-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DjCz5CdLR+v3ZDZ2fjgvFNxWRPnndGCvKI55rwLE1JXIfFmXsV10cpFP9Yc2RmIx ydwg6N4hcbuY5DtnIKjH0Q== 0000947871-03-002495.txt : 20031114 0000947871-03-002495.hdr.sgml : 20031114 20031114133001 ACCESSION NUMBER: 0000947871-03-002495 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20031114 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DEUTSCHE BANK AG\ CENTRAL INDEX KEY: 0000948046 IRS NUMBER: 13294498 STATE OF INCORPORATION: I8 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: TAUNUSANLAGE 12 D-60325 CITY: FRANKFURT AM MAIN GE STATE: I8 MAIL ADDRESS: STREET 1: TAUNUSANLAGE 12 D-60325 CITY: FRANKFURT AM MAIN STATE: I8 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AEGIS COMMUNICATIONS GROUP INC CENTRAL INDEX KEY: 0000778426 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 752050538 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-46288 FILM NUMBER: 031002614 BUSINESS ADDRESS: STREET 1: 7880 BENT BRANCH DRIVE STREET 2: SUITE 150 CITY: IRVING STATE: TX ZIP: 75063 BUSINESS PHONE: 9728301800 FORMER COMPANY: FORMER CONFORMED NAME: ATC COMMUNICATIONS GROUP INC DATE OF NAME CHANGE: 19960930 FORMER COMPANY: FORMER CONFORMED NAME: NRP INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL REFERENCE PUBLISHING INC DATE OF NAME CHANGE: 19880726 SC 13D 1 sc13d_111403.txt SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 AEGIS COMMUNICATIONS GROUP, INC. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, par value $.01 per share - -------------------------------------------------------------------------------- (Title of Class of Securities) 00760B105 - -------------------------------------------------------------------------------- (CUSIP Number) Deutsche Bank AG c/o DB Advisors, L.L.C. 280 Park Avenue, New York, New York 10017 (212) 469-7471 Attn: General Counsel - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 5, 2003 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. Note: Schedules filed in paper format shall include a signed original and five copies of the Schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. The information required on this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Exchange Act") or otherwise subject to the liabilities of that section of the Exchange Act but shall be subject to all other provisions of the Exchange Act (however, see the Notes). (Continued on following pages) (Page 1 of 12 pages) SCHEDULE 13D - ------------------------ ----------------------- CUSIP No. 00760B105 Page 2 of 12 Pages - ------------------------ ----------------------- - ------------ ------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Deutsche Bank AG - ------------ ------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)[X] (b)[ ] - ------------ ------------------------------------------------------------------- 3 SEC USE ONLY - ------------ ------------------------------------------------------------------- 4 SOURCE OF FUNDS WC (See Item 3) - ------------ ------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ------------ ------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Deutsche Bank AG is organized under the laws of the Federal Republic of Germany. - ------------ ------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 0 (SEE ITEM 5) OWNED BY -------- -------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING 33,974,174 (SEE ITEM 5) PERSON WITH --------- -------------------------------------------- 9 SOLE DISPOSITIVE POWER 0 (SEE ITEM 5) --------- -------------------------------------------- 10 SHARED DISPOSITIVE POWER 33,974,174 (SEE ITEM 5) - ------------ ------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 33,974,174 (SEE ITEM 5) - ------------ ------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - ------------ ------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 28.7% (SEE ITEM 5) - ------------ ------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON BK - ------------ ------------------------------------------------------------------- - ------------------------ ------------------------ CUSIP No. 00760B105 Page 3 of 12 Pages - ------------------------ ------------------------ - ------------ ------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON DB Advisors, L.L.C. - ------------ ------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)[ ] (b)[X] - ------------ ------------------------------------------------------------------- 3 SEC USE ONLY - ------------ ------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - ------------ ------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) - ------------ ------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------ ---------- -------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 0 (SEE ITEM 5) OWNED BY EACH REPORTING PERSON WITH ---------- -------------------------------------------- 8 SHARED VOTING POWER 33,974,174 (SEE ITEM 5) ---------- -------------------------------------------- 9 SOLE DISPOSITIVE POWER 0 (SEE ITEM 5) ---------- -------------------------------------------- 10 SHARED DISPOSITIVE POWER 33,974,174 (SEE ITEM 5) - ------------------------ ---------- -------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 33,974,174 (SEE ITEM 5) - ------------ ------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES - ------------ ------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 28.7% (SEE ITEM 5) - ------------ ------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IA - ------------ ------------------------------------------------------------------- Page 3 of 16 Item 1. Security and Issuer. This statement on Schedule 13D (this "Statement") relates to warrants to purchase a certain number of shares of common stock, par value $.01 per share (the "Common Stock"), of Aegis Communications Group, Inc., a Delaware corporation (the "Company"). The principal executive offices of the Company are located at 7880 Bent Branch Drive, Suite 150, Irving, Texas 75063. Item 2. Identity and Background. This Statement is being filed by DB Advisors, L.L.C. ("DB Advisors") and Deutsche Bank AG ("Deutsche Bank", together with DB Advisors, the "Reporting Persons" and each, a "Reporting Person"). A joint filing agreement has been filed as Exhibit 1 to this Statement pursuant to Rule 13d-1(k) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). DB Advisors is a limited liability company organized under the laws of Delaware, and is a wholly-owned subsidiary of Deutsche Bank. Deutsche Bank is organized under the laws of the Federal Republic of Germany. The securities associated with this Statement were acquired through the London Branch of Deutsche Bank, which is licensed by the United Kingdom banking authority. The address of the principal office of DB Advisors is 280 Park Avenue, New York, New York 10017. The address of the principal place of business of Deutsche Bank is Taunusanlage 12, 60325 Frankfurt, Federal Republic of Germany. The principal business activity of DB Advisors is to act as a proprietary trading group that invests in publicly listed companies undergoing financial or operational restructuring. The principal business of Deutsche Bank is the provision of financial and related services. Deutsche Bank is the largest banking institution in the Federal Republic of Germany and is the parent company of a group consisting of banks, capital market and fund management companies, mortgage banks and property finance companies, installment financing and leasing companies, insurance companies, research and consultancy companies and other companies. In addition, in accordance with Securities Exchange Act Release No. 39538 (January 12, 1998), this Statement reflects the securities beneficially owned by the Corporate and Investment Banking business group and the Corporate Investments business group (collectively, "CIB") of Deutsche Bank and its subsidiaries and affiliates. This filing does not reflect securities, if any, beneficially owned by any other business group of Deutsche Bank. Consistent with Rule 13d-4 under the Exchange Act, this filing shall not be construed as an admission that CIB is, for purposes of Section 13(d) under the Exchange Act, the beneficial owner of any securities covered by the filing. Furthermore, CIB disclaims beneficial ownership of the securities beneficially owned by (i) any client accounts with respect to which CIB or its employees have voting or investment discretion, or both, and (ii) certain investment entities, of which CIB is the general partner, managing general partner, or other manager, to the extent interests in such entities are held by persons other than CIB. Page 4 of 16 Set forth on Schedules A-1 and A-2 to this Statement, and incorporated herein by reference, are lists of the executive officers and directors of the Reporting Persons that contain the following information with respect to each such person: (i) name; (ii) business address; (iii) present principal occupation or employment; and (iv) citizenship. During the last five years, none of the Reporting Persons and, to the best knowledge of the Reporting Persons, none of the persons named on Schedules A-1 and A-2 hereto has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration. Pursuant to the terms of the Note and Warrant Purchase Agreement (the "Purchase Agreement"), dated as of November 5, 2003, by and between the Company, Deutsche Bank AG-London acting through DB Advisors as investment advisor and Essar Global Limited, a company organized under the laws of Mauritius ("Essar"), Deutsche Bank, acting through its London Branch and DB Advisors, agreed to purchase a non-convertible secured promissory note in the principal amount of $14,087,352 (the "Note"), and warrants to purchase 263,329,130 shares of the Company's Common Stock (the "Warrants"). On November 5, 2003, warrants to purchase 33,974,174 shares of Common Stock (the "Initial Warrants") were issued to Deutsche Bank. The Company will issue warrants to purchase 229,329,130 shares of Common Stock to the London branch of Deutsche Bank upon the satisfaction of certain conditions including the increase of the Company's authorized share capital (the "Subsequent Warrants"). All funds used by DB Advisors to acquire the above-listed securities were provided to DB Advisors by Deutsche Bank. Deutsche Bank provided the funds out of working capital. Item 4. Purpose of Transaction. Deutsche Bank purchased the securities covered by this Statement in order to acquire an interest in the Company for investment purposes. Deutsche Bank intends to review continuously its position in the Company. Depending on further evaluations of the business prospects of the Company and upon other developments, including, but not limited to, general economic and business conditions and stock market conditions, Deutsche Bank may (i) exercise its right to purchase Common Stock pursuant to the Warrants, (ii) retain or dispose of all or a portion of the Note, the Warrants and/or Common Stock beneficially owned by it, subject to any applicable legal and contractual restrictions on its ability to do so in privately negotiated transactions, open market sales or otherwise or (iii) purchase or dispose of any other securities of the Company. Pursuant to the terms of the Purchase Agreement and subject to applicable laws and regulations, Deutsche Bank has the right to designate three out of ten directors for appointment to the Board of Directors of the Company. Page 5 of 16 Pursuant to the terms of the Purchase Agreement and subject to applicable laws and regulations, the Company has used the proceeds from both the sale of the securities covered by this Statement and the sale of similar securities under the Purchase Agreement to Essar to retire its senior and subordinated debt. Simultaneously with execution of the Purchase Agreement, Questor Partners Fund II, L.P., a Delaware limited partnership, Questor Side-by-Side Partners II, L.P., a Delaware limited partnership, and Questor Side-by-Side Partners II 3(c)(1), L.P., a Delaware limited partnership (each a "Questor Party" and collectively the "Questor Parties"), and Thayer Equity Investors III, L.P., a Delaware limited partnership, and TC Co-Investors, LLC, a Delaware limited liability company, executed a written consent in which they consented to the amendment of the Company's Amended and Restated Certificate of Incorporation to increase the Company's number of authorized shares of Common Stock from 200,000,000 to 800,000,000, and the amendment of the Series F Preferred Stock Certificate of Designation to increase the number of shares of Common Stock into which each share of Series F Preferred Stock is convertible. Such amendments will occur following the Company's filing with the SEC and distribution to its stockholders of an information statement in accordance with Section 14(c) of the Exchange Act, in the form provided by Schedule 14C promulgated pursuant thereto. After the amendment of the Series F Preferred Stock Certificate of Designation, the Questor Parties' remaining 23,375 shares of Series F Preferred Stock will be convertible into 46,910,503 shares of Common Stock (an increase from the 34,527,594 shares of Common Stock into which those shares of Series F Preferred Stock are currently convertible), and the Questor Parties have committed in the Stockholders Agreement (as described below) to convert these remaining shares of Series F Preferred Stock into Common Stock following such amendments and the satisfaction of certain other conditions. In addition, the matters set forth in Item 6 below are incorporated in this Item 4 by reference as if fully set forth herein. Except as set forth in this Item 4 (including the matters described in Item 6 which are incorporated in this Item 4 by reference), the Reporting Persons have no present plans or proposals that relate to, or that would result in, any of the actions specified in clauses (a) through (j) of Schedule 13D of the Exchange Act. Item 5. Interest in Securities of the Issuer. (a)-(b) On November 5, 2003, Deutsche Bank, acting through its London Branch and DB Advisors, acquired the Initial Warrants. Based on the 84,623,580 shares of Common Stock outstanding as of November 5, 2003, and assuming that the Initial Warrants are fully exercised, after such exercise Deutsche Bank would beneficially own approximately 28.65% of the outstanding Common Stock. Pursuant to the Purchase Agreement, the Company will issue the Subsequent Warrants to the London branch of Deutsche Bank upon the satisfaction of certain conditions, including the increase of the Company's authorized share capital and adjustment of the conversion rate for the Company's Series F Preferred Stock. DB Advisors acts as the discretionary investment manager for Deutsche Bank with respect to the Warrants and, as such, shares the power to exercise and dispose of such Warrants and the shares of Common Stock issuable upon the exercise of the Warrants, and, upon exercise of the Warrants, would share the power to vote or direct the vote of the shares of Common Stock issuable upon such exercise. Page 6 of 16 In connection with the Purchase Agreement, Deutsche Bank, acting through its London Branch and DB Advisors, entered into the Stockholders Agreement (the "Stockholders Agreement"), dated November 5, 2003, by and among the Company, and the Questor Parties, Thayer Equity Investors III, L.P., TC Co-Investors, LLC, (each an "Existing Stockholder" and collectively with Essar and Deutsche Bank, the "Majority Stockholders") and Essar (collectively with Deutsche Bank, the "New Stockholders"). Pursuant to the Stockholders Agreement (as described in Item 6 below), each of the Majority Stockholders has agreed to vote all of its shares of Common Stock and other voting securities of the Company in favor of certain designees of Deutsche Bank and Essar for election to the Board of Directors and have agreed to certain restrictions on the sale of such shares. As a result of the voting and other agreements set forth in the Shareholders Agreement, the Reporting Persons may be deemed to beneficially own the shares of stock or similar securities of the Company or any securities convertible or exchangeable into or for any such stock or similar securities, or any securities carrying any warrant or right to subscribe to or purchase any such stock or similar securities, or any such warrant or right (the "Equity Securities") held by the Majority Stockholders other than the Reporting Persons. Each Reporting Person disclaims beneficial ownership of those Equity Securities held by the Majority Stockholders other than those Reporting Persons. (c) Except for the transactions described herein, there were no transactions effected in the past sixty days in this class of securities by either Deutsche Bank or DB Advisors. (d) Not applicable. (e) Not applicable. Item 6. Contracts, Arrangements, Understanding or Relationships with Respect to Securities of the Issuer. The response to Item 4 of this Statement is incorporated herein by reference. Note and Warrant Purchase Agreement On November 5, 2003, Deutsche Bank, acting through its London Branch and DB Advisors, entered into the Purchase Agreement with the Company and Essar. Subject to the terms and conditions of the Purchase Agreement, Deutsche Bank agreed to purchase the Note and the Warrants. On November 5, 2003, the Initial Warrants were issued to Deutsche Bank. The Company will issue the Subsequent Warrants to the London branch of Deutsche Bank upon the satisfaction of certain conditions, including the increase of the Company's authorized share capital and adjustment of the conversion rate for the Company's Series F Preferred Stock. Set forth below is the information regarding the amount of Notes purchased by Deutsche Bank and Essar under the Purchase Agreement, as well as the number of shares of Common Stock Deutsche Bank and Essar may purchase upon exercise of their respective warrants to purchase Common Stock: Page 7 of 16
Purchaser Principal Amount Shares of Common Stock Issuable Shares of Common Stock Issuable upon --------- ---------------- ------------------------------- ------------------------------------ of Note upon Exercise of Initial Warrants Exercise of Subsequent Warrants ------- -------------------------------- ------------------------------ Deutsche Bank $14,087,352 33,974,174 229,329,130 Essar $14,143,815 34,110,343 230,248,285
Pursuant to the Purchase Agreement, the Company is obligated to amend its Certificate of Incorporation to increase the authorized number of shares of Common Stock and amend the Certificate of Designation of its Series F Preferred Stock to adjust the conversion rate such that, following such amendment, the 23,375 shares of Series F Preferred Stock outstanding immediately after the date of the Purchase Agreement shall be convertible into 46,910,503 shares of Common Stock on the date the Company issues the Subsequent Warrants to Deutsche Bank. Deutsche Bank and Essar also received certain registration rights for their securities as set forth in the Registration Rights Agreement (as described below). This description of the Purchase Agreement is qualified in its entirety by reference to the Purchase Agreement, a copy of which has been filed as Exhibit 2 to this Statement and is incorporated herein by reference. Registration Rights Agreement On November 5, 2003, Deutsche Bank, acting through its London Branch and DB Advisors, entered into a Registration Rights Agreement with the Company, Essar, Questor Partners Fund II, L.P., Questor Side-by-Side Partners II, L.P., Questor Side-by-Side Partners II 3(c)(1), L.P., Thayer Equity Investors III, L.P., TC Co-Investors, LLC, ITC Services Company, Edward Blank and The Edward Blank 1995 Grantor Retained Annuity Trust (the "Registration Rights Agreement"). If the Company qualifies for use of the applicable form of registration statement, within 90 days of execution of the Registration Rights Agreement, the Company shall file with the Securities and Exchange Commission (the "SEC"), and thereafter use its reasonable best efforts to have declared effective as soon as practicable after filing thereof, a "shelf" registration statement (a "Shelf Registration Statement") on Form S-3 pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"), in each case, covering the resale of all of the shares of Common Stock issuable upon the exercise of the warrants to purchase Common Stock issued to Deutsche Bank and Essar pursuant to the Purchase Agreement or securities issuable, issued, or distributed in respect of any of the Common Stock issuable upon the exercise of such warrants (the "New Registrable Securities"). The Company shall, subject to customary terms and conditions, use its reasonable best efforts to keep the Shelf Registration Statement continuously effective from the date that such Shelf Registration Statement is declared effective to the extent required to permit the disposition of the New Registrable Securities so registered. Pursuant to the Registration Rights Agreement, with certain limitations, Deutsche Bank, Essar and their permitted transferees under the Registration Rights Agreement or the Purchase Agreement (collectively, the "New Holders") may send a written request (a "Demand") Page 8 of 16 to the Company which specifies the intended method or methods of disposition of all or part of the New Registrable Securities and the number of shares to be registered. After receipt of such Demand, the Company shall promptly give written notice of such request (the "Notice of Demand") to the New Holders, Questor Partners Fund II, L.P., Questor Side-by-Side Partners II, L.P., Questor Side-by-Side Partners II 3(c)(1), L.P., Thayer Equity Investors III, L.P., TC Co-Investors, LLC, ITC Services Company, Edward Blank and The Edward Blank 1995 Grantor Retained Annuity Trust (collectively the "Existing Holders" and together with the New Holders, the "Holders"). Thereafter, the Company shall, subject to certain limitations, use its reasonable best efforts to effect as soon as practicable a registration statement under the Securities Act of all the New Registrable Securities and all of the shares of Common Stock held by, or issuable upon conversion of preferred stock to, the Existing Holders and any securities issuable or issued or distributed in respect of any of the Common Stock held by, or issuable upon conversion of preferred stock to, the Existing Holders (the "Existing Registrable Securities" and together with the New Registrable Securities, the "Registrable Securities"), that the Holders request to be registered in the Demand or a written request given within ten (10) days of the Notice of Demand by the Company; provided, however, that the aggregate value of the Registrable Securities requested to be registered (i) be at least $2,500,000 based on the closing trading price of the Common Stock on the date of such Demand, (ii) be at least 25% of the New Registrable Securities issuable upon the exercise of the warrants to purchase Common Stock initially sold to Deutsche Bank and Essar or (iii) includes all Registrable Securities which remain outstanding at such time. However, the Company may delay or defer such a filing or the effectiveness of such registration statement during no more than three (3) periods aggregating to not more than 60 days in any twelve-month period if (i) the Company would, in accordance with the advice of counsel, be required to disclose, in any prospectus included in a registration statement filed under the Securities Act pursuant to a Demand by the Holders, information not otherwise required by law to be publicly disclosed and (ii) in the reasonable judgment of the Company's Board of Directors, there is a reasonable likelihood that such disclosure, or any other action to be taken in connection with such prospectus, would materially and adversely affect or interfere with any financing, acquisition, merger, disposition of assets (not in the ordinary course of business), corporate reorganization or other similar transaction involving the Company. The Company shall promptly give the Holders written notice of such determination containing a general statement of the reasons for such postponement and an approximation of the anticipated delay. If the Company proposes to register any of its Common Stock under the Securities Act, with limited exceptions, it must give written notice of such registration to all Holders at least twenty (20) days before initial filing of such registration statement. The Company must include in such registration all the Registrable Securities then outstanding and specified in a written request or requests made by Holders within ten (10) days after the date of the written notice by the Company of such registration. Deutsche Bank's registration rights set forth in the Registration Rights Agreement terminate when (i) a registration statement under the Securities Act covering all Registrable Securities held by Deutsche Bank has been declared effective under the Securities Act by the SEC and such Registrable Securities have been disposed of pursuant to such effective registration statement or (ii) all such Registrable Securities held by Deutsche Bank may be sold pursuant to Rule 144(k) of the Securities Act. Page 9 of 16 The Company has the customary rights to delay the filing or effectiveness of any registration statement under the Registration Rights Agreement. The Registration Rights Agreement contains customary indemnification provisions for the registration rights. This description of the Registration Rights Agreement is qualified in its entirety by reference to the Registration Rights Agreement, a copy of which has been filed as Exhibit 3 to this Statement and is incorporated herein by reference. Stockholders Agreement On November 5, 2003, Deutsche Bank, acting through its London Branch and DB Advisors, entered into the Stockholders Agreement. Pursuant to the Stockholders Agreement, any Majority Stockholder may sell (directly or indirectly), assign, mortgage, transfer, pledge or hypothecate ("Transfer") all or a portion of its Equity Securities to a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Majority Stockholder; provided such transferee agrees in writing to be bound by the terms and conditions of the Stockholders Agreement. Pursuant to the Stockholders Agreement, any Existing Stockholder (the "Selling Stockholder") desiring to Transfer (other than in a public sale) any Equity Securities must, prior to Transferring such Equity Securities to any third party or parties, deliver to each of the New Stockholders a letter (the "Sale Notice") setting forth (i) the number of Equity Securities such Selling Stockholder wishes to Transfer, (ii) the material terms and conditions, including the purchase price per security, on which such Selling Stockholders wishes to transfer such shares, and (iii) such Selling Stockholder's offer (irrevocable by its terms for 15 days following receipt) to Transfer to the New Stockholders all such Equity Securities on the terms and conditions set forth in the Sale Notice. Within 15 days of receipt of such letter, the New Stockholders may agree to purchase in the aggregate all of the Equity Securities covered by the Sale Notice, and (i) individually, that portion of such Equity Securities offered by the Selling Stockholder equal to their pro rata interest in the Company relative to each other, (ii) such other portion of such Equity Securities as the New Stockholders may agree upon or (iii) in the event either of the New Stockholders does not exercise such right, all of the Equity Securities offered to such declining New Stockholder. If, upon the expiration of 15 days following the receipt by the New Stockholders of the Sale Notice, none of the New Stockholders has agreed to purchase all of the Equity Securities covered by such Sales Notice, the Selling Shareholder may sell to a third party or parties all such Equity Securities for at least 95% of the price and upon substantially the same other terms and conditions as contained in the Sale Notice; provided such sale is pursuant to a binding purchase agreement executed within 90 days after the expiration of such 15-day period and closed thereunder within 120 days from the execution of the binding purchase agreement. If the New Stockholders shall have agreed to purchase the Equity Securities covered by the Sale Notice, such sale shall be consummated as soon as practicable after delivery of a notice of acceptance by the Selling Stockholder, but in any event within 90 days of the delivery of the Sales Notice. Page 10 of 16 The rights of first offer described above shall apply if one New Stockholder, on the one hand, and the other New Stockholder, on the other hand, were the Selling Stockholder and the New Stockholders, respectively. The rights and obligations of the New Stockholders and Existing Stockholders relating to the right of first offer described above shall terminate on November 5, 2006. Each Stockholder agrees to vote all of the Equity Securities owned or held of record by him, her or it to elect a Board of Directors of the Company consisting of ten members, three of whom shall be designated by Deutsche Bank and three of whom shall be designated by Essar, one of whom shall be the President and Chief Executive Officer of the Company and three of whom shall be independent of Deutsche Bank, Essar and the Company. Each Stockholder grants to the Secretary of the Company then in office an irrevocable proxy solely for the purpose of voting all of the Company securities that have voting rights and owned by the grantor of the proxy for the election of directors. This description of the Stockholders Agreement is qualified in its entirety by reference to the Stockholders Agreement, a copy of which has been filed as Exhibit 4 to this Statement and is incorporated herein by reference. Promissory Note The Note received by Deutsche Bank bears simple interest compounded quarterly at the floating rate of LIBOR plus 0.50% per annum. Interest is payable on the last day of each three (3) month interest period, as set forth in the Note, and calculated on the basis of actual number of days elapsed and a year of 360 days. The Company has the option to pay such interest in cash or to cause such interest to be capitalized and added to the principal amount of the Note, which additional amount shall bear interest and otherwise be payable in accordance with the terms and conditions of the Note. Unless paid on or prior to maturity, the Note matures, and the principal and accrued and unpaid interest becomes due, in two installments. The initial installment of $6,159,489 is, with certain limitations, payable in full upon the earlier of (i) February 5, 2004, and (ii) the first date the Company has availability to receive any funds under a credit facility for which Wells Fargo Foothill, Inc. acts as the arranger and administrative agent or any other lender or group of lenders. The second installment of $7,929,863 is payable in full on November 5, 2006. Subsidiary Guaranty The Note received by Deutsche Bank is guaranteed pursuant to the Subsidiary Guaranty, dated as of November 5, 2003, by the following subsidiaries of the Company: Advanced Telemarketing Corporation, a Nevada corporation, IQI, Inc., a New York corporation, Lexi International, Inc., a California corporation, InterServ Services Corporation, a Delaware Corporation and EBA Direct, Inc., a Canadian corporation.. Item 7. Material to be filed as Exhibits. Exhibit 1: Joint Filing Agreement Page 11 of 16 Exhibit 2: Purchase Agreement, dated November 5, 2003, among the Company, Deutsche Bank, acting through its London Branch and DB Advisors and Essar Exhibit 3: Registration Rights Agreement, dated November 5, 2003, by and among the Company, Deutsche Bank, acting through its London Branch and DB Advisors, Essar, Questor Partners Fund II, L.P., Questor Side-by-Side Partners II, L.P., Questor Side-by-Side Partners II 3(c)(1), L.P., Thayer Equity Investors III, L.P., TC Co-Investors, LLC, ITC Services Company, Edward Blank and The Edward Blank 1995 Grantor Retained Annuity Trust Exhibit 4: Stockholders Agreement, dated November 5, 2003, by and among Aegis, Questor Partners Fund II, L.P., Questor Side-by-Side Partners II, L.P., Questor Side-by-Side Partners II 3(c)(1), L.P., Thayer Equity Investors III, L.P., TC Co-Investors, LLC, Deutsche Bank, acting through its London Branch and DB Advisors and Essar Page 12 of 16 SIGNATURE After reasonable inquiry and to the best of our knowledge and belief, we certify that the information set forth in this Statement is true, complete and correct. Dated: November 14, 2003 Deutsche Bank AG By: /s/ Jeffrey A. Ruiz --------------------------------- Name: Jeffrey A. Ruiz Title: Vice President DB ADVISORS, L.L.C. By: /s/ Roger Ehrenberg --------------------------------- Name: Roger Ehrenberg Title: President Page 13 of 16 SCHEDULE A-1 EXECUTIVE OFFICERS AND DIRECTORS OF DB ADVISORS, L.L.C. The following sets forth the name, business address, title and citizenship of the directors and principal executive officer of DB Advisors, L.L.C. The business address of DB Advisors, L.L.C. is 280 Park Avenue, New York, New York 10017.
NAME BUSINESS ADDRESS TITLE CITIZENSHIP - ---- ---------------- ----- ----------- Kevin Parker 60 Wall Street Chief Executive Officer United States New York, New York Roger Ehrenberg 280 Park Avenue President United States New York, New York Shengbei Guo 280 Park Avenue Executive Vice President China New York, New York Paul G. Bigler II 280 Park Avenue Managing Director United States New York, New York Mark Cullen 60 Wall Street Managing Director Australia New York, New York Steven Morris 60 Wall Street Managing Director, Chief Financial New Zealand New York, New York Officer and Treasurer Glen MacMullin 280 Park Avenue Director Canada New York, New York Tracy C. Wills-Zapata 280 Park Avenue Director United States New York, New York
Page 14 of 16 SCHEDULE A-2 MANAGING DIRECTORS OF DEUTSCHE BANK AG The following sets forth the name, business address, title and citizenship of the managing directors of Deutsche Bank AG. The business address of Deutsche Bank AG is Taunusanlage 12, 60325 Frankfurt, Federal Republic of Germany.
NAME BUSINESS ADDRESS TITLE CITIZENSHIP - ---- ---------------- ----- ----------- Dr. Josef Ackermann Deutsche Bank AG Chairman of the Group Executive Swiss Taunusanlage 12 Member of the Board of 60325 Frankfurt Managing Directors, Deutsche The Federal Republic of Bank AG Germany Dr. Tessen von Heydebreck Deutsche Bank AG Member of the Board of Managing German Taunusanlage 12 Directors, Deutsche Bank AG 60325 Frankfurt The Federal Republic of Germany Dr. Hermann-Josef Lamberti Deutsche Bank AG Member of the Board of Managing German Taunusanlage 12 Directors, Deutsche Bank AG 60325 Frankfurt The Federal Republic of Germany Dr. Clemens Borsig Deutsche Bank AG Member of the Board of Managing German Taunusanlage 12 Directors, Deutsche Bank AG 60325 Frankfurt The Federal Republic of Germany
Page 15 of 16 EXHIBIT INDEX Exhibit 1: Joint Filing Agreement Exhibit 2: Note and Warrant Purchase Agreement, dated as of November 5, 2003, by and between Aegis Communications Group, Inc., Deutsche Bank AG-London acting through DB, LLC as investment advisor and Essar Global Limited Exhibit 3: Registration Rights Agreement, dated November 5, 2003, by and among Aegis Communications Group, Inc., Deutsche Bank AG-London acting through DB, LLC as investment advisor, Essar Global Limited , Questor Partners Fund II, L.P., Questor Side-by-Side Partners II, L.P., Questor Side-by-Side Partners II 3(c)(1), L.P., Thayer Equity Investors III, L.P., TC Co-Investors, LLC, ITC Services Company, Edward Blank and The Edward Blank 1995 Grantor Retained Annuity Trust Exhibit 4: Stockholders Agreement, dated November 5, 2003, by and among Aegis Communications Group, Inc., Questor Partners Fund II, L.P., Questor Side-by-Side Partners II, L.P., Questor Side-by-Side Partners II 3(c)(1), L.P., Thayer Equity Investors III, L.P., TC Co-Investors, LLC, Deutsche Bank AG-London acting through DB Advisors, LLC as investment advisor and Essar Global Limited Page 16 of 16 EX-1 3 ex1.txt JOINT FILING AGREEMENT EXHIBIT 1 JOINT FILING AGREEMENT The undersigned hereby agree that the statement on Schedule 13D, dated November 14, 2003, with respect to the common stock, par value $.01 per share, of Aegis Communications Group, Inc. is, and any amendments thereto executed by each of us shall be, filed on behalf of each of us pursuant to and in accordance with the provisions of Rule 13d-1(k)(1) under the Securities and Exchange Act of 1934, as amended, and that this Agreement shall be included as an Exhibit to the Schedule 13D and each such amendment. Each of the undersigned agrees to be responsible for the timely filing of the Schedule 13D and any amendments thereto, and for the completeness and accuracy of the information concerning itself contained therein. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the 14th day of November, 2003. DEUTSCHE BANK AG By: /s/ Jeffrey A. Ruiz ------------------------ Name: Jeffrey A. Ruiz Title: Vice President DB ADVISORS, L.L.C. By: /s/ Roger Ehrenberg ----------------------- Name: Roger Ehrenberg Title: President EX-2 4 ex2.txt NOTE AND WARRANT PURCHASE AGREEMENT EXHIBIT 2 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 Page ARTICLE I DEFINITIONS SECTION 1.01 Definitions....................................................1 Article II PURCHASE AND SALE OF Interests SECTION 2.01 Sale and Issuance of Notes and Warrants........................9 SECTION 2.02 Closing........................................................9 SECTION 2.03 Closing Deliveries by the Company.............................10 SECTION 2.04 Closing Deliveries by the Purchasers..........................10 ARTICLE III REPRESENTATIONS AND WArranties OF THE COMPANY SECTION 3.01 Organization, Authority and Qualification of the Company......11 SECTION 3.02 Subsidiaries..................................................12 SECTION 3.03 Debt and Capitalization.......................................12 SECTION 3.04 No Conflict...................................................13 SECTION 3.05 Consents and Approvals........................................13 SECTION 3.06 Compliance with Laws..........................................14 SECTION 3.07 Financial Information; Books and Records......................14 SECTION 3.08 Litigation....................................................14 SECTION 3.09 SEC Reports...................................................14 SECTION 3.10 Valid Issuance of the Notes, Warrants and Warrant Shares............................................15 SECTION 3.11 Absence of Certain Changes or Events; Absence of Undisclosed Liabilities.......................................15 SECTION 3.12 Material Contracts............................................16 i SECTION 3.13 Intellectual Property.........................................17 SECTION 3.14 Taxes.........................................................18 SECTION 3.15 Properties; Encumbrances......................................19 SECTION 3.16 Insurance.....................................................19 SECTION 3.17 Environmental Matters.........................................19 SECTION 3.18 Employee Benefit Plans; Labor Matters.........................20 SECTION 3.19 Labor.........................................................22 SECTION 3.20 Investment Company............................................22 SECTION 3.21 Brokers.......................................................22 SECTION 3.22 Indemnification...............................................22 SECTION 3.23 Registration Rights...........................................23 SECTION 3.24 Affiliate Agreements..........................................23 SECTION 3.25 Existing Merger Agreement.....................................23 SECTION 3.26 Fairness Opinion..............................................23 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER SECTION 4.01 Organization and Authority of Each of the Purchasers..........23 SECTION 4.02 No Conflict...................................................24 SECTION 4.03 Restricted Securities.........................................24 SECTION 4.04 Accredited Investor...........................................24 SECTION 4.05 Purchase Entirely For Own Account.............................24 SECTION 4.06 Investment Company............................................24 ARTICLE V ADDITIONAL AGREEMENTS ii SECTION 5.01 Access to Information.........................................24 SECTION 5.02 Information Statement.........................................25 SECTION 5.03 Further Action................................................25 SECTION 5.04 Corporate Actions.............................................26 SECTION 5.05 Affiliate Agreements..........................................26 SECTION 5.06 Directors' and Officers' Insurance............................26 SECTION 5.07 Use of Proceeds...............................................27 SECTION 5.08 Preferred Stock Amendment.....................................27 ARTICLE VI CONDITIONS TO CLOSING SECTION 6.01 Conditions to Obligations of the Purchasers...................27 SECTION 6.02 Conditions to Obligations of the Company......................29 ARTICLE VII INDEMNIFICATION SECTION 7.01 Survival of Representations and Warranties....................29 SECTION 7.02 Indemnification by the Company................................29 ARTICLE VIII MISCELLANEOUS SECTION 8.01 Amendment; Waiver.............................................30 SECTION 8.02 Confidentiality...............................................31 SECTION 8.03 Expenses......................................................31 SECTION 8.04 Notices.......................................................31 SECTION 8.05 Severability..................................................32 SECTION 8.06 Assignment....................................................33 SECTION 8.07 Third Party Beneficiaries and Transfers.......................33 iii SECTION 8.08 Governing Law; Consent to Jurisdiction........................33 SECTION 8.09 Waiver of Jury Trial..........................................33 SECTION 8.10 Entire Agreement..............................................33 SECTION 8.11 Headings......................................................33 SECTION 8.12 Counterparts..................................................34 SECTION 8.13 Public Announcements..........................................34 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. ss. 9601 et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. ss. 6901 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. ss. 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq.; the Clean Air Act, 42 U.S.C. ss. 7401 et seq.; Occupational Safety and Health Act, 29 U.S.C. ss. 651 et seq.; Oil Pollution Act of 1990, 33 U.S.C. ss. 2701 et seq.; the Safe Drinking Water Act, 42 U.S.C. ss. 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. ss.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). (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 and CEO 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 Schedule 1 Principal Initial Subsequent Purchase Amount of Note Warrants Warrants Price -------------- -------- ---------- ---------- Deutsche Bank AG $14,087,352 33,974,174 229,329,130 $14,087,352 London by DB Advisors, LLC as Investment Advisor Essar Global $14,143,815 34,110,343 230,248,285 $14,143,815 Limited 36 Schedule 2 Use of Proceeds Payment to retire Senior Debt $ 12,463,795.25 Retirement of Subordinated Debt: Thayer $ 7,563,262.76 (93%) Edward Blank $ 453,056.36 (6%) The Edward Blank 1995 Grantor Retained $ 107,240.90 (1%) Annuity Trust Break-up fee $ 1,137,500 Deal Expenses: Investment Banking $ 496,646.00 Legal $ 669,001.70 Prepaid Expenses $ 283,900.38 Reserve for Series B Preferred Stock $ 285,200.80 Retention Bonuses $ 427,895.86 Letters of Credit $ 4,343,666.33 A-1 Schedule 3 Directors Appointed as of the Closing William Jefferson Marshall Roderick Glen MacMullin Erik W. Jansen Ravikant N. Ruia Prashant S. Ruia Madhu Vuppuluri John Scot Brunke EXHIBIT A FORM OF THE NOTES EXHIBIT B FORM OF THE WARRANT B-1 EXHIBIT C FORM OF REGISTRATION RIGHTS AGREEMENT C-1 EXHIBIT D FORM OF STOCKHOLDERS AGREEMENT D-1 EX-3 5 ex3.txt REGISTRATION RIGHTS AGREEMENT EXHIBIT 3 REGISTRATION RIGHTS AGREEMENT ----------------------------- REGISTRATION RIGHTS AGREEMENT, dated as of November 5, 2003 (this "Agreement"), by and among Aegis Communications Group, Inc., a Delaware corporation (the "Company"), Deutsche Bank AG - London acting through DB Advisors, LLC as investment advisor ("DB"), Essar Global Limited ("Essar" and collectively with DB, the "Purchasers") and Questor Partners Fund II, L.P., a Delaware limited partnership ("Fund II"), Questor Side-by-Side Partners II, L.P., a Delaware limited partnership (the "Side-By-Side Fund"), Questor Side-by-Side Partners II 3(c)(1), L.P., a Delaware limited partnership (the "3(C)(1) Fund", and together with Fund II and the Side-by-Side Fund, "Questor"), Thayer Equity Investors III, L.P., a Delaware limited partnership ("Thayer Equity"), TC Co-Investors, LLC, a Delaware limited liability company ("TC Co-Investors", and together with Thayer Equity, "Thayer"), Edward Blank, and The Edward Blank 1995 Grantor Retained Annuity Trust. WHEREAS, the Purchasers are purchasing warrants (the "Warrants") to purchase 527,661,932 shares of the Company's common stock, par value $0.01 per share (the "Common Stock"), and secured promissory notes in the principal amount of $15,887,500 (the "Notes") pursuant to that certain Note and Warrant Purchase Agreement dated as of the date hereof (the "Purchase Agreement"), between the Company and the Purchasers. NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, it is agreed as follows: 1. Definitions. (a) Unless otherwise defined herein, the terms below shall have the following meanings (such meanings being equally applicable to both the singular and plural forms of the terms defined): "Affiliate" shall mean, 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. "Agreement" shall mean this Registration Rights Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing. "Business Day" shall mean any day that is not a Saturday, a Sunday or a day on which commercial banks are required or authorized by law to be closed in the State of New York. "Control" (including the terms "Controlled by" and "under common Control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise, including, without limitation, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person. "Effective Period" shall mean the period commencing with the effective date of the Shelf Registration Statement and ending upon the earlier of (i) the termination of the registration rights pursuant to Section 5 hereof and (ii) such time as the Purchasers cease to own any Registrable Securities. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and all rules and regulations promulgated thereunder. "Existing Holders" shall mean the Existing Stockholders that hold Registrable Securities. "Existing Registrable Securities" shall mean (a) the shares of Common Stock held by, or issuable upon conversion of preferred stock to, the Existing Stockholders and (b) any securities issuable or issued or distributed in respect of any of the Common Stock identified in clause (a) by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, reorganization, merger, consolidation or otherwise. "Existing Stockholders" shall mean Questor, Thayer, Edward Blank and The Edward Blank 1995 Grantor Retained Annuity Trust. "Holders" shall means the Existing Holders and the New Holders. "NASD" shall mean the National Association of Securities Dealers, Inc., or any successor entity thereof. "New Holders" shall mean the Purchasers, and any transferees of the Purchasers to whom Registrable Securities are permitted to be transferred in accordance with the terms of this Agreement and the Purchase Agreement, and, in each case, who continue to be entitled to the rights of a Holder hereunder. "New Registrable Securities" shall mean (a) the shares of Common Stock issuable upon exercise of the Warrants and (b) any securities issuable or issued or distributed in respect of any of the Common Stock identified in clause (a) by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, reorganization, merger, consolidation or otherwise. "Person" shall mean any individual, corporation, partnership, joint venture, firm, trust, unincorporated organization, government or any agency or political subdivision thereof or other entity. "Prospectus" shall mean the Prospectus (including any summary Prospectus, preliminary Prospectus and any final Prospectus) included in the Registration Statement as amended or supplemented by any supplement with respect to the terms of the offering of any portion of the Registrable Securities pursuant to a Demand Registration or Piggy-Back Registration and by all other amendments and supplements thereto, including post-effective amendments and any material incorporated by reference therein. 2 "Registrable Securities" shall mean the Existing Registrable Securities and the New Registrable Securities. For purposes of this Agreement, Registrable Securities shall cease to be Registrable Securities when (i) a Registration Statement covering such Registrable Securities has been declared effective under the Securities Act by the SEC and such Registrable Securities have been disposed of pursuant to such effective Registration Statement or (ii) such Registrable Securities may be sold pursuant to Rule 144(k) of the Securities Act. "Registration Statement" shall mean the Demand Registration Statement, the Piggy-Back Registration Statement and/or the Shelf Registration Statement, as the case may be, including the Prospectus contained therein, any amendments to such Registration Statement (including post-effective amendments) and all exhibits and any material incorporated by reference in such Registration Statement. "Securities Act" shall mean the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder. "SEC" shall mean the Securities and Exchange Commission, or any successor thereto. (b) The following terms have the meanings set forth in the Section set forth opposite such term: Term Section ---- ------- Blackout Period 6 Common Stock Recitals Demand for Registration 3(c) Demand Registration 3(a) Demand Registration Statement 3(a) Indemnified Party 10(d) Indemnifying Party 10(d) Maximum Number of Securities 3(b) Notes Recitals Participating Demand Holders 3(a) Participating Piggy-Back Holders 4(b) Piggy-Back Registration 4(a) Piggy-Back Registration Statement 4(a) Purchase Agreement Recitals Purchasers Recitals Shelf Registration Statement 2 Warrants Recitals 2. Shelf Registration Statement. If the Company qualifies for use of the applicable form of registration statement, within 90 days after the date hereof, the Company shall file with the SEC, and thereafter use its reasonable best efforts to have declared effective as soon as practicable after the filing thereof, a "shelf" Registration Statement (a "Shelf Registration Statement") on Form S-3 (or any successor form) pursuant to Rule 415 under the Securities Act or on such other form as may be appropriate under the Securities Act, in each case, covering the 3 resale of all of the New Registrable Securities. The Company shall, subject to customary terms and conditions, use its reasonable best efforts to keep the Shelf Registration Statement continuously effective from the date that such Shelf Registration Statement is declared effective during the Effective Period to the extent required to permit the disposition (in accordance with the intended method or methods thereof, as aforesaid) of the New Registrable Securities so registered. 3. Demand Registration. (a) After receipt of a written request from one or more New Holders requesting that the Company effect a registration (a "Demand Registration") under the Securities Act covering all or part of the Registrable Securities which specifies the intended method or methods of disposition thereof and the number of shares to be registered, the Company shall promptly notify all Holders in writing of the receipt of such request and each such Holder, in lieu of exercising its rights under Section 4 hereof, may elect (by written notice sent to the Company within ten (10) Business Days from the date of such Holder's receipt of the aforementioned notice from the Company) to have all or part of such Holder's Registrable Securities included in such registration thereof pursuant to this Section 3, and such Holder shall specify in such notice the number of Registrable Securities that such Holder elects to include in such registration. Thereupon, the Company shall, as expeditiously as is practicable, but in any event no later than thirty (30) days (excluding any days which occur during a permitted Blackout Period under Section 6 below) after receipt of a written request for a Demand Registration, file with the SEC and use its reasonable best efforts to cause to be declared effective a registration statement (a "Demand Registration Statement") relating to all shares of Registrable Securities that the Company has been so requested to register by such Holders ("Participating Demand Holders") for sale, to the extent required to permit the disposition (in accordance with the intended method or methods thereof, as aforesaid) of the Registrable Securities so registered; provided, however, that the aggregate value of the Registrable Securities requested to be registered (i) be at least $2,500,000, based on the closing trading price of the Common Stock on the date the demand to file such Demand Registration Statement is made, (ii) be at least 25% of the New Registrable Securities initially issuable upon exercise of the Warrants or (iii) include all Registrable Securities which remain outstanding at such time. (b) If the majority-in-interest of the Participating Demand Holders in a Demand Registration relating to a public offering requests that the offering be underwritten with a managing underwriter selected in the manner set forth in Section 14 below and such managing underwriter of such Demand Registration advises the Company in writing that, in its opinion, the number of securities to be included in such offering is greater than the total number of securities which can be sold therein without having a material adverse effect on the distribution of such securities or otherwise having a material adverse effect on the marketability thereof (the "Maximum Number of Securities"), then the Company shall include in such Demand Registration the Registrable Securities that the Participating Demand Holders have requested to be registered thereunder only to the extent the number of such Registrable Securities does not exceed the Maximum Number of Securities. If such amount exceeds the Maximum Number of Securities, the number of Registrable Securities included in such Demand Registration shall be allocated first, among all the New Holders participating in such Demand Registration on a pro rata basis (based on the number of Registrable Securities requested to be included in such 4 Demand Registration by each New Holder), and, second, to the Existing Holders on a pro rata basis (based on the number of Registrable Securities requested to be included in such Demand Registration by each Existing Holder); provided, however, that in no event may Registrable Securities held by the Existing Holders be included in such Demand Registration unless all of the Registrable Securities requested to be included in the Demand Registration by the New Holders are included in such Demand Registration. If the amount of such Registrable Securities does not exceed the Maximum Number of Securities, the Company may include in such Demand Registration any other securities of the Company and other securities held by other security holders of the Company as the Company may in its discretion determine or be obligated to allow, in an amount, which together with the Registrable Securities included in such Demand Registration, shall not exceed the Maximum Number of Securities. (c) New Holders shall be entitled to an aggregate of four (4) registrations of Registrable Securities pursuant to this Section 3 (each, a "Demand for Registration") in addition to the Shelf Registration Statement pursuant to Section 2; provided that a registration requested pursuant to this Section 3 shall not be deemed to have been effected for purposes of this Section 3(c) unless (i) it has been declared effective by the SEC, (ii) it has remained effective for the period set forth in Section 7(a), (iii) Holders of Registrable Securities included in such registration have not, prior to the filing of the relevant Demand Registration Statement, withdrawn sufficient shares from such registration such that the remaining Holders requesting registration would not have been able to request registration under the provisions of Section 3, and (iv) the offering of Registrable Securities pursuant to such registration is not subject to any stop order, injunction or other order or requirement of the SEC (other than any such stop order, injunction, or other order or requirement of the SEC prompted by act or omission of Holders of Registrable Securities); provided, however, that if the New Holders participating in such Demand Registration are not able to register and sell at least two-thirds of the New Registrable Securities requested to be included in a Demand Registration, then such Demand Registration shall not be counted as one of the five Demands for Registration provided for pursuant to this Section 3(c). (d) Notwithstanding anything to the contrary contained herein, the Company shall not be required to prepare and file (i) more than two (2) Demand Registration Statements in any twelve-month period, (ii) any Demand Registration Statement within 90 days following the date of effectiveness of any other Registration Statement or (iii) any Demand Registration Statement within 90 days following the date of effectiveness of any other registration statement filed pursuant to any other registration rights agreement to which the Company is a party or with respect to the sale of Common Stock by the Company (or such longer period of time as may be specified in an underwriting agreement relating to such registration statement). 4. Piggy-Back Registration. (a) If the Company proposes to file on its behalf and/or on behalf of any holder of its securities (other than a Holder of Registrable Securities) a registration statement under the Securities Act on any form (other than a registration statement on Form S-4 or S-8 or any successor form for securities to be offered in a transaction of the type referred to in Rule 145 under the Securities Act or to employees of the Company pursuant to any employee benefit plan, respectively) for the registration of Common Stock (a "Piggy-Back Registration"), it will give 5 written notice to all Holders at least twenty (20) days before the initial filing with the SEC of such registration statement (a "Piggy-Back Registration Statement"), which notice shall set forth the intended method of disposition of the securities proposed to be registered by the Company. The notice shall offer to include in such filing the aggregate number of shares of Registrable Securities as such Holders may request. (b) Each Holder desiring to have Registrable Securities registered under this Section 4 ("Participating Piggy-Back Holders") shall advise the Company in writing within ten (10) days after the date of receipt of such offer from the Company, setting forth the amount of such Registrable Securities for which registration is requested. The Company shall thereupon include in such filing the number or amount of Registrable Securities for which registration is so requested, subject to paragraph (c) below, and shall use its reasonable best efforts to effect registration of such Registrable Securities under the Securities Act. (c) If the Piggy-Back Registration relates to an underwritten public offering and the managing underwriter of such proposed public offering advises in writing that, in its opinion, the amount of Registrable Securities requested to be included in the Piggy-Back Registration in addition to the securities being registered by the Company would be greater than the Maximum Number of Securities (having the same meaning as defined in Section 3 but replacing the term "Demand Registration" with "Piggy-Back Registration"), then: (i) in the event the Company initiated the Piggy-Back Registration, the Company shall include in such Piggy-Back Registration, first, the securities the Company proposes to register and, second, the Registrable Securities of all Participating Piggy-Back Holders, proposed to be included in such Piggy-Back Registration in an amount which, together with the securities the Company proposes to register, shall not exceed the Maximum Number of Securities, such amount to be allocated, first, to the New Holders requesting Registrable Securities be included in the Piggy-Back Registration on a pro rata basis (based on the aggregate number of Registrable Securities requested by such New Holders to be included in the Piggy-Back Registration Statement) and, second, to the Existing Holders requesting Registrable Securities be included in the Piggy-Back Registration Statement on a pro rata basis (based on the aggregate number of Registrable Securities requested by such Existing Holders to be included in the Piggy-Back Registration Statement); provided, however, that in no event may Registrable Securities held by the Existing Holders be included in such Piggy-Back Registration unless all of the Registrable Securities requested to be included in such Piggy-Back Registration by the New Holders are included in such Piggy-Back Registration; (ii) in the event any holder or holders of securities of the Company initiated the Piggy-Back Registration, the Company shall include in such Piggy-Back Registration, first, the securities such initiating security holder or holders propose to register, second, the Registrable Securities of all Participating Piggy-Back Holders proposed to be included in such Piggy-Back Registration, in an amount which, together with the securities the initiating security holder or holders propose to register, shall not exceed the Maximum Number of Securities, such amount to be allocated among such Participating Piggy-Back Holders, first, to the New Holders requesting Registrable Securities be included in the Piggy-Back Registration Statement on a pro rata basis (based on the 6 aggregate number of Registrable Securities requested by such New Holders to be included in the Piggy-Back Registration Statement) and, second, to the Existing Holders requesting Registrable Securities be included in the Piggy-Back Registration Statement on a pro rata basis (based on the aggregate number of Registrable Securities requested by such Existing Holders to be included in the Piggy-Back Registration Statement); provided, however, that in no event may Registrable Securities held by the Existing Holders be included in such Piggy-Back Registration unless all of the Registrable Securities requested to be included in such Piggy-Back Registration by the New Holders are included in such Piggy-Back Registration. (d) The Company will not hereafter enter into any agreement, which is inconsistent with the rights of priority provided in paragraph (c) above. 5. Termination of Registration Rights. (a) The registration rights set forth in Sections 1, 2 and 3 above shall terminate at such time as there cease to be any Registrable Securities. (b) By execution hereof, the Company and the Existing Stockholders hereby terminate all registration rights granted pursuant to (i) the Securities Purchase and Registration Rights Agreement, dated April 7, 1998, by and between ATC Communications Group, Inc. and Thayer Equity and (ii) the Series F Senior Voting Convertible Preferred Stock Purchase and Registration Rights Agreement, dated August 25, 1999, by and among the Company and the Existing Stockholders. 6. Blackout Periods. The Company shall have the right to delay or defer the filing or effectiveness of a Registration Statement required pursuant to Sections 3 and 4 hereof or suspend sales under any Shelf Registration Statement filed hereunder during no more than three (3) periods aggregating to not more than 60 days in any twelve-month period (a "Blackout Period") in the event that (i) the Company would, in accordance with the advice of its counsel, be required to disclose in the Prospectus information not otherwise then required by law to be publicly disclosed and (ii) in the reasonable judgment of the Company's Board of Directors, there is a reasonable likelihood that such disclosure, or any other action to be taken in connection with the Prospectus, would materially and adversely affect or interfere with any financing, acquisition, merger, disposition of assets (not in the ordinary course of business), corporate reorganization or other similar transaction involving the Company; provided, however, that the Company shall delay during such Blackout Period the filing or effectiveness of, or suspend sales under, any Registration Statement required pursuant to the registration rights of the holders of any other securities of the Company. The Company shall promptly give the Holders written notice of such determination containing a general statement of the reasons for such postponement and an approximation of the anticipated delay. 7. Registration Procedures. Except as otherwise provided herein, if the Company is required by the provisions of Section 2, 3 or 4 to use its reasonable best efforts to effect the registration of any of its securities under the Securities Act, the Company will, as expeditiously as practical: 7 (a) prepare and file with the SEC a Registration Statement with respect to such securities and use its reasonable best efforts to cause such Registration Statement promptly to become and remain effective for a period of time required for the disposition of such securities by the holders thereof but not to exceed 30 days (except with respect to a Shelf Registration Statement which shall remain effective during the Effective Period); provided, however, that before filing such Registration Statement or any amendments or supplements thereto (for purposes of this subsection, amendments shall not be deemed to include any filing that the Company is required to make pursuant to the Exchange Act), the Company shall furnish the representatives of the Holders referred to in Section 7(m) copies of all documents proposed to be filed, which documents will be subject to the reasonable review and comment of the representatives' counsel. The Company shall not be deemed to have used its reasonable best efforts to keep a Registration Statement effective during the applicable period if it voluntarily takes any action that would result in the Holders of such Registrable Securities not being able to sell such Registrable Securities during that period, unless such action is undertaken for a legitimate business purpose and the delay in effectiveness is required under applicable law; (b) prepare and file with the SEC such amendments and supplements to such Registration Statement as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all securities covered by such Registration Statement until the earlier of such time as all of such securities have been disposed of in a public offering or the expiration of 30 days (except with respect to the Shelf Registration Statement, for which such period shall be the Effective Period); (c) furnish to such Holders such number of conformed copies of the applicable Registration Statement and each such amendment and supplement thereto (including in each case all exhibits), and of any Prospectus in conformity with the requirements of the Securities Act, and such other documents, as such selling security holders may reasonably request; (d) use its reasonable best efforts to register or qualify the securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions within the United States and Puerto Rico as each Holder of such securities shall reasonably request, to keep such registration or qualification in effect for so long as such Registration Statement remains in effect, and to take any other action which may be reasonably necessary to enable such seller to consummate the disposition in such jurisdictions of the securities owned by such Holder (provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business, subject itself to taxation in or to file a general consent to service of process in any jurisdiction wherein it would not but for the requirements of this paragraph (d) be obligated to do so; and provided further that the Company shall not be required to qualify such Registrable Securities in any jurisdiction in which the securities regulatory authority requires that any Holder submit any shares of its Registrable Securities to the terms, provisions and restrictions of any escrow, lockup or similar agreement(s) for consent to sell Registrable Securities in such jurisdiction unless such Holder agrees to do so), and do such other reasonable acts and things as may be required 8 of it to enable such Holder to consummate the disposition in such jurisdiction of the securities covered by such Registration Statement; (e) furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to Section 3 or 4, if the method of distribution is by means of an underwriting, on the date that the shares of Registrable Securities are delivered to the underwriters for sale pursuant to such registration, or if such Registrable Securities are not being sold through underwriters, on the date that the Registration Statement with respect to such shares of Registrable Securities becomes effective, (1) a signed opinion, dated such date, of the independent legal counsel representing the Company for the purpose of such registration, addressed to the underwriters, if any, and if such Registrable Securities are not being sold through underwriters, then to the Holders making such request, as to such matters as such underwriters or the Holders holding a majority of the Registrable Securities included in such registration, as the case may be, may reasonably request; and (2) letters dated such date and the date the offering is priced from the independent certified public accountants of the Company, addressed to the underwriters, if any, and if such Registrable Securities are not being sold through underwriters, then to the Holders making such request and, if such accountants refuse to deliver such letters to such Holders, then to the Company (i) stating that they are independent certified public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements and other financial data of the Company included in the Registration Statement comply as to form in all material respects with the applicable accounting requirements of the Securities Act and (ii) covering such other financial matters (including information as to the period ending not more than five (5) Business Days prior to the date of such letters) with respect to the registration in respect of which such letter is being given as such underwriters or the Holders holding a majority of the Registrable Securities included in such registration, as the case may be, may reasonably request and as would be customary in such a transaction; (f) enter into customary agreements (including, if the method of distribution is by means of an underwriting, an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities; (g) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make earnings statements satisfying the provisions of Section 11(a) of the Securities Act generally available to the Holders no later than 45 days after the end of any twelve-month period (or 90 days, if such period is a fiscal year) (i) commencing at the end of any fiscal quarter in which Registrable Securities are sold to underwriters in an underwritten public offering, or (ii) if not sold to underwriters in such an offering, beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Registration Statement, which statements shall cover said twelve-month periods, provided that the obligations shall be satisfied by the timely filing of quarterly and annual reports on Forms 10-Q and 10-K under the Exchange Act; 9 (h) use its reasonable best efforts to cause all such Registrable Securities to be listed on each securities exchange or quotation system on which similar securities issued by the Company are listed or traded; (i) give written notice to the Holders: (i) when such Registration Statement or any amendment thereto has been filed with the SEC and when such Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the SEC for amendments or supplements to such Registration Statement or for additional information; (iii) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Common Stock for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and (v) of the existence of any fact that results in: (A) the Registration Statement containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and (B) the Prospectus containing an untrue statement of a material fact or omitting to state a material fact necessary in order to make the statements therein not misleading (which notice shall be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made); (j) use its reasonable best efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness of such Registration Statement at the earliest possible time; (k) furnish to each Holder, without charge, at least one copy of such Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits (including those, if any, incorporated by reference); (l) upon the occurrence of any event contemplated by Section 7(i)(v) above, promptly prepare a post-effective amendment to such Registration Statement or a supplement to the related Prospectus or file any other required document so that, as thereafter delivered to the Holders, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holders in accordance with Section 7(i)(v) above to suspend the use of the Prospectus until the requisite changes to the Prospectus have been made, then 10 the Holders shall suspend use of such Prospectus and use their reasonable best efforts to return to the Company all copies of such Prospectus (at the Company's expense) other than permanent file copies then in such Holder's possession, and the period of effectiveness of such Registration Statement provided for above shall be extended by the number of days from and including the date of the giving of such notice to the date Holders shall have received such amended or supplemented Prospectus pursuant to this Section 7(l); (m) make reasonably available for inspection by representatives of the Holders, any underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other agent retained by such representative or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and cause the Company's officers, directors and employees to supply all relevant information reasonably requested by such representative or any such underwriter, attorney, accountant or agent in connection with the registration; and (n) use its reasonable best efforts to procure the cooperation of the Company's transfer agent in settling any offering or sale of Registrable Securities, including with respect to the transfer of physical stock certificates into book-entry form in accordance with any procedures reasonably requested by the Holders or the underwriters. It shall be a condition precedent to the obligation of the Company to take any action pursuant to this Agreement in respect of the Registrable Securities which are to be registered at the request of any Holder that such Holder shall furnish to the Company within ten days of the Company's request such information regarding the Registrable Securities held by such Holder and the intended method of disposition thereof as the Company shall reasonably request and as shall be required in connection with the action taken by the Company. 8. Expenses. All expenses incurred in connection with each registration pursuant to Sections 2, 3 and 4 of this Agreement, excluding underwriters' discounts and commissions, but including without limitation all registration, filing and qualification fees, word processing, duplicating, printers' and accounting fees (including the expenses of any special audits or "comfort" letters required by or incidental to such performance and compliance), fees of the NASD or listing fees, messenger and delivery expenses, all fees and expenses of complying with state securities or blue sky laws, fees and disbursements of counsel for the Company and the reasonable fees and disbursements of one counsel for the selling Holders (which counsel shall be selected by the Holders holding a majority in interest of the Registrable Securities being registered), shall be paid by the Company. 9. Rule 144 Information. (a) At all times after ninety (90) days after any Registration Statement covering securities of the Company shall have become effective, the Company agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act; and 11 (ii) use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act. (b) At all times during which the Company is neither subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, nor exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, it will provide, upon the written request of any Holder of Registrable Securities in written form (as promptly as practicable and in any event within 15 Business Days), to any prospective buyer of such stock designated by such Holder, all information required by Rule 144A(d)(4)(i) of the General Regulations promulgated by the SEC under the Securities Act. 10. Indemnification and Contribution. (a) The Company shall indemnify and hold harmless each Holder, such Holder's directors and officers, each person who participates in the offering of such Registrable Securities, including underwriters (as defined in the Securities Act), and each person, if any, who controls such Holder or participating person within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or proceedings in respect thereof) arise out of or are based on any untrue or alleged untrue statement of any material fact contained in such registration statement on the effective date thereof (including any Prospectus filed under Rule 424 under the Securities Act or any amendments or supplements thereto) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse each such Holder, such Holder's directors and officers, such participating person or controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company shall not be liable to any Holder, such Holder's directors and officers, participating person or controlling person in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in connection with such registration statement, preliminary prospectus, final prospectus or amendments or supplements thereto, in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, such Holder's directors and officers, participating person or controlling person. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any such Holder, such Holder's directors and officers, participating person or controlling person, and shall survive the transfer of such securities by such Holder. (b) Each Holder requesting or joining in a registration severally and not jointly shall indemnify and hold harmless the Company, each of its directors and officers, each person, if any, who controls the Company within the meaning of the Securities Act, and each agent and any underwriter for the Company (within the meaning of the Securities Act) against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director, officer, controlling person, agent or underwriter may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or proceedings 12 in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in such registration statement on the effective date thereof (including any Prospectus filed under Rule 424 under the Securities Act or any amendments or supplements thereto) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in such registration statement, preliminary or final prospectus, or amendments or supplements thereto, in reliance upon and in conformity with written information furnished by or on behalf of such Holder expressly for use in connection with such registration; and each such Holder shall reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling Person, agent or underwriter in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the liability of each Holder hereunder shall be limited to the aggregate net proceeds received by such Holder in connection with any such registration under the Securities Act. (c) If the indemnification provided for in this Section 10 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. If the allocation provided in this paragraph (c) is not permitted by applicable law, the parties shall contribute based upon the relevant benefits received by the Company from the initial offering of the Registrable Securities on the one hand and the net proceeds received by the Holders from the sale of Registrable Securities on the other. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 10(c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. (d) Any Person entitled to indemnification hereunder (the "Indemnified Party") agrees to give prompt written notice to the indemnifying party (the "Indemnifying Party") after the receipt by the Indemnified Party of any written notice of the commencement of 13 any action, suit, proceeding or investigation or threat thereof made in writing for which the Indemnified Party intends to claim indemnification or contribution pursuant to this Agreement; provided that the failure so to notify the Indemnified Party shall not relieve the Indemnifying Party of any liability that it may have to the Indemnifying Party hereunder unless such failure is materially prejudicial to the Indemnifying Party. If notice of commencement of any such action is given to the Indemnifying Party as provided above, the Indemnifying Party shall be entitled to participate in and, to the extent it may wish, to assume the defense of such action at its own expense, with counsel chosen by it and reasonably satisfactory to such Indemnified Party. The Indemnified Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be paid by the Indemnified Party unless (i) the Indemnifying Party agrees to pay the same, (ii) the Indemnifying Party fails to assume the defense of such action, or (iii) the named parties to any such action (including any impleaded parties) have been advised by such counsel that either (A) representation of such Indemnified Party and the Indemnifying Party by the same counsel would be inappropriate under applicable standards of professional conduct or (B) there are one or more legal defenses available to it which are substantially different from or additional to those available to the Indemnifying Party. No Indemnifying Party shall be liable for any settlement entered into without its written consent, which consent shall not be unreasonably withheld. (e) The agreements contained in this Section 10 shall survive the transfer of the Registration Statement and shall remain in full force and effect, regardless of any investigation made by or on behalf of any Holder or such director, officer or participating or controlling Person. 11. Certain Additional Limitations on Registration Rights. Notwithstanding the other provisions of this Agreement, the Company shall not be obligated to register the Registrable Securities of any Holder (i) if such Holder or any underwriter of such Registrable Securities shall fail to furnish to the Company necessary information in respect of the distribution of such Registrable Securities, or (ii) if such registration involves an underwritten offering, such Registrable Securities are not included in such underwritten offering on the same terms and conditions as shall be applicable to the other securities being sold through underwriters in the registration or such Holder fails to enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwritten offering. 12. Limitations on Registration of Other Securities; Representation. From and after the date of this Agreement, the Company shall not, without the prior written consent of a majority-in-interest of the Holders, enter into any agreement with any holder or prospective holder of any securities of the Company giving such holder or prospective holder any registration rights the terms of which are as or more favorable taken as a whole than the registration rights granted to the Holders hereunder unless the Company shall also give such rights to the Holders hereunder. 13. No Inconsistent Agreements. The Company will not hereafter enter into any agreement, with respect to its securities, which is inconsistent in any material respects with the rights granted to the Holders in this Agreement. 14 14. Selection of Managing Underwriters. In the event the Participating Demand Holders have requested an underwritten offering, the underwriter or underwriters shall be selected by the Holders of a majority of the Registrable Securities proposed to be sold in such Demand Registration and shall be approved by the Company, which approval shall not be unreasonably withheld or delayed, provided (i) that all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of such Holders of Registrable Securities, (ii) that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement shall be conditions precedent to the obligations of such Holders of Registrable Securities, and (iii) that no Holder shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Holder, the Registrable Securities of such Holder and such Holder's intended method of distribution and any other representations required by law or reasonably required by the lead underwriter. Subject to the foregoing, all Holders proposing to distribute Registrable Securities through such underwritten offering shall enter into an underwriting agreement in customary form with the underwriter or underwriters. Subject to the provisions of Section 9(b), if any Holder of Registrable Securities disapproves of the terms of the underwriting, such Holder may elect to withdraw all its Registrable Securities by written notice to the Company, the managing underwriter and the other Holders participating in such registration. The securities so withdrawn shall also be withdrawn from registration. 15. Miscellaneous. (a) Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of the Agreement was not performed in accordance with the terms hereof and that the parties hereto shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or in equity. (b) Amendments; Waivers. (i) This Agreement may be amended, modified or supplemented by a written instrument signed by the Company and a majority in interest of the New Holders; provided, however, that no amendment, modification or supplement may materially and adversely affect any other Holder without such Holder's written consent. The Company shall notify all Holders promptly after any such amendment, modification or supplement shall have taken effect. (ii) No failure or delay by any party in exercising any right, power or privilege hereunder (other than a failure or delay beyond a period of time specified herein) shall operate as a waiver thereof and no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. (c) Notice Generally. All notices, request, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses: 15 (i) If to any Holder, at its last known address appearing on the books of the Company maintained for such purpose. (ii) If to the Company, at: Aegis Communications Group, Inc. 7880 Bent Branch Drive Suite 150 Irving, Texas 75063 Attn: Herman M. Schwarz Facsimile: (678) 433-6502 with a copy to: Hughes & Luce, LLP 1717 Main Street Suite 2800 Dallas, Texas 75201 Attn: David G. Luther Facsimile: (214) 939-5849 or at such other address as may be substituted by notice given as herein provided. (d) Successors and Assigns; Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto as hereinafter provided. The registration rights of any Holder with respect to any Registrable Securities shall be transferred to any Person who is the transferee of such Registrable Securities. All of the obligations of the Company hereunder shall survive any such transfer. Except as provided in Sections 3, 4 and 10, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement. (e) Headings. The headings and subheadings in this Agreement are included for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof. (f) Governing Law; Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. (i) Any claim, action, suit or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby may be heard and determined in any New York state or federal court sitting in The City of New York, County of Manhattan, and each of the parties hereto hereby consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom in any such claim, action, suit or proceeding) and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any such claim, action, suit or proceeding in any such court or that any such claim, action, suit or proceeding that is brought in any such court has been brought in an inconvenient forum. 16 (ii) Subject to applicable law, process in any such claim, action, suit or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing and subject to applicable law, each party agrees that service of process on such party as provided in Section 15(c) shall be deemed effective service of process on such party. Nothing herein shall affect the right of any party to serve legal process in any other manner permitted by law or at equity. WITH RESPECT TO ANY SUCH CLAIM, ACTION, SUIT OR PROCEEDING IN ANY SUCH COURT, EACH OF THE PARTIES IRREVOCABLY WAIVES AND RELEASES TO THE OTHER ITS RIGHT TO A TRIAL BY JURY, AND AGREES THAT IT WILL NOT SEEK A TRIAL BY JURY IN ANY SUCH PROCEEDING. (g) Severability. If, at any time, any provision hereof is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions hereof nor the legality, validity or enforceability of such provision under the law of any other jurisdiction shall in any way be affected or impaired thereby. (h) Entire Agreement. This Agreement, the Purchase Agreement, the Notes and the Warrants constitute the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto. (i) Cumulative Remedies. The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive its right to use any or all other remedies. Such rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise. (j) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. [Signature appears on next page] 17 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. AEGIS COMMUNICATIONS GROUP, INC. By: /s/ Herman M. Schwarz ----------------------------------------- Name: Herman M. Schwarz Title: President and CEO 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 18 QUESTOR: QUESTOR PARTNERS FUND II, L.P. By: /s/ Dean Anderson ------------------------------------- Name: Questor General Partner II, L.P., its General Partner Title: Managing Director By: /s/ Dean Anderson ------------------------------------ Name: Questor Principals II, Inc., its General Partner Title: Managing Director QUESTOR SIDE-BY-SIDE PARTNERS II, L.P. By: /s/ Dean Anderson ------------------------------------ Name: Questor Principals II, Inc. Title: Managing Director QUESTOR SIDE-BY-SIDE PARTNERS II 3(C)(1), L.P. By: /s/ Dean Anderson ------------------------------------ Name: Questor Principals II, Inc. Title: Managing Director 19 TC CO-INVESTORS, LLC Name: TC Management Partners, LLC a Delaware limited liability company, its General Partner By: /s/ Christopher M. Temple -------------------------------- Title: An Authorized Officer Name: Christopher M. Temple THAYER EQUITY INVESTORS III, L.P. Name: TC Equity Partners, LLC a Delaware limited liability company, its General Partner By: /s/ Christopher M. Temple -------------------------------- Title: An Authorized Officer Name: Christopher M. Temple 20 EDWARD BLANK By: /s/ Edward Blank ------------------------------------- Name: Edward Blank THE EDWARD BLANK 1995 GRANTOR RETAINED ANNUITY TRUST By: /s/ Allen B. Levithan ------------------------------------- Name: Allen B. Levithan Title: Trustee 21 EX-4 6 ex4.txt STOCKHOLDERS AGREEMENT EXHIBIT 4 STOCKHOLDERS AGREEMENT By and Among AEGIS COMMUNICATIONS GROUP, INC., CERTAIN STOCKHOLDERS As Identified herein, DEUTSCHE BANK AG - LONDON Acting Through DB ADVISORS, LLC As Investment Advisor, AND ESSAR GLOBAL LIMITED Dated as of November 5, 2003 TABLE OF CONTENTS ----------------- Page ---- 1. SALES TO THIRD PARTIES..................................................1 1.1 SALES TO THIRD PARTIES.........................................1 1.2 RIGHT OF FIRST OFFER...........................................1 1.3 INVOLUNTARY TRANSFERS..........................................2 2. ELECTION OF DIRECTORS...................................................3 2.1 BOARD MAKE-UP..................................................3 2.2 IRREVOCABLE PROXY..............................................3 2.3 MAJOR DECISIONS................................................4 3. STOCK CERTIFICATE LEGEND................................................5 4. COVENANTS; REPRESENTATIONS AND WARRANTIES...............................6 4.1 NO OTHER ARRANGEMENTS OR AGREEMENTS............................6 4.2 ADDITIONAL REPRESENTATIONS AND WARRANTIES......................7 4.3 AFFILIATE TRANSACTIONS.........................................7 4.4 PREFERRED STOCK CONVERSION.....................................7 5. AMENDMENT AND MODIFICATION..............................................8 6. PARTIES.................................................................8 6.1 ASSIGNMENT BY THE COMPANY......................................8 6.2 ASSIGNMENT GENERALLY...........................................8 6.3 TERMINATION....................................................8 6.4 AGREEMENTS TO BE BOUND.........................................9 7. RECAPITALIZATIONS, EXCHANGES, ETC.......................................9 8. FURTHER ASSURANCES......................................................9 9. GOVERNING LAW...........................................................9 i 10. INVALIDITY OF PROVISION.................................................9 11. WAIVER.................................................................10 12. NOTICES................................................................10 13. HEADINGS; EXECUTION IN COUNTERPART.....................................11 14. COUNTERPARTS...........................................................11 15. ENTIRE AGREEMENT.......................................................11 16. INJUNCTIVE RELIEF......................................................11 17. MISCELLANEOUS..........................................................12 18. DEFINED TERMS..........................................................12 ii This STOCKHOLDERS AGREEMENT (this "Agreement"), is made effective as of November 5, 2003, by and among Aegis Communications Group, Inc., a Delaware corporation (the "Company"), Questor Partners Fund II, L.P., a Delaware limited partnership ("Fund II"), Questor Side-by-Side Partners II, L.P., a Delaware limited partnership (the "Side-By-Side Fund"), Questor Side-by-Side Partners II 3(c)(1), L.P., a Delaware limited partnership (the "3(C)(1) Fund", and together with Fund II and the Side-by-Side Fund, "Questor"), Thayer Equity Investors III, L.P., a Delaware limited partnership ("Thayer Equity"), TC Co-Investors, LLC, a Delaware limited liability company ("TC Co-Investors", and together with Thayer Equity, "Thayer" and together with Questor, the "Existing Stockholders"), Deutsche Bank AG - London acting through DB Advisors, LLC as investment advisor ("DB") and Essar Global Limited ("Essar") (DB and Essar, collectively, the "New Stockholders"). The Existing Stockholders and New Stockholders are herein referred to collectively as the "Stockholders." Capitalized terms used herein without definition are defined in Section 18. The parties hereto agree as follows: 1. SALES TO THIRD PARTIES. 1.1 SALES TO THIRD PARTIES. Any Stockholder may Transfer all or a portion of its Equity Securities to a third party, provided that such Transfer is made in compliance with the provisions of Section 1.2 (Right of First Offer) and Section 6.4 (Agreements to Be Bound). Any Stockholder may Transfer all or a portion of its Equity Securities to an Affiliate, provided that such Transfer is made in compliance with Section 6.4 (Agreements to Be Bound). For the purposes of Section 1.2, a Transfer to a "third party" shall not include a Transfer to any New Stockholders Assignee or Existing Stockholders Assignee or a Transfer in a Public Sale (it being understood that there shall be no restriction on any Transfer in a Public Sale). 1.2 RIGHT OF FIRST OFFER. (a) PROCEDURE. If any Existing Stockholder (the "Selling Stockholder") desires to Transfer any Equity Securities (other than any Transfers referred to in the second or final sentence of Section 1.1), then prior to Transferring such Equity Securities to any third party or parties, the Selling Stockholder shall deliver to each of the New Stockholders a letter (the "Sale Notice") signed by it setting forth: (i) the number of Equity Securities such Selling Stockholder wishes to Transfer; (ii) the material terms and conditions on which such Selling Stockholder wishes to Transfer such shares, including, without limitation, the purchase price per security of Equity Securities; and (iii) such Selling Stockholder's offer (irrevocable by its terms for 15 days following receipt) to Transfer to the New Stockholders all (but not less than all) of such Equity Securities, for a purchase price and on the other terms and conditions set forth in subparagraph (ii) of this Section 1.2(a). Within 15 days of receipt of the Sale Notice, the New Stockholders may agree to purchase in the aggregate all of the Equity Securities covered by the Sale Notice, and (A) individually, that portion of such Equity Securities offered by the Selling Stockholder equal to their pro rata interest in the Company relative to each other (based on the percentage of outstanding Common Stock Equivalents owned by each of them on the date of the Sale Notice), (B) such other portion of such Equity Securities as the New Stockholders may agree upon or (C) in the event either of the New Stockholders does not exercise such right, all of the Equity Securities offered to such declining New Stockholder by the Selling Stockholder in amounts determined pursuant to subclause (A) or (B) above without regard to such declining New Stockholders, by delivering written notice to such effect to the Selling Stockholder setting forth closing arrangements and a closing date not less than 30 nor more than 90 days following the delivery of such notice (or such later date as is necessary to obtain all requisite governmental and regulatory approvals and consents). (b) EFFECTING SALES. If, upon the expiration of 15 days following receipt by the New Stockholders of the Sale Notice, none of the New Stockholders shall have agreed to purchase all of the Equity Securities covered by the Sale Notice, the Selling Stockholder may sell to a third party or parties all, but not less than all, of the Equity Securities covered by the Sale Notice for at least 95% of the price and upon substantially the same other terms and conditions as contained in the Sale Notice; provided that the Selling Stockholder and the third party execute a binding purchase agreement (subject to customary closing conditions) within 90 days after the expiration of such 15 day period and consummate the closing thereunder within 120 days (or such later date as is necessary to obtain all requisite governmental and regulatory approvals and consents) from the execution of the binding purchase agreement. If the New Stockholders shall have agreed to purchase the Equity Securities covered by the Sale Notice, then the sale of such Equity Securities shall be consummated as soon as practicable after the delivery of a notice of acceptance by the Selling Stockholder, but in any event within 90 days of the delivery of the Sale Notice (or such later date as is necessary to obtain all requisite governmental and regulatory approvals and consents). The New Stockholders shall have the right to assign to one or more New Stockholders Assignees all or any of their rights to purchase Equity Securities pursuant to this Section 1.2. (c) Notwithstanding anything to the contrary herein, the rights granted to and obligations imposed on the New Stockholders and the New Stockholders Assignees, on the one hand, and the Existing Stockholders and the Existing Stockholders Assignees, on the other hand, pursuant to this Section 1.2 shall terminate upon the third anniversary of the date of this Agreement. (d) This Section 1.2 shall apply mutatis mutandis hereto, as if one New Stockholder, on the one hand, and the other New Stockholder, on the other hand, were the Selling Stockholder and the New Stockholders, respectively; provided, that for the avoidance of doubt, the New Stockholder that is a Selling Stockholder shall be deemed to have declined its own offer for purposes of Section 1.2(a). 1.3 INVOLUNTARY TRANSFERS. Any transfer of title or beneficial ownership of Equity Securities upon default, foreclosure, forfeit, divorce, court order or otherwise than by a voluntary decision on the part of a Stockholder (each, an "Involuntary Transfer") shall be void unless the Stockholder complies with this Section 1.3 and enables the Company to exercise in full its rights hereunder. Upon any Involuntary Transfer, the Company 2 shall have the right to purchase such Equity Securities pursuant to this Section 1.3 and the person or entity to whom such Equity Securities have been Transferred (the "Involuntary Transferee") shall have the obligation to sell such Equity Securities in accordance with this Section 1.3. Upon the Involuntary Transfer of any Equity Securities, such Stockholder shall promptly (but in no event later than two days after such Involuntary Transfer) furnish written notice (the "Notice") to the Company indicating that the Involuntary Transfer has occurred, specifying the name of the Involuntary Transferee, giving a detailed description of the circumstances giving rise to, and stating the legal basis for, the Involuntary Transfer. Upon the receipt of the Notice, and for 60 days thereafter, the Company shall have the right to purchase, and upon exercise of such right the Involuntary Transferee shall have the obligation to sell, all (but not less than all) of the Equity Securities acquired by the Involuntary Transferee for a purchase price equal to the Market Value of such Equity Securities. 2. ELECTION OF DIRECTORS. 2.1 BOARD MAKE-UP. (a) Each Stockholder agrees that from and after the Closing such Stockholder will use his, her or its best efforts to nominate and elect and will vote all of the Equity Securities owned or held of record by him, her or it that have voting rights to elect and, thereafter for such period, to continue in office a Board consisting of ten members, three of whom shall be designated by DB (the "DB Designees"), three of whom shall be designated by Essar (the "Essar Designees"), one of whom shall be the President and Chief Executive Officer and three of whom shall be independent of DB, Essar and the Company. The persons designated pursuant to this Section 2.1 by DB and Essar may be changed from time to time by DB and Essar, respectively. If the directors are to be elected in staggered terms, the number of nominees designated by DB and Essar for each such term shall equal the total number of DB Designees or Essar Designees, respectively, divided by the number of such terms and rounded up to the nearest whole number. (b) The number of DB Designees and Essar Designees will be subject to reduction as provided in this Section 2.1(b). With respect to DB or Essar, respectively, upon the occurrence of (i) the First Break Point with respect to DB or Essar, as the case may be, the number of DB Designees or Essar Designees, respectively, will be reduced to two such designees, (ii) the Second Break Point with respect to DB or Essar, as the case may be, the number of DB Designees or Essar Designees, respectively, will be reduced to one such designee and (iii) the Third Break Point with respect to DB or Essar, as the case may be, the number of DB Designees or Essar Designees, respectively, will be reduced to zero such designees. As soon as practicable after the occurrence of any reduction in the number of DB Designees or Essar Designees, respectively, pursuant to clauses (i), (ii) or (iii) in the immediately preceding sentence, DB or Essar, respectively, shall use reasonable best efforts to cause the resignation of the number of DB Designee(s) or Essar Designee(s), respectively, in excess of the number of DB Designees or Essar Designees, respectively, that it is entitled to designate pursuant to this Section 2.1(b). For the avoidance of doubt, except as explicitly indicated in this Section 2.1(b), Section 2.1(a) shall remain in full force, including the obligations of each party to vote for the directors that such other party is entitled to designate. 2.2 IRREVOCABLE PROXY. In order to effectuate Section 2.1 and, in addition to and not in lieu of Section 2.1, each Stockholder hereby grants to the Secretary of the 3 Company then in office an irrevocable proxy solely for the purpose of voting all of the Equity Securities that have voting rights and owned by the grantor of the proxy for the election of directors nominated only in accordance with Section 2.1. 2.3 MAJOR DECISIONS. (a) Each Stockholder agrees that from and after the Closing such Stockholder will use his, her or its best efforts, and, where applicable, will vote all of the Equity Securities owned or held of record by him, her or it that have voting rights, to cause the By-laws of the Company to require that (i) at all meetings of the Board a majority of the number of directors shall constitute a quorum for the transaction of business; provided that such majority of directors include at least one independent director (so long as there is more than one independent director serving on the board), at least one DB Designee and at least one Essar Designee unless and until the Third Break Point occurs with respect to DB or Essar, as the case may be, (ii) any committee of the Board be constituted so that the number of DB Designees and Essar Designees on any such committee be as nearly as possible in the same proportion as the number of DB Designees and Essar Designees on the entire Board unless prohibited by applicable law or listing standards; provided that any committee of the Board shall at all times have a minimum of one DB Designee and one Essar Designee, unless and until the Third Break Point occurs with respect to DB or Essar, as the case may be and (iii) any Major Decision (as defined below) be approved by the affirmative vote of not less than three-fourths of the directors then serving on the Board; provided that, unless and until the First Break Point occurs, such Major Decision also be approved by each of at least one DB Designee and at least one Essar Designee. (b) The term "Major Decision" means any decision by the Board with respect to any of the following matters: (i) issuing any shares or any security, including any indebtedness, convertible into shares, or any other form of equity in the Company or any subsidiary of the Company, other than (A) granting options to directors or employees of the Company pursuant to any incentive or other benefit plan adopted by the Board, (B) issuing shares of Common Stock pursuant to the exercise of such options or any other securities outstanding on the date hereof and (C) issuing shares of Common Stock or any security, including any indebtedness, convertible into shares of Common Stock, or any other form of equity in the Company, in one or more offerings (excluding any issuances referred to in (A) or (B) above); (ii) adoption of any stock-based employee benefit plan; (iii) incurring indebtedness or entering into guarantees for borrowed money (excluding trade payables incurred in the ordinary course of business) in excess of $2,500,000 in any twelve consecutive month period, provided, however, that the Board may approve pursuant to this Section 2.3(b)(iii) a revolving credit or similar borrowing facility together with subsequent draw-downs under such facility without obtaining separate Board approval for each such draw-down; 4 (iv) selling, leasing, pledging or granting a security interest or encumbrance in all or substantially all of the Company's or any subsidiary of the Company's assets, except in connection with the incurrence of indebtedness for borrowed money that does not involve a Major Decision under the preceding paragraph; (v) acquiring (whether through an asset purchase, merger, equity purchase or otherwise) any assets (excluding acquisitions of raw materials and supplies in the ordinary course of business) having a value, individually or in the aggregate for any series of related transactions, in excess of $2,000,000; (vi) selling or otherwise disposing of any assets (excluding sales or other dispositions of inventory in the ordinary course of business) having a value, individually or in the aggregate for any series of related transactions, in excess of $2,000,000; (vii) amending the By-laws or the Certificate of Incorporation of the Company; (viii) any Change in Control Transaction; (ix) executing or delivering any assignment for the benefit of creditors of the Company; (x) filing any voluntary petition in bankruptcy or receivership with respect to the Company; (xi) taking any action while there is a vacancy on the Board, including without limitation the filling of such vacancy except in accordance with the terms of this Agreement; or (xii) changing the size or composition of the Board except in accordance with this Agreement. 3. STOCK CERTIFICATE LEGEND. A copy of this Agreement shall be filed with the Secretary of the Company and kept with the records of the Company. Each certificate representing shares of Common Stock owned by the Stockholders shall bear upon its face the following legends, as appropriate: (i) "THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL TO THE STOCKHOLDER, 5 WHICH COUNSEL MUST BE, AND THE FORM AND SUBSTANCE OF WHICH OPINION ARE, REASONABLY SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS EXEMPT FROM REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE ACT AND SUCH LAWS." (ii) "THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND OTHER CONDITIONS, AS SPECIFIED IN THE STOCKHOLDERS' AGREEMENT OF THE ISSUER DATED AS OF NOVEMBER 5, 2003 (THE "STOCKHOLDERS' AGREEMENT"), COPIES OF WHICH ARE ON FILE AT THE OFFICE OF THE ISSUER AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF SUCH SHARES UPON WRITTEN REQUEST AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS, IN THE OPINION OF COUNSEL TO THE STOCKHOLDER, WHICH COUNSEL MUST BE, AND THE FORM AND SUBSTANCE OF SUCH OPINION ARE, REASONABLY SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS IN COMPLIANCE WITH THE STOCKHOLDERS' AGREEMENT." In addition, certificates representing shares of Common Stock owned by residents of certain states shall bear any legends required by the laws of such states. All Stockholders shall be bound by the requirements of such legends. 4. COVENANTS; REPRESENTATIONS AND WARRANTIES. 4.1 NO OTHER ARRANGEMENTS OR AGREEMENTS. Each Stockholder hereby represents and warrants to the Company and to each other Stockholder that he or she has not entered into or agreed to be bound by any other arrangements or agreements of any kind that conflict with this Agreement. Each Stockholder agrees that, except as expressly permitted under this Agreement, he, she or it will not enter into any such other arrangements or agreements as he, she or it has represented and warranted to above with any other party as long as any of the terms of this Agreement, the Note and Warrant Purchase Agreement and the Registration Rights Agreement remain in effect. Upon the execution of this Agreement, each of the Stockholders and Voting Agreement dated as of August 25, 1999 among Questor and the stockholders listed on Schedule A thereto and the Stockholders Agreement dated December 10, 1999 among Questor, Thayer and the Company shall terminate and have no further force and effect whatsoever. 6 4.2 ADDITIONAL REPRESENTATIONS AND WARRANTIES. (a) Each Stockholder represents and warrants to the Company and each other Stockholder that: (i) such Stockholder has the power, authority and capacity (or, in the case of any Stockholder that is a corporation, trust or limited partnership, all corporate, trust or limited partnership power and authority, as the case may be) to execute, deliver and perform this Agreement; (ii) in the case of a Stockholder that is a corporation, trust or limited partnership, the execution, delivery and performance of this Agreement by such Stockholder has been duly and validly authorized and approved by all necessary corporate, trust or limited partnership action, as the case may be; (iii) this Agreement has been duly and validly executed and delivered by such Stockholder and constitutes a valid and legally binding obligation of such Stockholder, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to creditors' rights generally and general principles of equity; and (iv) the execution, delivery and performance of this Agreement by such Stockholder does not and will not violate the terms of or result in the acceleration of any obligation under (A) any material contract, commitment or other material instrument to which such Stockholder is a party or by which such Stockholder is bound or (B) in the case of a Stockholder that is a corporation, trust or limited partnership, the certificate of incorporation, certificate of limited partnership, by-laws, limited partnership agreement or other organizational documents, as the case may be. 4.3 AFFILIATE TRANSACTIONS. Each of the New Stockholders hereby agrees not to, and to cause each of its Affiliates not to, engage in any transaction with the Company or any subsidiary or Affiliate of the Company unless each such transaction is on terms that could be obtained on an arm's length, commercially reasonable basis from unrelated parties. 4.4 PREFERRED STOCK CONVERSION. (a) As of the date hereof, Questor agrees to and hereby does convert (i) 9,058.42 shares of Series E Preferred Stock of the Company, representing all of its Series E Preferred Stock immediately prior to such conversion, into 381,407.11 shares of Common Stock of the Company in accordance with the conversion rate set forth in the certificate of designation governing the Series E Preferred Stock and (ii) 23,375 shares of Series F Preferred Stock of the Company, representing 50% of Questor's Series F Preferred Stock immediately prior to such conversion, into 34,527,594.305 shares of Common Stock of the Company in accordance with the conversion rate set forth in the certificate of designation governing the Series F Preferred Stock. As of the Subsequent Closing Date (as defined in the Purchase Agreement) Questor agrees to and will convert its remaining 23,375 shares of Series F Preferred Stock of the Company into 46,910,503 shares of Common Stock of the Company in accordance with the conversion rate set forth in the then-effective certificate of designation governing the Series F Preferred Stock, subject to completion of the Preferred Stock Amendment (as defined in the Purchase Agreement) and the satisfaction of the Thayer Condition (as defined in the Purchase Agreement). 7 (b) Questor hereby waives all of its rights under the certificate of designations of the Series F Preferred Stock other than the rights set forth in Sections 6(a), 7(a) through (c), 7(e), 7(f), 7(i) through (j), and 7(p) through (t). The Company hereby agrees with Questor to complete and cause to become effective the Preferred Stock Amendment (as defined in the Purchase Agreement). Thayer hereby agrees with Questor to cause the Thayer Condition (as defined in the Purchase Agreement) to be satisfied. If the Company changes (or establishes a record date for changing) the number of shares of Common Stock issued and outstanding prior to the Subsequent Closing Date (as defined in the Purchase Agreement) as a result of a stock split, stock dividend, recapitalization, subdivision, reclassification, combination, exchange of shares or similar transaction with respect to the outstanding shares of Common Stock, then the number of shares into which the Series F Preferred (as defined in the Purchase Agreement) shall be convertible pursuant to the Preferred Stock Amendment shall be appropriately adjusted to preserve the percentage ownership of the Common Stock that the holders of the Series F Preferred would otherwise obtain if the Preferred Stock Amendment were effected and the Series F Preferred outstanding immediately after the Closing were converted on the date hereof. 5. AMENDMENT AND MODIFICATION. This Agreement may not be amended, modified or supplemented except by a written instrument signed by each of the parties hereto and, in the case of an amendment, modification or supplement that would materially and adversely affect any other Stockholder, any such other Stockholder. The Company shall notify all Stockholders promptly after any such amendment, modification or supplement shall have taken effect. 6. PARTIES. 6.1 ASSIGNMENT BY THE COMPANY. If the Company has not exercised in full its right to purchase Equity Securities pursuant to Section 1.3 within 30 days of receipt by the Company of the Notice giving rise to such right, then the New Stockholders (other than any New Stockholders subject to such Involuntary Transfer) shall have the right to require the Company to assign to such New Stockholders such right to purchase those Equity Securities not being purchased by the Company. The New Stockholders shall have the right to assign to one or more of the New Stockholders Parties all or any of their rights to purchase Equity Securities pursuant to this Section 6.1. 6.2 ASSIGNMENT GENERALLY. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns, provided that the Company may not assign any of its rights or obligations hereunder without the consent of the New Stockholders and provided, further, that no Stockholder may assign any of its rights or obligations hereunder without the prior written consent of the New Stockholders, unless such assignment is in connection with a Transfer explicitly permitted by this Agreement and, prior to such assignment, such assignee complies with the requirements of Section 6.4. 6.3 TERMINATION. Any party to, or person who is subject to, this Agreement which ceases to own Equity Securities or any interest therein, shall cease to be a party to, or person who is subject to, this Agreement and thereafter shall have no rights or obligations hereunder, provided, however, that a Transfer of Equity Securities not explicitly 8 permitted under this Agreement shall not relieve a Stockholder of any of his or her obligations hereunder. Notwithstanding the foregoing, in connection with a Transfer to an Affiliate explicitly permitted by this Agreement, prior to any such Person ceasing to be an Affiliate of the Stockholder from whom such Person acquired its Equity Securities, such Person shall be obligated to transfer such Equity Securities back to such original Stockholder and such original Stockholder shall thereupon again be subject to this Agreement. Notwithstanding any other provision in this Agreement, this Agreement shall terminate and be of no further force or effect at such time as each of the New Stockholders Parties beneficially own less than 5% of the outstanding Equity Securities. 6.4 AGREEMENTS TO BE BOUND. Notwithstanding anything to the contrary contained in this Agreement, any Transfer of Equity Securities by a Stockholder (other than pursuant to a Public Sale) shall be permitted under the terms of this Agreement only if the transferee of such Stockholder shall agree in writing to be bound by the terms and conditions of this Agreement pursuant to an instrument of assumption reasonably satisfactory in substance and form to the New Stockholders, and, in the case of a transferee who is an individual and who resides in a state with a community property system, such transferee causes his or her spouse, if any, to execute a Spousal Waiver in the form of Exhibit A attached hereto. Upon the execution of the instrument of assumption by such transferee and, if applicable, the Spousal Waiver by the spouse of such transferee, such transferee shall have the rights and be subject to all of the restrictions and obligations of his or her transferor hereunder. 7. RECAPITALIZATIONS, EXCHANGES, ETC. Except as otherwise provided herein, the provisions of this Agreement shall apply to the full extent set forth herein with respect to (A) the Equity Securities and (B) any and all shares of capital stock of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for, or in substitution for the Equity Securities by reason of any stock dividend, split, reverse split, combination, recapitalization, reclassification, merger, consolidation or otherwise. All share numbers and percentages shall be proportionately adjusted to reflect any stock split, stock dividend or other subdivision or combination effected after the date hereof. Except as otherwise provided herein, this Agreement is not intended to confer upon any person, except for the parties hereto, any rights or remedies hereunder. 8. FURTHER ASSURANCES. Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments and documents as any other party hereto or person subject hereto may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 9. GOVERNING LAW. This Agreement and the rights and obligations of the parties hereunder and the persons subject hereto shall be governed by, and construed and interpreted in accordance with, the laws of the State of Delaware, without giving effect to the choice of law principles thereof. 10. INVALIDITY OF PROVISION. The invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability 9 of the remainder of this Agreement in that jurisdiction or the validity or enforceability of this Agreement, including that provision, in any other jurisdiction. 11. WAIVER. Waiver by any party hereto of any breach or default by the other party of any of the terms of this Agreement shall not operate as a waiver of any other breach or default, whether similar to or different from the breach or default waived. No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by either party to assert its or his or her rights hereunder on any occasion or series of occasions. 12. NOTICES. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (A) delivered personally, (B) mailed, certified or registered mail with postage prepaid, (C) sent by next-day or overnight mail or delivery or (D) sent by fax, as follows (or to such other address as the party entitled to notice shall hereafter designate in accordance with the terms hereof): (i) If to the Company, to it at: Aegis Communications Group, Inc. 7880 Bent Branch Drive Suite 150 Irving, Texas 75063 Fax: (972) 868-0396 Attention: Chief Executive Officer with a copy to Questor and Thayer at their addresses set forth below. (ii) If to Thayer, to it at: Thayer Capital Management Partners 1455 Pennsylvania Avenue, N.W. Suite 350 Washington, D.C. Fax: (202) 371-0391 Attention: (iii) If to Questor, to it at: c/o Organization Services, Inc. 3411 Silverside Road Wilmington, Delaware 19810 Fax: (302) 478-3667 Attention: Gilbert Warren With a copy to: Questor Management Company 10 4000 Town Center Suite 530 Southfield, Michigan 48075 Fax: (248) 213-2200 Attention: President (iv) if to the New Stockholders: DB Advisors, LLC 280 Park Avenue, 9th Floor New York, NY 10017 Facsimile: Attention: Essar Global Limited 145 East 48th Street (PH) New York, NY 10017 Facsimile: (212) 758-5860 Attention: All such notices, requests, demands, waivers and other communications shall be deemed to have been received (A) if by personal delivery on the day after such delivery, (B) if by certified or registered mail, on the fifth business day after the mailing thereof, (C) if by next-day or overnight mail or delivery, on the day delivered, or (D) if by fax, on the next day following the day on which such fax was sent, provided that a copy is also sent by certified or registered mail. 13. HEADINGS; EXECUTION IN COUNTERPART. The headings to sections in this Agreement are for the convenience of the parties only and shall not control or affect the meaning or construction of any provision hereof. 14. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 15. ENTIRE AGREEMENT. This Agreement, the Note and Warrant Purchase Agreement and the Registration Rights Agreement constitute the entire agreement and understanding of the parties hereto with respect to the matters referred to herein. This Agreement and the agreements referred to in the preceding sentence supersede all prior agreements and understandings among the parties with respect to such matters. 16. INJUNCTIVE RELIEF. The parties hereto agree that the Company and the Stockholders will be irreparably damaged in the event this Agreement is not specifically enforced. Each of the parties therefore agrees that in the event of a breach of any provision of this Agreement, the aggrieved party may elect to institute and prosecute proceedings in any court of competent jurisdiction to enforce specific performance or to enjoin the continuing breach of this Agreement. Such remedies shall be cumulative and not exclusive, and shall be in addition to any other remedy which the Company or any Stockholder may have. Each Stockholder hereby 11 irrevocably submits to the non-exclusive jurisdiction of the state and federal courts in New York for the purposes of any suit, action or other proceeding arising out of or based upon this Agreement or the subject matter hereof. Each Stockholder hereby consents to service of process made in accordance with Section 12. 17. MISCELLANEOUS. All references in this Agreement to Sections of or Rules under the Securities Act or the Exchange Act are intended to include, and shall be deemed to include, references to all successor Sections and Rules which are intended to replace the Sections and Rules herein referenced. 18. DEFINED TERMS. As used in this Agreement, the following terms shall have the meanings ascribed to them below: "Affiliate" means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified, including, without limitation, with regard to the New Stockholders or the Existing Stockholders, any partner or member of the New Stockholders or the Existing Stockholders, respectively; provided that no Person shall be deemed to be an Affiliate of another Person solely as a result of this Agreement, the Note and Warrant Purchase Agreement and the Registration Rights Agreement or the other agreements contemplated thereby, or solely as a result of the ownership of Common Stock Equivalents. "Beneficially own" has the meaning given in Rule 13d-3 under the Exchange Act. "Board" means the board of directors of the Company. "Change in Control Transaction" means any of the following: (a) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than the Company, or any of its Subsidiaries or any Investor or Excluded Group (an "Acquiring Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of the combined voting power or economic interests of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that any transfer from any Investor or Excluded Group will not result in a Change in Control if such transfer was part of one or a series of related transactions the effect of which, absent the transfer to such Acquiring Person by the Investor or Excluded Group, would not have resulted in the acquisition by such Acquiring Person of 35% or more of the combined voting power or economic interests of the then outstanding voting securities; or (b) the individuals who at the beginning of any 12 consecutive month period following the Closing constituted a majority of the directors of the Company (the "Incumbent Majority") cease for any reason to constitute at least a majority of such directors; provided that (I) any individual becoming a director whose election, or nomination for election by the Company's stockholders 12 pursuant to this Agreement, was approved by a vote of the stockholders having the right to designate such director pursuant to this Agreement and (II) any director whose election to the Board or whose nomination for election by the stockholders of the Company was approved by the Incumbent Majority, shall, in each such case, be considered as though such individual were a member of the Incumbent Majority, but excluding, as a member of the Incumbent Majority, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Company (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) and further excluding any person who is an affiliate or associate of an Acquiring Person having or proposing to acquire beneficial ownership of 25% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; or (c) the approval by the stockholders of the Company of a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the respective beneficial owners of the voting securities of the Company or its parent immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, more than 51% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the Company or its parent resulting from such reorganization, merger or consolidation; or (d) the sale or other disposition of assets representing 50% or more of the assets of the Company and its subsidiaries in one transaction or series of related transactions. "Closing" means the date hereof. "Common Stock" means the common stock of the Company, par value $.01 per share. "Common Stock Equivalents" means the number of shares of Common Stock owned beneficially or of record by the New Stockholders or the Existing Stockholders, as the case may be, as of the date of this Agreement. In the event that any New Stockholder Party or Existing Stockholder Party acquires beneficial or record ownership of any Equity Securities after the date of this Agreement which are not Common Stock Equivalents pursuant to the immediately preceding sentence, any Equity Securities thereafter Transferred by such Person shall be deemed to be such after acquired Equity Securities until the number of such after acquired Equity Securities owned beneficially or of record by such Person has been reduced to 0. "Equity Security" means any stock or similar security of the Company or any security (including indebtedness for borrowed money) convertible or exchangeable, with or without consideration, into or for any such stock or similar security, or any security (including 13 indebtedness for borrowed money) carrying any warrant or right to subscribe to or purchase any such stock or similar security, or any such warrant or right. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Excluded Group" means a "group" (as such term is used in Rule 13d-5 of the Exchange Act) that includes one or more of the Investors, including, without limitation, for the purpose of this definition only, any party to this Agreement. "Existing Stockholders Assignee" means the Existing Stockholders and any Affiliate of any Existing Stockholders, and, in the case of any individual, such individual's spouse, parents, immediate family or lineal descendants. "Existing Stockholder Parties" means the Existing Stockholders, the Existing Stockholders Assignees and any third party other than an Involuntary Transferee or New Stockholder Party who receives Equity Securities from any Existing Stockholder or any Existing Stockholders Assignee pursuant to Section 1 of this Agreement. "First Break Point" means the time at which the Total Ownership Ratio for either DB or Essar, as the case may be, is less than 50% but greater than 25%. "Investor" means Questor or Thayer or their respective Affiliates. "Involuntary Transfer" has the meaning set forth in Section 1.3. "Market Value" means, as of any date: (i) if any Equity Securities are listed on a national securities exchange, the average of the closing prices as reported for composite transactions during the 30 consecutive trading days preceding the trading day immediately prior to such date or, if no sale occurred on a trading day, then the mean between the closing bid and asked prices on such exchange on such trading day; (ii) if any Equity Securities are traded on the Nasdaq National Market ("NMM"), the average of the closing prices as reported on the NMM during the 30 consecutive trading days preceding the trading day immediately prior to such date or, if no sale occurred on a trading day, then the mean between the highest bid and lowest asked prices as of the close of business on such trading day, as reported on the NMM; (iii) if any Equity Securities are not traded on a national securities exchange or the NMM but are otherwise traded over-the-counter, the arithmetic average (for consecutive trading days) of the mean between the highest bid and lowest asked prices as of the close of business during the 30 consecutive trading days preceding the trading day immediately prior to such date as quoted on the National Association of Securities Dealers Automated Quotation system or an equivalent generally accepted reporting service; or (iv) if there is no active market for any Equity Securities, the market value thereof as mutually agreed by the Company and a majority of the Board including a majority of the independent directors. "New Stockholders Assignee" means the New Stockholders and any Affiliate of the New Stockholders, and, in the case of any individual, such individual's spouse, parents, immediate family or lineal descendants. 14 "New Stockholders Parties" means the New Stockholders, any New Stockholders Assignee and any third party other than an Involuntary Transferee or Existing Stockholder Party who receives Equity Securities from the New Stockholders or any the New Stockholders Assignee pursuant to a Transfer to which Section 1.2 hereof applies. "Note and Warrant Purchase Agreement" means the Note and Warrant Purchase Agreement among the Company and the New Stockholders dated as of the date of this Agreement. "Person" means an individual, corporation, partnership, limited liability company, joint venture, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Public Sale" means Transfers (I) to the general public pursuant to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement, (II) to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, or (III) in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof so that all transfer restrictions and restrictive legends with respect to such Common Stock are removed upon the consummation of such Transfer and the transferor and transferee of such Common Stock receive an opinion of counsel for the Company, which shall be in form and content reasonably satisfactory to the transferor and transferee and their respective counsel, to the effect that such Common Stock in the hands of the transferee is freely transferable without restriction or registration under the Securities Act in a public or private transaction, or (IV) pursuant to Rule 144 or Rule 144A under the Securities Act; provided that a Public Sale shall not include Transfers of more than 5% of the Common Stock of the Company on a fully diluted basis by any party in one or a series of related transactions to any single Person or group (as defined in Rule 13d-5 under the Exchange Act). "Purchase Agreement" means the Note and Warrant Purchase Agreement by and among the Company and the New Stockholders dated as of the date of this Agreement. "Registration Rights Agreement" means the Registration Rights Agreement among the Company and the New Stockholders dated as of the date of this Agreement. "Second Break Point" means the time at which the Total Ownership Ratio for either DB or Essar, as the case may be, is less than 25% but greater than 10%. "Securities Act" means the Securities Act of 1933, as amended. "Third Break Point" means the time at which the Total Ownership Ratio for either DB or Essar, as the case may be, is less than 10%. "Total Ownership" means, with respect to any party, the total Common Stock Equivalents owned beneficially or of record by such party after giving effect to the consummation of all of the transactions contemplated by the Note and Warrant Purchase 15 Agreement (and assuming that all warrants held by such party have been exercised) and without giving effect to any subsequent dispositions of Common Stock Equivalents by such party. "Total Ownership Ratio" means, with respect to any party, the total Common Stock Equivalents owned beneficially or of record by such party upon the date of determination divided by Total Ownership of such party. "Transfer" means any direct or indirect sale, assignment, mortgage, transfer, pledge, hypothecation or other disposal other than the exercise, conversion or exchange of any option, warrant or convertible security. [Remainder of this page left blank intentionally] 16 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above. AEGIS COMMUNICATIONS GROUP, INC. By: /s/ Herman M. Schwarz ------------------------------------ Name: Herman M. Schwarz Title: President and CEO 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 17 QUESTOR: QUESTOR PARTNERS FUND II, L.P. By: /s/ Dean Anderson ------------------------------------- Name: Questor General Partner II, L.P., its General Partner Title: Managing Director By: /s/ Dean Anderson ------------------------------------ Name: Questor Principals II, Inc., its General Partner Title: Managing Director QUESTOR SIDE-BY-SIDE PARTNERS II, L.P. By: /s/ Dean Anderson ------------------------------------ Name: Questor Principals II, Inc. Title: Managing Director QUESTOR SIDE-BY-SIDE PARTNERS II 3(C)(1), L.P. By: /s/ Dean Anderson ------------------------------------ Name: Questor Principals II, Inc. Title: Managing Director 18 TC CO-INVESTORS, LLC Name: TC Management Partners, LLC a Delaware limited liability company, its General Partner By: /s/ Christopher M. Temple -------------------------------- Title: An Authorized Officer Name: Christopher M. Temple THAYER EQUITY INVESTORS III, L.P. Name: TC Equity Partners, LLC a Delaware limited liability company, its General Partner By: /s/ Christopher M. Temple -------------------------------- Title: An Authorized Officer Name: Christopher M. Temple 19 EXHIBIT A Spousal Waiver -------------- [INSERT NAME] hereby waives and releases any and all equitable or legal claims and rights, actual, inchoate or contingent, which he or she may acquire with respect to the disposition, voting or control of the shares of Common Stock subject to the Stockholders' Agreement of Aegis Communications Group, Inc., dated as of _______, 2003, as the same shall be amended from time to time, except for rights in respect of the proceeds of any disposition of such Common Stock. - ------------------------- Name: 20 -----END PRIVACY-ENHANCED MESSAGE-----