the “Exercise Price”), subject to the
provisions and upon the terms and conditions hereinafter set forth.  As used herein the term “Date of Grant”
shall mean November 5, 2003.  The
term “Warrant” as used herein shall be deemed to include any warrants
issued upon transfer or partial exercise of this Warrant unless the context
clearly requires otherwise.  Capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed to them in the Note and Warrant Purchase Agreement dated as of
November 5, 2003 between the Company, Deutsche Bank AG-London acting through DB Advisors, LLC as investment
advisor and the Purchaser (the “Purchase Agreement”).

 

1.               Term.  The purchase right represented by this
Warrant is exercisable by the holder hereof, in whole or in part, at any time
and from time to time from the Date of Grant through November 5, 2010  (as such date may be extended as provided
below, the “Expiration Date”). 
Notwithstanding the foregoing, the Expiration Date of this Warrant may
be extended if, on the Expiration Date, (i) there is no effective Registration
Statement (as defined in the Registration Rights Agreement) covering all of the
Registrable Securities (as defined in the Registration Rights Agreement) or
(ii) a Blackout Period (as defined in the Registration Rights Agreement) is
then in effect, then in either of those events, the Expiration Date and the
Principal Payment Date shall be automatically extended until such time as a
Registration Statement covering all of the Registrable Securities has been
declared effective and/or there is no Blackout Period in effect.

 

 

2.               Method of
Exercise.

 

(a)                                  Cash
and Other Exercise.  Subject to Sections
1 and 5 hereof, the purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part and from time to time, at
the election of the holder hereof, by (i) the surrender of this Warrant
(with the notice of exercise substantially in the form attached hereto as Exhibit A-1
duly completed and executed) at the principal office of the Company and the
payment to the Company by wire transfer to an account designated by the Company
(a “Wire Transfer”) of an amount equal to the then applicable Exercise
Price multiplied by the number of Shares then being purchased, or (ii) if
in connection with a registered public offering of the Common Stock, the
surrender of this Warrant (with the notice of exercise form attached hereto as Exhibit
A-2 duly completed and executed) at the principal office of the Company
together with notice of arrangements reasonably satisfactory to the Company for
payment to the Company by Wire Transfer from the proceeds of the sale of such
number of Shares to be sold by the holder hereof in such public offering of an
amount equal to the then applicable Exercise Price per share multiplied by the
number of Shares then being purchased, or (iii) the tender of all or a portion
of the Note issued by the Company pursuant to the Purchase Agreement in a
principal amount equal to the then applicable Exercise Price multiplied by the
number of Shares then being purchased.

 

(b)                                 Cashless
Exercise.  Subject to Sections 1
and 5 hereof, in lieu of exercising this Warrant pursuant to Section 2(a),
the holder of this Warrant may elect to receive, without the payment by the
holder of any additional consideration, Shares equal to the value of this
Warrant (or the portion hereof being canceled), together with any cash in lieu
of fractional Shares, by surrender of this Warrant at the principal office of
the Company together with an executed Notice of Exercise or Exchange in
substantially the form attached hereto as Exhibit A-1 or Exhibit A-2.  In such event, the number of Shares that the
Company shall issue to the holder hereof shall be computed using the following
formula:

 

	
   

  	
   

  	
  Y (A - B)

  
	
  X =

  	
   

  	
  A

  	
   

  

 

	
   

  	
  Where:

  	
  X =

  	
   

  	
  The adjusted number of
  Shares to be issued to the Holder as a result of the cashless exchange
  election under this Section 2(b);

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Y =

  	
   

  	
  The number of Shares in
  respect of which the cashless exchange election under this Section 2(b)
  is made;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A =

  	
   

  	
  The Fair Market Value
  of one Share at the time the cashless exchange election is made; and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B =

  	
   

  	
  The Exercise Price.

  

 

3.               Certificates for
Shares.  Within three Business Days
after the exercise of the purchase rights evidenced by this Warrant, one or
more certificates for the number of Shares so purchased shall be issued to the
holder or as the holder may direct (with appropriate restrictive legends, as
applicable).  In the event of a partial
exercise of this Warrant, a new warrant or warrants (dated the date hereof) of
like tenor shall be issued to the holder or, subject to the limitations set
forth herein, as

 

2

 

the holder may direct (with appropriate restrictive
legends, as applicable), for the aggregate number of Shares equal to the number
of Shares called for on the face of this Warrant minus the number of Shares
purchased by the holder hereof upon such partial exercise.  For all purposes of this Warrant other than Sections
2(a) and 2(b), any reference to the exercise of this Warrant shall be
deemed to include a reference to the cashless exchange of the Warrant into
Common Stock, in accordance with the terms of Section 2(b) and this
Section 3.  The Company
shall pay all of its expenses associated with the issuance of any Shares and
replacement Warrants in accordance with the terms hereof, including, without
limitation, any applicable issue taxes.

 

4.               Stock Fully
Paid; Reservation of Shares.  All
Shares that may be issued upon the exercise of the rights represented by this
Warrant will, upon issuance pursuant to the terms and conditions herein, be
duly and validly issued and fully paid and nonassessable, and free from all
preemptive rights, taxes, liens and charges with respect to the issuance
thereof.  During the period within which
the rights represented by this Warrant may be exercised, the Company will at
all times have authorized, and reserved for the purpose of the issuance upon
exercise of the purchase rights evidenced by this Warrant, a sufficient number
of shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant.

 

5.               Hart-Scott-Rodino.  If any filing or notification becomes
necessary pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the “HSR Act”), based upon the planned exercise of this
Warrant or any portion hereof, the holder hereof shall notify the Company of
such requirement, and the holder and the Company shall file with the proper
authorities all forms and other documents necessary to be filed pursuant to the
HSR Act, as promptly as possible and shall cooperate with each other in promptly
producing such additional information as those authorities may reasonably
require to allow early termination of the notice period provided by the HSR Act
or as otherwise necessary to comply with requirements of the Federal Trade
Commission or the Department of Justice. 
The holder and the Company agree to cooperate with each other in
connection with such filings and notifications, and to keep each other informed
of the status of the proceedings and communications with the relevant
authorities.  The holder shall pay any
filing fee required to be paid in connection with a filing pursuant to the HSR
Act required as a result of the exercise of Warrants.  Notwithstanding the preceding sentence, the Company shall pay all
such filing fees required to be paid in connection with any filing pursuant to
the HSR Act required as a result of the exercise of Warrants held by the
Purchaser or its Affiliates (but not other successors or assigns of the
Purchaser).  The holder and the Company
shall each bear its own expenses (other than such filing fees) incurred in
connection with any filing required pursuant to the HSR Act.  Each holder by acceptance of this Warrant or
any portion hereof agrees to comply with the provisions of this Section 5.

 

6.               Adjustment of
Exercise Price and Number of Warrant Shares.  The Number of Warrant Shares and the Exercise Price shall be
subject to adjustment from time to time, but without duplication, upon the
occurrence of certain events, as follows:

 

(a)                                  Subdivisions,
Combinations and Other Issuances. 
Prior to the exercise or expiration of this Warrant, if the Company
shall:  (i) subdivide its outstanding
shares of Common Stock into a larger number of shares of Common Stock by stock
split or otherwise, (ii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock by reverse stock split or otherwise or
(iii) issue additional shares of Common Stock or other capital stock as a

 

3

 

dividend or distribution
on or with respect to its Common Stock, the Exercise Price in effect prior to
such subdivision, combination or issuance shall forthwith be proportionately
decreased in the case of a subdivision or stock dividend or distribution, or
proportionately increased in the case of a combination and the Number of
Warrant Shares in effect prior to such subdivision, combination or issuance
shall forthwith be proportionately increased in the case of a subdivision,
stock dividend or distribution, or proportionately decreased in the case of a
combination.  Any adjustment under this Section 6(a)
shall become effective at the close of business on the date the subdivision,
combination or reclassification becomes effective, or as of the record date of
such dividend or distribution (provided the Company makes such dividend or
distribution), or in the event that no record date is fixed, upon the making of
such dividend or distribution.

 

(b)                                 Reclassification,
Reorganization, Consolidation, etc. 
In the event of any corporate reclassification, capital reorganization,
consolidation, spin-off, merger, transfer of all or a substantial portion of
the Company’s properties or assets or any dissolution, liquidation or winding
up of the Company (other than as a result of a subdivision, combination,
dividend or distribution provided for in Section 6(a) above) (a “Corporate
Transaction”), then, as a condition of such event, provision shall be made,
and duly executed documents evidencing the same from the Company and any
surviving or acquiring Person (the “Successor Company”) shall be
delivered to the holder hereof, so that the holder shall have the right to
receive upon exercise of this Warrant the same number of shares of Common Stock
and amount of cash and other property that such holder would have been entitled
to receive upon such Corporate Transaction had this Warrant been exercised
immediately prior to the effective date of such Corporate Transaction.  The Company shall provide that any Successor
Company in such Corporate Transaction shall enter into an agreement with the
Company confirming the holder’s rights pursuant to this Warrant, assuming the
Company’s obligations under this Warrant, jointly and severally with the
Company if the Company shall survive such Corporate Transaction, and providing
after the date of such Corporate Transaction for adjustments, which shall be as
nearly equivalent as possible to the adjustments provided for in this Section 6.  The provisions of this Section 6(b)
shall apply similarly to successive Corporate Transactions involving any
Successor Company.  In the event of a
Corporate Transaction in which consideration payable to holders of Common Stock
is payable solely in cash, then the holder shall be entitled to receive in exchange
for this Warrant cash in an amount equal to the amount such holder would have
received had the holder exercised this Warrant immediately prior to such
Corporate Transaction, less the aggregate Exercise Price for this Warrant then
in effect.  In case of any Corporate
Transaction described in the immediately preceding sentence of this Section 6(b),
the Company or any Successor Company, as the case may be, shall make available
any funds necessary to pay to the holder the amount to which the holder is
entitled as described above in the same manner and at the same time as holders
of Common Stock would be entitled to such funds.

 

(c)                                  Issuance
of Additional Shares of Common Stock. 
In the event the Company at any time or from time to time shall, or
shall be deemed to, issue or sell Additional Shares of Common Stock, other than
Excluded Stock, for consideration per share received by the Company of less
than the Current Market Price, then, and in each such case, the Exercise Price
for any Warrant shall be decreased to an amount determined by dividing the
previously applicable Exercise Price by a fraction, (A) the numerator
of which shall be the sum of (i) the number of shares of Common
Stock outstanding immediately prior to such issuance or sale, plus (ii)
the number of Additional Shares of Common Stock issued or sold or deemed to be
issued or sold, and (B) the denominator of which shall be the sum
of (x) the number of shares of Common Stock outstanding immediately
prior to

 

4

 

such issuance or sale, plus
(y) the number of shares of Common Stock which the aggregate
consideration received by the Company for the Additional Shares of Common Stock
so issued or sold or deemed to be issued or sold would purchase at the Current
Market Price; provided, however, that if at such time or as a
result of such adjustment the Exercise Price for any Warrant is or would be, as
the case may be, equal to or less than $0.01 per share, then in lieu of the
adjustment of the Exercise Price the Number of Warrant Shares purchasable upon
exercise of this Warrant shall be increased to a number determined by
multiplying the previously applicable number of Shares purchasable upon
exercise of this Warrant by a fraction, (A) the numerator of
which shall be the sum of (i) the number of shares of Common
Stock outstanding immediately prior to such issuance or sale, plus (ii)
the number of Additional Shares of Common Stock issued or sold or deemed to be
issued or sold, and (B) the denominator of which shall be the sum
of (x) the number of shares of Common Stock outstanding immediately
prior to such issuance or sale, plus (y) the number of shares of
Common Stock which the aggregate consideration received by the Company for the
Additional Shares of Common Stock so issued or sold or deemed to be issued or
sold would purchase at the Current Market Price.

 

(d)                                 Options
and Convertible Securities.

 

(i)                                     In
the event that the Company at any time or from time to time issues, sells,
grants or assumes, or fixes a record date for the determination of holders of
any class of securities entitled to receive, any Options or Convertible
Securities, other than Excluded Stock, then, and in each such case, the number
of shares of Common Stock at any time issuable upon the exercise of such
Options and/or the conversion or exchange of such Convertible Securities, as
the case may be, shall be deemed to be Additional Shares of Common Stock issued
as of the close of business on the date of the earliest of such issuance, sale,
grant, assumption or record date.

 

(ii)                                  If
any Options or Convertible Securities provide, with the passage of time or
otherwise, for any decrease or increase, as the case may be, in (A) the
consideration payable to the Company or for which such Options or Convertible
Securities are exercisable, convertible or exchangeable, or (B) the number of
Additional Shares of Common Stock issuable upon the exercise and/or conversion
or exchange thereof, then the Exercise Price for this Warrant shall be adjusted
upon any such decrease or increase becoming effective to reflect such decrease
or increase insofar as it affects any such Options or Convertible Securities
which are outstanding at such time, as if such Options or Convertible
Securities included such terms as adjusted upon their original issuance, sale,
grant, assumption or record date, as the case may be; provided, however,
that no adjustments relating to any Options or Convertible Securities pursuant
to this subsection, individually or in the aggregate, shall increase the
Exercise Price for this Warrant by more than all previous reductions in the
Exercise Price for such Warrant relating to the same Options or Convertible
Securities.

 

(iii)                               In
any case in which Additional Shares of Common Stock are deemed to be issued,
sold, granted or assumed, no further adjustment of the Exercise Price shall be
made upon the exercise of such Options or the conversion or exchange of such
Convertible Securities and the consequent issue or sale of Convertible
Securities or shares of Common Stock.

 

(iv)                              Upon
(x) the expiration, or the repurchase and cancellation or retirement by the
Company, of any Options which have not been exercised, or (y) the expiration of
any rights of conversion or exchange under any Convertible Securities which
have not been

 

5

 

exercised, or the
repurchase and cancellation or retirement by the Company of any such
Convertible Securities the rights of conversion or exchange of which have not
been exercised, any adjustments to the Exercise Price computed upon the
original issuance, sale, grant, assumption or record date, and upon any
subsequent adjustments to such Options or Convertible Securities, shall,
effective as of such expiration, cancellation or retirement, as the case may
be, be recomputed as if:  (i) the only
Additional Shares of Common Stock (including, without limitation, pursuant to
the issuance or sale of Options or Convertible Securities) issued or sold were
the Additional Shares of Common Stock (including, without limitation, pursuant
to the issuance or sale of Options or Convertible Securities), if any, actually
issued or sold upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities; (ii) in the case of Options, the
consideration received therefor was the consideration actually received by the
Company for the issuance, sale, grant or assumption of such Options, whether or
not exercised, plus the consideration actually received by the Company upon
such exercise, plus, in the case of Options for Convertible Securities, any
additional consideration deemed to be received by the Company upon the issuance
and upon any conversion or exchange of such Convertible Securities for which
Options were exercised; and (iii) in the case of Convertible Securities, the consideration
received therefor was the consideration actually received by the Company for
the issuance, sale, grant or assumption of such Convertible Securities which
were actually converted or exchanged, plus the additional consideration, if
any, actually received by the Company upon such conversion or exchange; provided,
however, that no adjustments relating to any Options or Convertible
Securities pursuant to this subsection, individually or in the aggregate, shall
increase the Exercise Price by more than all previous reductions in the
Exercise Price relating to the same Options or Convertible Securities.

 

(e)                                  Consideration.

 

(i)                                     For
purposes of this Section 6, the consideration for the issuance,
sale, grant or assumption of any Additional Shares of Common Stock,
irrespective of the accounting treatment of such consideration, shall equal:

 

(1)                                  insofar
as it consists of cash, the amount of cash paid in consideration for the
issuance, sale, grant or assumption of such Additional Shares of Common Stock,
without giving effect to customary expenses, commissions or other compensation
paid by the Company and customary concessions or discounts allowed by the
Company to underwriters, dealers or others performing similar services in
connection with any such issuance, sale, grant or assumption;

 

(2)                                  insofar
as it consists of property (including, without limitation, securities) other
than cash actually received by the Company as direct consideration for the
issuance, sale, grant or assumption or such Additional Shares of Common Stock,
the Fair Market Value thereof at the time of such issuance, sale, grant or
assumption;

 

(3)                                  insofar
as it consists of other property or consideration, including the provision of
services to the Company,  the Fair
Market Value of such other property or consideration; and

 

6

 

(4)                                  in
the event Additional Shares of Common Stock are issued or sold together with
other securities or property for a consideration which covers both, the portion
of such consideration so received, computed as provided in clauses (1), (2) and
(3) above, allocable to such Additional Shares of Common Stock (as reasonably
determined by the Board of Directors of the Company in good faith, as evidenced
by a written board resolution delivered to the holder hereof).

 

(ii)                                  Additional
Shares of Common Stock deemed to have been issued, sold, granted or assumed
pursuant to Section 6(d) hereof shall be deemed to have been
issued, sold, granted or assumed for consideration per share equal to the
quotient of:  (A) the total amount of
cash and other property, if any, received by the Company as direct
consideration for the issuance, sale, grant or assumption of the Options or
Convertible Securities in question, plus the aggregate amount of additional
consideration (as set forth in the instruments relating thereto) payable to the
Company upon the exercise of such Options or the conversion or exchange of such
Convertible Securities or, in the case of Options for Convertible Securities,
the exercise of such Options and the conversion or exchange of such Convertible
Securities, divided by (B) the number of shares of Common Stock (as set
forth in the instruments relating thereto) issuable upon the exercise of such
Options and the conversion or exchange of such Convertible Securities.

 

(f)                                    Dividends
and Distributions.  In the event
that the Company at any time or from time to time declares, orders, pays or
makes any dividend or other distribution on the Common Stock, including,
without limitation, distributions of cash, evidence of its indebtedness,
Options, Convertible Securities, other securities or property or rights to
subscribe for or purchase any of the forgoing, and whether by way of dividend,
spin-off, reclassification, recapitalization, similar corporate reorganization
or otherwise, other than a dividend or distribution payable in Additional
Shares of Common Stock that gives rise to an adjustment pursuant to Section 6(a)
hereof, then, and in each such case, the Exercise Price of this Warrant shall
be reduced to a number determined by dividing the previously applicable
Exercise Price by a fraction (which must be less than 1, otherwise no
adjustment is to be made pursuant to this Section 6(f)) (A) the numerator
of which shall be the Fair Market Value per share of Common Stock on the record
date for such dividend or other distribution, and (B) the denominator of
which shall be the excess, if any, of (x) such Fair Market Value per
share of Common Stock, over (y) the sum of the amount of any cash distributed
per share of Common Stock plus the positive Fair Market Value, if any, per
share of Common Stock of any such evidences of indebtedness, Options,
Convertible Securities, other securities or property or rights to be so
distributed.  Such adjustments shall be
made whenever any such dividend or other distribution is made and shall become
effective as of the date of such distribution, retroactive to the record date
therefor.

 

(g)                                 Other
Events.  If any event occurs as to
which the provisions of this Section 6 are not strictly applicable
or if strictly applicable would not fairly protect the purchase rights of the
holder hereof in accordance with such provisions, then the Board of Directors
of the Company shall make an adjustment in the number of Shares available under
this Warrant, the Exercise Price, or the applicability of such provisions so as
to protect such purchase rights.  The
adjustment shall be such as will give the holder hereof upon exercise for the
same aggregate Exercise Price the total number of shares of Common Stock as the
holder would have owned had this Warrant been exercised prior to the event and
had the holder continued to hold such Common Stock until after the event
requiring

 

7

 

the adjustment, but in no
event shall any such adjustment have the effect of increasing the Exercise
Price.

 

(h)                                 Minimum
Adjustment.  The adjustments
required by the preceding subsections of this Section 6 shall be
made whenever and as often as any specified event requiring an adjustment shall
occur, except that no adjustment of the Exercise Price or the number of Shares
purchasable upon exercise of this Warrant that would otherwise be required
shall be made unless and until such adjustment either by itself or with other
adjustments not previously made decreases the Exercise Price immediately prior
to the making of such adjustment by at least $0.01 or increases or decreases
the number of Shares purchasable upon exercise of this Warrant immediately
prior to the making of such adjustment by at least one Share.  Any adjustment representing a change of less
than such minimum amount shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Section 6
and not previously made, would result in the requisite minimum adjustment.

 

(i)                                     Accountants’
Report as to Adjustments.  In the
case of any adjustment in the number of Shares purchasable upon exercise of
this Warrant or the Exercise Price, the Company, at its sole expense, shall promptly
(i) compute such adjustment in accordance with the terms of this Warrant and,
if the holder hereof so requests in writing from the Company within 30 days of
receipt of such computations from the Company, cause independent certified
public accountants of recognized national standing to verify such computation
(other than any determination of the Fair Market Value of Common Stock or the
fair market value of any other property); (ii) prepare a report setting forth
such adjustment and showing in reasonable detail the method of calculation
thereof and the facts upon which such adjustment is based, including, without
limitation, (a) the event or events giving rise to such adjustment; (b) the
consideration received by the Company for any Additional Shares of Common Stock
issued or sold or deemed to have been issued or sold; (c) the number of shares
of Common Stock outstanding or deemed to be outstanding prior and subsequent to
any such transaction; (d) the method by which any such adjustment was calculated
(including a description of the basis on which the Board of Directors of the
Company made any determination of Fair Market Value or fair market value
required thereby); and (e) the number of Shares purchasable upon exercise of
this Warrant and the Exercise Price in effect immediately prior to such event
or events and as adjusted; (iii) mail a copy of each such report to the holder
hereof and, upon the request at any time of the holder hereof, furnish to the
holder a like report setting forth the number of Shares purchasable upon
exercise of this Warrant and the Exercise Price at the time in effect and
showing in reasonable detail how they were calculated; and (iv) keep copies of
all such reports available at the principal office of the Company for inspection
during normal business hours by the holder or any prospective purchaser of this
Warrant designated by the holder hereof.

 

(j)                                     No
Dilution or Impairment.  The Company
shall not, by amendment of its certificate of incorporation or other
organizational document or through any sale or other issuance of securities,
capital reorganization, reclassification, recapitalization, consolidation,
merger, transfer of assets, dissolution, liquidation, winding-up, any similar
transaction or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all terms hereunder and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder hereof against dilution or other
impairment.  Without limiting the
generality of the foregoing, the Company (a) will not permit the par value of
any shares of Common Stock receivable upon the exercise of this

 

8

 

Warrant to exceed the
Exercise Price and (b) will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant by
the holder hereof.  Without limiting the
generality of the foregoing, before taking any action that would cause a
reduction of the Exercise Price pursuant to Section 6 hereof below
the then par value (if any) of the Common Stock, the Company shall take any and
all corporate action (including, without limitation, a reduction in par value)
which shall be necessary to validly and legally issue fully paid and
nonassessable shares of Common Stock, as the case may be, at the Exercise Price
as so reduced.

 

(k)                                  Contest
and Appraisal Rights.  If the holder
hereof shall, in good faith, disagree with any determination by the Board of
Directors of the Company of the Fair Market Value made pursuant to this
Warrant, and such disagreement is in respect of securities not traded on a
national securities exchange or quoted on an automated quotation system or
other property valued by the Board of Directors of the Company at more than
$100,000 then the holder may by notice to the Company (an “Appraisal Notice”),
given within 30 days after notice to the holder hereof following such
determination, elect to contest such determination; provided, however,
that the holder hereof may not seek appraisal of any determination of Fair
Market Value to the extent that the Company has received a fairness opinion or
other appraisal from an Appraiser in connection with the transaction giving
rise to such determination.  Within 20
days after an Appraisal Notice, the Company shall engage an Appraiser to make
an independent determination of such Fair Market Value (the “Appraiser’s
Determination”), and to deliver to the Company and the holder hereof a
report describing its methodology and results in reasonable detail within 30
days of such engagement.  In arriving at
its determination, the Appraiser shall base any valuation upon:  (i) in the case of the Fair Market Value of
shares of Common Stock, the fair market value of the Company and its
Subsidiaries on the basis of an arm’s length sale of a going concern between an
informed and willing buyer and an informed and willing seller, under no
compulsion to buy or sell, taking into account all the relevant facts and
circumstances then prevailing, and without consideration of (x) the lack of an
actively trading public market for the Common Stock, (y) any restrictions on
the transfer of shares of Common Stock, or (z) any control premium or minority
discount, and (ii) in the case of the Fair Market Value of any other property,
the fair market value of such other property assuming that such other property
was sold in an arm’s length transaction between an informed and willing buyer
and an informed and willing seller, under no compulsion to buy or sell, taking
into account all the relevant facts and circumstances then prevailing.  The holder hereof shall be afforded
reasonable opportunities to discuss the appraisal with the Appraiser.  The Appraiser’s Determination shall be final
and binding on the Company and the holders hereof, absent manifest error.  The costs of conducting an appraisal shall
be borne by the Company.

 

7.                                       Notice
of Corporate Action.  In the event
the Company proposes to:  (i) pay,
distribute, or take a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of capital stock or any other securities or
property; or (ii) consummate any capital reorganization, reclassification,
recapitalization, consolidation, merger, transfer of all or substantially all
of its assets, dissolution, liquidation or winding-up, or any similar
transaction; then, at least 10 days prior to the earlier of any applicable
record date or such event, as the case may be, the Company shall deliver to the
holder hereof a notice specifying:  (a)
the date or expected date on which any such payment or distribution is to be
made or record is to be taken and the amount and character of any such
dividend, distribution or

 

9

 

right; (b) the date or expected date on which any such
reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation, winding-up or similar transaction is to
take effect and any record date therefor; (c) the time as of which any holders
of record of shares of Common Stock and/or any other class of securities shall
be entitled to exchange their shares of Common Stock and/or other securities
for the securities or other property deliverable upon such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
dissolution, liquidation, winding-up or similar transaction and a description
in reasonable detail of such transaction; and (d) in each case, the expected
effect on the number of Shares purchasable upon exercise of this Warrant and
the Exercise Price of each such transaction or event.  The Company shall update any such notice to reflect any change in
the foregoing information.

 

8.               No Fractional
Shares.  No fractional shares of
Common Stock shall be issued in connection with any exercise hereunder, but in
lieu of such fractional shares the Company shall make a cash payment therefor
based on the Fair Market Value thereof.

 

9.               Other Antidilution Provisions.  The
Company covenants not to issue, sell, grant or assume any securities
(including, without limitation, any Additional Shares of Common Stock or rights
to acquire Additional Shares of Common Stock) to any Person (other than the
Purchaser, Deutsche Bank
AG-London acting through DB Advisors, LLC as investment advisor or any of their transferees), which, in the
aggregate, provide for greater or more favorable antidilution protection than
the antidilution protection provided for in Section 6 hereof.  For the avoidance of doubt, a different
exercise price or trigger price for the application of such rights (including
any such price based on fair market value) shall not by itself be considered
more favorable; provided, however, that a trigger price for
antidilution protection that is 120% or more of the Fair Market Value of shares
of Common Stock at the time of issuance of such securities shall be considered
more favorable in the aggregate.

 

10.         Compliance with
Securities Act; Disposition of Warrant or Shares of Common Stock.

 

(a)                                  Compliance
with Securities Act.  The Holder, by
acceptance hereof, agrees that this Warrant, and the Shares issuable upon
exercise of this Warrant, are being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Warrant, or any Shares
issuable upon exercise of this Warrant, except under circumstances which will
not result in a violation of the Securities Act or any applicable state
securities laws.  This Warrant and all
Shares issued upon exercise of this Warrant (unless registered under the
Securities Act and any applicable state securities laws) shall be stamped or
imprinted with a legend in substantially the following form:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE 
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS.  THESE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH THE
REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE
SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.”

 

10

 

Whenever the foregoing
legend is no longer required in the opinion of counsel to the holder hereof,
upon request of the holder hereof, the Company, at its sole expense (including,
without limitation, the payment of any applicable issue taxes), shall issue or
cause to be issued in the name of and delivered to the holder hereof or as the
holder hereof may direct new Warrant Certificates of like tenor, dated the date
hereof, and/or new certificates for shares of Common Stock.

 

(b)                                 Transferability.  Subject to compliance with applicable
federal and state securities laws, the holder hereof may, without the prior
written consent of the Company, transfer this Warrant and all rights hereunder
are transferable, in whole or in part, at any time by the holder hereof to any
Person.  Any transfer of this Warrant or
any portion hereof shall be recorded on the books of the Company upon the
surrender of this Warrant, properly endorsed for transfer by delivery of an
Assignment Form in substantially the form attached hereto as Exhibit B,
to the Company at the address set forth in Section 16 hereof.  In the event of a partial transfer of this
Warrant, the Company shall issue to the holder one or more appropriate new
Warrants.

 

11.         No Stockholder Rights
or Liabilities.  Prior to the
exercise of this Warrant, the holder hereof shall not be entitled to any rights
of a stockholder with respect to the Shares, including (without limitation) the
right to vote such Shares or receive dividends or other distributions thereon,
and the holder hereof shall not be entitled to any notice or other communication
concerning the business or affairs of the Company, other than as specifically
required by this Warrant.  Nothing
contained in this Warrant shall be construed as imposing any obligation on any
holder to purchase any securities or as imposing any liabilities on such holder
as a stockholder of the Company, whether such obligation or liabilities are
asserted by the Company or by creditors of the Company or otherwise.

 

12.         Replacement of
Warrants.  Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant held by any Person other than the initial holder
hereof or any institutional investor, upon delivery of an indemnity reasonably
satisfactory to the Company or, in the case of any such mutilation, upon
surrender of this Warrant for cancellation at the principal office of the
Company, the Company, at the expense of the holder (including, without
limitation, the payment of any applicable issue taxes), shall execute and
deliver, in lieu thereof, a new Warrant of like tenor and dated the date
hereof.

 

13.         Remedies.  The Company stipulates that the remedies at
law available to the holder hereof in the event of any default by the Company
in the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate and that, to the fullest extent permitted by law,
such terms may be specifically enforced by a decree for the specific
performance of any agreement contained herein or by an injunction against a
violation of any of the terms hereof or otherwise.  No failure or delay on the part of the holder hereof, in
exercising any right, power or remedy hereunder, shall operate as a suspension
or waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder. 
The remedies herein provided are in addition to and not exclusive of any
other remedies provided at law or in equity.

 

11

 

14.         Successors and Assigns.  The terms and provisions of this Warrant
shall inure to the benefit of, and be binding upon, the Company and the holder
hereof from time to time of this Warrant and the Shares issuable upon exercise
of this Warrant.

 

15.         Amendments and Waivers.  Any term of this Warrant may be amended,
altered or modified and the observance of any term of this Warrant may be
waived (either generally or in a particular instance and either retroactively
or prospectively) upon the written consent of the Company and the holder
hereof.  Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

 

16.         Notices.  All notices required under this Warrant
shall be deemed to have been given or made for all purposes (i) upon personal
delivery, (ii) upon confirmation receipt that the communication was
successfully sent to the applicable number if sent by facsimile, or (iii) one
day after being sent, when sent by professional overnight courier service.  Notices to the Company shall be sent to the
address of the Company set forth below (or at such other place as the Company
shall notify the Holders hereof in writing) and notices to the Holder shall be
sent to the address of the Holder set forth on the signature page hereto (or at
such other place as the Holder shall notify the Company in writing):

 

	
   

  	
  To the Company:

  	
   

  	
  Aegis Communications
  Group, Inc.

  
	
   

  	
   

  	
   

  	
  7880 Bent Branch Drive

  
	
   

  	
   

  	
   

  	
  Suite 150

  
	
   

  	
   

  	
   

  	
  Irving, Texas  75063

  
	
   

  	
   

  	
   

  	
  Facsimile:  (678) 443-6502

  
	
   

  	
   

  	
   

  	
  Attention:

  	
  Herman M. Schwarz

  
	
   

  	
   

  	
   

  	
   

  	
  President and Chief
  Executive Officer

  

 

17.         Headings.  The section and
subsection headings of this Warrant are inserted for convenience only and
shall not constitute a part of this Warrant in construing or interpreting any
provision hereof.

 

18.         Governing Law.  This Warrant and the rights and duties of
the parties hereto hereunder and (unless otherwise provided) all amendments and
supplements to, and all consents and waivers pursuant to, this Warrant shall in
all respects be governed by, and construed and enforced in accordance with, the
laws of the State of New York without giving effect to its conflict of laws
principles or rules.

 

19.         Severability.  If any provision of this Warrant is held to
be invalid or unenforceable for any reason, it shall be adjusted rather than
voided, if possible, to achieve the intent of the parties hereto to the maximum
extent possible.  Any provision of this
Warrant which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.

 

12

 

20.         Defined Terms.  The following terms have the meanings
indicated below, unless the context otherwise requires:

 

“Additional Shares of
Common Stock” means all shares, including treasury shares, of Common Stock,
issued, sold or granted, or deemed to be issued, sold or granted pursuant to
the terms hereof, by the Company after the date hereof, whether or not
subsequently reacquired or retired by the Company, other than the shares of
Common Stock issued upon the exercise of this Warrant.

 

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

 

“Appraiser” means
an independent nationally recognized investment bank or other qualified
financial institution acceptable to the Company and the holder hereof.

 

“Business Day”
means any day other than a Saturday or a Sunday or a day on which commercial
banking institutions in New York City are authorized or required to be closed.

 

 “Common Stock” means the common stock
of the Company, par value $0.01  per
share, any capital stock into which such Common Stock shall have been changed
or converted, any capital stock resulting from any reclassification of such
Common Stock, and all other capital stock of any class or classes of the
Company, other than preference stock, the holders of which share equally with
the Common Stock in current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference.

 

“Convertible Securities”
means any evidences of indebtedness, shares of capital stock or any other
securities convertible into or exchangeable for, directly or indirectly, shares
of Common Stock.

 

 “Current Market Price” means the
average of the closing prices of the Common Stock during the five-day trading
period ending immediately prior to the date of determination as quoted on the
Nasdaq Small Cap Market or any United States automated quotation system or
national securities exchange or national market system on which the Common
Stock is then quoted or traded, as applicable

 

“Excluded Stock”
means securities issued, or deemed issued, to directors, officers, employees or
consultants of the Company or a subsidiary of the Company in connection with
their service as directors of the Company or a subsidiary of the Company, their
employment by the Company or a subsidiary of the Company or their retention as
consultants by the Company or a subsidiary of the Company under the Company’s
employee benefit plans approved by the Company’s board of directors, as such
plans may be amended from time to time with the approval of the Company’s board
of directors, or under other plans, adopted or assumed by the Company with the
approval of the Company’s board of directors.

 

“Fair Market Value”
means (i) with respect to any share of Common Stock, including with respect to
a Share for purposes of Section 2(b), the Current Market Price; provided
that, if the Common Stock is not then quoted on the Nasdaq Small Cap Market or
any United States automated quotation system or national securities exchange or
national market system or the OTC Bulletin Board or Pink Sheets, the fair
market value shall be:  (A) the
value based on the most recently completed arm’s

 

13

 

length transaction
between the Company and a Person other than an affiliate of the Company within
the three-month period prior to the date of determination with respect to such
security, or (B) if (A) does not apply, the fair market value as most recently
determined by an Appraiser within such prior three-month period, provided,
that, any such appraisal was made within the two-month period following the
date of the financial statements on which such appraisal is based, or (C) if
neither (A) nor (B) applies, the fair market value as reasonably determined by
the Board of Directors of the Company in good faith, as evidenced by a written
board resolution delivered to the holder hereof and (ii) with respect to any
other property other than cash or Common Stock,  (A) the value based on the most recently completed arm’s length
transaction between the Company and a Person other than an affiliate of the
Company within the three-month period prior to the date of determination with
respect to such property, or (B) if (A) does not apply, the fair
market value as most recently determined by an Appraiser within such prior
three-month period, provided that, any such appraisal was made within
the two-month period following the date of the financial statements on which
such appraisal is based, or (C) if neither (A) nor (B) applies, the fair market
value as reasonably determined by the Board of Directors of the Company in good
faith, as evidenced by a written board resolution delivered to the holder
hereof.  Any determination pursuant to
subsections (i)(B) or (C) or (ii)(B) or (C) shall be made on the basis of an
arm’s length sale of a going concern between an informed and willing buyer and
an informed and willing seller, under no compulsion to buy or sell, taking into
account all the relevant facts and circumstances then prevailing and without
consideration of (x) the lack of an actively trading public market for the
Common Stock, (y) any restrictions on the transfer of shares of Common
Stock or (z) any control premium or minority discount.  For the avoidance of doubt, any
determination pursuant to subsections (i)(C) or (ii)(C) shall be subject to Section 6(k).

 

“Note” means the
secured promissory note issued to the Purchaser on the date hereof pursuant to
the Purchase Agreement.

 

“Options” means
rights, options or warrants to subscribe for, purchase or otherwise acquire,
directly or indirectly, shares of Common Stock, including, without limitation,
Convertible Securities.

 

“Person” means any
individual, partnership, limited liability company, unlimited liability
company, corporation, association, joint stock company, trust, joint venture,
unincorporated organization or any federal, state, county or municipal
governmental or quasi-governmental agency, department, commission, board,
bureau, instrumentality or similar entity.

 

“Registration Rights
Agreement” means the Registration Rights Agreement entered into by the
Company and the Purchaser on the date hereof.

 

“Securities Act”
means the Securities Act of 1933 and all rules and regulations of the
Securities and Exchange Commission thereunder, as amended from time to time.

 

14

 

IN WITNESS WHEREOF, the
Company has caused this Warrant to be executed in its corporate name by its
duly authorized officer and to be dated as of the Date of Grant set forth on
the first page to this Warrant.

 

	
  AEGIS COMMUNICATIONS
  GROUP, INC.

  
	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Herman M. Schwarz

  	
   

  
	
  Name:

  	
  Herman M. Schwarz

  
	
  Title:

  	
  President and Chief
  Executive Officer

  
				

 

 

EXHIBIT A-1

NOTICE OF EXERCISE

To:  AEGIS
COMMUNICATIONS GROUP, INC. (the “Company”)

 

1.                                       The
undersigned hereby:

elects to
purchase     shares of Common Stock of the Company pursuant
to the terms of the attached Warrant, and tenders herewith payment of the
purchase price of such shares in full, or elects to exercise its net issuance
rights pursuant to Section 2(b) of the attached Warrant with
respect to     shares of Common Stock.

 

2.                                       Please
issue a certificate or certificates representing said shares in the name of the
undersigned or in such other name or names as are specified below:

 

	
   

  	
   

  
	
  (Name)

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Address)

  

 

3.                                       The
undersigned represents that the aforesaid shares are being acquired for the
account of the undersigned for investment and not with a view to, or for resale
in connection with, the distribution thereof and that the undersigned has no
present intention of distributing or reselling such shares, all except as in
compliance with applicable securities laws.

 

	
   

  	
   

  
	
  (Signature)

  
	
   

  	
   

  
	
  (Date)

  

 

B-1

 

EXHIBIT A-2

NOTICE OF EXERCISE

To:  AEGIS
COMMUNICATIONS GROUP, INC. (the “Company”)

 

1.                                       Contingent
upon and effective immediately prior to the closing (the “Closing”) of
the Company’s public offering contemplated by the Registration Statement on
Form S-     (File No.
                          ),
which was filed with the Securities and Exchange Commission on
                          ,
20    , the undersigned hereby:

 

elects to purchase
      shares of Common Stock of the Company (or such
lesser number of shares as may be sold on behalf of the undersigned at the
Closing) pursuant to the terms of the attached Warrant, or elects to exercise
its net issuance rights pursuant to Section 2(b) of the attached
Warrant with respect to     Shares of Common Stock.

 

2.                                       Please
deliver to the custodian for the selling shareholders a stock certificate
representing such
             
shares.

 

3.                                       The
undersigned has instructed the custodian for the selling shareholders to
deliver to the Company
$                  
or, if less, the net proceeds due the undersigned from the sale of shares in
the aforesaid public offering.  If such
net proceeds are less than the purchase price for such shares, the undersigned
agrees to deliver the difference to the Company prior to the Closing.

 

	
   

  	
   

  
	
  (Name)

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Address)

  
	
   

  	
   

  
	
  (Date)

  
			

 

B-1

 

EXHIBIT B

ASSIGNMENT FORM

To:                              AEGIS
COMMUNICATIONS GROUP, INC. (the “Company”)

 

The undersigned hereby
assigns and transfers unto
                                                                                                                                                                                (Please
typewrite or print in block letters) the right to purchase                  
Shares (as defined in the Warrant) of Aegis Communications Group, Inc., subject
to the Warrant, dated as of                                                   ,
granted to the undersigned (the “Warrant”).

 

This assignment complies
with the provisions of Section 10 of the Warrant.

 

 

	
  Date:

  	
   

  	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  
	
  (Print Name of
  Signatory)

  
	
   

  
	
   

  	
   

  
	
  (Title of Signatory)

  
					

 

B-1Exhibit
10.2

 

EXECUTION COPY

 

 

 

NOTE AND WARRANT PURCHASE AGREEMENT

 

By and Among

 

AEGIS COMMUNICATIONS GROUP, INC.,

 

DEUTSCHE BANK AG – LONDON ACTING THROUGH

DB ADVISORS, LLC AS INVESTMENT ADVISOR

 

AND

 

ESSAR GLOBAL LIMITED

 

Dated as of November 5, 2003

 

 

 

1

 

Table of Contents

 

	
  ARTICLE I

  
	
   

  
	
  DEFINITIONS

  
	
   

  
	
  SECTION 1.01

  	
  Definitions

  	
   

  
	
   

  	
   

  
	
  ARTICLE II

  
	
   

  	
   

  
	
  PURCHASE AND SALE OF INTERESTS

  
	
   

  	
   

  
	
  SECTION 2.01

  	
  Sale and Issuance of Notes and Warrants

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.02

  	
  Closing

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.03

  	
  Closing Deliveries by the Company

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.04

  	
  Closing Deliveries by the Purchasers

  	
   

  
	
   

  	
   

  
	
  ARTICLE III

  
	
   

  
	
  REPRESENTATIONS AND WARRANTIES 

  OF THE COMPANY

  
	
   

  
	
  SECTION 3.01

  	
  Organization, Authority and Qualification
  of the Company

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.02

  	
  Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.03

  	
  Debt and Capitalization

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.04

  	
  No Conflict

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.05

  	
  Consents and Approvals

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.06

  	
  Compliance with Laws

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.07

  	
  Financial Information; Books and Records

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.08

  	
  Litigation

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.09

  	
  SEC Reports

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.10

  	
  Valid Issuance of the Notes, Warrants and
  Warrant Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.11

  	
  Absence of Certain Changes or Events;
  Absence of Undisclosed Liabilities

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.12

  	
  Material Contracts

  	
   

  

 

i

 

	
  SECTION 3.13

  	
  Intellectual Property

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.14

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.15

  	
  Properties; Encumbrances

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.16

  	
  Insurance

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.17

  	
  Environmental Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.18

  	
  Employee Benefit Plans; Labor Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.19

  	
  Labor

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.20

  	
  Investment Company

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.21

  	
  Brokers

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.22

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.23

  	
  Registration Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.24

  	
  Affiliate Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.25

  	
  Existing Merger Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.26

  	
  Fairness Opinion

  	
   

  
	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  	
   

  
	
  REPRESENTATIONS AND WARRANTIES

  OF THE PURCHASER

  
	
   

  
	
  SECTION 4.01

  	
  Organization and Authority of Each of the
  Purchasers

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.02

  	
  No Conflict

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.03

  	
  Restricted Securities

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.04

  	
  Accredited Investor

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.05

  	
  Purchase Entirely For Own Account

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.06

  	
  Investment Company

  	
   

  
	
   

  	
   

  
	
  ARTICLE V

  
	
   

  	
   

  
	
  ADDITIONAL AGREEMENTS

  

 

ii

 

	
  SECTION 5.01

  	
  Access to Information

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.02

  	
  Information Statement

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.03

  	
  Further Action

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.04

  	
  Corporate Actions

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.05

  	
  Affiliate Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.06

  	
  Directors’
  and Officers’ Insurance

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.07

  	
  Use of Proceeds

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.08

  	
  Preferred Stock Amendment

  	
   

  
	
   

  	
   

  
	
  ARTICLE VI

  
	
   

  	
   

  
	
  CONDITIONS TO CLOSING

  
	
   

  
	
  SECTION 6.01

  	
  Conditions to Obligations of the
  Purchasers

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.02

  	
  Conditions to Obligations of the Company

  	
   

  
	
   

  	
   

  
	
  ARTICLE VII

  
	
   

  	
   

  
	
  INDEMNIFICATION

  
	
   

  
	
  SECTION 7.01

  	
  Survival of Representations and Warranties

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.02

  	
  Indemnification by the Company

  	
   

  
	
   

  	
   

  
	
  ARTICLE VIII

  
	
   

  	
   

  
	
  MISCELLANEOUS

  
	
   

  
	
  SECTION 8.01

  	
  Amendment; Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.02

  	
  Confidentiality

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.03

  	
  Expenses

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.04

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.05

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.06

  	
  Assignment

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.07

  	
  Third Party Beneficiaries and Transfers

  	
   

  

 

iii

 

	
  SECTION 8.08

  	
  Governing Law; Consent to Jurisdiction

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.09

  	
  Waiver of Jury Trial

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.10

  	
  Entire Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.11

  	
  Headings

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.12

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.13

  	
  Public Announcements

  	
   

  

 

iv

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE I

 

DEFINITIONS

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“SEC”
means the Securities and Exchange Commission.

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE II

 

PURCHASE AND SALE OF INTERESTS

 

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

 

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

 

9

 

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

 

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

 

(i)            the Notes executed by
the Company;

 

(ii)           the Initial Warrants
executed by the Company;

 

(iii)          the Written Consent executed
by the Majority Stockholders;

 

(iv)          the Ancillary Agreements
executed by the Company; and

 

(v)           the
certificates, opinions and other documents required to be delivered pursuant to
Section 6.01 and any other certificates or documents reasonably requested
by the Purchasers.

 

(b)           On
the Subsequent Closing Date, the Company shall deliver, or cause to be
delivered, to the Purchasers:

 

(i)            the Subsequent
Warrants in accordance with Schedule 1 hereto; and

 

(ii)           evidence of the Preferred Stock Amendment
and the conversion of the outstanding Series F Preferred.

 

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

 

(a)           the
Purchase Price by wire transfer in immediately available funds to an account
designated in writing by the Company to the Purchasers prior to the Closing
Date;

 

(b)           the
Ancillary Agreements executed by the Purchasers; and

 

(c)           the
certificates, opinions and other documents required to be delivered pursuant to
Section 6.02 and any other certificates or documents reasonably requested
by the Company.

 

10

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF THE COMPANY

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

(b)           No
Governmental Order has or, to the knowledge of the Company, could affect the
legality, validity or enforceability of this Agreement, any Ancillary Agreement
or the consummation of the transactions contemplated hereby or thereby.

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

19

 

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

 

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

 

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

 

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

 

20

 

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

 

21

 

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

 

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

 

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

 

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

 

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

 

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

 

22

 

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

 

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

 

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

 

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

 

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

 

ARTICLE IV 

 

REPRESENTATIONS AND WARRANTIES

OF THE PURCHASER

 

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

 

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

 

23

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE V

 

ADDITIONAL
AGREEMENTS

 

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

 

24

 

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

 

SECTION 5.02       Information
Statement.  (a)   As promptly as reasonably practical, but in
no event later than 10 Business Days after Closing, the Company shall prepare
and file with the SEC an information statement (as such information statement
may be amended, the “Information Statement”) to be sent to the Company’s
stockholders in accordance with Regulation 14C of the Exchange Act.  Prior to filing the Information Statement
with the SEC, the Company shall give the Purchasers the opportunity to timely
review and comment upon the Information Statement.  The Company will promptly advise, and provide copies to, the
Purchasers of any request by the SEC for additional information, amendment of
the Information Statement or comments thereon and all responses by the Company
thereon.

 

(b)           The
Company represents that the information supplied by the Company for inclusion
in the Information Statement shall not contain any untrue statement of a
material fact or fail to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.  The Information Statement will comply as to
form and substance in all material respects with the applicable requirements of
the Exchange Act.

 

(c)           Each
of the Purchasers, severally but not jointly, represents that the information
supplied in writing by such Purchaser for inclusion in the Information
Statement shall not contain any untrue statement of a material fact or fail to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading.

 

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

 

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

 

25

 

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

 

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

 

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

 

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

 

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

 

26

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE VI

 

CONDITIONS TO
CLOSING

 

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

 

27

 

(a)           Ancillary
Agreements.  The Company shall have
executed and delivered to the Purchasers each of the Ancillary Agreements to
which it is a party;

 

(b)           Issuance
of the Notes and the Warrants.  All
actions required by any applicable Law or necessary in the reasonable opinion
of the Purchasers to issue the Notes and the Warrants (other than furnishing
the Information Statement to the Company’s stockholders pursuant to Regulation
14C of the Exchange Act and amending the Company’s Certificate of Incorporation
to increase the authorized number of shares of Common Stock) shall have been
duly taken (or provisions therefor shall have been made), including, without
limitation, the making of all registrations and filings, and all necessary
consents shall have been received;

 

(c)           Conversion
of Preferred Stock. 
Contemporaneously with the Closing, Thayer shall deliver all of its
shares of Series D Preferred and Series E Preferred and 2,572,364 shares of
Common Stock to the Company for cancellation (the “Thayer Condition”).  Contemporaneously with the Closing, all
other holders of the Series E Preferred shall convert such shares into Common
Stock in accordance with their respective terms.  Contemporaneously with the Closing, 23,375 shares of Series F
Preferred, representing 50% of the outstanding shares of Series F Preferred as
of the Closing, shall be converted into Common Stock in accordance with their
respective terms.  On the Subsequent
Closing Date, the remaining 23,375 outstanding shares of Series F Preferred
shall be converted subject to the completion and effectiveness of the Thayer
Condition and the Preferred Stock Amendment.

 

(d)           Termination
of Warrants and Options.  All items
listed in Section 3.03(c) of the Company Disclosure Letter will be
cancelled, terminated or released by the Closing such that no liability will
continue to the Purchasers or the Company.

 

(e)           Existing
Debt.  Simultaneously with the
Closing, the Company shall have obtained releases of the Bank Debt and the
Subordinated Debt as of the Closing on substantially the same terms and
conditions as have been previously negotiated in connection with the Merger
Agreement and otherwise in form and substance satisfactory to the Purchasers
and in exchange for the amounts set forth on Schedule 2;

 

(f)            Board
Composition.  All of the current
Directors of the Company (other than the Chief Executive Officer) hereto shall
have delivered their written resignations effective as of the Closing and the
individuals set forth on Schedule 3 hereto, including six
individuals named by the Purchasers and reasonably acceptable to the Company
and comprising a majority of the Board, shall have been appointed to the Board
of Directors of the Company effective as of the Closing; and

 

(g)           Opinion
of Counsel.  The Purchasers shall
have received from Hughes & Luce LLP, counsel for the Company, a legal
opinion dated as of the Closing Date in form and substance mutually agreed upon
by the Company and the Purchasers.

 

28

 

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

 

(a)           Ancillary
Agreements.  The Purchasers shall
have executed and delivered to the Company each of the Ancillary Agreements to
which any of them is a party; and

 

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

 

ARTICLE VII

 

INDEMNIFICATION

 

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

 

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

 

(b)           Notwithstanding
the provisions of Section 7.02(a), (i) the Company shall not be liable for
any Loss unless the aggregate amount of Losses exceeds $100,000 and then only
to the extent of such excess and (ii) the maximum liability of the Company
under this Section 7.02 shall not exceed the Purchase Price; provided,
however, that the limitations in this Section 7.02(b) shall not
apply to breaches by the Company of its representations and warranties
contained in Sections 3.01, 3.03 and 3.10 or a breach of the covenants in
Section 5.04.

 

(c)           A
Purchaser Indemnified Party shall give the Company prompt written notice of any
matter that a Purchaser Indemnified Party has determined has given or could
give rise to a right of indemnification under this Agreement stating in
reasonable detail the amount of the Loss, if known, and method of computation
thereof, and containing a reference to the provisions of this Agreement in
respect of which such right of indemnification is claimed or

 

29

 

arises.  The obligations and Liabilities of the
Company under this Article VII with respect to Losses arising from claims
of any third party that are subject to the indemnification provided for in this
Article VII (“Third Party Claims”) shall be governed by and be
contingent upon the following additional terms and conditions:  if a Purchaser Indemnified Party shall
receive notice of any Third Party Claim, the Purchaser Indemnified Party shall
give the Company prompt written notice of such Third Party Claim; provided,
however, that the failure to provide such notice shall not release the
Company from any of its obligations under this Article VII except to the
extent that the Company is materially prejudiced by such failure and shall not
relieve the Company from any other obligation or Liability that it may have to
any Purchaser Indemnified Party otherwise than under this
Article VII.  If the Company acknowledges
in writing its obligation to indemnify the Purchaser Indemnified Party
hereunder against any Losses that may result from such Third Party Claim
subject to the limitations of Section 7.02(b), then the Company shall be
entitled to assume and control the defense of such Third Party Claim at its
expense and through counsel of its choice if it gives notice of its intention
to do so to the Purchaser Indemnified Party within five days of the receipt of
such notice from the Purchaser Indemnified Party; provided, however,
that if there exists or is reasonably likely to exist a conflict of interest
that would make it inappropriate in the judgment of the Purchaser Indemnified
Party in its sole and absolute discretion for the same counsel to represent
both the Purchaser Indemnified Party, on the one hand, and the Company, on the
other hand, then the Purchaser Indemnified Party shall be entitled to retain
its own counsel in addition to any requisite local counsel for which the
Purchaser Indemnified Party reasonably determines counsel is required at the expense
of the Company.  In the event that the
Company exercises the right to undertake any such defense against any such
Third Party Claim as provided above, the Purchaser Indemnified Party shall
cooperate with the Company in such defense and make available to the Company,
at the expense of the Company, all witnesses, pertinent records, materials and
information in the Purchaser Indemnified Party’s possession or under the
Purchaser Indemnified Party’s control relating thereto as is reasonably
required by the Company.  Similarly, in
the event the Purchaser Indemnified Party is, directly or indirectly,
conducting the defense against any such Third Party Claim, the Company shall
cooperate with the Purchaser Indemnified Party in such defense and make
available to the Purchaser Indemnified Party, at the expense of the Company,
all such witnesses, records, materials and information in the Company’s
possession or under the Company’s control relating thereto as is reasonably
required by the Purchaser Indemnified Party.  No such Third Party Claim may be settled by the Company without
the prior written consent of the Purchaser Indemnified Party, except if such
settlement constitutes a full and unconditional release of the Purchaser Indemnified
Party.

 

ARTICLE VIII

 

MISCELLANEOUS

 

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

 

30

 

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

 

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

 

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

 

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

 

31

 

if to the Company:

 

(a)                                  Aegis Communications
Group, Inc.

7880 Bent Branch Drive

Suite 150

Irving, Texas  75063

Facsimile:  (678) 433-6502

Attention:  Herman M. Schwarz

 

with
a copy to:

 

Hughes & Luce, LLP

1717 Main Street

Suite 2800

Dallas, Texas  75201

Attn:  David G. Luther

Facsimile:  (214) 939-5849

 

(b)                                 if to the Purchasers:

 

DB
Advisors LLC

280
Park Avenue

New
York, New York  10017

Facsimile:  Counsel

Attention:  (212) 797-4562

 

Essar
Global Limited

c/o
Essar Group

145
East 48th Street (PH)

New
York, New York 10017

Facsimile:
(212) 758-5860

Attention:  Madhu Vuppuluri

 

with
a copy to:

 

Shearman
& Sterling LLP

599
Lexington Avenue

New
York, New York  10022-6069

Facsimile:  (212) 848-7179

Attention:
 Stephen M. Besen, Esq.

 

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

 

32

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

33

 

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

 

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

 

[Remainder of page left blank intentionally]

 

34

 

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

 

	
   

  	
  AEGIS COMMUNICATIONS
  GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Herman M. Schwarz

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Herman M. Schwarz

  
	
   

  	
   

  	
  Title:

  	
  President & Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DEUTSCHE BANK AG LONDON

  
	
   

  	
  BY DB ADVISORS, LLC AS
  INVESTMENT

  ADVISOR.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Glen MacMullin

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Glen MacMullin

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Bigler

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Paul Bigler

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ESSAR GLOBAL LIMITED

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Madhu S. Vuppuluri

  	
   

  
	
   

  	
  Name:

  	
  Madhu S. Vuppuluri

  	
   

  
	
   

  	
  Title:

  	
  Executive Director

  	
   

  
						

 

35

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}]]