10-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934.

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005.

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM             TO             

Commission file number: 0-14315

AEGIS COMMUNICATIONS GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	75-2050538
(State of Incorporation)	(IRS Employer Identification No.)

8001 Bent Branch Drive, Irving, Texas 75063

(Address of Principal Executive Offices, Zip Code)

Registrant’s telephone number, including area code: (972) 830-1800

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 Par Value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.     Yes  ¨    No  x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨ Accelerated filer  ¨ Non-accelerated filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes  ¨    No  x

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of the last day of the registrant’s most recently completed second fiscal quarter was approximately $14 million.

As of March 30, 2006, 1,147,217,086 shares of the registrant’s Common Stock were outstanding, of which 475,600 were held in Treasury.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s 2005 Proxy Statement and Notice of Annual Meeting of Stockholders are incorporated by reference into Parts I and II of this report, and portions of the registrant’s 2006 Proxy Statement and Notice of Annual Meeting of Stockholders are incorporated by reference into Part III of this report.

PART I

ITEM 1. BUSINESS

GENERAL

Aegis Communications Group, Inc. (OTC Bulletin Board: AGIS) is a worldwide transaction-based business process outsourcing company that enables clients to make customer contact programs more profitable and drive efficiency in back office processes. In this report, the terms “Company,” “we,” “us” or “our” mean Aegis Communications Group, Inc. and all subsidiaries included in our consolidated financial statements.

Our primary business is customer relationship management. Our customer relationship management, or CRM service offerings include: web-enabled and telephone-based customer service, help desk, and customer acquisition and retention; multilingual communications programs; client service center facilities management; order provisioning, which is the transferring of data into our clients’ billing systems and customer records; up-selling and cross-selling of products and services; and database management. Our web-enabled customer care capabilities include online customer-initiated call back, automated e-mail response, live web text chat, pushed content web sessions (in which we send, or “push,” web pages to the customer from anywhere on the Internet), web self-service, fax/e-mail on demand and online management reporting.

Over the past year, we have expanded our primary business model to include business process outsourcing services. In addition, we have begun to offer our customers a “right shore” solution by strengthening our offshore capabilities. We have leveraged our expertise and capabilities in customer relationship management, analytics and database management as a platform for entering into business process outsourcing. We expanded our operational capabilities in India by pursuing strategic relationships with the Essar Group Companies, which have significant investments and holdings in diverse industries, including steel, oil & gas, shipping, logistics and telecommunications services. The Essar Group is the indirect majority stockholder of the Company, and now maintains its ownership in the Company through its indirect subsidiary World Focus, a private company limited by shares organized under the laws of Mauritius. The Essar Group is providing offshore resources and assistance to the Company through its direct subsidiary, Aegis BPO Services Limited.

Aegis Communications Group, Inc. is a Delaware corporation originally organized in that state in 1985. Our trading symbol is “AGIS”. Aegis Communications Group, Inc. was formerly known as ATC Communications Group, Inc., or ATC. On July 9, 1998 ATC completed the acquisition of IQI, Inc., a New York corporation, or IQI. Effective upon the merger, we formally changed the company name to Aegis Communications Group, Inc. Our headquarters are located at 8001 Bent Branch Drive, Irving, Texas 75063. Our telephone number is (972) 830-1800 and our web-site address is www.aegiscomgroup.com.

SERVICES AND STRATEGY

Our near term objective is to continue to strengthen our position as a premier high-quality, full service provider of outsourced CRM solutions and back office transaction support to progressive companies that place a high level of significance on the quality of their customer interaction experience. We believe that web-enabled services, inbound CRM services, complex order processing and provisioning and non-voice support programs will continue to serve the core long-term demand for services in our industry, but that providers demonstrating competence in outbound acquisition services will continue to realize attractive opportunities for new business development as companies increase their investment in this customer acquisition channel. The Company intends to target only those outbound programs that have an agreed rate of return, and will not pursue so-called “pay for performance” programs. In the medium to long term, the Company is working on expanding its basket of service offerings to include technology services, which complements the Company’s long history of expertise in the contact center industry. For the year ended December 31, 2005, approximately 89% of our revenues were generated by inbound CRM solutions and non-voice services and 11% by outbound CRM solutions. In comparison, for the year ended December 31, 2004, approximately 76% of our revenues were generated by

2

inbound CRM solutions and non-voice services and 24% from outbound CRM solutions; and for the year ended December 31, 2003, approximately 74% of our revenues were generated by inbound CRM solutions and non-voice services and 26% by outbound CRM solutions. The decline in the Company’s outbound programs over this three year period was due in part to our loss of the AT & T outbound program in mid 2004, and to the Company’s decision to phase out its pay for performance programs in 2005.

We specialize in developing and implementing customized multi-channel contact programs designed to strengthen our clients’ relationships with their customers while reducing or eliminating their related service costs. Our CRM solutions consist of telephone-based marketing and customer service programs (teleservices), web-based capabilities, which comprise handling a variety of customer contacts through our clients’ Internet web sites, and phone-based customer service offerings.

We design, manage and conduct telecommunications-based CRM programs scaled to the client’s needs, which feature live, knowledgeable customer service representatives, or CSRs, provided on an outsourced basis to companies in a wide variety of industries.

Inbound CRM solutions require answering incoming telephone calls or web-initiated queries and responding to customer service requests. To illustrate, when one of our client’s customers requests an interaction (e.g., places a call to a toll-free “800” customer service number, sends an e-mail to our client, or initiates an online call back or text chat at a client’s web-site) it is directed to one of our client service centers and answered by one of our trained CSRs. The CSR is able to handle the customer’s inquiry because, in most instances, the customer’s account information has been instantaneously transferred to the CSR’s computer screen through high-speed links between our computer system and the client’s customer database. At the end of the interaction, the customer’s record is automatically updated in the client’s database with any new information.

Outbound CRM solutions involve making outgoing telephone calls, usually to market a client’s products or to acquire new customers for the client. Our outbound CRM capabilities include predictive dialing, preview or power dialing and manual dialing. Appropriate technology is tailored for business-to-business or business-to-consumer engagements. We subscribe and adhere to the federal and state do-not-call legislation. We are actively involved in industry compliance organizations to maintain current on do not call requirements. We do not engage in any form of outbound calling that uses computerized voice presentations or makes unsolicited financial requests, nor are we engaged in the “900” number business.

Our operations are technology driven through our advanced data and communications systems, which permit real-time interface with our clients’ host systems through the Internet or dedicated networks. We also provide a suite of web-enabled customer care capabilities that includes multi-channel capable workstations able to handle a variety of customer interactions, including those originating from the Internet. Through the web-enabled services, we can assist our clients by providing real-time, web-based data that tracks customers’ interactions with a client’s web-site, allows us to handle all aspects of responding to client e-mail from customers, provides a secure chat window to conduct one-on-one chat with client customers, initiates live voice conversations when a client customer clicks an icon on a client’s web-site, and performs other functions.

We endeavor to establish long-term relationships with clients that use some combination of telecommunications and the Internet as important, ongoing tactical elements in their core CRM strategies. Those arrangements usually require us to develop unique software systems for the client. By offering high quality, customized, flexible and fully-integrated customer contact management services designed to improve quality, productivity and effectiveness, we can enhance and add value to our clients’ existing marketing and customer service programs. The company’s delivery services are managed through a senior level account management organization providing a single point interface for our client companies.

3

BUSINESS OPERATIONS

As of December 31, 2005, we operated or managed approximately 3,059 production workstations in our seven proprietary client service centers in the United States, and through our strategic relationship with our affiliate Aegis BPO Services Limited, we manage the operational processes and performance of two India-based service centers that focus on vendor related services. A workstation includes a cubicle, personal computer with monitor and keyboard, a headset and an automatic call distributor console.

Our current legacy technology platform delivers custom CRM solutions based on a browser-based application environment and primarily Avaya Definity telecommunications switches interfaced with multiple servers running on UNIX or Microsoft 2000 Advanced Server platforms. The data system is based on an open architecture design supported by sophisticated relational databases. This open architecture design allows us to interface seamlessly, and in real-time, with our clients’ host systems. It also provides the flexibility that enables us to deliver solutions rapidly to our clients’ marketing and customer service needs. Outbound calling is enhanced through our proprietary dialer technology leveraging the Avaya platform. Our operations are further enhanced by the use of universal workstations that can automatically handle either inbound or outbound call activity. Such technology permits us to offer productivity enhancements associated with this “call blending” activity. Despite its flexibility, this legacy platform has limited and expensive maintenance support, and the Company would have to continue to run voice and data on expensive trunk networks. To address those issues, the Company has made significant progress in developing a voice-over-Internet protocol (“VoIP”) platform with related software applications running on an IBM and Informix computer systems environment. The network supporting the transport of the voice and data for this VoIP platform will be on the technologically advanced and robust MPLS over IP network. The Company’s VoIP platform is designed to support over 3,500 workstations in the United States and allow for accelerated deployment of virtual agents across our geographically diverse service center locations. The new VoIP platform is planned to be implemented across all our service centers by the end of the second quarter of 2006, and is currently functional at one of our service center locations supporting a large financial services client. We have invested approximately $4 million into the hardware and software required for our new VoIP platform. Our new VoIP platform should enable us to streamline our operations and scale programs to client demand more adroitly, centralize our telecom and networking intelligence, and, over time, allow us to reduce our telecommunications expenses and those additional expenses attributed to our current multiple network configuration.

The quality of our people and their delivery of our customer solutions are critical to our success. Because our customer service representatives deal directly with our clients’ customers and sales prospects, we place a heavy emphasis on their training and the quality control process. Towards this goal, our training facilities are equipped with workstations for live role-playing. We employ a staff of trainers dedicated to teaching the details of client programs to our customer service representatives. The training curriculum includes instruction on the client’s sales or service process, study of the features and benefits of the product and service, intensive role-playing and information about both our and the client’s philosophy and culture. We conduct both initial and follow-up training for all representatives that, depending on the complexity of the client program, can take up to six weeks to complete. Our training curriculum is developed by professional experts in adult learning methods and includes a “hands-on” personal computer lab experience. This attentiveness to training enables our representatives to perform an assortment of duties when handling inbound and outbound calling programs. Along with our clients, we monitor our marketing and customer service representatives to confirm strict compliance with our client’s quantitative and qualitative standards. In many instances, quality is evaluated and communicated on a daily basis.

INDUSTRY AND COMPETITION

Several trends continue to shape the teleservices and back-office business processing industries. Many U.S.-based companies that have a history of outsourcing customer sales and service are moving certain portions of their business to non-U.S. locations in order to take advantage of labor arbitrage available in many foreign markets. Additionally, downturns in overall transaction volumes due to general economic conditions and

4

transition of many traditional phone-based activities to the Internet have led many of these same companies to redirect transactions to existing, in-house call centers with excess capacity and away from outsourced CRM providers. We continue to believe, however, that an overall long-term focus on business fundamentals will lead companies to maintain or increase their outsourcing activities, especially when considering the favorable impact on cost structures in moving from a fixed cost model to a variable outsourced-cost model offered by providers with expanded services. Client spending on technology has slowed with the economy, and outsourced providers offer a viable alternative, since the significant investment required to automate these transactions has already been made by companies in the outsourced CRM market. We believe clients will require more efficiency from their outsourcing partners in the form of performance-based pricing that further aligns the interests of the client and of the service provider. In addition, due to excess capacity in the industry, we believe we can continue to expect some firms to offer below market pricing of their services in an attempt to gain market share and utilize excess capacity.

We compete in a market that provides progressive companies the opportunity to take advantage of the latest advances in processes and technology across multiple communications channels to drive more effective and efficient means of customer interaction. Customer contact services are spread across a broad spectrum of competitors, including a client company’s own in-house call center and numerous third-party providers like us. Our market, which is extremely competitive, ranges from very small firms offering specialized applications to larger, full-service companies with multiple, high-volume call centers, including APAC Customer Services, Inc., Convergys Corporation, ICT Group, Inc., NCO Group, Sitel Corporation, Sykes Enterprises, Inc., Teleperformance USA, Inc., TeleTech Holdings, Inc. and West Corporation.

We believe we compete primarily on the basis of:

• Our unique operating model that allows us to create client capabilities and deliver the appropriate means of communication with each of the end customers to drive more value in each client engagement;

• Consistency and quality of our service as evidenced by our longstanding relationships with our customers;

• Our ability to implement advanced technology and processes, including web-enabled capabilities, predictive dialing, skills based routing, call blending and proprietary interfaces which enable real-time access to clients’ host data;

• A proactive and a flexible approach to changing client needs and the ability to adapt to unique client requirements;

• Our cost/value proposition wherein we provide more value from each customer engagement, as measured by a mutually agreed upon set of financial and operational metrics;

• Our ability to construct a “right shore” solution and offer the benefit of a global delivery model; and

• Our flexibility in our operational structure with our clients, which ranges from a standard outsourcing arrangement to a build, operate and transfer model that accommodates greater client participation and operational control.

MARKETING OF SERVICES

We differentiate from our competitors by providing a unique blend of strategic and tactical resources to meet the broad demands of our clients. To reinforce the value of our approach, we place an emphasis on enhancing the results of each engagement we manage on behalf of our clients. We seek to develop and maintain long-term profitable relationships with our clients, whereby we provide as much value to the client as they provide to us. We focus our marketing and sales efforts on progressive companies in growing markets that use integrated customer services to more effectively acquire and retain customers. We believe those organizations represent the greatest potential for us to deliver a differentiated service that takes advantage of our total

5

resources, including our skilled employees and technology platform. We believe this approach will ultimately provide the greatest opportunity for stable and recurring revenue growth. We obtain new business through our dedicated sales force, existing relationships with current clients, client referrals and by responding to requests for proposals. Our sales team is comprised of sales leaders from the our industry who have a track record for originating large transactions, and our efforts in developing this team is a key part of our strategy to reposition the Company as an industry leader.

GOVERNMENT REGULATION

Both federal and state governments regulate our business. The Federal Communications Commission (“FCC”), rules under the Federal Telephone Consumer Protection Act of 1991 prohibit telemarketing firms from initiating telephone solicitations to residential telephone subscribers before 8:00 a.m. or after 9:00 p.m., local time, and prohibit the use of automated telephone dialing equipment to call certain telephone numbers. In addition, the FCC rules require telemarketing firms to maintain a list of residential consumers who have stated that they do not want to receive telephone solicitations called Do Not Call lists (“DNC”), and to avoid making calls to such consumers.

The Federal Telemarketing and Consumer Fraud and Abuse Protection Act of 1994 broadly authorized the Federal Trade Commission (“FTC”), to issue regulations prohibiting misrepresentation in telephone sales. The FTC issued its telemarketing sales rules (“TSR”), which became effective December 31, 1995. Generally, those rules prohibit abusive telephone solicitation practices and impose disclosure and record keeping requirements on telemarketers. Both the FCC and the FTC introduced new amendments to their respective Acts during 2003, which placed further restrictions on the use of automated telephone dialing equipment relative to abandoned calls and require enhanced record keeping. These amendments also introduced a national do not call list that became effective in 2003 and require all telemarketing firms to suppress consumer records found on the national list. In January 2004, the requirement to deliver caller identification with name and number became effective. The advent of number portability between landlines and wireless telephone numbers in November 2003 created confusion with reference to the prohibition of telemarketing calls to wireless numbers. No clearinghouse is available to date to provide a suppression list of recently ported numbers, making a good faith effort the only safe harbor available to the telemarketing industry.

In addition to these rules and regulations, bills are frequently introduced in Congress to regulate the use of credit information, as well as new proposals to further refine the DNC and TSR regulations and restrict predictive dialer use. We cannot predict whether this legislation will be enacted and what effect, if any; it would have on our industry.

Most states have also enacted or are considering legislation to regulate telephone solicitations. For example, telephone sales in certain states are not final until a written contract is delivered to and signed by the buyer, and then the contract may be canceled within three business days. At least one state also prohibits telemarketers from requiring credit cards as a method of payment, and several other states require certain telemarketers to obtain licenses and post bonds. For instance, in certain states persons selling insurance products or mortgage services are required to be licensed by various state insurance commissions and participate in regular continuing education programs. Some industries we serve are also subject to various state government regulations with regard to selling practices and consumer disclosure requirements.

We specifically train our representatives to conduct calls in an approved manner and believe we are in compliance in all material respects with all federal and state regulations. We manage this compliance process through a Director of Corporate Training and Compliance who is charged with the responsibility for integrating applicable regulatory requirements into the training process. There can be no assurance, however, that we may not be subject to regulatory challenge for a violation of federal or state law by any of our clients or other third parties.

6

REVENUES AND SEASONAL NATURE OF BUSINESS

The timing and size of our clients’ marketing programs, which are impacted by unique seasonal situations and subject to variations in underlying economic conditions, directly affect our revenues. Our expenses are also directly affected by these factors. We cannot predict the seasonal variations in our clients’ demands for our services.

PERSONNEL AND TRAINING

Our business depends on people. We place a high priority on hiring, training, retaining and managing good people. We attempt to locate our client service centers where the cost of labor is relatively low and there are sufficient qualified and motivated workers to meet our needs. We do this to maintain lower operating costs while maintaining a high quality workforce and generating a manageable turnover rate. Employee turnover rates, while manageable, exceed those experienced in most other industries and the cost of attrition training remains a significant cost of operation. We offer internal educational and professional development opportunities for our supervisors and managers, and have processes that allow associates to self identify next level opportunities as efforts to help mitigate turnover.

RELIANCE ON TECHNOLOGY AND COMPUTER SYSTEMS

We rely on specialized telecommunications and computer technology to meet our clients’ needs. We will need to continue to select, invest in and develop new and enhanced technology to remain competitive. Our future success will also depend on our operational and financial ability to develop information technology solutions that keep pace with evolving industry standards and changing client demands. Our business is highly dependent on our computer and telephone equipment and software systems, the temporary or permanent loss of which could materially and adversely affect our business.

RELIANCE ON MAJOR CLIENTS

As is typical for our industry, we have a client concentration risk that we must manage. In 2005, three clients each accounted for over 10% or our revenues. Qwest Communications International (“Qwest”) accounted for approximately 15% of our revenues, and financial services industry leaders Western Union and American Express accounted for 13% and 10% of our revenues, respectively. In 2004, four clients each accounted for over 10% of our revenues. AT&T, then our largest telecommunications client, accounted for 26%, and Qwest accounted for approximately 15% of our revenues. Trilegiant, our largest membership services client, accounted for 10%, while American Express was responsible for approximately 11% of our revenues. In 2003, five clients each accounted for over 10% of our revenues. AT&T accounted for 26%, Qwest accounted for approximately 14%, Trilegiant accounted for 15%, and American Express and Cablevision were both responsible for 11% of our revenues.

The Company made efforts to enter the healthcare industry in 2005 in order to diversify our industry and client exposure. Although we continue to improve and grow our existing customer relationships, it is also our goal to reduce our dependence on a few major clients by broadening our customer base, which should help to mitigate adverse impacts and business risk that unilateral client decisions can have on our business. See Item 7 under the caption “Revenue Concentration.”

QUALITY ASSURANCE

Aegis maintains a reputation for quality service. This reputation is especially important because our services involve direct contact with our clients’ customers and sale prospects. To that end, our representatives are monitored to confirm that they comply with the client’s guidelines and deliver quality and efficient service. We regularly measure the quality of our services by benchmarking factors such as customer satisfaction and call

7

handling metrics such as sales per hour, service levels and abandoned calls. Our information systems enable us to provide clients with real time reports regarding the status of an ongoing campaign. We also transmit summary data and captured information electronically to our clients. Access to this data enables our clients to modify or enhance an ongoing campaign to improve its effectiveness. The company participates in client-sponsored reporting calls in which valuable information is available on how the Company is performing and this is used to make short cycle changes. In addition, the Company’s senior account management team conducts a quarterly business review with each of our clients.

Our client service representatives deal directly with our clients’ customers and prospects. For this reason, Aegis places a heavy emphasis on training and quality control processes. We dedicate a training staff at each facility to conduct both primary and recurrent training for all client service representatives. We employ a quality control staff at each facility that measures quality on both a quantitative and qualitative basis. We believe this attentiveness to training and customer service enables our client service representatives to perform a variety of highly complex and proprietary functions for our clients.

EMPLOYEES

As of December 31, 2005, we employed 3,700 persons, including 3,200 client service representatives. We believe our relationship with our employees is generally good.

8

ITEM 1A. RISK FACTORS

CAUTIONARY STATEMENT FOR THE PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Certain information in this Form 10-K contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues or other financial items, any statements of the plans and objectives of management for future operations, any statements concerning proposed new services, any statements regarding future economic conditions or performance and any statement of assumptions underlying any of the foregoing. Terms such as “anticipates”, “believes”, “estimates”, “expects”, “plans”, “predicts”, “may”, “should”, “will”, and “intends,” the negative thereof and similar expressions are intended to identify forward-looking statements. Such statements are by nature subject to uncertainties and risks, including but not limited to those summarized below:

Results of Operations

Our Company has historically incurred losses, and there can be no assurance that we will be able to reduce such losses and become profitable in the future. The Company experienced net losses of $13.1 million, $22.2 million and $19.1 million for the years ended December 31, 2005, 2004 and 2003 respectively. The Company incurred operating losses from continuing operations of $13.1 million, $22.2 million and $10.9 million for the years ended December 31, 2005, 2004 and 2003 respectively. While we believe that we will be able to reduce such losses and become profitable in future periods, there can be no assurance that we will be able to do so. The Company also measures performance based upon an earnings before interest and taxes depreciation amortization (EBITDA). The Company’s EBIDTA for the years ending December 31, 2005, 2004, 2003 were $3.8 million loss, $10.2 million loss, and $4.9 million profit respectively.

	2005			2004			2003
	(Dollars In Thousands)
Loss From Continuing Operations	$	(13,161	)	$	(22,240	)	$	(10,896	)
Add Back: Interest & Non-Cash Interest		3,448			3,376			3,998
Taxes		—			145			300
Depreciation or Amortization		5,905			8,521			11,462
EBITDA	$	(3,808	)	$	(10,198	)	$	4,864

Control by Principal Stockholder

We have a single stockholder, World Focus, that owns 79% of our issued and outstanding Common Stock, and who can therefore exercise significant control over the outcome of substantially all matters that require a Board or a stockholder vote. Under the terms of a Stockholders Agreement among Deutsche Bank, Essar and certain Thayer and Questor entities, Deutsche Bank and Essar each have the right to nominate three of the ten Board members, with the remaining four directors consisting of the President and Chief Executive Officer and three independent directors. Any major decision must be approved by at least three-fourths of the directors, which must include at least one Deutsche Bank-designated director and one Essar-designated director. Subsequently, Deutsche Bank and Essar entered into a Put and Call Option Agreement under which, among other things, Deutsche Bank assigned its right to nominate three of the ten directors to Essar. In November of 2005, under the terms of assignment and assumption agreements, Essar assigned its rights under the Stockholders Agreement and Put and Call Option Agreement to World Focus, a company under common control with Essar. As a result, World Focus can exercise significant control over the outcome of substantially all matters that require a Board or stockholder vote. This fact may discourage, delay or prevent a change in control of the Company. In addition, since our officers serve at the pleasure of the Board, World Focus may be able to exert influence over day-to-day operations.

9

The Stockholders Agreement provides that the parties to the agreement satisfy a “right of first offer” to the others prior to a transfer of shares to a third party. The Stockholders Agreement also provides that the parties provide each other with certain “tag-along” rights in the event of a sale or transfer of shares to a third party. The Stockholders’ Agreement and the Bylaws also provide that certain major decisions will require the affirmative vote of not less than three-fourths of the directors of the Board. The list of major decisions include:

• Issuing shares, including any indebtedness convertible into shares, or any other form of equity in Aegis Communications Group, Inc. or any subsidiary of Aegis Communications Group, Inc. other than (a) granting options to directors or employees of Aegis Communications Group, Inc. 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 and (c) issuing shares of common stock or any security, including any debt convertible into shares of common stock, or any other form of equity in Aegis Communications Group, Inc., in one or more offerings;

• Adoption of any stock-based employee benefit plan by Aegis Communications Group, Inc.;

• Incurring debt or entering into guarantees for borrowed money (excluding trade payables) in excess of $2.5 million in a 12-month period, subject to certain exceptions;

• Selling, leasing, pledging or granting a security interest or encumbrance in all or substantially all of Aegis Communications Group, Inc.’s or any subsidiary of Aegis Communications Group, Inc.’s assets, except in connection with the incurrence of indebtedness for borrowed money that does not involve a major decision in excess of $2.5 million as noted above;

• 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 $2.0 million;

• 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 $2.0 million;

• Amending the Bylaws or the Certificate of Incorporation of Aegis Communications Group, Inc.;

• Any Change of Control Transaction;

• Executing or delivering any assignment for the benefit of creditors of Aegis Communications Group, Inc.;

• Filing any voluntary petition in bankruptcy or receivership with respect to Aegis Communications Group, Inc.;

• 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 the agreement; and

• Changing the size or composition of the Board except in accordance with the agreement.

Shares Available for Future Sale

Sales of a substantial amount of our Common Stock by World Focus could have an adverse effect on market prices for our Common Stock. World Focus owns approximately 79% of the Company’s issued and outstanding Common Stock. Although World Focus is restricted to some extent from reselling their respective shares of our common stock under applicable securities laws, World Focus possesses registration rights with respect to the shares of capital stock it owns, which can be exercised at any time. We cannot predict the effect that future sales of stock, especially by World Focus, will have on the market price of our common stock prevailing from time to time. Sales of substantial amounts of our common stock (including shares issued upon the conversion of preferred stock or the exercise of stock options), and even the perception that such sales could occur, may adversely affect prevailing market prices for our common stock.

10

Dependence on Key Personnel

The loss of one or more of our executive officers and other key executives could materially and adversely affect our results of operations. Our success depends in large part on the abilities and continued service of our executive officers and other key employees and our ability to hire and retain qualified executive officers and key personnel. We cannot assure you that we will be able to hire or retain these people.

Reliance on Major Clients

The loss of one or more of our major clients could have a material adverse effect on our results of operations. Historically a few major clients have accounted for the bulk of our revenue. In 2005, three separate clients accounted for approximately 15%, 13%, and 10% of our revenues, respectively. Relying on one or a few major clients includes a number of more specific business risks that may adversely impact our ability to derive revenue from the client, including:

• The risk that a client unilaterally decides to curtail or terminate marketing programs;

• The risk that service or billing disputes may adversely impact the client’s desire to utilize the provider’s services;

• The risk that the customer may decide to reduce the number of providers of the subject services or otherwise consolidate its operations;

• The risk that a client will merge into, or be acquired by, another company, resulting in a reduction or termination of that client’s demand for our services;

• The risk that financial, competitive or operational pressure on the client may inhibit its ability to purchase services from outside providers or prompt the client to negotiate lower fees for services provided; and

• The risk of adverse financial impact to us if the client is unable to meet the payment terms of open receivables as billed by Aegis Communications Group, Inc.

For example, in the third quarter of 2004, AT&T decided to withdraw their marketing efforts in the consumer long distance market. This adversely impacted us, forcing us to close two centers in California and to cease operations for a period of time in our New York City center which had been specifically leased for additional outbound volume anticipated from AT&T. Other customers may do the same. Many of our clients are concentrated in the telecommunications and financial services industries. A significant downturn in any of these industries or a trend away from their use of telephone-based sales or outsourced customer relationship management services could materially and adversely affect our business. Although we believe our relations with our major clients are good, the loss of one or more of our major clients could have a material adverse effect on our operating results. See “Item 1. Business—Reliance on Major Clients.”

Leverage and Future Capital Requirements

We may not be able to obtain financing sufficient to meet our working capital and capital expenditure needs. At December 31, 2005, we had long-term capital leases of approximately $3.7 million and notes payable of $3.2 million (net of discounts). Our tangible net book value was approximately negative $6.7 million at December 31, 2005. Our future capital requirements and the sufficiency of available funds will depend on numerous factors that are difficult to predict, including results of operations, efforts to expand existing operations and capital expenditures. We entered into an agreement for credit financing with Rockland Credit Finance LLC on April 4, 2005. The credit financing agreement has an initial term of one year, and unless terminated, the credit agreement will automatically renew for subsequent one-year periods. By its terms, that credit financing agreement allows us to select, sell and assign certain of our accounts receivable to Rockland from time to time, subject in each case to Rockland’s prior review and acceptance of those selected accounts. The agreement prohibits us from entering into alternative credit financing arrangements without Rockland’s prior written consent, unless Rockland rejects our selection of any particular account for sale and assignment, in which case that rejected account may be sold and assigned or pledged without restriction.

11

Factors Affecting Ability to Manage and Achieve Growth

We may not be able to effectively manage expanding operations or maintain or accelerate growth in our business. We anticipate that the trend toward outsourcing of telephone and Internet-based sales, marketing, and customer relationship management activities, as well as increased penetration of new and existing clients and markets, will drive future growth. A number of other factors, including the effective and timely initiation and development of client relationships, the opening of new client service centers, the recruitment, motivation and retention of qualified personnel, our ability to find qualified non-U.S. locations and intensified competition among our telecommunications clients will affect growth. Sustaining growth will also require better and faster systems and additional management, operational and financial resources. We cannot assure you that we will be able to manage expanding operations effectively or maintain or accelerate growth.

Dependence on Outsourcing Trend and Industries Served

A decline in the trend of outsourcing could materially and adversely affect our results of operations. Our growth depends in part on continued demand for our services prompted by the outsourcing trend, as well as continued growth in the industries we serve. If the interest in outsourcing declines or there is a significant downturn in the telecommunications, financial services, consumer products, entertainment or other industries, we could be materially and adversely affected.

Possible Volatility of Stock Price

Our stock price can be volatile, in response to:

• Sales or proposed sales by World Focus or other affiliates;

• Variations in quarterly operating results;

• The depth and liquidity of the market for our common stock;

• Investor perception of Aegis Communications Group, Inc. and the industry in which it competes;

• The gain or loss of significant customer contracts;

• Changes in management;

• Changes in or new services by Aegis Communications Group, Inc. or competitors;

• General trends in the industry;

• Leverage and future capital requirements; and

• Other events or factors.

In addition, our stock market generally has experienced extreme price and volume fluctuations, which have particularly affected the market price for many companies in similar industries and which have often been unrelated to the operating performance of these companies. These broad market fluctuations may adversely affect the market price of our common stock. Since July 9, 1998, the market price per share of our common stock has ranged from $3.50 to $0.01. On March 2, 2006, the closing price for our stock was $0.04 per share.

Potential Fluctuations in Quarterly Operating Results

The stability of our revenues and operating income is susceptible of sudden fluctuations, which may have an adverse effect on the market price of our Common Stock. We could experience quarterly variations in revenues and operating income due to many factors, including:

• The commencement or termination of significant CRM programs;

12

• The timing of clients’ marketing campaigns and customer service programs;

• The timing of additional SG&A expenses incurred to acquire and support new business;

• Changes in our revenue mix among our various service offerings; and

• Price competition.

In connection with certain contracts, we could incur costs in periods prior to recognizing revenue under those contracts. In addition, we must plan our operating expenditures based on revenue forecasts, and a revenue shortfall below such forecast in any quarter would likely materially and adversely affect our operating results for that quarter.

Risks Associated with Our Contracts

The revenues we generate from our client contracts are subject to variation, which may have a material adverse effect on our results of operations. Our contracts generally do not ensure a minimum level of revenue, and the profitability of each client program may fluctuate, sometimes significantly, throughout the various stages of such program. Although we seek to sign long-term contracts with our clients, our contracts generally enable the client to terminate the contract, or terminate or reduce program call volumes, on relatively short notice. Although, certain of such contracts require the client to pay a contractually agreed amount in the event of early termination, others do not, and we cannot be certain that you that we will be able to collect such amount or that such amount, if received, will sufficiently compensate us for our investment in the canceled program or for the revenues we may lose as a result of early termination.

Government Regulation

We could be adversely affected by new and existing laws and government regulations, or become subject to a regulatory challenge for a violation of federal or state law, any of which would have a material adverse effect on our results of operations. Both federal and state governments regulate our business. The FCC rules under the Federal Telephone Consumer Protection Act of 1991 prohibit telemarketing firms from initiating telephone solicitations to residential telephone subscribers before 8:00 a.m. or after 9:00 p.m., local time, and prohibit the use of automated telephone dialing equipment to call certain telephone numbers. In addition, the FCC rules require telemarketing firms to maintain a list of residential consumers who have stated that they do not want to receive telephone solicitations called DNC lists and to avoid making calls to such consumers.

The Federal Telemarketing and Consumer Fraud and Abuse Protection Act of 1994 broadly authorized the FTC to issue regulations prohibiting misrepresentation in telephone sales. The FTC issued its TSR, which became effective December 31, 1995. Generally, those rules prohibit abusive telephone solicitation practices and impose disclosure and record keeping requirements on telemarketers. Both the FCC and the FTC introduced new amendments to their respective Acts during 2003, which placed further restrictions on the use of automated telephone dialing equipment relative to abandoned calls and require enhanced record keeping. Those amendments also introduced a national do not call list that became effective in 2003 and require all telemarketing firms to suppress consumer records found on the national list. In January 2004, the requirement to deliver a caller identification with name and number became effective. The advent of number portability between landlines and wireless telephone numbers in November 2003 created confusion with reference to the prohibition of telemarketing calls to wireless numbers. No clearinghouse is available to date to provide a suppression list of recently ported numbers, making a good faith effort the only safe harbor available to the telemarketing industry.

In addition to these rules and regulations, bills are frequently introduced in Congress to regulate the use of credit information, as well as new proposals to further refine the DNC and TSR regulations and restrict predictive dialer use. We cannot predict whether this legislation will be enacted and what effect, if any, it would have on our industry.

13

Most states have also enacted or are considering legislation to regulate telephone solicitations. For example, telephone sales in certain states are not final until a written contract is delivered to and signed by the buyer, and then the contract may be canceled within three business days. At least one state also prohibits telemarketers from requiring credit cards as a method of payment, and several other states require certain telemarketers to obtain licenses and post bonds. For instance, in certain states persons selling insurance products or mortgage services are required to be licensed by various state insurance commissions and participate in regular continuing education programs. Some industries we serve are also subject to various state government regulations with regard to selling practices and consumer disclosure requirements.

We specifically train our representatives to conduct calls in an approved manner and believe we are in compliance in all material respects with all federal and state regulations. There can be no assurance, however, that we may not be subject to regulatory challenge for a violation of federal or state law by any of our clients or other third parties.

Dependence on Labor Force

High personnel turnover rates and unionization of our employee base could have a material adverse effect on our results of operations. Our business is very labor intensive and characterized by high personnel turnover. Although by industry standards we believe our employees are highly qualified and well trained, many employees receive modest hourly wages and have relatively short tenure with Aegis Communications Group, Inc. A higher turnover rate among our employees would increase our recruiting and training costs and decrease operating efficiencies and productivity. Some of our operations require specially trained employees. Growth in our business will require us to recruit and train qualified personnel at an accelerated rate from time to time. We cannot assure you that we will be able to continue to hire, train and retain a sufficient labor force of qualified employees. A significant portion of our costs consists of wages paid to hourly workers. An increase in hourly wages, costs of employee benefits or employment taxes could materially adversely affect our operating results.

During 2000, the United Steelworkers of America (“USWA”) undertook an effort to organize our call center workforce located in Elkins, West Virginia. We believe that a unionized workforce would be contrary to our best interests, and to our employees’, customers’ and shareholders’ best interests as well, and accordingly, vigorously opposed the unionization effort. Although the USWA ultimately withdrew its election petition in Elkins, there can be no assurances that the USWA or another union will not endeavor to organize our workforce in Elkins or other call center locations. Unionization of our workforce could materially and adversely affect our results of operations.

Competition

We may be unable to effectively compete in our industry, which could threaten the demand for our services. Our industry is very competitive. We cannot assure you that, as the CRM industry continues to evolve, additional competitors with greater resources than ours will not enter the industry or that our clients will not choose to conduct more of their telephone-based sales or customer relationship management activities internally. Further, the impact of non-U.S. companies entering our industry with lower operating costs, the development of new forms of direct sales and marketing techniques such as interactive home shopping through television, computer networks, including the Internet and other media, could adversely affect the demand for our services. In addition, the increased use of new telephone-based technologies, such as interactive voice response systems, and increased use of the Internet as a tool by our clients could reduce the demand for certain of our offered services. Moreover, the effectiveness of marketing by telephone could also decrease as a result of consumer saturation and increased consumer resistance to this direct marketing tool. Although we attempt to monitor industry trends and respond accordingly, we cannot assure you that we will be able to anticipate and successfully respond to such trends in a timely manner. See “Item 1. Business—Industry and Competition.”

14

Reliance on Technology and Computer Systems

We may be unable to effectively manage our technology resources, which could affect the demand for our services. We rely on specialized telecommunications and computer technology to meet our clients’ needs. We will need to continue to select, invest in and develop new and enhanced technology to remain competitive. Our future success will also depend on our operational and financial ability to develop information technology solutions that keep pace with evolving industry standards and changing client demands. Our business is highly dependent on our computer and telephone equipment and software systems, the temporary or permanent loss of which could materially and adversely affect our business.

Telephone Service Dependence

A temporary or permanent loss of local or long distance telephone service could have a material adverse effect on our results of operations. We depend on service provided by various local and long distance telephone companies. If service is disrupted or telecommunications costs increase significantly and we cannot recover those costs by increasing the price of our services, our operating results will suffer.

Risk of Business Interruption

Our business will suffer if we are unable to protect our client service centers, computer and telecommunications equipment and software systems against damage from fire, power loss, telecommunications interruption or failure, technology failure or sabotage, natural disaster and other similar events. We may incur contractual damages to some clients or allow some clients to terminate or renegotiate their contracts with us if one of these events occurs. We maintain property damage and business interruption insurance, but it may not adequately compensate us for any losses we may incur.

Other Uncertainties

We discuss other operating, financial or legal risks or uncertainties in this Form 10-K in specific contexts and in our other filings with the SEC. We are also subject to general economic risks, the risk of loss of a major customer and other risks and uncertainties.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

15

ITEM 2. PROPERTIES

Our principal executive offices and operational and administrative headquarters are located in a 52,866 square foot leased building in Irving, Texas. This lease expires on December 31, 2012. All of our facilities are occupied pursuant to various lease arrangements.

We believe that our operational facilities are representative of our strategic site selection, which focuses on locating client service centers in markets we believe offer lower wage rates, better employee retention and generally lower operating costs. An exception to this approach was the New York City services center, which was leased by the Company in order to leverage New York City’s multilingual employee base with higher skill levels. We will continue to use our New York City services center as a way to attract clients with headquarters in New York City, and who would like to have their operations close to those headquarters, while offering those same clients the cost benefits of a multi-location operations model. As of December 31, 2005, we performed our services in the facilities listed below:

Location	Client Service Centers		Square Footage	Number of Production Workstations
	Date Opened	Lease Expiration Date
Elkins, WV	November 1998	October 31, 2008	20,125	231
Fairmont, WV	October 1997	February 28, 2009	48,000	557
Irving, TX	September 1985	December 31, 2012	52,866	633
Joplin, MO	February 1998	February 1, 2008	33,055	445
New York, NY	September 2004	May 31, 2011	21,600	201
Port St. Lucie, FL	September 1997	July 23, 2007	44,000	377
Sierra Vista, AZ	February 1999	March 1, 2009	45,000	615
			264,646	3,059

We believe we can extend the leases at our operational locations or relocate those facilities on terms comparable with our current lease obligations. While our current capacity is sufficient to handle our current production demands, revenue growth may warrant additional client service center facilities. We will also attempt to balance our portfolio with longer term leases with a tactic of taking on fully fitted centers on a shorter term basis in which we would match a client service location with the term of the customer contract we enter into.

In addition to our operational domestic facilities, we have entered into arrangements with Aegis BPO Services Limited, an affiliate of the Company and a direct subsidiary of Essar, to offer a full suite of offshore CRM and business process outsourcing, or BPO, services to clients in North America. We began our alliance in 2005 by successfully collaborating on an engagement for two US-based major telecommunications providers. In this regard, Aegis BPO Services Limited operates a services center in Bangalore, India with 300 production workstations, and a second services center in Hyderabad, India with 250 production workstations.

ITEM 3. LEGAL PROCEEDINGS

We are party to certain legal proceedings incidental to our business. Certain claims arising in the ordinary course of business have been filed or are pending against us. Management believes that the ultimate resolution of such contingencies will not have a material adverse effect on the consolidated financial position or consolidated results of operations of Aegis.

On July 18, 2003, two of our public stockholders, John Beggi and Steven Stremke, filed complaints in the District Court of Dallas County, Texas against the Company and the individual members of its Board of Directors. The complaints alleged, among other things, that the then-proposed acquisition of the Company by AllServe was unfair to our public stockholders and that the defendants breached their fiduciary duties to our public stockholders in connection with the then-proposed acquisition. In 2005, the parties executed a settlement agreement and the case was dismissed.

16

Additionally, on November 12, 2003, AllServe and its wholly-owned subsidiary AllServe Systems, Inc. filed suit against us in the Court of Chancery of the State of Delaware. Based on the complaint, the plaintiffs are apparently seeking an injunction to prevent us from closing the transaction with Deutsche Bank and Essar, which in our view has already been closed. The complaint also seeks to specifically enforce our merger agreement with AllServe. Alternatively, the complaint seeks payment of the $1.1 million break-up fee as well as other monetary damages that, according to AllServe, exceed $50 million. We deny that AllServe is entitled to any injunctive relief, payment of the break-up fee or any other damages or payments. The $1.1 million was accrued at December 31, 2003 to a reserve for the benefit of the subordinated debt holders. Payment to the sub debt holders is contingent upon the outcome of the Allserve litigation. If certain fees are paid to Allserve, this will reduce the amount paid to the subordinated debt holders up to $1.1 million. At this time it is not possible to accurately predict the outcome of this lawsuit. We intend to contest this lawsuit vigorously.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company held an Annual Meeting of its Stockholders on December 28, 2005. At the Annual Meeting, the Company’s stockholders elected the following individuals to the Company’s Board, each to serve until the later of one year or until their successors are duly elected and qualified:

	For	Against	Withheld
Kannan Ramasamy	494,820,311	0	162,107
Richard N. Ferry	494,860,311	0	122,107
Rajiv Agarwal	494,820,311	0	162,107
John-Michael Lind	494,914,148	0	68,270
Pramod Saxena	494,820,311	0	162,107
Rashesh Shah	494,873,948	0	108,470
Kamalnayan Agarwal	494,872,648	0	109,770
Anshuman S. Ruia	494,819,811	0	162,607
Madhu Vuppuluri	494,820,311	0	162,107
Ravikant N. Ruia	494,819,511	0	162,907

At the Annual Meeting, the Company asked the stockholders to consider and vote upon an amendment to the Company’s Certificate of Incorporation to increase the Company’s number of authorized shares of Common Stock from 800,000,000 shares to 2,000,000,000 shares. Prior to the Annual Meeting, the Board approved the proposed increase in the Company’s number of authorized shares of Common Stock, and recommended that the stockholders consider and approve the amendment. The Board determined that the increase in the Company’s number of authorized Common Stock was necessary in order for the Company to enter into transactions in which the Company would issue Common Stock as the form of its tendered consideration. The Board also determined that an increase in the Company’s number of authorized shares of Common Stock was necessary in order for the Company to have the appropriate flexibility to provide equity compensation to its employees.

At the time of the Annual Meeting, only one transaction was pending that would involve the Company’s issuance of additional Common Stock. That transaction involved the conversion of approximately $18.5 million of the Company’s indebtedness to World Focus, which is currently also the Company’s majority stockholder, into additional shares of Common Stock. A Special Committee composed of independent directors of the Board considered the proposed debt conversion transaction and determined that a debt conversion price of $0.038 per share was fair to the Company. Because the Company had an insufficient amount of authorized Common Stock available for issuance to accommodate the debt conversion transaction, the proposed amendment to the Company’s Certificate of Incorporation to increase that amount of authorized Common Stock was a condition precedent to the consummation of that transaction. The Company’s stockholders approved the amendment to the Company’s Certificate of Incorporation by a vote of 493,412,462 in favor, 1,569,586 against or withheld, and 370 abstaining.

17

At the Annual Meeting, the Company also asked the stockholders to consider and vote upon an amendment to the Aegis Communications Group, Inc. Amended and Restated 1998 Stock Option Plan to increase the number of authorized shares of Common Stock available to be issued under the Option Plan from 11,842,720 shares to 35,000,000 shares. Prior to the Annual Meeting, the Board approved the proposed amendment to the Option Plan, and recommended that the stockholders consider and approve the amendment. The Board determined that an increase in the number of authorized shares of Common Stock available for issuance under the Option Plan was necessary in order for the Company to have the appropriate flexibility to provide equity compensation to its employees. The Company’s stockholders approved the amendment to the Company’s Certificate of Incorporation by a vote of 493,415,097 in favor, 1,496,751 against or withheld, and 70,570 abstaining.

18

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

Our Common Stock, $.01 par value per share, currently trades on the National Association of Securities Dealers’ Over-the-Counter Electronic Bulletin Board (“NASDAQ OTC BB”) under the symbol “AGIS.” As of December 31, 2005 there were 1,147,217,086 shares of our common stock outstanding held by approximately 720 holders of record.

The table below lists the range of high and low bid prices for our common stock as reported by the NASDAQ OTC BB for each full quarterly period within the two-year period ended December 31, 2005 and the subsequent interim period. These quotations reflect inter-dealer prices, without retail markup, markdown, or commission, and may not necessarily represent actual transactions.

Year ended December 31, 2004	High		Low
First Quarter	$	0.28	$	0.10
Second Quarter	$	0.17	$	0.06
Third Quarter	$	0.10	$	0.05
Fourth Quarter	$	0.18	$	0.08
Year ended December 31, 2005	High		Low
First Quarter	$	0.30	$	0.12
Second Quarter	$	0.16	$	0.08
Third Quarter	$	0.11	$	0.04
Fourth Quarter	$	0.06	$	0.03

DIVIDENDS

During the two year period ended December 31, 2005 and the subsequent interim period, we did not declare a cash dividend on our common stock. We have accrued an annual dividend of $0.36 per share on 29,778 outstanding shares of our Series B Preferred Stock. Our Series F Preferred Stock accrued dividends daily at a rate of 9.626% per annum. Under the terms of the Third Amended and Restated Credit Agreement (the “Credit Agreement”), we are prohibited from paying cash dividends on our common stock and preferred stock until all of the lender’s commitments had been met and all of our obligations under the Credit Agreement had been satisfied. See “Notes to Consolidated Financial Statements 7. Long-Term Debt and 11. Preferred Stock.”

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

IQI Plan

In November 1996, IQI, Inc. established the 1996 Incentive Stock Option Plan, or the IQI Plan. The IQI Plan provides for the award of incentive stock options to directors, officers, key employees and members of Thayer’s Advisory Board. A Compensation Committee, as established by IQI’s Board of Directors, administered the IQI Plan. These options are intended to qualify as incentive stock options, or ISOs, under the Internal Revenue Code or non-statutory stock options, also referred to as NSOs, which are not intended to qualify. IQI reserved 3,929,774 shares of common stock for issuance under the IQI Plan. Options granted pursuant to the IQI Plan are exercisable for ten years from the date of the grant subject to vesting schedules.

ATC Plans

Prior to the merger with IQI, ATC shareholders approved two stock option plans, known as the ATC Plans, which provided for the granting of options to purchase up to 5,000,000 shares of common stock to key

19

employees, officers and directors of ATC and its operating subsidiary. At the date of the IQI Merger, options to purchase 4,447,000 shares of common stock granted pursuant to the ATC Plans were outstanding. Options granted pursuant to the ATC Plans are exercisable for ten years from the date of the grant subject to vesting schedules.

1998 Plan

In September 1998, we initiated the Aegis Communications Group, Inc. 1998 Stock Option and Restricted Stock Plan, or the 1998 Aegis Communications Group Plan. As amended by the Company’s stockholders at the Company’s most recent Annual Meeting, the plan provides for the granting of options to purchase up to a maximum of 35,000,000 shares of Common Stock to key employees, officers and directors of the Company and our operating subsidiaries. Options granted pursuant to the 1998 Aegis Communications Group Plan are exercisable for ten years from the date of the grant subject to vesting schedules. We may grant additional options under the 1998 Aegis Communications Group Plan at any time prior to September 2008. As a result of the adoption of the 1998 Aegis Communications Group Plan, we will not grant any future options to purchase shares of common stock pursuant to the IQI Plan or the ATC plans.

Plan category	Number of securities to be issued upon exercise of outstanding warrants	Weighted average exercise price of outstanding warrants	Number of securities remaining available for future issuance under compensation plans (excluding securities reflected in column (a))
	(a)	(b)	(c)
Equity compensation plans approved by security holders	0	0	43,929,774
Equity compensation plans not approved by security holders	—	—	—
Total	0	0	43,929,774

Effective as of August 21, 2003, in connection with the anticipated AllServe transaction, all outstanding options to purchase capital stock of the Company or its subsidiaries were terminated and released by their holders, with an aggregate cost to the Company for obtaining those releases of $0.05 million. Effective as of November 5, 2003, all warrants to purchase capital stock of the Company that were outstanding prior to the transaction with Deutsche Bank and Essar were terminated and released by their holders. If the Company had elected to recognize compensation cost for the issuance of options to employees of the Company based on the fair value at the grant dates for awards consistent with the method prescribed by Statement of Financial Accounting Standards (“SFAS”) No. 123 Accounting for Stock Based Compensation, $1.5 million in unearned stock compensation expense at the date of cancellation would have been recognized.

20

ITEM 6. SELECTED FINANCIAL DATA

The table below sets forth certain of our selected consolidated financial data for the last five years. This information should be read in conjunction with Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and related notes to the consolidated financial statements.

	Year ended December 31,
	2005			2004			2003			2002			2001
	(Dollars in thousands except per share data)
Statements of Operations Data
Revenues	$	68,641		$	94,327		$	139,861		$	135,894		$	214,410
Cost of services		51,731			68,426			99,667			93,492			141,643
SG&A expenses		20,147			31,357			39,884			43,118			55,542
Depreciation & amortization		5,905			8,521			11,462			13,013			14,014
Loss on fixed assets dispositions		889			—			—			—			—
Acquisition goodwill amortization		—			—			—			—			2,377
Restructuring and other non-recurring charges		—			4,742			1,645			900			—
Operating (loss) income		(10,031	)		(18,719	)		(12,797	)		(14,629	)		834
Other (Income) Expense—net		(318	)		—			—			—			—
Gain on early extinguishment of debt		—			—			(6,199	)		—			—
Interest expense, net		859			634			2,385			1,160			2,951
Non-cash interest expense		2,589			2,742			1,613			1,565			1,374
Loss from continuing operations before income taxes		(13,161	)		(22,095	)		(10,596	)		(17,354	)		(3,491	)
Income tax expense (benefit)		—			145			300			9,671			5,774
Net loss from continuing operations		(13,161	)		(22,240	)		(10,896	)		(27,025	)		(9,265	)
Net loss from operations of discontinued segment		—			—			—			(94	)		(105	)
Estimated (loss) gain on disposal of business segment		—			—			(569	)		8,283			—
Cumulative effect of change in accounting for goodwill impairment		—			—			—			(43,448	)		—
Net loss		(13,161	)		(22,240	)		(11,465	)		(62,284	)		(9,370	)
Preferred stock dividends		11			11			7,608			8,468			7,572
Net loss applicable to common shareholders	$	(13,172	)	$	(22,251	)	$	(19,073	)	$	(70,752	)	$	(16,942	)
Basic and diluted loss per share	$	(0.02	)	$	(0.07	)	$	(0.33	)	$	(1.35	)	$	(0.32	)
Basic and diluted weighted average number of common and common equivalent shares outstanding (In Thousands)		716,368			313,054			57,299			52,171			52,171
Balance Sheet Data
Total Assets	$	18,115		$	22,121		$	50,294		$	52,678		$	130,524
Long-Term Debt	$	4,085		$	18,323		$	18,924		$	19,836		$	26,171
Shareholders Equity/Deficit	$	(6,721	)	$	(12,061	)	$	(26,449	)	$	(45,550	)	$	22,421
Operating Data
Client service centers at end of period		7			6			11			12			14
Teleservices workstations at end of period		3,059			2,715			4,585			5,136			6,189
Marketing research facilities at end of period		—			—			—			—			6
Marketing research workstations at end of period		—			—			—			—			161
Number of teleservices representatives		3,200			1,732			2,418			3,440			3,557

The Company manages its operations by driving the metrics on revenues, capacity utilization, direct margins, bill to pay ratio (which establishes recovery on our costs) and contribution margin from each of our centers. Those metrics are monitored based on the performance of each center against the budgets set for those centers.

21

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

The following table contains certain statement of operations data as a percentage of revenues for the periods indicated:

	Year ended December 31,
	2005		2004		2003
Revenues	100.0	%	100.0	%	100.0	%
Operating Costs:
Cost of services	75.4	%	72.5	%	71.2	%
Selling, general and administrative expenses	29.5	%	33.2	%	28.5	%
Depreciation and amortization	8.4	%	9.1	%	8.2	%
Loss on fixed asset disposition	1.2	%	—		—
Restructuring charges	—		5.0	%	1.2	%
Total operating expenses	114.5	%	119.8	%	109.1	%
Operating (loss) income	(14.5	)%	(19.8	)%	(9.1	)%
Other (Income) expense—net	(.5	)%	—		—
Gain on early extinguishment of debt	0.0	%	0.0	%	(4.4	)%
Interest expense, net	1.3	%	0.7	%	1.7	%
Non-cash interest expense	3.9	%	2.9	%	1.2	%
Loss from continuing operations before income taxes	(19.2	)%	(23.4	)%	(7.6	)%
Current taxes	0.0	%	0.2	%	0.2	%
Deferred taxes	0.0	%	0.0	%	0.0	%
Net loss from continuing operations	(19.2	)%	(23.6	)%	(7.8	)%
Discontinued operations:
Net loss from operations of discontinued segment	0.0	%	(23.6	)%	0.0	%
Estimated (loss) gain on disposal of business segment	0.0	%	0.0	%	(0.4	)%
Loss before cumulative effect of change in accounting principle	(19.2	)%	0.0	%	(8.2	)%
Cumulative effect of change in accounting for goodwill impairment	0.0	%	0.0	%	0.0	%
Net loss	(19.2	)%	(23.6	)%	(8.2	)%
Preferred stock dividends	0.0	%	0.0	%	5.4	%
Net loss applicable to common shareholders	(19.2	)%	(23.6	)%	(13.6	)%

Executive Overview

During the fiscal year ended December 31, 2005, management addressed two significant challenges in its efforts to improve the Company’s financial health and operating results. The first of these challenges was “strategic direction”, and the second was the Company’s effort to turnaround operations and improve liquidity as represented by the Company’s balance sheet, which was necessary in order for the Company to attract credit financing on acceptable terms. Those operating and financial challenges were systematically addressed by the Company’s senior management throughout the year ended December 31, 2005. The Company’s revenues declined in 2004 and throughout the first quarter of the 2005 fiscal year due to termination of reduction of our client programs, and these events had a material effect on our operating results for the year ended December 31, 2005. Because the Company was not able to realize the benefit of new sales efforts until the fourth quarter of 2005, the Company focused on reducing costs across many critical areas in order to align costs with existing revenue levels. The Company’s declining revenues throughout 2004 and the first quarter of 2005 had a serious

22

impact on the Company’s ability to finance ongoing operations, particularly because of the unfavorable credit facility we had entered into with Wells Fargo Foothill in January of 2004. Because our borrowing ability under the Foothill Credit Facility was based on minimum threshold of outstanding accounts receivable, our declining revenues put extraordinary stress on the Company’s ability to finance its working capital needs. Our liquidity situation improved in April of 2005, when we terminated the Foothill Credit Facility and established an alternative credit financing arrangement based on factored accounts receivable with Rockland Credit Finance, LLC. We also turned to Essar Global Limited, then our largest stockholder, for short-term working capital loans in the first and second quarters of 2005. We were able to effectively manage our financing needs in the 2005 fiscal year through our combination of cost alignment, the establishment of the Rockland credit arrangement and the short-term financing provided by Essar.

In October of 2005, the Company began to see results from its sales efforts, as the Company began performing services for new clients in the healthcare industry to support their Medicare Part D prescription drug benefit programs. Those programs have marked the beginning of the Company’s entry into the healthcare industry, and the Company looks forward to future growth within the broader healthcare industry sector. During the 2005 fiscal year, the Company has focused on improving its strategic direction by focusing its sales efforts and business strategies on the healthcare, utility, automotive and financial services sectors. Management believes that the Company’s success in the fourth quarter of 2005 in attracting new business within the healthcare industry has validated the Company’s strategy in this regard. Management is optimistic that the Company’s other targeted industry sectors should also yield successful new business engagements as those sectors complete their internal consolidation, and the surviving companies should be prepared to expand their outsourcing activities. The Company has also invested in and installed a VoIP solution that should allow the Company to rapidly scale the scope of its services across a global delivery model, which should be a competitive advantage for the Company if and when segments of the market embrace our business strategy. The Company has also focused on strengthening its balance sheet by working closely with its majority shareholder to obtain required short-term working capital. We have accomplished this by renegotiating our debt balances and completing the conversion of outstanding debt into common stock of the Company.

Turnaround Approach. Management pursued a number of turnaround initiatives beginning in the first quarter of 2005, and the benefits of those efforts began to manifest towards the end of the third quarter of 2005 and the first part of the fourth quarter of 2005. The Company strengthened its operations and business results by making progress in the areas of (1) an expanded sales and marketing organization, established through a direct marketing arrangement with Business Transformation Consulting, Inc. (“BTC”), a company also affiliated with the Essar Group, which will provide sales and business development services on a sales commission basis; (2) a reduced cost of operations, particularly with respect to our cost of services in the telecommunications and insurance sectors, (3) a leveraged offshore capability, obtained by outsourcing certain core staff operations to India where the cost of labor is lower and the education and technical ability of the labor supply are good; (4) a new technology platform, which will replace our old legacy telecommunications technology platforms with a state of the art VoIP platform running on a robust MPLS over IP network cloud; (5) began the migration of parts of our IT and finance support functions to offshore providers to realize efficiencies; (6) strengthened management processes within the Company designed to align the Company’s performance metrics and goals; (7) a comprehensive budget for 2006 which has been presented to and approved by the Company’s Board of Directors, and has since been rolled out to the Company’s operational managers; and (8) a human resources audit of the Company’s talent pool, including a senior leadership 360 degree effectiveness measurement.

Our efforts in sales and marketing yielded six new accounts during the third and fourth quarters of 2005. Those new accounts include Humana (healthcare), PharmaCare (a division of CVS), Kipany (servicing Verizon products), EduCap (an education loan product), Vartec (a telecommunications company), and NationsHealth (a public company in the healthcare industry), although during the first quarter of 2006, NationsHealth elected first to reduce its demand for our services by ceasing operations in our New York City call services facility, and then subsequently opted to terminate its agreement with us. Our contracts with Humana, PharmaCare and NationsHealth, to provide call center services, have opened up new marketing opportunities in the area of the

23

Medicare Part D prescription drug benefit program, which was introduced by the United States federal government effective January 1, 2006. Medicare Part D is expected to represent the biggest expansion of U.S. entitlement programs since Medicare itself was established in the 1960’s. Estimates of the 10-year cost of this entitlement range from $395 billion to more than $2 trillion. Under Medicare Part D, senior citizens choose from multiple prescription drug plans that have differing premiums and covered prescription drugs. Although Medicare Part D is sponsored by the United States federal government, the program is administered by federally-approved private companies. The Company successfully executed a significant increase in its operational capacity in a very short period of time, and this execution was possible largely because of our strong operating platform and corporate culture. Our revenues rose from $5.3 million in September 2005 to $9.1 million in December 2005, and our number of full time employees (“FTE’s”) increased from 1,800 in September 2005 to 3,200 in December 2005. The Company is leveraging its relationships to gain more work from those programs as well as other healthcare-related services, as this market shows tremendous growth potential over the next decade because of the increase in the retirement-aged population in the United States.

On the cost side, during the third quarter of 2005 we favorably renegotiated our telecommunications service contract with AT&T to a reduced minimum usage commitment level that should adequately cover our current utilization. Our new contract extends our commitment to 2010 with a lower minimum commitment of $3.4 million per year as compared with our previous commitment of $7.4 million per year. Our revised contract allows the Company to realize significant reductions and discounts in our circuits and usage rates. The revised contract also includes important provisions requiring that the rates for all items under the contract be reviewed periodically and revised to match rates for similar services consistent with industry competition. The Company began to realize the benefits of this revised contract effective September 1, 2005.

Also on the cost side, the Company has spent considerable time benchmarking its healthcare benefits insurance costs and administrative practices. We placed our contracts for health insurance that were due for renewal on June 12, 2005 through a competitive bidding process that included restructuring coverage, particularly in the area of workers compensation, in which the Company has over the past year shown significant improvements in claims performance. As a result, the Company has restructured its healthcare benefits arrangements in a manner that allows for different shaded premiums and Company contributions, and that does not require any collateral beyond the premiums payable during the tenure of the policy. In addition, during the third and fourth quarters of 2005, the Company began realizing savings from the closure of certain of our call centers in 2004.

The Company has also succeeded in developing plans for a streamlined and cost efficient finance and information technology organization located in the United States, albeit with related business processes migrating to Aegis BPO Services Ltd. (“ABSL”), a direct subsidiary of the Essar Group. Though still progressing on this migration program, the Company has demonstrated that the outsourced information technology capabilities can provide cost efficiencies and effective services. We expect to realize increased cost reduction by outsourcing expanded areas of our information technology and finance capabilities during the 2006 fiscal year.

Similarly, in order to achieve a variable cost structure for the Company’s sales and marketing business processes, the Company negotiated a contract with BTC to provide the services of a seasoned sales and business development team on an exclusive basis in exchange for a percentage commission on revenues collected from new business developed by BTC.

As the Company completes an important phase of its turnaround efforts by rightsizing its business operations, and prepares to support and deliver on the new business developed by its sales and marketing organization, it has also been important for the Company to overhaul its existing technology platform. The Company has been operating on a legacy platform that has limited and expensive maintenance support, and the Company continues to run voice and data on expensive trunk networks. The Company has made significant progress in developing a VoIP platform with its related software applications running in an IBM and Informix environment. The network supporting the transport of the voice and data will be on the technologically advanced

24

and robust MPLS over IP network. This technology platform is designed to support over 3,500 workstations in the United States and allow for accelerated deployment of the virtual agents across our service center locations. The new platform is planned to be implemented across all our centers by the end of the second quarter of 2006 and is currently functional at one of our service centers supporting a large client in the financial services sector.

Throughout the 2005 fiscal year, the Company’s management has spent a significant amount time creating a management review structure that integrates all elements that impact the Company’s business processes and operational performance. The Company has worked diligently to ensure timely and responsive internal communication through two management forums: (1) the Senior Leadership Team, comprised of direct reports to the Chief Executive Officer, which team discusses and addresses substantive resource allocation and organizational issues; and (2) The Extended Staff, comprised of the Senior Leadership Team, Service Center Directors and Account Directors serving as a operating forum to focus on the operational and financial performance of service centers and customer accounts with the goal of expeditiously responding to risks and opportunities in the Company’s business. Furthermore, in order to ensure a broader understanding of the Company’s goals and milestones we held our first company-wide “All Hands Meeting” to energize around 300 operating managers on the possibilities for our business in 2006. We believe that these efforts should create the appropriate operating culture fundamental to the turnaround progress and implementation of the strategic direction of the Company.

Management spent a significant amount of time during the fourth quarter of 2005 developing a detailed comprehensive budget for 2006, as well as completing an audit of the Company’s operating talent pool and aligning the skills of the Company’s human resources against the requirements of the many clients we serve. This appraisal process has helped further streamline our operating organization and has provided critical feedback on the gaps we will need to address to execute on our 2006 operating plans. Management believes that the Company’s success in 2006 should be largely a function of how effectively the Senior Leadership team is able to collaborate and take accountability for the parts of our business designated to them. To enable that positive change, a 360 degree assessment was carried out for each of the Senior Leadership Team members, which should help to improve the effectiveness of the Senior Leadership Team’s constituent members.

The Company’s sharp decline in revenues during 2004 and flat revenue levels during the first three quarters of 2005 also caused serious difficulties in financing ongoing operations through our credit facility with Wells Fargo Foothill. On April 4, 2005, the Company successfully replaced the Foothill credit facility with a $7.5 million credit arrangement through Rockland Credit Finance, LLC. In an effort to improve our balance sheet, the Company closed on a transaction with World Focus, an Essar Company, in which the Company sold 487,164,064 shares of Common Stock to World Focus in exchange for their cancellation of approximately $18.5 million in outstanding debt. The Company formed a special committee comprised of independent members of the Board of Directors to consider this transaction, negotiate with World Focus, and approve the transaction on terms that were in the best interests of the Company and its stockholders, and the transaction was completed on December 28, 2005.

Year Ended December 31, 2005 vs. Year Ended December 31, 2004

We recognized a net loss applicable to common shareholders of $13.1 million or $0.02 per share for the year ended December 31, 2005, versus a net loss applicable to common shareholders of $22.2 million or $0.07 per share in 2004, a 41% reduction of prior year losses applicable to common shareholders.

Revenues. For the year ended December 31, 2005, revenues from continuing operations were $68.6 million versus $94.3 million in the prior year, a decrease of $25.7 million, or 27.2%. The decrease in revenues versus the year ended December 31, 2004 resulted primarily from a reduced demand for our services from three of our legacy clients, each of which reduced demand by approximately 33% percent from 2004. Those unfavorable losses were partially offset by increases in healthcare- related call services initiated by new customers during the three months ended December 31, 2005. Although the new work is beneficial, the short time of approximately one quarter was not sufficient to offset completely the declining revenues from other clients over the year.

25

During the quarter ended December 31, 2005, the Company’s revenues were $22 million as against $18 million in the quarter ended December 31, 2004 showing a growth of 22%. In addition, during the year 2005, the EBITDA performance showed an improvement from losses of $2.2 million in the quarter ended March 31, 2005, $1.9 million in the quarter ended June 30, 2005, $699 thousand in the quarter ended September 30, 2005 to a positive EBITDA of $930 thousand in the quarter ended December 31, 2005. During the year ended December 31, 2005, the Company recognized $3.6 million of revenues applicable to customer reimbursement which primarily relate to direct reimbursable expenses incurred on behalf of the NationsHealth contract.

Revenue Mix. Inbound CRM and non-voice services continued to be responsible for the majority of our revenues in 2005. Together those two service areas accounted for approximately 89.2% of our revenues, as compared to 75.5% in 2004. Outbound CRM revenue for 2005 accounted for approximately 10.8% as compared to 24.5% in 2004. The decrease in outbound CRM revenues from 2004 was due to reduced volume for existing client programs.

	Year ended December 31,
	2005		%		2004		%
	(Dollars in millions)
Inbound CRM	$	54.9	80.0	%	$	61.6	65.3	%
Outbound CRM		7.4	10.8	%		23.1	24.5	%
Non-Voice & Other		6.3	9.2	%		9.6	10.2	%
Total revenues	$	68.6	100.0	%	$	94.3	100.0	%

Revenue Concentration. We are dependent on a few large clients for a significant portion of our revenues. The loss of one or more of these clients or a significant decline in business with any of these clients individually or as a group, or our inability to collect amounts owed to us by such clients, could have, and have had a material adverse effect on our business. For the year ended December 31, 2005, three customers each were responsible for at least 10% of our revenues and together accounted for approximately 39% of our revenues as compared to four customers accounting for approximately 63% for the prior year comparable period. Our revenue concentration for those customers for the years ended December 31, 2005 and 2004 was as follows:

		Year ended December 31,
Client	Industry Segment	2005		%		2004		%
		(Dollars in millions)
Qwest	Telecommunications	$	10.6	15.4	%	$	14.4	15.3	%
Western Union	Financial Services		9.1	13.3	%		9.3	9.8	%
American Express	Financial Services		7.0	10.2	%		10.2	10.8	%
AT&T	Telecommunications		5.9	8.6	%		24.6	26.1	%
Trilegiant	Membership Services		5.0	7.3	%		9.8	10.4	%
	Total	$	37.6	54.8	%	$	68.3	72.4	%

Historically, our revenues have been also concentrated within the telecommunications industry segment. The telecommunications industry has been under significant economic pressures since 2003. That revenue concentration creates an additional level of risk to the Company in terms of the continuity of this revenue and our ultimate ability to collect the related accounts receivable. The Company has been able to penetrate the healthcare industry with the start of 3 new contracts in the fourth quarter of 2005, and the Company entry into this industry sector should help to mitigate the risk associated customer concentrations in the telecommunications sector

Cost of Services (including customer reimbursements). For the year ended December 31, 2005, cost of services decreased $16.7 million from $68.4 million to $51.7 million compared to 2004. As a percentage of sales, cost of services rose slightly over the same period, from 72.3% to 75.4%. The total decrease in cost of sales experienced during the year is due to the reduction in wage expense associated with revenue shortfall for the

26

comparable periods as well as the consolidation and elimination of redundant internal administrative functions. The slight increase of cost of services as a percentage of revenue in both periods is a result of revenue declines occurring in advance of, or without a corresponding equal reduction of, variable costs.

Selling, General and Administrative Expenses. For the year ended December 31, 2005, selling, general and administrative expenses, SG&A, decreased from $31.4 million to $20.1 million, or from 33.2% of revenues in 2004 to 29.3% of revenues in 2005. The decrease in SG&A is primarily attributable to the elimination of overhead costs due to the reduction in workforce and management’s decision at the beginning of the third quarter of 2005 to outsource all new customer marketing and sales efforts. The Company anticipates that these changes in sales prospects management should provide better cost containment. During the 2005 fiscal year, the Company also lowered its expenses relating to insurance and healthcare benefits for its employees. Management expects the cumulative effect of these measures to help provide competitive advantage to the Company and its shareholders. Increases as a percentage of revenue are primarily due to decreases in revenues for 2005 vs. 2004.

Depreciation and Amortization. For the years ended December 31, 2005 and 2004, respectively, depreciation and amortization expenses were $5.9 million, or 8.6% of revenues and $8.5 million, or 9.1% of revenues. The reduction in depreciation expense is due to the effects of reduced capital spending, disposal of certain assets due to the closing of certain client service centers in prior years and a mature asset base which is approximately fully depreciated.

Loss on Fixed Asset Disposal. During the year, the Company had performed a fiscal inventory of its fixed assets. The Company noted that there were assets disposed with an original cost basis of approximately $55.6 million with accumulated depreciation of $54.7 million recording a loss on asset disposal of $889 thousand, net of proceeds from sale of equipment of $7 thousand.

Interest Expense, net. Net interest expense increased $0.2 million from $0.6 million in 2004 to $0.8 million in 2005. The increase in net interest expense for the year is mainly attributable to the increased finance costs incurred with the Rockland Credit facility compared to the Company’s prior agreement with Wells Fargo Foothill.

Non-cash interest expense. Non-cash interest expense was mostly unchanged due to the non-cash interest charge associated with the amortization of discount associated with the Deutsche Bank and Essar notes payable.

Income Tax Provision. We have historically generated net operating losses for income tax purposes. We recognize a deferred tax asset reflecting the future benefits of the resultant net operating loss carry-forward. These future tax benefits expire through 2022. Management regularly evaluates the company’s ability to realize its deferred tax asset, and determined as of June 30, 2002, that more likely than not, the deferred tax asset would not be realized in the near future. We have allocated a valuation allowance representing the amount of the deferred tax asset for which a valuation allowance previously had not been established. The income tax benefits from the operating losses incurred during 2005, 2004 and 2003 was offset by the Company’s valuation allowance since the benefit would exceed the projected realizable deferred tax asset. The Company has entered into transactions which may have an impact as to the ability to absorb Net Operating Losses in the future based on Section 382 income tax rulings.

At December 31, 2005, the Company had net operating loss carry forwards of approximately $84.2 million and unutilized tax credits of approximately $0.8 million. Due to an ownership change and the separate return limitation year rules, the utilization of net operating losses and tax credits may be limited in future years. The net operating loss carry forwards and tax credits begin to expire from 2013 through 2022. Management has established a valuation allowance for deferred taxes where management believes it is more likely than not that the deferred tax asset will not be realized.

27

Year Ended December 31, 2004 vs. Year Ended December 31, 2003

We recognized a net loss applicable to common shareholders of $22.2 million or $0.07 per share for the year ended December 31, 2004, versus a net loss applicable to common shareholders of $19.1 million or $0.33 per share in 2003. Excluding net income from discontinued operations, a gain on sale of the related assets, a gain on the early extinguishment of debt and the cumulative effect of a change in accounting for goodwill, we incurred a net loss from continuing operations of $22.2 million or $0.07 per share for the period ended December 31, 2004, as compared to a net loss from continuing operations of $10.9 million or $0.33 per share for the period ended December 31, 2003.

Revenues. For the year ended December 31, 2004, revenues from continuing operations were $94.3 million versus $139.9 million in the prior year, a decrease of $45.6 million, or 32.6%. The decrease in revenues versus the year ended December 31, 2003 resulted from a number of factors. First, an inbound contract with a cable services provider that expired in the fourth quarter of 2003 was not renewed by the client as they made a decision to consolidate their customer service into their available in-house capacity. This expired inbound contract accounted for approximately 33% of the decrease for 2003 vs. 2004. Second, the decision at the end of June 2004 by AT&T to discontinue its outbound acquisition services accounted for a majority of the 26% decrease in revenue billings on their campaigns 2003 vs. 2004. Additionally, another of our telecommunications clients (who is one of our five largest clients) reduced transaction volumes and a client in the membership services industry ramped down a campaign in the first quarter of 2004. Revenues for the third quarter of 2004 were also negatively impacted by the hurricanes experienced in the southeastern part of the country.

Revenue Mix. Inbound CRM and non-voice services continued to be responsible for the majority of our revenues in 2004. Together those two service areas accounted for approximately 75.6% of our revenues, as compared to 74.1% in 2003. Outbound CRM revenue for 2004 accounted for approximately 24.4% as compared to 25.9% in 2003. The decrease in outbound CRM revenues for 2004 is due to reduced volume for existing client programs.

	Year ended December 31,
	2004		%		2003		%
	(Dollars in millions)
Inbound CRM	$	61.6	65.3	%	$	88.1	63.0	%
Outbound CRM		23.1	24.5	%		36.3	25.9	%
Non-Voice & Other		9.6	10.2	%		15.5	11.1	%
Total revenues	$	94.3	100.0	%	$	139.9	100.0	%

Revenue Concentration. In 2004 we depended on several large clients for a significant portion of our revenues. For the year ended December 31, 2004, four customers each were responsible for at least 10% of our revenues and together accounted for approximately 63% of our revenues as compared to 66% for the prior year comparable period. Our revenue concentration for these four customers for the years ended December 31, 2004 and 2003 was as follows:

		Year ended December 31,
Client	Industry Segment	2004		%		2003		%
		(Dollars in millions)
AT&T	Telecommunications	$	24.6	26.1	%	$	36.4	26.0	%
Trilegiant	Membership Services		9.8	10.4	%		21.1	15.1	%
Qwest	Telecommunications		14.4	15.3	%		20.0	14.3	%
American Express	Financial Services		10.2	10.8	%		14.9	10.7	%
Cablevision	Cable Television		—	—			14.8	10.6	%
	Total	$	59.0	62.6	%	$	107.2	76.7	%

28

Cost of Services. For the year ended December 31, 2004, cost of services decreased $31.3 million from $99.7 to $68.4 million compared to 2003. As a percentage of sales, cost of services rose slightly over the same period, from 71.2% to 72.3%. The total decrease in cost of sales experienced during the year is due to the reduction in wage expense associated with revenue shortfall for the comparable periods as well as the consolidation and shutting down of call center operations from eleven centers in 2003 to six centers in 2004. The slight increase of cost of services as a percentage of revenue in both periods is a result of revenue declines occurring in advance of, or without a corresponding equal reduction of variable costs.

Selling, General and Administrative Expenses. For the year ended December 31, 2004, selling, general and administrative expenses, SG&A, decreased from $39.9 million to $31.4 million, or from 28.5% of revenues in 2003 to 33.2% of revenues in 2004. The decrease in SG&A is primarily attributable to the elimination of overhead costs due to the reduction in workforce, the closing of client service centers as well as improved management of our self-insured workers compensation plan in this year compared to the comparable period in the prior year. Increases as a percentage of revenue are primarily due to decreases in revenues for 2004 vs. 2003.

Restructuring Charges. We recorded $4.7 million in restructuring charges during the second, third and fourth quarters of 2004 relating to the closure of several call centers and office space located in Terra Haute, IN (3^rd quarter); Los Angeles, CA (4^th quarter); St. Joseph, MO (3^rd quarter); El Segundo, CA (4^th quarter); New York, NY (4^th quarter); Rocky Mount, NC (4^th quarter); Paramus, NJ (2^nd quarter); and Atlanta, GA (3^rd quarter). Included in the restructuring charges was $0.8 million in severance to key executives and $3.2 million for the removal from operations or disposal or both, of certain leasehold improvements, equipment, furniture, and fixtures from the call centers that were closed.

We recorded $1.6 million in restructuring charges during the second, third and fourth quarters of 2003 relating to the closure a call center located in Arlington, TX (May 2003), and the downsizing of the call center located in Irving, TX (December 2003). Included in the restructuring charges was $0.4 million retention bonus and $0.1 million non-cancelable lease costs.

Depreciation and Amortization. For the years ended December 31, 2004 and 2003, respectively, depreciation and amortization expenses were $8.5 million, or 9.1% of revenues and $11.5 million, or 8.2% of revenues. The reduction in depreciation expense is due to the effects of reduced capital spending, disposal of certain assets due to the closing of certain client service centers and a mature asset base becoming fully depreciated.

Interest Expense, net. Net interest expense decreased $1.8 million from $2.4 million in 2003 to $0.6 million in 2004. The decrease in net interest expense for the year is mainly attributable to the $1.0 million fee charged in November 2003 for the pay-off of the Scotia Bank Credit Agreement by the Deutsche Bank/Essar transaction.

Non-cash interest expense. Non-cash interest expense increased $1.1 million from $1.6 million in 2003 to $2.7 million in 2004. The increase in Non-cash interest expense is mainly attributable to amortizing $1.3 million of the discount on the Deutsche Bank/Essar note payable after the $9.9 million pay down in the first quarter of 2004. This was offset by the remaining months of reduced bond discount amortization.

Income Tax Provision. We have historically generated net operating losses for income tax purposes. We recognize a deferred tax asset reflecting the future benefits of the resultant net operating loss carry-forward. These future tax benefits expire through 2022. Management regularly evaluates the company’s ability to realize its deferred tax asset, and determined as of June 30, 2002, that more likely than not, the deferred tax asset would not be realized in the near future. We have allocated a valuation allowance representing the amount of the deferred tax asset for which a valuation allowance previously had not been established. The income tax benefit from the operating losses incurred during 2004, 2003 and 2002 were offset by the Company’s valuation allowance since the benefit would exceed the projected realizable deferred tax asset. The Company has entered into transactions which may have an impact as to the ability to absorb Net Operating Losses in the future based on Section 382 income tax rulings.

29

At December 31, 2004, the Company had net operating loss carry forwards of approximately $86.6 million and unutilized tax credits of approximately $0.8 million. Due to an ownership change and the separate return limitation year rules, the utilization of net operating losses and tax credits may be limited in future years. The net operating loss carry forwards and tax credits begin to expire from 2013 through 2022. Management has established a valuation allowance for deferred taxes where management believes it is more likely than not that the deferred tax asset will not be realized.

Preferred Dividends. Preferred dividends decreased to approximately $0.011 million for the year ended December 31, 2004 from $7.6 million in the prior year. During 2003 dividends on the Series F Preferred Shares were not paid in cash, but were added to the investment value of such shares. Dividends on the Series D and E Preferred Stock were paid in additional shares of Series D and E Preferred Stock, respectively. In connection with the November 5, 2003 Deutsche Bank/Essar transaction, all of the Series D and E Preferred Shares and 23,375 in 2003 and 23,375 in 2004, which represent all of the Series F Preferred Shares were converted to Common Stock.

LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth certain information from our statements of cash flows for the periods indicated:

	Year ended December 31,
	2005			2004			2003
	(Dollars in millions)
Net cash provided by (used in) operating activities	$	(2.0	)	$	2.9		$	(7.0	)
Net cash provided by (used in) investing activities		0.5			1.4			(5.6	)
Net cash provided by (used in) financing activities		1.8			(5.8	)		13.0
Cash flows of discontinued operations—operating activities		—			(0.2	)		(0.3	)
Net increase (decrease) in cash and cash equivalents	$	0.3		$	(1.7	)	$	0.1

We have historically utilized cash flow from operations, available borrowing capacity under a revolving line of credit, subordinated indebtedness provided by certain of our stockholders, and the issuance of convertible preferred stock to meet our liquidity needs. On January 26, 2004, we entered into a Loan Agreement with Wells Fargo Foothill (“Foothill”) allowing the company to borrow up to $25 million. The maximum amount available to borrow under the Loan Agreement was determined by the lesser of (i) the sum of a percentage of eligible billed accounts and a percentage of the amount of eligible unbilled accounts or (ii) an amount equal to the collections on accounts receivable for the past 60 days, less the sum of certain reserves established by Foothill. Effective April 4, 2004, the Company replaced the Foothill Facility with an alternative credit arrangement with Rockland Credit Financing, LLC (“Rockland”), which was subsequently amended on August 22, 2005. From time to time, we have also obtained short term loans from Essar to support our working capital requirements. See the caption “Related Party Short Term Borrowing” below. Furthermore, in December of 2005, World Focus, as successor in interest to approximately $18.3 million of the Company’s indebtedness to Essar, entered into a debt conversion transaction with the Company in which World Focus cancelled approximately $18.3 million of the Company’s long term debt in exchange for the Company’s issuance to World Focus of additional shares of the Company’s Common Stock. See the caption “Long Term Debt” below. Management believes that cash flows from operations and funds available from financing activities should be sufficient to meet our current liquidity requirements.

Cash used by operating activities was $2.0 million in 2005, as compared to cash provided of $2.9 million in 2004. The $2.0 million of operating cash flow in 2005 is mainly a result of net loss from operating activities less non cash expenses of depreciation and amortization of $5.9 million, amortization of note payable discount of $2.2 million and net $1.4 million of increase in accounts payable, accrued and other liabilities. Though revenues

30

are up for the three months ended December 31, 2005 of $22.4 million vs. $18 million for the three months ended December 31, 2004, accounts receivable dropped slightly from $9.8 million at December 31, 2004 to $9.2 million at December 31, 2005. The decrease is mainly attributable to the Company’s sale of selected accounts receivables under its recourse factoring agreement with Rockland Credit Finance, LLC (Rockland), and also due to improvement in collections cycle.

Cash provided by investing activities was $0.5 million in 2005, as compared to cash provided of $1.4 million in 2004. The change is primarily attributable to $4.6 million of restricted cash used as collateral for letters of credits covering our workers compensation insurance policies. Those letters of credit had been restricted by the Foothill credit facility, which we terminated in April of 2005. Our total capital expenditures in 2005 were $0.4 million (excluding capital lease obligations) as compared to $2.4 million in 2004. Our capital expenditures consisted primarily of telecommunications equipment and information technology hardware and software required for the upgrade of our operations and the upgrade or replacement of workstations in our existing facilities.

Cash provided by financing activities was $1.8 million in 2005, as compared to cash used of $5.8 million in 2004. The change of $5.0 million in 2005 is primarily due to payments of $10.8 million on the Deutsche Bank/Essar notes and $1.1 million of capital lease obligations offset by proceeds of $5.3 million from Deutsche Bank and Essar for warrants exercised all during the 2004 fiscal year.

On August 20, 2004, Deutsche Bank and Essar entered into a Put and Call Agreement under which Deutsche Bank had the right to put 80% of its notes due from the Company’s outstanding indebtedness to Deutsche Bank to Essar, and in which Essar had the right to call 80% of the shares of common stock of the Company owned by Deutsche Bank. Deutsche Bank exercised its put right on December 15, 2004, and Essar exercised its call right on December 28, 2004. The Put and Call Agreement had no net effect on the Company’s balance sheet, but only affected the relative proportions of the debt and equity positions in the Company held by Deutsche Bank and Essar.

During the first and second quarters of 2005, in an effort to improve our balance sheet and attract alternative lines of credit, The Company and World Focus (an Essar affiliate), discussed a possible transaction in which the Company would sell additional share of its common stock to World Focus in exchange for World Focus’ cancellation of the Company’s then-approximate $17.8 million indebtedness to World Focus. In July of 2005, the Company formed a special committee comprised of independent members of the Board of Directors to consider this transaction, negotiate with World Focus, and potentially approve the transaction on terms that are entirely fair and in the best interest of the Company and its stockholders. On November 30, 2005, the Company entered into a Debt Conversion Agreement with World Focus to convert the aggregate outstanding principal and accrued and unpaid interest it holds under three promissory notes, totaling approximately $18,501, into 487,164,064 shares of common stock at a December 28, 2005.

In March 2005, Essar arranged for the posting of two letters of credit to cover certain bonding requirements and workers compensation contingent liabilities of the Company by way of a credit extension to the Company in the form of stand-by letters of credit to cover these bonding requirements in place.

Restricted Cash

On December 31, 2004, the Company had restricted cash balance of $966 made up of the Company’s letters of credit outstanding of $2,900 as detailed below mostly offset by the borrowing base facility of $1,900. Those two outstanding irrevocable letters of credit were valued at approximately $2,900 and set to expire between February 6, 2005 and July 13, 2005. Those letters of credit were being maintained as security for the self-insured portion of the Company’s workers compensation insurance program and to support licensing requirements related to certain of the Company’s contractual obligations. Effective on March 15, 2005, Essar arranged for the replacement of those letters of credit with two alternative letters of credits, which have been posted by the Company. As a result, the restricted cash collateral was released in 2005.

31

Accounts Receivable

Accounts receivable at December 31, 2005 were $9,296, as compared to $9,783 at December 31, 2004. The Company’s revenues and related accounts receivable are spread evenly between telecommunications, financial services, healthcare service products and other individual service related products.

On April 4, 2005, the Company entered into a financing agreement with Rockland Credit Finance, LLC (Rockland) for a maximum borrowing of up to $7,500. The arrangement is based on recourse factoring of the Company’s accounts receivables. Substantially all cash and accounts receivable of the Company have been pledged as collateral for the Rockland facility.

Under the arrangement, Rockland typically advances to the Company 85% of the total amount of accounts receivable factored. Rockland retains 15% of the outstanding factored accounts receivable as a reserve, which it holds until the customer pays the factored invoice to Rockland. The cost of funds for the accounts receivable portion of the borrowings with Rockland is a .75% for each 30-day period up to a maximum of 60 days, thereafter; the fee will be .45% each 15 day period for an additional 30 days for a maximum of 90 day advance. The Company may be obligated to purchase the receivable back from Rockland at the end of 90 days. In the year ended December 31, 2005, we factored invoices totaling $46.1 million in receivables. We received $40.2 million in proceeds from the factor, with a balance due at December 31, 2005 from the factor agent of $5.9 million.

On August 22, 2005, the Company entered into an addendum to its agreement for credit financing with Rockland. The credit financing agreement addendum allows for the Company to receive mid-month funding based on 50% of the current work in process relating to work that will be invoiced at the end of the month. The credit financing agreement addendum has an initial term of 120-days, and the Company may request one or more 90-day extensions from Rockland. As a precondition to the credit financing agreement addendum, the Company was required to induce Essar Global Limited to extend the term of the promissory note in the amount of $1,388 to a date that is 90 days after the expiration of the credit financing agreement addendum, including all applicable extensions. By its terms, and construed together with the initial credit financing agreement, the credit financing agreement addendum allows the Company to assign, on a once per month basis, all of its unbilled accounts receivable to Rockland, subject in each case to Rockland’s prior review, selection and acceptance of some of those unbilled accounts. The credit financing agreement and addendum prohibit the Company from entering into alternative credit financing arrangements without Rockland’s prior written consent, unless Rockland rejects the Company’s selection of any particular unbilled account for sale and assignment, in which case that rejected account may be sold and assigned or pledged without restriction. During its term, the credit financing agreement addendum also prohibits the Company from using cash from its operations to repay any of its outstanding debts owed to third parties other than Rockland. The Company’s obligations to Rockland are collateralized by all of the Company’s cash and accounts receivables.

Related Party Short Term Borrowings

On March 21, 2005, the Company executed a Promissory Note in favor of Essar Global Limited. The Promissory Note was repaid to Essar during April 2005. The Promissory Note was in the amount of $1,250, was unsecured and bore interest at a simple rate of 0.50% over LIBOR per annum, with interest payable in arrears in fifteen-day periods beginning from the date of execution. Periodic interest payments are payable in cash, unless Essar agreed that such interest should be capitalized and added to the principle amount of the Promissory Note. The Promissory Note was paid in two installments of $250 on April 11, 2005 and $1,000 including interest on April 28, 2005.

On July 25, 2005, the Company executed a Promissory Note in favor of Essar Global Limited. The promissory note was in the amount of $1,500 in favor of Essar Global Limited. The Promissory Note is unsecured and bears interest at a simple rate of 0.50% over LIBOR per annum, with interest payable in arrears in fifteen-day periods beginning from the date of execution. During the three months ended September 31, 2005, the Company made an installment payment of $112 with a balance outstanding of $1,388 at December 31, 2005.

32

Related Party—Other

Essar has invested in the Company and has continued its support by providing key Essar personnel to assist the Company in strategic sales, marketing, operating finance and information technology functions. Those individuals are paid by Essar and provide services in their particular discipline for the Company.

On May 6, 2005, the Company announced that Richard N. Ferry resigned from his positions as President and Chief Executive Officer of the Company and from all other officer positions held with the Company’s subsidiaries effective as of April 30, 2005. Mr. Ferry will continue to serve as a director of the Company’s Board of Directors. Mr. Ferry continues to serve and provide additional resource in a marketing and sales capacity for the Company. On May 6, 2005, the Company announced that Kannan Ramasamy has been elected President and Chief Executive Officer and as a director on the Board of Directors of the Company effective as of May 1, 2005.

The Company has continued to pursue cost reduction initiatives moving some contracting services in India from WNS Services to Aegis BPO Services Limited (ABSL). ABSL is a wholly owned subsidiary of Essar Global Ltd., which is also a significant shareholder of the Company

Effective July 1, 2005, the Company entered into an agreement with Business Transformation Consulting Inc., under which Business Transformation Consulting provides a sales function for the Company on an outsourced basis. Through this relationship, the Company outsources all of its sales and marketing functions, including its client prospecting, market research, leads generation, customer acquisitions, up-selling, cross-selling, “building loyalty” programs and relationship management services to support its inbound and outbound telephone offerings. Under this program, all of the Company’s sales and marketing personnel have been hired by Business Transformation Consulting for the exclusive right to market and sell for the Company. Business Transformation Consulting is responsible for all costs including but not limited to salaries, commissions, travel, and presentation, and the Company is obligated to pay commissions to Business Transformation Consulting on any new business that they bring to the Company going forward.

Effective August 8, 2005, the Company entered into a tri-party Networking Equipment Lease Agreement between ABSL, a wholly owned subsidiary of Essar Global Limited, and SREI Infrastructure Finance Limited. Under that agreement, SREI loaned $4,000 to ABSL to purchase VoIP equipment, which ABSL subsequently leased to the Company over a 36 month period at a monthly lease cost of approximately $129. Consistent with FAS 13, that lease is accounted for as a capital lease depreciated over the life of the lease and lease payments are charged against capital lease liability and interest expense.

The Company has Master Service Agreements and related Statement of Works in process with ABSL for the off-shore production of back office work related to call service operations, information technology support, payroll support and other back office functions that support the operations of the Company. Although ABSL is an affiliate, all contracts have been negotiated and entered into through arms length transactions at prices comparable to market rates.

The Company is continuing to pursue its strategy of growing beyond the call center business to a full line of business process operating initiatives, some of which may be associated through related parties. The sensitivity and timing of these discussions are not complete allowing us to provide appropriate disclosure in this report. We look forward to providing additional communication and disclosure upon resolution of those issues when they are complete.

33

Contractual Obligations and Commercial Commitments

The following table sets forth certain information concerning the Company’s contractual obligations and commercial commitments at December 31, 2005, and outlines the Company’s expected future payments to be made under such obligations and commitments:

	Payments due by period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(Dollars in millions)
Long/Short-Term Debt Obligations	$	3.3	$	1.6	$	1.7	$	—	$	—
Capital Lease Obligations		4.2		1.5		2.7		—		—
Operating Lease Obligations		10.0		2.8		4.9		2.3		—
Purchase Obligations		15.0		3.4		6.8		4.8		—
Total	$	32.5	$	9.3	$	16.1	$	7.1	$	—

The Company has agreements with some telephone long distance carriers which currently range to 60 months, and which provide for annual minimum usage requirements. During the fourth quarter of 2004, the Company reached agreement with its largest carrier to cancel the remaining minimum usage commitment under the then existing agreement in exchange for entering into a reduced usage commitment effective October 1, 2000, under which it is committed to usage of $7,400 annually for seven years.

At December 31, 2004, the Company accrued $290 related to unused and under accrual usage for the December 31, 2004 commitment of $7,400. The contract provides for a “Business Downturn / Network Optimization” clause which in the event of a business downturn beyond our control that significantly reduces the volume of services required by us, with the result that we will be unable to meet our revenue and or volume commitments, we and the vendor service provider will cooperate to develop a mutually agreeable alternative agreement, and amend or replace the affected metrics of the contract currently in place. In January 2005, we initiated the downturn clause and worked with the vendor provider to redraft the contract. Effective July 1, 2005, the Company amended the current 7-year agreement to a revised 10-year agreement reducing our annual commitment usage from $7,400 annually to $3,400 annually and established a contract that allowed for review of rates for purchase of circuits and usage that is benchmarked competitively to reflect the use of the most productive technology configuration. For example, the Company was able to reduce the usage rate from 2.4 cent per minute to 1.84 cents per minute. As partial consideration for the extended term, AT&T provided a credit of all underutilized charges in the original contract from prior periods. Therefore, in the third quarter 2005, the Company had reversed the $290 accrual set on the books at December 31, 2004 related to prior underutilization.

At the beginning of 2005, the Company had two outstanding irrevocable letters of credit. Those letters of credit totaled approximately $2.9 million in value and were set to expire between February 6, 2005 and July 13, 2005. In April 2005, Essar had placed 2 irrevocable letters of credit from its credit facility in place to cover the Company’s workers compensation requirements along with bonding requirements for the Company’s do not call list. As a result, these two letters of credit placed by the Company have been cancelled.

On April 4, 2005, the Company executed a new financing arrangement with Rockland. The agreement provides for a $7,500 facility based on factored receivables. The cost basis of financing is Wall Street Journal published prime rate plus 2% on funds employed. Management Fees are based on 0.75% of the face value of every invoice purchased for each 30-day period up to 60 days. Thereafter, the fee is 0.45% each 15-day period for an additional 30 days for a total 90-day period. The Company may be required to purchase back outstanding invoices greater than 90 days. On August 22, 2005, the Company entered into an addendum to its agreement for credit financing with Rockland, which it entered into on April 4, 2005. The credit financing agreement addendum has an initial term of 120-days, and the Company may request one or more 90-day extensions from Rockland. As a precondition to the credit financing agreement addendum, the Company must induce Essar Global Limited to

34

extend the term of the promissory note in the amount of $1,388 to a date that is 90 days after the expiration of the credit financing agreement addendum, including all applicable extensions. By its terms, and construed together with the initial credit financing agreement, the credit financing agreement addendum allows the Company to assign, on a once per month basis, all of its unbilled accounts receivable to Rockland, subject in each case to Rockland’s prior review, selection and acceptance of some of those unbilled accounts. The credit financing agreement and addendum prohibit the Company from entering into alternative credit financing arrangements without Rockland’s prior written consent, unless Rockland rejects the Company’s selection of any particular unbilled account for sale and assignment, in which case that rejected account may be sold and assigned or pledged without restriction. During its term, the credit financing agreement addendum also prohibits the Company from using cash from its operations to repay any of its outstanding debts owed to third parties other than Rockland.

Long-Term Debt

On November 5, 2003, Deutsche Bank and Essar purchased three-year promissory notes in the aggregate principal amount of $28.2 million from the Company. Those notes have a floating interest rate equal to the three-month London Interbank Borrowing Offered Rate plus 0.50%. Interest under the notes is payable quarterly in cash or the Company may, at its option, cause such interest to be capitalized and added to the principal amount of the notes. (See “Deutsche Bank/Essar transaction—Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants”)

On December 28, 2005, the Company executed an agreement to exchange its debt of approximately $18,501 for 487,164,604 shares of Company stock. (See Deutsche Bank/Essar transaction—Accounting for Convertible Debt and Debt Issued With Stock Purchase Warrants).

Other Credit Facilities

On April 4, 2005, the Company entered into an agreement for credit financing up to $7,500 with Rockland Credit Finance, LLC (Rockland). By its terms, that credit financing agreement allows the Company to select, sell and assign some of its accounts receivable to Rockland from time to time, subject in each case to Rockland’s prior review and acceptance of those selected accounts. The agreement prohibits the Company from entering into alternative credit financing arrangements without Rockland’s prior written consent, unless Rockland rejects the Company’s selection of any particular account for sale and assignment, in which case that rejected account may be sold and assigned or pledged without restriction.

On August 22, 2005, the Company entered into an addendum to its agreement for credit financing with Rockland, which it entered into on April 4, 2005. The credit financing agreement addendum has an initial term of 120-days, and the Company may request one or more 90-day extensions from Rockland. As a precondition to the credit financing agreement addendum, the Company must induce Essar Global Limited to extend the term of the promissory note in the amount of $1,388 to a date that is 90 days after the expiration of the credit financing agreement addendum, including all applicable extensions. By its terms, and construed together with the initial credit financing agreement, the credit financing agreement addendum allows the Company to assign, on a once per month basis, all of its unbilled accounts receivable to Rockland, subject in each case to Rockland’s prior review, selection and acceptance of some of those unbilled accounts. The credit financing agreement and addendum prohibit the Company from entering into alternative credit financing arrangements without Rockland’s prior written consent, unless Rockland rejects the Company’s selection of any particular unbilled account for sale and assignment, in which case that rejected account may be sold and assigned or pledged without restriction. During its term, the credit financing agreement addendum also prohibits the Company from using cash from its operations to repay any of its outstanding debts owed to third parties other than Rockland.

Effective August 8, 2005, the Company entered into a tri-party Networking Equipment Lease Agreement between ABSL, a wholly owned subsidiary of Essar Global Limited, and SREI Infrastructure Finance Limited.

35

Under that agreement SREI loaned $4,000 to ABSL to purchase VoIP equipment, which ABSL subsequently leased to the Company over a 36 month period at a monthly lease cost of approximately $129. Consistent with FAS 13, that lease is accounted for as a capital lease depreciated over the life of the lease and lease payments are charged against capital lease liability and interest expense.

Subordinated Indebtedness

In accordance with the terms of our then-existing senior and subordinated loans, as well as the terms of our agreement with Deutsche Bank and Essar, we were required to repay or otherwise retire our obligations to various lenders from the proceeds of this transaction (and, to the extent the subordinated debt was not paid off, the holders of the subordinated debt discharged the debt and released us from any further liability under their promissory notes). As a result of the November 5, 2003 Deutsche Bank/Essar transaction, all subordinated indebtedness was repaid and/or forgiven, and all warrants were canceled. The termination of the Company’s agreement to be acquired by AllServe resulted in the possibility of a break-up fee of up to $1.1 million, owed to AllServe. The $1.1 million fee was reserved as a partial reduction of the gain on early extinguishment of debt at December 31, 2003. Any part of the $1.1 million reserved for the break-up fee that is not paid to AllServe will be distributed to the subordinated debt holders, net of certain expenses. See Item 1. Business—Deutsche Bank/Essar Transaction—Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants.

Inflation

In the opinion of Management, inflation has not had a material effect on the Company’s financial condition or results of its operations.

Off-Balance Sheet Arrangements

The Company does not maintain off-balance sheet arrangements nor does it participate in non-exchange traded contracts requiring fair value accounting treatment.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of revenues and expenses. Actual results could differ from those estimates. We believe that our critical accounting policies are limited to those described below. For a detailed discussion on the application of these and other accounting policies, see the notes to the consolidated financial statements.

Accounts Receivable

Trade receivables are comprised primarily of amounts owed to Aegis through its CRM services and are presented net of an allowance for doubtful accounts. Contracts with individual clients determine when receivables are due, generally within 30 days, and whether interest is accrued on late payments. The amount of the allowance for doubtful accounts is calculated as follows: Account balances over 90 days past due are specifically identified, reviewed and reserved, based upon management’s best estimate. An additional reserve amount equal to two percent of the remaining accounts receivable balance is added to the amount for which a specific reserve was established based on historical trends. This combined amount comprises the balance in the allowance account. The adequacy of the reserve is periodically reviewed to determine its appropriateness. Receivable accounts are reviewed on a regular basis to determine whether collection is realistic. If collection of the account is no longer assured, then the amount is written-off against the allowance account. The reserve was adjusted downward at December 31, 2004 and 2005 to reflect the over accrual reserve based on a review of

36

balances aged at 60 days that had not been collected by February 28 of the succeeding year. At future reporting periods, the Company will consider the need for comparable adjustments to the Accounts Receivable Reserve based on individual client credit worthiness and aged balances.

Revenue Recognition

Revenues earned under contracts to provide customer solutions are based on telephone call time incurred per minute and/or on individual customer sales transactions handled and processed. Such revenue is recognized immediately on the completion of the related services that are performed at rates negotiated under client contracts. Revenue earned under contracts that are based on successful sales or pay for performance contract arrangements are recognized on the date the sale is verified by the customer and invoiced accordingly. Clients are provided with the ability to audit documentation in support of their respective billings. While management believes all such billings are proper and accurate, the Company periodically records reserves against revenues representing management’s best estimate of any potential billing adjustments or concessions that may be made as a result of such audits. Please refer below to notation of and compliance with SEC Staff Accounting Bulletin No. 104 “Revenue Recognition”.

In January 2003, the Company entered into a services agreement with Trilegiant Corporation (“Trilegiant”). Under the agreement, the Company, via forwarded call transfers, offers Trilegiant membership services to individuals. The Company is obligated to pay Trilegiant for the call transfers and recognizes this expense as a cost of services. When an individual agrees to enroll in the membership services program, a sale is made and the Company receives a commission from Trilegiant after the trial period is completed and Trilegiant has successfully billed the member. Sold memberships are subject to cancellation by the member with prorated refunds of membership fees. Aegis recognizes revenue on customer reimbursements primarily due to contract considerations. These are contracts where the customer has contracted with the Company on providing customer services operations where revenue is associated with direct reimbursement of cost to man the project, facility and network costs associated with running the campaign. Revenues associated with these campaigns that have negotiated margin associated are accounted for in Service Revenue.

Because the member can cancel their membership after the date of sale, the Company uses historical cancellation information to record revenue for the period. The estimated amount of revenue recorded under the contract is determined by applying the historical cancellation rates to the gross amount of membership commissions. If the actual cancellation rate for the period is different from that used to determine revenue at the time of sale, a resulting adjustment is made to revenue and accounts receivable.

According to SEC Staff Accounting Bulletin No. 104, “Revenue Recognition”, revenue recognition is appropriate if all of the following are met:

• Persuasive evidence of an arrangement exists,

• Delivery has occurred or services have been rendered,

• The seller’s price to the buyer is fixed or determinable, and

• Collectibility is reasonably assured.

The Company feels that the amount of revenue recognized under this contract for the years ending December 31, 2005, 2004 and 2003 is appropriate.

Deutsche Bank/Essar transaction—Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants

On November 5, 2003, the Company signed definitive documents to effect an investment in the Company by Deutsche Bank and Essar. In the transaction, Deutsche Bank (“DB”) and Essar Global Limited (“Essar”)

37

provided approximately equal portions of a $28.2 million investment in the Company in return for three-year secured promissory notes and warrants to purchase up to 80 percent of the Company’s common stock. The Company accounted for the warrants and notes payable issued under the Deutsche Bank and Essar transaction in accordance with APB No. 14, “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants” (“APB 14”). Deutsche Bank and Essar had been issued initial and subsequent warrants to purchase 527,661,932 shares of common stock. APB 14 requires a portion of the proceeds from the issuance of debt securities with detachable stock warrants to be allocated to the warrants and treated as paid-in capital. Any resulting discount or premium on the notes payable should be recorded and amortized over the life of the notes. The Company used the Black-Scholes model to determine the value of the warrants issued to Deutsche Bank and Essar. Under the Black-Scholes model, the value of the warrants are determined by taking the difference between acquiring the stock outright and the present value of paying the exercise price on the expiration day. As a result, the Company valued the initial warrants at $4.4 million. This amount was recorded as paid-in capital and the resulting discount on the notes payable was recorded and is being amortized using the interest method over the life of the notes. As a result of making $10,000 in principal payments on the Notes during the first quarter of 2004, the Company recognized $1.4 million in accelerated amortization of the discount on notes payable during the period. On July 13, 2004, Essar exercised all 264,358,628 of their warrants in exchange for one share of common stock per warrant. The total amount of consideration given was $2,600. These funds were used to reduce outstanding debt under the new line of credit and make capital investments. On August 20, 2004, Deutsche Bank exercised all 263,303,304 of their warrants in exchange for one share of common stock per warrant. The total amount of consideration given was $2.6 million. These funds were used to reduce outstanding debt and make capital investments.

On December 15, 2004, the Company executed a Secured Promissory Note in favor of Essar Global Limited (“Essar”). The Secured Promissory Note was executed in favor of Essar as a result of DB’s exercise of the Put and Call Agreement, pursuant to which DB has sold to Essar 80% of the outstanding principal and accrued interest of the Fourth Amended and Restated Secured Promissory Note, dated November 22, 2004, made by the Company in favor of DB (the “DB Debt Put”). The DB Debt Put was calculated as of December 15, 2004 to be $7,443, and this amount is the principal amount of the Secured Promissory Note. The Fourth Amended and Restated Secured Promissory Note held by DB was cancelled concurrently with the Company’s execution of the Secured Promissory Note, and the balance of the outstanding principal and interest due to DB under that instrument, or $1,860, was converted into a new Fifth Amended and Restated Secured Promissory Note, dated December 15, 2004, in favor of DB. By its terms, the Secured Promissory Note bears interest, compounded quarterly, at an annual rate equal to 0.50% per annum above the London Interbank Offered Rate for U.S. dollar-denominated deposits, adjusted quarterly. The Company has the option of paying accrued interest due under the Secured Promissory Note in arrears on a quarterly basis, or capitalizing such interest into the outstanding principal amount of the Secured Promissory Note.

On December 23, 2004, Deutsche Bank sold to Essar 150,000,000 shares of Aegis Communications Group, Inc. common stock.

On January 3, 2005, the Company executed a Fifth Amended and Restated Secured Promissory Note in favor of Essar. The amendment changes a scheduled initial principal payment under the Fourth Amended and Restated Secured Promissory Note, dated November 22, 2004, in the amount of $1,184, that would have been due on January 3, 2005. Under the Fifth Amended and Restated Secured Promissory Note, that initial principal payment of $1,184 was due on June 3, 2005. Additionally, the accrued interest under the Fourth Amended and Restated Secured Promissory Note had been calculated beginning on November 22, 2004 up to January 3, 2005 and added to the original principal amount of $9,346, resulting in a face amount for the Fifth Amended and Restated Secured Promissory Note of $9,377.

On January 3, 2005, the Company executed a First Amended and Restated Secured Promissory Note in favor of Essar. The amendment changes a scheduled initial principal payment under the original Secured Promissory Note, dated December 15, 2004, in the amount of $928, that would have been due on January 3, 2005. Under the

38

First Amended and Restated Secured Promissory Note, that initial principal payment of $928 was due on June 3, 2005. Additionally, the accrued interest under the original Secured Promissory Note was calculated beginning on December 15, 2004 up to January 3, 2005 and added to the original principal amount of $7,444, resulting in a face amount for the First Amended and Restated Secured Promissory Note of $7,454.

On January 3, 2005, the Company executed a Sixth Amended and Restated Secured Promissory Note in favor of Deustche Bank AG—London, acting through DB Alternative Trading, Inc. (“DB”). The amendment changes a scheduled initial principal payment under the Fifth Amended and Restated Secured Promissory Note, dated December 15, 2004, in the amount of $232, that would have been due on January 3, 2005. Under the Sixth Amended and Restated Secured Promissory Note, that initial principal payment of $232 was due on June 3, 2005. Additionally, the accrued interest under the Fifth Amended and Restated Secured Promissory Note has been calculated beginning on December 15, 2004 up to January 3, 2005 and added to the original principal amount of $1,861, resulting in a face amount for the Sixth Amended and Restated Secured Promissory Note of $1,863.

On April 27, 2005, the Company delivered an executed Seventh Amended and Restated Secured Promissory Note in favor of Deutsche Bank AG—London, acting through DB Alternative Trading, Inc. (“DB”). The amendment changes a scheduled initial principal payment under the Sixth Amended and Restated Secured Promissory Note, dated January 3, 2005, in the amount of $232 that was due on June 3, 2005. Under the amended promissory note, that initial principal payment of $232 was due on April 16, 2006. Additionally, the accrued interest under the Sixth Amended and Restated Promissory Note was calculated beginning on January 3, 2005 up to April 20, 2005 and added to the original principal amount of $1,863, resulting in a face amount for the Seventh Amended and Restated Promissory Note of $1,885.

On December 28, 2005, the Company closed a debt conversion transaction with World Focus, an affiliate of the Essar who purchased the debt and share interest from Essar Global Limited, in which World Focus converted the aggregate outstanding principal and accrued and unpaid interest it held under three promissory notes, totaling $18,501, into 487,164,064 shares of Aegis Communications Group, Inc. common stock at a conversion price of $0.038 per share. The terms of the debt conversion transaction are as set forth in a Debt Conversion Agreement, dated as of November 30, 2005, between the Company and World Focus, and which was described on the Company’s Current Report on Form 8-K filed with the SEC on December 2, 2005 and incorporated by reference herein. In the Debt Conversion Agreement, World Focus represented that it was a non-U.S. person. The shares were issued by the Company to World Focus in an offshore transaction pursuant to the exemption from registration available under Rule 903 of Regulation S. No directed selling efforts were conducted in connection with the offer and sale of the securities.

On February 15, 2006, the World Focus had purchased the remaining debt outstanding related to the Fifth Amended and Restated Secured Promissory note of $1,861 due for maturity on April 26, 2007 and 113,303,304 common shares of the Company that was owned by Deutsche Bank.

The November 5, 2003 Essar and Deutsche Bank transaction expenses of $0.4 million were treated as debt issuance costs in accordance with APB No. 21, “Interest on Receivables and Payables” and are being amortized over the life of the notes. All other expenses associated with the deal were expensed and recorded in selling, general and administrative expenses.

Gain on early extinguishment of debt

The Company was required, by the existing loan terms, to repay or otherwise retire its existing loan obligations with the proceeds of the Deutsche Bank and Essar transaction. To the extent the subordinated debt was not paid off, the holders of the subordinated debt discharged the debt and released the Company from any further liability under their promissory notes, resulting in a $6.2 million gain on early extinguishment of debt. The termination of the Company’s agreement to be acquired by AllServe resulted in the possibility of a break-up

39

fee of up to $1.1 million, owed to AllServe. Any part of the $1.1 million reserved for the break-up fee that is not paid to AllServe will be distributed to the subordinated debt holders, net of certain expenses. If certain fees are paid to Allserve, this will reduce the amount paid to the subordinated debt holders, up to $1.1 million.

Impairment of long-lived assets

On January 1, 2002, the Company adopted SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). Management periodically evaluates the carrying value of our assets to determine if future operating results are adequate to cover the carrying value of those assets. In the event that facts and circumstances indicate that the value of property and equipment or other long-term assets may be impaired, an evaluation of recoverability is performed. Indicators may include continued future operating losses as well as the disposal of a material asset before the end of its estimated useful life. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the asset’s carrying amount to determine if a write-down to fair value is required.

Income taxes

We account for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes (“SFAS 109”), which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between book and tax basis of recorded assets and liabilities. SFAS 109 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

At December 31, 2005, we had deferred tax assets in excess of deferred tax liabilities of $29.8 million. Based upon our estimates of future taxable income and review of available tax planning strategies, we believe that it is more likely than not that any such assets will not be realized, resulting in a valuation allowance of $29.8 million. On a quarterly basis, we evaluate the need for this valuation allowance based on the expected realizability of our deferred tax assets and adjusting the amount of such allowance, if necessary. The factors used to assess the likelihood of realization are our latest forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets.

At December 31, 2005, the Company had net operating loss carry forwards of approximately $84.2 million and unutilized tax credits of approximately $0.8 million. Due to an ownership change and the separate return limitation year rules, the utilization of net operating losses and tax credits may be limited in future years. The net operating loss carry forwards and tax credits begin to expire from 2013 through 2022. Management has established a valuation allowance for deferred taxes where management believes it is more likely than not that the deferred tax asset will not be realized.

Accounting for employee benefits

Prior to June 1, 2005, Aegis recorded an accrued liability for workers compensation based on an estimate of claims incurred but not reported as well as asserted claims at the end of the year. This estimate is derived from analysis performed by actuaries hired by the Company who have expertise in this area. Effective June 1, 2005, the Company has provided for workers compensation through a fully insured workers compensation program with monthly premium payments as the only liability to be booked.

Accounting for Contingencies

In the ordinary course of business, Aegis has entered into various contractual relationships with strategic corporate partners, customers, suppliers, vendors and other parties. As such, the Company could be subject to litigation, claims or assessments arising from any or all of these relationships, or from its relationships with its employees. The Company accounts for contingencies such as these in accordance with SFAS No. 5, Accounting

40

for Contingencies (“SFAS 5”). SFAS 5 requires the Company to record an estimated loss contingency when information available prior to issuance of the Company’s financial statements indicates that it is probable that an asset has been impaired or a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. SFAS 5 further states that when there is a range of loss and no amount within that range is a better estimate than any other, that the minimum amount in the ranges shall be accrued. Accounting for contingencies arising from contractual or legal proceedings requires Company management to use its best judgment when estimating an accrual related to such contingencies. As additional information becomes known, the Company’s accrual for a loss contingency could fluctuate, thereby creating variability in the Company’s results of operations from period to period. Likewise, an actual loss arising from a loss contingency which significantly exceeds the amount accrued for in the Company’s financial statements could have a material adverse impact on the Company’s operating results for the period in which such actual loss becomes known. As of December 31, 2005, accruals for loss contingencies, excluding estimated legal fees to defend the Company against currently pending matters, totaled $0.2 million and are included in accrued liabilities in the accompanying consolidated balance sheet. The Company accrued a reserve of $1.1 million for the benefit of the subordinated debt holders at December 31, 2005, pending outcome of the AllServe litigation. If certain fees are paid to AllServe, this will reduce the amount paid to the subordinated debt holders, up to $1.1 million. This amount was not accounted for as a contingency, as it is not possible to accurately predict the outcome of this lawsuit at this time. The managements’ best estimate of future costs to defend the AllServe lawsuit is approximately $0.7 million. This will be offset against settlement to be paid to shareholders and has not been accrued separately in the balance sheet.

The Company has agreements with some telephone long distance carriers which currently range to 60 months, and which provide for annual minimum usage requirements. During the fourth quarter of 2004, the Company reached agreement with its largest carrier to cancel the remaining minimum usage commitment under the then existing agreement in exchange for entering into a reduced usage commitment effective October 1, 2000, under which it is committed to usage of $7,400 annually for seven years.

At December 31, 2004, the Company accrued $290 related to unused and under accrual usage for the 2004 commitment of $7,400. The contract provides for a “Business Downturn / Network Optimization” clause which in the event of a business downturn beyond our control that significantly reduces the volume of services required by us, with the result that we will be unable to meet our revenue and or volume commitments, we and the vendor service provider will cooperate to develop a mutually agreeable alternative agreement, and amend or replace the affected metrics of the contract currently in place. In January 2005, we initiated the downturn clause and worked with the vendor provider to redraft the contract. Effective July 1, 2005, the Company amended the current 7-year agreement to a revised 10-year agreement reducing our annual commitment usage from $7,400 annually to $3,400 annually and established a contract that allowed for review of rates for purchase of circuits and usage that is benchmarked competitively to reflect the use of the most productive technology configuration. For example, the Company was able to reduce the usage rate from 2.4 cents per minute to 1.84 cents per minute. As partial consideration for the extended term, AT&T provided a credit of all underutilized charges in the original contract form prior periods. Therefore, in the third quarter 2005, the Company had reversed the $290 accrual set on the books at December 31, 2004 related to prior underutilization.

On July 22, 2004, the Company signed an agreement with the New York State Urban Development Corporation giving to us a financial grant of $0.9 million initial disbursement after execution of a lease for 80 Broad Street to expire no earlier than April 1, 2011. We employed at least 260 full-time permanent employees at the project location by December 31, 2005 or repay the Grant. Accordingly in 2005, the Company had met the required 260 full time employees employed at the New York Facility, therefore in the fourth quarter 2005, the Company had reduced the $884 accrual set on the books at December 31, 2004 to $566 at December 31, 2005 related to that contingency.

The Company has an employment agreement with Kannan Ramasamy. The employment agreement provides for, upon the Company’s adoption of an employee stock option plan, an initial option grant of 3,450,000 shares of

41

Company common stock at a price equal to the closing market price of the common stock on the initial date of grant, which was September 14, 2004, and Mr. Ramasamy will receive a second option grant of 3,450,000 shares of common stock at a price equal to the closing market price of the common stock on September 30, 2005. For both the initial and the secondary option grants, the options will vest in three equal installments and terminate ten years from the date of grant.

The Company has a transition agreement with Richard Ferry, the Company’s immediate past Chief Executive Officer. The transition agreement provides for grants of options to purchase 2,277,000 shares of the Company’s common stock upon the earlier of (i) the adoption of an employee stock option plan; or (ii) October 31, 2005. The price of those options is the closing market price of the Company’s common stock on the date of grant. The options are exercisable commencing on November 1, 2005, and will expire on November 1, 2010, if not exercised on or before that date.

Additionally, on November 12, 2003, AllServe and its wholly-owned subsidiary AllServe Systems, Inc. filed suit against us in the Court of Chancery of the State of Delaware. Based on the complaint, the plaintiffs are apparently seeking an injunction to prevent us from closing the transaction with Deutsche Bank and Essar, which in our view has already been closed. The complaint also seeks to specifically enforce our merger agreement with AllServe. Alternatively, the complaint seeks payment of the $1,137 break-up fee as well as other monetary damages that, according to AllServe, exceed $50. We deny that AllServe is entitled to any injunctive relief, payment of the break-up fee or any other damages or payments. The $1,137 was accrued at December 31, 2005 to the subordinated debt-holders. Payment to the sub-debt holders is contingent upon the outcome of the AllServe litigation and may be net of expenses. If certain fees are paid to AllServe, which will reduce the amount paid to the subordinated debt-holders, up to $1,137. At this time it is not possible to accurately predict the outcome of this lawsuit. We intend to contest this lawsuit vigorously.

Impact Of Recently Issued and Proposed Accounting Announcements

FASB Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment.” In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment,” referred to as SFAS 123R, which is a revision of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation,” and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees,” referred to as APB 25. SFAS 123R requires that the cost of all share-based payments to employees, including stock option grants, be recognized in the financial statements based on their fair values, as currently permitted but not required under SFAS 123. The standard applies to newly granted awards and previously granted awards that are not fully vested on the date of adoption. Companies must adopt SFAS 123R no later than the beginning of their next fiscal year that begins after June 15, 2005. Accordingly, we adopted the standard on January 1, 2006. We do not believe the adoption of SFAS No. 123R will have a material impact on our financial statements.

FASB Statement of Financial Accounting Standards No. 154, “Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3.” In May 2005, the FASB issued Statement of Financial Accounting Standards No. 154, “Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3”, referred to as SFAS No. 154, which replaces APB Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting for and reporting of a change in accounting principle. SFAS No. 154 applies to all voluntary changes in accounting principles. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. It does not change the transition provisions of any existing accounting pronouncements, including those that are in a transition phase as of the effective date of SFAS No. 154. We do not believe the adoption of SFAS No. 154 will have a material impact on our financial statements.

42

FASB Statement of Financial Accounting Standards No. 155, “Accounting for Certain Hybrid Financial Instruments—an amendment of FASB Statements No. 133 and 140.” In February 2006, the FASB issued Statement of Financial Accounting Standards No. 155, “Accounting for Certain Hybrid Financial Instruments,” referred to as SFAS No. 155. This statement amends SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” and SFAS No. 140 “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No. 155 permits fair value remeasurement for hybrid financial instruments that contain embedded derivatives that would require separate accounting. In addition, the statement establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain embedded derivatives. SFAS No. 155 is effective for all financial instruments acquired or issued beginning after an entity’s fiscal year beginning on September 15, 2006 with earlier adoption permitted. Management is evaluating the statement and does not believe that it will have a material impact on our financial statements.

43

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have exposure to market risk associated with the floating rate portion of the interest charged on a secured promissory note payable to World Focus, which was previously held by Deutsche Bank and sold to World Focus in the first quarter of 2006. The World Focus note payable, which matures on April 26, 2007, bears interest at fluctuating rates based on the prime rate and/or LIBOR. Our exposure to interest rate risk due to changes in the prime rate or LIBOR is not expected to be material and, at December 31, 2005, the fair value of the Loan Agreement approximates its related carrying value because the obligation bears interest at the current market rate.

We invest our cash reserves in high quality short-term liquid money market instruments with major financial institutions. The rate of interest earned on these investments varies with overall market rates. A hypothetical one hundred basis point change in the interest rate earned on these investments would not have a material effect on our income or cash flows.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See pages F-1 through F-32 of this Annual Report on Form 10-K.

ITEM 9. CHANGE IN ACCOUNTANTS

Upon the recommendation of the Audit Committee of the Board of Directors of Aegis Communications Group, Inc., BDO Seidman, LLP (“BDO”) has been dismissed as the Company’s independent auditor effective May 3, 2005. BDO served as the Company’s independent auditor for fiscal years 2003 and 2004. The reports of BDO for those fiscal years did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. During those fiscal years and for fiscal year 2005 through May 2, 2005 there were (A) no disagreements with BDO on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of BDO, would have caused BDO to make reference to such disagreements in its reports provided to the Company; and (B) on March 23, 2005, BDO reported to the Audit Committee of Aegis the existence of certain weaknesses in its internal controls over financial reporting, which we believe are “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K. Those weaknesses, after discussion with and by the Company’s Audit Committee, were subsequently disclosed in the Company’s Form 10-K, Item 9A, filed on April 15, 2005. The Company has authorized its successor independent auditor to discuss those weaknesses with BDO. The Company has provided BDO with a copy of the disclosures contained herein and has requested that BDO provide the Company with a letter addressed to the Securities and Exchange Commission stating whether or not BDO agrees with the statements contained herein.

Effective May 3, 2005, the Company’s Audit Committee engaged Russell, Bedford, Stefanou Mirchandani, LLP (“Russell Bedford”) to audit the Company’s financial statements for the fiscal year ending on December 31, 2005. Prior to the engagement of Russell Bedford, neither the Company nor anyone on behalf of the Company had consulted with Russell Bedford during the Company’s two most recent fiscal years and for fiscal year 2005 through May 2, 2005 in any matter regarding either: (A) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither was a written report nor oral advice provided to the Company that Russell Bedford concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issued; or (B) any matter which was the subject of either a disagreement or a reportable event, as each are defined in Items 304(a)(1)(iv) and (v) of Regulation S-K, respectively.

44

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that the Company files under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.

Evaluation of Disclosure and Controls and Procedures. As of the end of the period covered by this report, management performed, with the participation of our chief executive officer (who is also the chief financial officer) and our chief accounting officer, an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on the evaluation and the identification of the material weaknesses in internal control over financial reporting described below, management concluded that, as of December 31, 2005, the Company’s disclosure controls and procedures were not adequately effective.

Based upon this assessment, management determined we had the following material financial reporting and control deficiencies.

Deficiencies and Corrective Actions Relating to the Company’s Internal Controls over Financial Reporting:

During the course of the audit it was observed that there were financial weaknesses due to lack of adequate staff in the accounting and finance functions of the Company. Though in the 1^st quarter 2005, the Company took steps to address its understaffed Finance and Accounting team from 2004, by bringing on two CPA’s, one with extensive CFO level management and SEC reporting experiences in public companies and the second, an Accounting Manager versed with SEC reporting experience. The Company moved to a plan during the year to outsource functions of its accounting processes to an outside service in India. Those services had not developed timely before the end of the year, and coupled with the departure of accounting and finance personnel earlier in the year; there was a lack of adequate trained personnel to cover the Company’s immediate accounting need. The result of a lack of sufficient personnel impacted the timing of monthly closing of the books and effective internal controls on the payroll process.

To correct this material weakness, checklists and calendars will be reinstituted delineating tasks, preparation and review responsibilities targeting specific completion dates. The checklists will provide evidentiary support of work performed and reviewed. The checklists will be a source of documentation to our offshore resource supporting their work accomplished and the outsource resource will be held accountable to report to Company personnel directly on daily basis for work responsibilities as well as held accountable for monthly closing procedures in timely basis defined in this ITEM 9A section. These checklists and timelines will be instituted on March 31, 2006 for the Company’s 1^st Quarter 10-Q report. The Company’s Vice President of Finance & Accounts will report to the Audit Committee of the controls and processes in place and report quarterly to the Audit Committee any unfavorable variance from plan. During 2006, we also intend to hire additional accounting personnel, increase management oversight of payroll, accounting and reporting functions in our offices along with our outside off shore resource.

Deficiencies and Corrective Actions Relating to the Company’s Internal Controls over Fixed Assets:

In the course of the Company closing the books for the year-end, the Company noted that the historical system of monitoring asset disposals and actions relating to the Company’s internal controls as well as regular

45

physical inventory was deficient. In review of the controls and processes, we noted that the Company did not design and maintain effective controls to provide reasonable assurance that asset disposals were completely and accurately recorded, depreciation and amortization expense was accurately recorded based on appropriate useful lives assigned and the related assets, existence of assets was confirmed through periodic inventories, and there were deficiencies in identification and determination of impairment losses performed in accordance with GAAP.

To correct this material weakness, the Company performed a physical inventory reviewing all assets under control. In the 4^th Quarter 2005, physical counts of all assets were performed, matched and reconciled to the Company’s current fixed asset list. Disposed asset items were researched through a follow up review with management. Moving further, the Company has purchased a Bar Scanner program to scan and record all Computer and telecommunications equipment and the company will audit those items along with their other fixed assets timely in coming years.

Our management believes that the above remediation measures, will address the material weaknesses described above. The Board of Directors and management will continue to monitor the effectiveness of our internal controls and procedures on an ongoing basis and will take further action as appropriate

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events.

Except as otherwise discussed herein, there have been no other changes in our internal control over financial reporting during the most recently completed fiscal quarter that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.

46

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

This information will be contained in our definitive proxy statement for the 2006 Annual Meeting of Stockholders under the captions “Election of Directors,” “Executive Officers,” “Code of Ethics,” “Audit Committee Financial Expert,” and “Audit Committee” and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

This information will be contained in our definitive proxy statement for the 2006 Annual Meeting of Stockholders under the caption “Compensation of Directors and Executive Officers” and is incorporated herein by reference. Information in the definitive proxy statement section entitled “Report of the Compensation Committee of the Board of Directors” and in the subsection entitled “Performance Graph” are not incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

This information will be contained in our definitive proxy statement for the 2006 Annual Meeting of Stockholders under the caption “Security Ownership of Certain Beneficial Owners and Management” and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

This information will be contained in our definitive proxy statement for the 2006 Annual Meeting of Stockholders under the caption “Certain Relationships and Related Transactions” and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

This information will be contained in our definitive proxy statement for the 2006 Annual Meeting of Stockholders under the caption “Corporate Governance” and is incorporated herein by reference.

47

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) (1) FINANCIAL STATEMENTS

See “Index to Consolidated Financial Statements” included on page F-1 of this Annual Report on Form 10-K for a listing of the financial statements filed as a part of this Annual Report on Form 10-K.

      (2) FINANCIAL STATEMENT SCHEDULES

Aegis Communications Group, Inc.

Schedule II—Valuation and Qualifying Accounts

Years Ended December 31, 2005, 2004 and 2003

(Dollars In Thousands)

Description	Balance at Beginning of Year		Additions Charged to Cost and Expenses			Net Write-Off			Balance at End of Year
Year Ended December 31, 2005:
Allowance for doubtful accounts	$	87	$	—		$	1		$	86
Deferred tax asset valuation allowance	$	30,785	$	(937	)	$	—		$	29.848
Year Ended December 31, 2004:
Allowance for doubtful accounts	$	541	$	(388	)	$	66		$	87
Deferred tax asset valuation allowance	$	20,915	$	9,870		$	—		$	30,785
Year Ended December 31, 2003:
Allowance for doubtful accounts	$	639	$	747		$	(845	)	$	541
Deferred tax asset valuation allowance	$	18,438	$	2,477		$	—		$	20,915

48

(b) EXHIBITS

Aegis Communications Group, Inc.

Index to Exhibits

3.1	Amended and Restated Certificate of Incorporation, as amended (filed herewith).
3.2	Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.2 of the registrant’s Form 10-K Annual Report for the year ended December 31, 2000).
4.1	Specimen of Share Certificate of Company’s common stock (Incorporated by reference to Exhibit 4.1 of the registrant’s Form 10-Q Quarterly Report for the quarterly period ended September 30, 1998).
4.2	Form of Series B Preferred Stock certificate, as amended. (Incorporated by reference to the registrant’s Form 10-K Annual Report for the year ended June 30, 1994).
10.1	1992 Stock Option Plan as amended (Incorporated by reference to Exhibit 4.1 of the registrant’s Form S-8 Registration Statement—File No. 333-01131).
10.2	1996 Stock Option Plan as amended (Incorporated by reference to Exhibit 4.2 of the registrant’s Form S-8 Registration Statement—File No. 333-01131).
10.3	Second Amended and Restated 1998 Stock Option Plan (filed herewith).
10.4	Registration Rights Agreement, dated November 5, 2003, by and among the Company, Deutsche Bank AG—London acting through DB Advisors, 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, Edward Blank and the Edward Blank 1995 Grantor Retained Annuity Trust (Incorporated by reference to Exhibit 10.5 of the registrant’s Form 10-Q Quarterly Report for the quarterly period ended September 30, 2003).
10.5	Stockholders Agreement, dated November 5, 2003, by and among the Company, Deutsche Bank AG—London acting through DB Advisors, 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. and TC Co-Investors, LLC (Incorporated by reference to Exhibit 10.6 of the registrant’s Form 10-Q Quarterly Report for the quarterly period ended September 30, 2003).
10.6	Subsidiary Guaranty dated as of November 5, 2003 (Incorporated by reference to Exhibit 10.46 of the registrant’s Form 10-K Annual Report for the year ended December 31, 2003).
10.7	General Security Agreement, dated as of January 26, 2004, by and among Aegis Communications Group, Inc., its subsidiaries that are signatories thereto and Wilmington Trust Company, as agent for Deutsche Bank AG—London Acting Through DB Advisors, LLC and Essar Global Limited 2003 (Incorporated by reference to Exhibit 10.50 of the registrant’s Form 10-K Annual Report for the year ended December 31, 2003)(exhibits excluded).
10.8	Trademark Collateral Assignment and Security Agreement, dated as of January 26, 2004, by and among Aegis Communications Group, Inc., its subsidiaries that are signatories thereto and Wilmington Trust Company, as collateral trustee for Deutsche Bank AG—London Acting Through DB Advisors, LLC and Essar Global Limited 2003 (Incorporated by reference to Exhibit 10.51 of the registrant’s Form 10-K Annual Report for the year ended December 31, 2003)(exhibits excluded).
10.9	Copyright Collateral Assignment and Security Agreement, dated as of January 26, 2004, by and among Aegis Communications Group, Inc., its subsidiaries that are signatories thereto and Wilmington Trust Company, as collateral trustee for Deutsche Bank AG—London Acting Through DB Advisors, LLC and Essar Global Limited 2003 (Incorporated by reference to Exhibit 10.52 of the registrant’s Form 10-K Annual Report for the year ended December 31, 2003)(exhibits excluded).

49

10.10	Stock Pledge Agreement, dated as of January 26, 2004, by Aegis Communications Group, Inc. and certain of its subsidiaries signatory thereto in favor of Wilmington Trust Company (Incorporated by reference to Exhibit 10.53 of the registrant’s Form 10-K Annual Report for the year ended December 31, 2003)(exhibits excluded).
10.11	Amendment No. 1 to Subsidiary Guaranty, dated as of January 26, 2004, among Advanced Telemarketing Corporation, IQI, Inc., LEXI International, Inc., Interserv Services Corporation, Deutsche Bank AG London, acting through DB Advisors, LLC, Essar Global Limited and Wilmington Trust Company, as Collateral Trustee 2003 (Incorporated by reference to Exhibit 10.54 of the registrant’s Form 10-K Annual Report for the year ended December 31, 2003).
10.12	Collateral Trustee Agreement, dated as of January 26, 2004, among Aegis Communications Group, Inc., its subsidiaries that are signatories thereto, Deutsche Bank AG—London, acting through DB Advisors, LLC, Essar Global Limited and Wilmington Trust Company, as Collateral Trustee (2003 (Incorporated by reference to Exhibit 10.55 of the registrant’s Form 10-K Annual Report for the year ended December 31, 2003)(exhibits excluded).
10.13	Employment agreement by and among Aegis Communications Group, Inc. and subsidiaries, and Kannan Ramasamy dated September 30, 2004, (Incorporated by reference to Exhibit 10.2 of the registrant’s Form 10-Q Quarterly Report for the quarterly period ended September 30, 2004).
10.14	First Amended and Restated Promissory Note, dated January 3, 2005, in the original principal amount of $1,006,162.40, payable to Essar Global Limited (Incorporated by reference to Exhibit 10.50 of the registrant’s Form 10-K Annual Report for the year ended December 31, 2004).
10.15	Master Factoring Agreement, dated April 3, 2004, between Aegis Communications Group, Inc. and Rockland Credit Finance, LLC (Incorporated by reference to Exhibit 10.54 of the registrant’s Form 10-K Annual Report for the year ended December 31, 2004).
10.16	Multiple Guaranty of Payment, dated as of March 30, 2005, between Aegis Communications Group, Inc. and its subsidiaries and Rockland Credit Finance, LLC (Incorporated by reference to Exhibit 10.55 of the registrant’s Form 10-K Annual Report for the year ended December 31, 2004).
10.17	Promissory Note, dated March 21, 2005, in the original principal amount of $1,250,000, payable to Essar Global Limited (Incorporated by reference to Exhibit 10.56 of the registrant’s Form 10-K Annual Report for the year ended December 31, 2004).
10.18	Seventh Amended and Restated Secured Promissory Note, dated April 27, 2005, in the original principal amount of $1,884,500.54, payable to Deutsche Bank AG-London acting through DB Alternative Investments, Inc. (Incorporated by reference to Exhibit 10.57 of the registrant’s Form 10-Q Quarterly Report for the period ended March 31, 2005).
10.19	Transition Agreement, dated as of May 3, 2005, between Aegis Communications Group, Inc. and Richard N. Ferry (Incorporated by reference to Exhibit 10.58 of the registrant’s Form 10-Q Quarterly Report for the period ended March 31, 2005).
10.20	Promissory Note, dated July 25, 2005, in the original principal of $1,500,000 payable to Essar Global Limited (Incorporated by reference to Exhibit 10.59 of the registrant’s Form 10-Q Quarterly Report for the period ended June 30, 2005).
10.21	Addendum to the Master Factoring Agreement, dated August 22, 2005, between Aegis Communications Group, Inc. and Rockland Credit Finance, LLC (Incorporated by reference to Exhibit 10.60 of the registrant’s Form 10-Q Quarterly Report for the period ended September 30, 2005).
10.22	Sales and Marketing Outsourcing Agreement, dated July 1, 2005, between Aegis Communications Group, Inc. and Business Transformation Consulting Inc. (Incorporated by reference to Exhibit 10.61 of the registrant’s Form 10-Q Quarterly Report for the period ended September 30, 2005).

50

10.23	Networking Equipment Lease Agreement, dated August 8, 2005, between Aegis Communications Group, Inc., Aegis BPO Services Ltd, and SREI Infrastructure Finance Limited (Incorporated by reference to Exhibit 10.62 of the registrant’s Form 10-Q Quarterly Report for the period ended September 30, 2005).
10.24	Master Agreement, dated July 29, 2005, between Aegis Communications Group, Inc. and AT&T (Incorporated by reference to Exhibit 10.63 of the registrant’s Form 10-Q Quarterly Report for the period ended September 30, 2005).
10.25	Master Teleservices Agreement, dated November 1, 2005, between Aegis Communications Group, Inc. and PharmaCare Management Services, Inc. and its PharmaCare Affiliates (Incorporated by reference to Exhibit 10.64 of the registrant’s Form 10-Q Quarterly Report for the period ended September 30, 2005).
10.26	Master Services Agreement, dated February 14, 2005, between Aegis Communications Group, Inc. and Aegis BPO Services Ltd. (Incorporated by reference to Exhibit 10.65 of the registrant’s Form 10-Q Quarterly Report for the period ended September 30, 2005).
10.27	Master Lease Agreement, dated November 1, 2005, between Aegis Communications Group, Inc. and NationsHealth, Inc. (filed herewith).
10.28	Debt Conversion Agreement, dated November 30, 2005, between Aegis Communications Group, Inc. and World Focus (filed herewith).
10.29	Supplement to Employment Agreement, dated as of September 14, 2005, between Aegis Communications Group, Inc. and Kannan Ramasamy (filed herewith).
21.1	Subsidiaries of the Registrant (Incorporated by reference to Exhibit 21.1 of the registrant’s Form 10-K Annual Report for the year ended June 30, 1998).
23.1	Consent of BDO Seidman, LLP (filed herewith).
23.2	Consent of Russell, Bedford, Stefanou & Mirchanadi, LLP (filed herewith).
31.1	Certification of the Chief Executive Officer Pursuant to Rule 13a-15(e) or 15d-15(c), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley act of 2002 (filed herewith).
31.2	Certification of the Chief Financial Officer Pursuant to Rule 13a-15(e) or 15d-15(c), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley act of 2002 (filed herewith).
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes Oxley Act of 2002 (furnished herewith).
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes Oxley Act of 2002 (furnished herewith).

Copies of the above Exhibits are available to stockholders of current record at a charge of $0.50 per page, minimum of $5.00 each. Direct requests to:

Aegis Communications Group, Inc.

Attention: Secretary

8001 Bent Branch Drive

Irving, Texas 75063

51

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	AEGIS COMMUNICATIONS GROUP, INC. (The Registrant)
Dated: March 30, 2006	By:	/s/    KANNAN RAMASAMY
		Kannan Ramasamy President, Chief Executive Officer & Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Dated: March 30, 2006	By:	/s/    KANNAN RAMASAMY
		Kannan Ramasamy, President, Chief Executive Officer, Chief Financial Officer & Director
Dated: March 30, 2006	By:	/s/    RICHARD FERRY
		Richard Ferry Director
Dated: March 30, 2006	By:	/s/    MADHU VUPPULURI
		Madhu Vuppuluri, Director
Dated: March 30, 2006	By:	/s/    KAMALNAYAN AGARWAL
		Kamalnayan Agarwal Director
Dated: March 30, 2006	By:	/s/    RASHESH CHANDRAKANT SHAH
		Rashesh Chandrakant Shah, Director
Dated: March 30, 2006	By:	/s/    PRAMOD SAXENA
		Pramod Saxena, Director
Dated: March 30, 2006	By:	/s/    RAVI RUIA
		Ravi Ruia, Director
Dated: March 30, 2006	By:	/s/    JOHN MICHAEL LIND
		John Michael Lind, Director
Dated: March 30, 2006	By:	/s/    RAJIV AGARWAL
		Rajiv Agarwal, Director
Dated: March 30, 2006	By:	/s/    ANSHUMAN S. RUIA
		Anshuman S. Ruia, Director

52

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AND FINANCIAL STATEMENT SCHEDULE

	Page
Reports of Independent Registered Public Accounting Firm	F-2
Consolidated Statements of Operations for the Years Ended December 31, 2005, 2004 and 2003	F-4
Consolidated Balance Sheets as of December 31, 2005 and 2004	F-5
Consolidated Statements of Shareholders’ Equity (Deficit) for the Years Ended December 31, 2005, 2004 and 2003	F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003	F-7
Notes to Consolidated Financial Statements	F-9

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Aegis Communications Group, Inc.

Irving, Texas

We have audited the accompanying consolidated balance sheet of Aegis Communications Group, Inc. (a Delaware corporation) and subsidiaries as of December 31, 2005, and the related consolidated statement of operations, shareholders’ equity (deficit) and cash flows for the year ended December 31, 2005. We have also audited the schedule listed in Item 15(a)(2) of this Form 10-K for 2005. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and schedule are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and schedule, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Aegis Communications Group, Inc. and subsidiaries as of December 31, 2005, and the results of their operations and their cash flows for the years ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the schedule presents fairly, in all material respects, the information set forth therein.

/s/    RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP

Russell Bedford Stefanou Mirchandani LLP

McLean, Virginia

March 17, 2006

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Aegis Communications Group, Inc.

Irving, Texas

We have audited the accompanying consolidated balance sheet of Aegis Communications Group, Inc. (a Delaware corporation) and subsidiaries as of December 31, 2004, and the related consolidated statements of operations, shareholders’ equity (deficit) and cash flows for the years ended December 31, 2004 and 2003. We have also audited the schedule listed in Item 15(a)(2) of this Form 10-K for 2004 and 2003. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and schedule are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and schedule, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and schedule. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Aegis Communications Group, Inc. and subsidiaries as of December 31, 2004, and the results of their operations and their cash flows for the years ended December 31, 2004 and 2003 in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the schedule presents fairly, in all material respects, the information set forth therein.

As described in Note 1, management has plans to continue working with Essar Global Ltd. And Essar Group Companies, a majority stockholder of Aegis Communications Group, to restructure debt and provide additional financing.

/s/    BDO SEIDMAN, LLP

Dallas, Texas

April 14, 2005

F-3

Aegis Communications Group, Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

	Year ended December 31,
	2005			2004			2003
Revenues:
Service Revenues	$	65,002		$	94,327		$	139,861
Customer Reimbursements		3,639			—			—
Total Revenues		68,641			94,327			139,861
Operating Expenses:
Cost of services		48,092			68,426			99,667
Customer Reimbursements		3,639			—			—
Selling, general and administrative expenses		20,147			31,357			39,884
Depreciation and amortization		5,905			8,521			11,462
Loss on fixed asset dispositions		889			—			—
Restructuring charges		—			4,742			1,645
Total operating expenses		78,672			113,046			152,658
Operating loss		(10,031	)		(18,719	)		(12,797	)
Other (Income)/Expense—Net		(318	)		—			—
Gain on extinguishment of debt		—			—			(6,199	)
Interest expense, net		859			634			2,385
Non-cash interest expense		2,589			2,742			1,613
Loss from continuing operations before income taxes		(13,161	)		(22,095	)		(10,596	)
Current taxes		—			145			300
Deferred taxes		—			—			—
Net loss from continuing operations		(13,161	)		(22,240	)		(10,896	)
Discontinued operations:
Loss from operations of discontinued segment		—			—			—
Estimated gain (loss) on disposal of business segment		—			—			(569	)
Net loss		(13,161	)		(22,240	)		(11,465	)
Preferred stock dividends		11			11			7,608
Net loss applicable to common shareholders	$	(13,172	)	$	(22,251	)	$	(19,073	)
Basic and diluted loss per common share:
Loss from continuing operations	$	(0.02	)	$	(0.07	)	$	(0.33	)
Discontinued operations		—			—			—
Net loss applicable to common shareholders	$	(0.02	)	$	(0.07	)	$	(0.33	)
Weighted average shares of common stock outstanding (in thousands):
Basic		716,368			313,054			57,299
Diluted		716,368			313,054			57,299

The accompanying notes are an integral part of the consolidated financial statements.

F-4

Aegis Communications Group, Inc.

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

	December 31,
	2005			2004
Assets
Current assets:
Cash and cash equivalents	$	270		$	—
Restricted Cash		—			966
Accounts receivable—trade, less allowance for doubtful accounts of $86 and $87, respectively		9,296			9,783
Prepaid expenses and other assets		869			1,100
Total current assets		10,435			11,849
Property and equipment, net of accumulated depreciation of $28,851 and $78,485, respectively		7,490			9,042
Deferred financing costs, net of accumulated amortization of $4,166 and $3,344, respectively		24			846
Other assets		166			384
	$	18,115		$	22,121
Liabilities & Shareholders’ Deficit
Current liabilities:
Short term revolver	$	904		$	—
Accounts payable		6,281			3,534
Accrued compensation expense and related liabilities		962			1,075
Accrued interest expense		47			76
Other current liabilities		9,405			10,477
Current portion of equipment capital leases with Aegis BPO		1,239			324
Current maturity of notes payable, net of discount of $-10- and $0, respectively		1,609			—
Total current liabilities		20,447			15,486
Long term notes payable, net of discount of $73 and $1,835, respectively		1,617			17,816
Equipment Capital lease obligations, net of current portions with Aegis BPO		2,468			507
Other Long-Term Liabilities		304			373
Commitments and Contingencies
Shareholders’ deficit:
Preferred Stock, $.01 par value, 2,000,000 shares authorized; 29,778 convertible, $.36 cumulative Series B shares issued and outstanding in 2005 and 2004; -0- convertible 15% cumulative Series D shares issued and outstanding in 2005 and 2004; -0- convertible 15% cumulative Series E shares issued and outstanding in 2005 and 2004.		—			—
Common stock, $.01 par value, 2,000,000,000 shares authorized; 1,147,217,086 and 660,053,022 shares issued and outstanding in 2005 and 2004, respectively		11,472			6,601
Additional paid-in capital		150,603			136,973
Treasury shares; at cost, 475,600 held in 2005 and 2004		(1,199	)		(1,199	)
Accumulated deficit		(167,597	)		(154,436	)
Total shareholders’ deficit		(6,721	)		(12,061	)
	$	18,115		$	22,121

The accompanying notes are an integral part of the financial statements.

F-5

Aegis Communications Group, Inc.

Consolidated Statements of Shareholders’ Equity Deficit

(In thousands, except share amounts)

	Preferred Stock																						Additional Paid-In Capital			Retained Deficit			Total Shareholders’ Equity (Deficit)
	Series B			Series D					Series E					Common Stock					Treasury Stock
	Shares	Par Value		Shares		Par Value			Shares		Par Value			Shares		Par Value			Shares	Par Value
Balance at December 31, 2002	29,778	$	—	129,423		$	1		73,699		$	1		52,646,768		$	526		475,600	$	(1,199	)	$	75,852		$	(120,731	)	$	(45,550	)
Proceeds from issuance of preferred shares upon conversion of dividends	—		—	15,070			—		8,582			—		—			—		—		—			(5,243	)		—			(5,243	)
Conversion of preferred shares to common stock in connection with Deutsche Bank/Essar transaction	—		—	(144,493	)		(1	)	(82,281	)		(1	)	35,406,183			355		—		—			31,010			—			31,363
Cancellation of common stock in connection with Deutsche Bank/Essar transaction	—		—	—			—		—			—		(2,572,364	)		(26	)	—		—			26			—			—
Warrants issued in connection with Deutsche Bank/Essar transaction	—		—	—			—		—			—		—			—		—		—			4,446			—			4,446
Net loss	—		—	—			—		—			—		—			—		—		—			—			(11,465	)		(11,465	)
Balance at December 31, 2003	29,778	$	—	—		$	—		—		$	—		85,480,587		$	855		475,600	$	(1,199	)	$	106,091		$	(132,196	)	$	(26,449	)
Conversion of preferred shares to common stock in connection with Deutsche Bank/Essar transaction	—		—	—			—		—			—		46,910,503			469		—		—			30,882			—			31,351
Exercise by Deutsche Bank/Essar of warrants to common shares	—		—	—			—		—			—		527,661,932			5,277		—		—			—			—			5,277
Net loss	—		—	—			—		—			—		—			—		—		—			—			(22,240	)		(22,240	)
Balance at December 31, 2004	29,778		—	—			—		—			—		660,053,022		$	6,601		475,600	$	1,199	)	$	136,973		$	(154,436	)	$	(12,061	)
Conversion of World Focus notes payable into common shares	—		—	—			—		—			—		487,164,064			4,871		—		—			13,630			—			18,501
Net loss	—		—	—			—		—			—		—			—		—		—			—			(13,161	)		(13,161	)
Balance at December 31, 2005	29,778		—	—			—		—			—		1,147,217,086		$	11,472		475,600	$	(1,199	)	$	150,603		$	(167,597	)	$	(6,721	)

The accompanying notes are an integral part of the consolidated financial statements.

F-6

Aegis Communications Group, Inc.

Consolidated Statements of Cash Flows

(In thousands)

	Year ended December 31,
	2005			2004			2003
OPERATING ACTIVITIES
Net loss	$	(13,161	)	$	(22,240	)	$	(11,465	)
Less Loss on disposal of business segment		—			—			569
Loss from continuing operations		(13,161	)		(22,240	)		(10,896	)
Adjustments to reconcile loss from continuing operations to net cash (used in) provided by operating activities:
Depreciation and amortization		5,905			8,521			11,462
Loss on disposal of fixed assets		889			3,442			—
Non-cash interest expense		434			421			1,613
Amortization of Note Payable discount		2,155			2,363			247
Non-cash gain on lease cancellation		(673	)		—			—
Gain on extinguishment of debt		—			—			(6,199	)
Changes in operating assets and liabilities:
Accounts receivable		565			13,832			(2,744	)
Prepaid and other current assets		231			279			—
Other assets		218			(120	)		(668	)
Accounts payable and other accrued liabilities		2,527			(4,468	)		61
Other liabilities		(1,141	)		874			123
Net cash (used in) provided by operating activities from continuing operations		(2,051	)		2,904			(7,001	)
INVESTING ACTIVITIES
Proceeds from sale of equipment		7			272			—
Capital expenditures		(427	)		(2,466	)		(919	)
Restricted cash		966			3,663			(4,629	)
Net cash provided by (used in) investing activities from continuing operations		546			1,469			(5,548	)
FINANCING ACTIVITIES
Payments on revolving line of credit		(19,613	)		(102,297	)		(48,000	)
Proceeds from revolving line of credit		20,517			102,297			42,100
Payments on capital lease obligations		(451	)		(1,141	)		(1,234	)
Payments on subordinated indebtedness due to affiliates		—			—			(8,124	)
Deferred financing costs		—			(953	)		—
Exercise of warrants for common stock		—			5,277			—
Payments on notes payable—Deutsche Bank/Essar		(1,316	)		(10,811	)		—
Proceeds from Notes Payable—Deutsche Bank/Essar		2,638			1,800			28,231
Net cash provided by (used in) financing activities from continuing operations		1,775			(5,828	)		12,973
Net cash provided by (used in) continuing operations		270			(1,455	)		424
Cash flows of discontinued operations—Operating activities		—			(248	)		(305	)
Net increase (decrease) in cash and cash equivalents		270			(1,703	)		119
Cash and cash equivalents at beginning of period		—			1,703			1,584
Cash and cash equivalents at end of period	$	270		$	—		$	1,703
Supplemental information on non-cash activities:
Conversion of dividends into preferred instruments	$	—		$	—		$	7,597
Conversion of preferred shares to common stock	$	—		$	31,351		$	—
Common stock issued in payment of notes payable	$	18,501		$	—		$	—
Equipment acquired under capital lease obligations	$	4,000		$	—		$	—
Supplemental information for cash paid during the period for:
Interest	$	736		$	614		$	2,161
Taxes	$	0		$	145		$	448

The accompanying notes are an integral part of the consolidated financial statements.

F-7

Aegis Communications Group, Inc.

Consolidated Statements of Cash Flows—(Continued)

(In thousands)

Non-Cash Investing and Financing Activities

During 2005, the Company recorded telephone equipment as fixed assets of $4,000 and related capital lease liability of $4,000 related to the capital lease commitment of voice over internet protocol equipment acquired in 2005.

During 2005 and 2004, the Company disposed of and wrote-off property and equipment and associated accumulated depreciation with a net book value of $889 and $3,442, respectively, in connection with the closing of certain call centers and asset disposals.

During 2003, the Company converted $7,597 in dividends on the Series D, E, and F convertible preferred stock into additional preferred shares.

During 2005, 2004 and 2003 the Company accrued $11 each year in dividends on the Series B Preferred Stock.

During 2004, the Company exchanged $31,351 of redeemable preferred stock (23,375 shares) for 46,910,503 shares of common stock.

During 2005, the Company exchanged $18,501 of World Focus notes payable for 487,164,064 shares of common stock.

The accompanying notes are an integral part of the consolidated financial statements.

F-8

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and where noted)

1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

The accompanying consolidated financial statements include the accounts of Aegis, IQI Inc. (formerly Edward Blank Associates) (“IQI”), ATC Communications Group, Inc. (“ATC”), Lexi International, Inc. (“Lexi”), and InterServ Services Corporation (“InterServ”) and its subsidiaries, (collectively, “Aegis” or “the Company”).

The Company provides outsourced telecommunications-based customer relationship management (“CRM”) to progressive companies in various industries through strategically located client service centers throughout the United States.

At December 31, 2005, Aegis had the following operating subsidiaries:

Name	State of incorporation	Percentage ownership		Principal business activity
Advanced Telemarketing	Nevada	98.9	%(1)	Customer solutions
InterServ Services Corporation	Delaware	100.0	%	Customer solutions
Lexi International, Inc.	California	100.0	%	Customer solutions
IQI, Inc.	New York	100.0	%	Customer solutions
EBA Direct, Inc.	Canada	100.0	%	Customer solutions

(1) The minority interest in Advanced Telemarketing is immaterial to the Company’s consolidated financial statements. Additionally, Advanced Telemarketing currently maintains a negative equity position. Accordingly, no minority interest has been presented in the accompanying consolidated financial statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation. The consolidated financial statements include the accounts of Aegis and its wholly-owned and majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results could differ from those estimates. Key estimates and assumptions impacting the amounts recorded in the consolidated financial statements include reserves for recoverability of receivables and the deferred tax asset, as well as liability reserves related to transmission commitments.

Operating Segments. The Company operates in one business segment: the provision of outsourced telecommunications-based CRM.

Revenue recognition. Customer solutions revenues earned under contracts based on time incurred and/or on transactions handled are recognized after the related services are performed at rates realizable under the contracts. Customer solutions revenues earned under contracts based on successful sales are recognized on the date such sale is verified by the customer. Principally all clients have the contractual right to, and from time to time do, audit documentation in support of their respective billings. While management believes all such billings

F-9

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

are proper and accurate, the Company periodically records reserves against revenues representing management’s best estimate of billing adjustments or concessions that may be made as a result of such audits. Aegis recognizes revenue on customer reimbursements primarily due to contract considerations. These are contracts where the customer has contracted with the Company on providing customer services operations where revenue is associated with direct reimbursement of cost to man the project, facility and network costs associated with running the campaign. Revenues associated with these campaigns that have negotiated margin associated are accounted for in Service Revenue.

Cash and Cash Equivalents. The Company considers all highly liquid instruments purchased with acquisition maturities of three months or less to be cash equivalents.

Restricted Cash. On December 31, 2004, the Company had restricted cash balance of $966 made up of the company’s letters of credit outstanding of $2,880 as detailed below mostly offset by the borrowing base facility of $1,900. On December 31, 2004 we had two outstanding irrevocable letters of credit. These letters totaled approximately $2.9 million in value and are set to renew between February 6, 2005 and July 13, 2005. These letters of credit are being maintained as security for the Company’s self-insured portion of its workers compensation insurance program and to support licensing requirements related to certain of the Company’s contractual obligations. Effective on March 15, 2005, Essar arranged for the replacement of these letters of credits with two alternative letters of credit form their credit facilities which have been posted by the Company. As a result, on April 26, 2005, the restricted cash collateral was released to the Company.

Accounts Receivable. Trades receivables are comprised primarily of amounts owed to Aegis through its CRM services and are presented net of an allowance for doubtful accounts. Contracts with individual clients determine when receivables are due, generally within 30 days, and whether interest is accrued on late payments. The amount of the allowance for doubtful accounts is calculated as follows: Account balances over 90 days past due are specifically identified, reviewed and reserved, based upon management’s best estimate. An additional reserve amount equal to two percent of the remaining accounts receivable balance is added to the amount for which a specific reserve was established based on historical trends. This combined amount comprises the balance in the allowance account. The adequacy of the reserve is periodically reviewed to determine its appropriateness. Receivable accounts are reviewed on a regular basis for collectibility. If collectibility of the account is no longer assured, the amount is charged against the allowance account. The reserve was adjusted downward at December 31, 2005 to reflect the over accrual reserve based on a review of balances aged at 60 days that had not been collected by February of the succeeding year. At future reporting periods, the Company will consider the need for comparable adjustments to the Accounts Receivable Reserve based on individual client credit worthiness and aged balances.

Under the arrangement, Rockland typically advances to the Company 85% of the total amount of accounts receivable factored. Rockland retains 15% of the outstanding factored accounts receivable as a reserve, which it holds until the customer pays the factored invoice to Rockland. The cost of funds for the accounts receivable portion of the borrowings with Rockland is a .75% for each 30-day period up to a maximum of 60 days, thereafter; the fee will be .45% each 15 day period for an additional 30 days for a maximum of 90 day advance. The Company may be obligated to purchase the receivable back from Rockland at the end of 90 days. In the year ended December 31, 2005, we factored invoices totaling $46.1 million in receivables. We received $40.2 million in proceeds from the factor, with a balance due at December 31, 2005 from the factor agent of $5.9 million.

The agreement prohibits the Company from entering into alternative credit financing arrangements without Rockland’s prior written consent, unless Rockland rejects the Company’s selection of any particular account for

F-10

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

sale and assignment, in which case that rejected account may be sold and assigned or pledged without restriction. The agreement also has no working capital restrictions nor does it require any pledging of assets.

Property and equipment. Property and equipment are carried at cost. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets. Equipment, furniture and fixtures, and computer software are depreciated over three-year to seven-year lives. Leasehold improvements are amortized over the asset life or lease term, whichever is shorter. Assets acquired under capitalized lease arrangements are recorded at the present value of the minimum lease payments. Gains and losses from the retirement or disposition of property and equipment are included in operations in the period incurred. Maintenance and repairs are charged to operations as incurred while renewals or improvements to such assets are capitalized.

The Company regularly reviews its property and equipment to ascertain that there is no impairment loss where the carrying amount of its long-lived assets are recoverable from the Company’s undiscounted cash flows. In 2005, the Company performed a fixed asset inventory and made adjustment to held amounts for properties that had been disposed during the year. Accordingly, the Company recorded a loss on fixed assets of $889 related to the net book value of certain dispositions.

Cost in excess of net assets acquired. In June 2001, the Federal Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 141 “Business Combinations” (“SFAS 141”) and SFAS No. 142 “Goodwill and Other Intangible Assets” (“SFAS 142”). SFAS 141 supersedes Accounting Principles Board Opinion 16 “Business Combinations” (“APB 16”) and eliminates pooling of interests accounting prospectively. It also provides guidance on purchase accounting related to the recognition of intangible assets and financial statement disclosures. SFAS 142 changes the accounting for certain intangibles, including goodwill, from an amortization method to an impairment-only approach. Under the provisions of SFAS 142, intangible assets, including goodwill, that are not subject to amortization are tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired, using a two step impairment assessment.

Impairment of long-lived assets. On January 1, 2002, the Company adopted SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). In the event that facts and circumstances indicate that the value of property and equipment or other long-term assets may be impaired, an evaluation of recoverability is performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the asset’s carrying amount to determine if a write-down to fair value is required.

Deferred financing costs. Deferred financing costs are amortized over the term of the related debt using the interest-method.

Income taxes. Aegis joins with its subsidiaries in filing a consolidated federal income tax return. Income taxes are presented based on the provisions of SFAS No. 109, “Accounting for Income Taxes”, which utilizes an asset and liability approach, and deferred taxes are determined based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of the enacted tax laws. Valuation allowances are established for deferred tax assets where management believes it is more likely than not that the deferred tax asset will not be realized.

Concentration of credit risk. The Company sells to clients in diversified industries throughout the United States. A significant percentage of the Company’s business is currently concentrated in the telecommunications

F-11

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

industry. The Company performs periodic credit evaluations of its clients’ financial conditions and generally does not require collateral. Receivables are generally due within 30 days. Credit losses from clients have been within management’s expectations. The Company currently has certain clients which each comprise more than 10% of the Company’s revenues and receivables. (See Note 14.—“Major Clients”).

Leasing Arrangements. The Company follows SFAS No. 13, “Accounting for Leases” and SFAS No. 98, “Accounting for Leases,” which requires companies to assess the classification of the leases they enter into as either a capital lease or an operating lease. Capital leases are considered financing arrangements and are accounted for on the balance sheet. Operating leases are considered to be rental arrangements and are not recorded on the balance sheet.

Grant Income. The Company earns grant income from government grants, primarily New York City. We recognize grant income based on meeting milestones related to employment of number of people who the government organization has set predetermined requirements of. To the extent we are not able to remain in compliance with certain terms of the grant, we may have to refund a portion of the grant previously received. To-date, no such amounts have been required to be refunded. Grant liability is recorded in Other Current Liabilities on our consolidated balance sheet.

Accounting for Litigation and Contingencies. In the ordinary course of business, Aegis has entered into various contractual relationships with strategic corporate partners, customers, suppliers, vendors and other parties. As such, the Company could be subject to litigation, claims or assessments arising from any or all of these relationships, or from its relationships with its employees. The Company accounts for contingencies such as these in accordance with SFAS No. 5, Accounting for Contingencies (“SFAS 5”). SFAS 5 requires the Company to record an estimated loss contingency when information available prior to issuance of the Company’s financial statements indicates that it is probable that an asset has been impaired or a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. SFAS 5 further states that when there is a range of loss and no amount within that range is a better estimate than any other, that the minimum amount in the ranges shall be accrued. Accounting for contingencies arising from contractual or legal proceedings requires company management to use its best judgment when estimating an accrual related to such contingencies. As additional information becomes known, the Company’s accrual for a loss contingency could fluctuate, thereby creating variability in the Company’s results of operations from period to period. Likewise, an actual loss arising from a loss contingency which significantly exceeds the amount accrued for in the Company’s financial statements could have a material adverse impact on the Company’s operating results for the period in which such actual loss becomes known.

Accounting for convertible debt and debt issued stock with warrants. The company accounts for a portion of the proceeds from the issuance of debt securities with detachable stock warrants to be allocated to the warrants and treated as paid-in capital. Any resulting discount of premium on the notes payable is recorded and amortized over the life of the notes. The Black-Scholes model is used to determine the value of the warrants by taking the difference between acquiring the Stock outright and the present value of paying the exercise price on the expiration day. The Company accounts for these costs pursuant to Accounting Principles Board Opinion (“APB”) 14.

Accounting for stock-based compensation. The Company has the ability but currently has not provided through the issuance of stock options and other stock-based awards to certain employees and directors. Historically the Company accounts for these awards using the intrinsic method pursuant to Accounting Principles Board (“APB”) Opinion 25 “Accounting for Stock Issued to Employees” (“APB 25”) and related interpretations.

F-12

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

In December 2004, the Financial Accounting Standards Board issued a revised SFAS No. 123 (revised 2004), Share-Based Payment (“SFAS 123R”), which replaces SFAS 123 and supersedes APB Opinion No. 25. SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The pro forma disclosures previously permitted under SFAS 123 will no longer be an alternative to financial statement recognition. SFAS 123R is effective for periods beginning after June 15, 2005, and the Company has adopted the method for accounting for stock based awards and payments. The guidance also provides for classifying awards as either liabilities or equity, which impacts when and if the awards must be remeasured to fair value subsequent to the grant date. At the time of adoption, companies can select from three transition methods, two of which would allow for restatement of certain prior periods. The Company has adopted the method for accounting for stock based awards and payments. Furthermore, Management anticipates selecting the transition method in which prior period financial statements would not be restated. The adoption of SFAS No. 123R is not expected to have a significant effect on our financial statements.

	Year ended December 31,
	2005			2004			2003
	(In thousands except per share data)
Net Loss available to common shareholders:
As reported	$	(13,172	)	$	(22,251	)	$	(19,073	)
Proforma compensation expense		—			—			1,533
Proforma	$	(13,172	)	$	(22,251	)	$	(20,606	)
Basic loss per share:
As reported	$	(0.02	)	$	(0.07	)	$	(0.33	)
Proforma	$	(0.02	)	$	(0.07	)	$	(0.36	)
Diluted loss per share:
As reported	$	(0.02	)	$	(0.07	)	$	(0.33	)
Proforma	$	(0.02	)	$	(0.07	)	$	(0.36	)

Loss per share. The Company accounts for loss per share (“EPS”) in accordance with SFAS No. 128 “Earnings Per Share”, which requires dual presentation of basic and diluted EPS on the face of the income statement for entities with complex capital structures and requires a reconciliation of the numerator and the denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.

Basic and diluted EPS are computed by dividing net loss applicable to common shareholders by the weighted average number of shares of common stock and common stock equivalents outstanding during the period. Basic EPS excludes the effect of potentially dilutive securities while diluted EPS reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised, converted into or resulted in the issuance of common stock. Common stock equivalents consist of common stock issuable under the assumed exercise of stock options and warrants, computed based on the treasury stock method, the assumed conversion of the Company’s issued and outstanding preferred stock, and convertible subordinated indebtedness. Common stock equivalents are not included in diluted EPS calculations to the extent their inclusion would be anti-dilutive.

New Accounting Policies

FASB Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment.” In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment,” referred to as SFAS 123R, which is a revision of Statement of Financial Accounting Standards

F-13

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

No. 123, “Accounting for Stock-Based Compensation,” and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees,” referred to as APB 25. SFAS 123R requires that the cost of all share-based payments to employees, including stock option grants, be recognized in the financial statements based on their fair values, as currently permitted but not required under SFAS 123. The standard applies to newly granted awards and previously granted awards that are not fully vested on the date of adoption. Companies must adopt SFAS 123R no later than the beginning of their next fiscal year that begins after June 15, 2005. Accordingly, we adopted the standard on January 1, 2006. We do not believe the adoption of SFAS No. 123R will have a material impact on our financial statements.

FASB Statement of Financial Accounting Standards No. 154, “Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3.” In May 2005, the FASB issued Statement of Financial Accounting Standards No. 154, “Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3”, referred to as SFAS No. 154, which replaces APB Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting for and reporting of a change in accounting principle. SFAS No. 154 applies to all voluntary changes in accounting principles. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. It does not change the transition provisions of any existing accounting pronouncements, including those that are in a transition phase as of the effective date of SFAS No. 154. We do not believe the adoption of SFAS No. 154 will have a material impact on our financial statements.

FASB Statement of Financial Accounting Standards No. 155, “Accounting for Certain Hybrid Financial Instruments—an amendment of FASB Statements No. 133 and 140.” In February 2006, the FASB issued Statement of Financial Accounting Standards No. 155, “Accounting for Certain Hybrid Financial Instruments,” referred to as SFAS No. 155. This statement amends SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” and SFAS No. 140 “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No. 155 permits fair value remeasurement for hybrid financial instruments that contain embedded derivatives that would require separate accounting. In addition, the statement establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain embedded derivatives. SFAS No. 155 is effective for all financial instruments acquired or issued beginning after an entity’s fiscal year beginning on September 15, 2006 with earlier adoption permitted. Management is evaluating the statement and does not believe that it will have a material impact on our financial statements.

F-14

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

3. PROPERTY AND EQUIPMENT

Property and equipment, at cost consisted of the following:

	December 31,
	2005			2004
Office furniture and equipment	$	770		$	9,812
Computer equipment		14,810			39,715
Computer software		2,211			10,384
Telecommunications equipment		17,440			19,238
Leasehold improvements		1,110			8,378
		36,341			87,527
Less: Accumulated Depreciation		(28,851	)		(78,485	)
	$	7,490		$	9,042

Depreciation expense was $5,083, $8,007 and $11,249 for the years ended December 31, 2005, 2004 and 2003, respectively.

During the year, the Company had performed a fiscal inventory of its fixed assets. The Company noted that there were assets disposed of with an original cost basis of approximately $55,613 with accumulated depreciation of $54,717, recording a loss on asset disposal of $889, net of proceeds from sale of equipment of $7.

Also during the year, the Company recorded fixed assets of $4,000 related to capital lease of telephone equipment, which has been sourced through a related party, Aegis BPO Services Limited through a network equipment lease.

4. RESTRUCTURING AND OTHER NON-RECURRING CHARGES

The Company’s results for 2004 included restructuring charges of $4,742 recorded during the year for severance payments to several top executives of the Company and costs associated with the closure of several call centers and office space located in Terra Haute, IN (3^rd quarter); Los Angeles, CA (4^th quarter); St. Joseph, MO (3^rd quarter); El Segundo, CA (4^th quarter); New York, NY (4^th quarter); Rocky Mount, NC (4^th quarter); Paramus, NJ (2^nd quarter); and Atlanta, GA (3^rd quarter).

The Company’s results for 2003 include a reclassification of restructuring charges from “Selling, general and administrative expenses, for comparability to 2004, of $1,645 recorded during the year for severance payments to employees and costs associated with closure of a call center located in Arlington, TX (May 2003), and the downsizing of the call center located Irving, TX (December 2003).

The following table details the restructuring and other non-recurring charges for the years ended December 31, 2005, 2004 and 2003:

A reconciliation of the changes in the restructuring liability account is as follows:

	2005			2004			2003
Balance January 1	$	668		$	248		$	553
Restructuring and other non-recurring charges during the period		—			4,742			1,645
Payments made during the period		(668	)		(4,322	)		(1,950	)
Balance at December 31	$	—		$	668		$	248

F-15

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

5. DEUTSCHE BANK/ESSAR TRANSACTION

On November 5, 2003, the Company terminated its pending agreement to be acquired by AllServe Systems, PLC (“AllServe”), in accordance with the terms and conditions of the merger agreement and signed definitive documents to effect, and did effect, an investment in the Company by Deutsche Bank AG—London (“Deutsche Bank”) and Essar Global Limited (“Essar”), part of the Essar Group, a diversified industrial group out of India. After consultation with its financial advisor SunTrust Robinson Humphrey, and taking into account legal, financial, regulatory and other aspects of the unsolicited written acquisition proposal from Deutsche Bank and Essar, the Company’s Board of Directors accepted the proposal. It was decided that the Deutsche Bank/Essar transaction was a superior proposal that would result in a more favorable outcome for the Company’s stockholders and debt holders, from a financial point of view, than the transaction with AllServe; and that its fiduciary duties required them to accept the Deutsche Bank/Essar transaction. The Deutsche Bank/Essar transaction resulted in the Company remaining a publicly traded company with at least 20 percent of the company’s equity remaining in the hands of the Company’s then existing stockholders and at least approximately four percent of the equity of the newly capitalized Company remaining in the hands of the Company’s current unaffiliated common stockholders.

The transaction resulted in Deutsche Bank and Essar providing approximately equal portions of a $28,200 investment in the Company in return for three-year secured promissory notes and warrants to purchase up to 80 percent of the Company’s common stock on a fully-diluted basis, taking into account the completed or pending, conversion or cancellation of all shares of Series D, E and F Preferred Stock that were outstanding immediately prior to the transaction. As of November 5, 2003, Deutsche Bank and Essar together had warrants to purchase approximately 34 percent of the Company’s Common Stock on a fully diluted basis. Following the amendment of the Company’s certificate of incorporation to increase the Company’s number of authorized shares, Deutsche Bank and Essar together received warrants on April 21, 2004, to purchase approximately an additional 46 percent of the Company’s Common Stock on a fully-diluted basis, or 80 percent after taking into account the warrants acquired on November 5, 2003. The Deutsche Bank/Essar notes provided for a total of 527,661,932 warrants. The warrants had an exercise price of $0.01 per warrant and expired on November 5, 2010. The warrants were valued with the Black-Scholes formula and treated as a discount on notes payable. The discount of $4,446 is being amortized over the life of the notes. On July 13, 2004, Essar exercised all 264,358,628 of their warrants in exchange for one share of common stock per warrant. The total amount of consideration given was $2,600. The funds were used to reduce outstanding debt and make capital investments. Additionally, on August 20, 2004, Deutsche Bank exercised all 263,303,304 of their warrants in exchange for one share of common stock per warrant. The total amount of consideration given was $2,600. The funds were used to reduce outstanding debt and make capital investments.

In accordance with the terms of its then-existing senior and subordinated loans, as well as the terms of its agreement with Deutsche Bank and Essar, the Company was required to repay or otherwise retire its obligations to various lenders from the proceeds of the November 5, 2003 transaction (and, to the extent the subordinated debt was not paid off, the holders of the subordinated debt discharged the debt and released the Company from any further liability under their promissory notes). In addition to the repayment of senior and subordinated debt, the other uses of the proceeds of the November 5, 2003 transaction included collateralizing the letters of credit that remained outstanding under the Company’s former credit facility, payment of investment banking, legal and accounting fees, payment of management retention bonuses, and amounts to be reserved for the holders of the Company’s Series B Preferred Stock and for the possible payment of all or a portion of a $1,137 break-up fee that may be owed to AllServe in connection with the termination of the Company’s agreement to be acquired by AllServe. If the $1,137 break-up fee is not owed to AllServe, it will be owed to the subordinated debt holders. If

F-16

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

certain fees are paid to Allserve, this will reduce the amount paid to the subordinated debt holders, up to $1,137. The Company reserved this fee as part of the gain on early extinguishment of debt for the year ending December 31, 2003. The Company was also responsible, under the terms of the November 5, 2003 agreement, for the costs of the transaction including the expenses of Deutsche Bank and Essar, and paid these costs and expenses after the completion of the transactions.

On December 15, 2004, the Company executed a Secured Promissory Note in favor of Essar Global Limited (“Essar”). The Secured Promissory Note was executed in favor of Essar as a result of DB’s exercise of the Put and Call Agreement, pursuant to which DB has sold to Essar 80% of the outstanding principal and accrued interest of the Fourth Amended and Restated Secured Promissory Note, dated November 22, 2004, made by the Company in favor of DB (the “DB Debt Put”). The DB Debt Put was calculated as of December 15, 2004 to be $7,443, and this amount is the principal amount of the Secured Promissory Note. The Fourth Amended and Restated Secured Promissory Note held by DB was cancelled concurrently with the Company’s execution of the Secured Promissory Note, and the balance of the outstanding principal and interest due to DB under that instrument, or $1,860, was converted into a new Fifth Amended and Restated Secured Promissory Note, dated December 15, 2004, in favor of DB. By its terms, the Secured Promissory Note bears interest, compounded quarterly, at an annual rate equal to 0.50% per annum above the London Interbank Offered Rate for U.S. dollar-denominated deposits, adjusted quarterly. The Company has the option of paying accrued interest due under the Secured Promissory Note in arrears on a quarterly basis, or capitalizing such interest into the outstanding principal amount of the Secured Promissory Note.

On December 23, 2004, Deutsche Bank sold to Essar 150,000,000 shares of Aegis Communications Group, Inc. common stock.

On January 3, 2005, the Company executed a Fifth Amended and Restated Secured Promissory Note in favor of Essar. The amendment changes a scheduled initial principal payment under the Fourth Amended and Restated Secured Promissory Note, dated November 22, 2004, in the amount of $1,184, that would have been due on January 3, 2005. Under the Fifth Amended and Restated Secured Promissory Note, that initial principal payment of $1,184 was due on June 3, 2005. Additionally, the accrued interest under the Fourth Amended and Restated Secured Promissory Note had been calculated beginning on November 22, 2004 up to January 3, 2005 and added to the original principal amount of $9,346, resulting in a face amount for the Fifth Amended and Restated Secured Promissory Note of $9,377.

On January 3, 2005, the Company executed a First Amended and Restated Secured Promissory Note in favor of Essar. The amendment changes a scheduled initial principal payment under the original Secured Promissory Note, dated December 15, 2004, in the amount of $928, that would have been due on January 3, 2005. Under the First Amended and Restated Secured Promissory Note, that initial principal payment of $928 was due on June 3, 2005. Additionally, the accrued interest under the original Secured Promissory Note was calculated beginning on December 15, 2004 up to January 3, 2005 and added to the original principal amount of $7,444, resulting in a face amount for the First Amended and Restated Secured Promissory Note of $7,454.

On January 3, 2005, the Company executed a Sixth Amended and Restated Secured Promissory Note in favor of Deustche Bank AG—London, acting through DB Alternative Trading, Inc. (“DB”). The amendment changes a scheduled initial principal payment under the Fifth Amended and Restated Secured Promissory Note, dated December 15, 2004, in the amount of $232, that would have been due on January 3, 2005. Under the Sixth Amended and Restated Secured Promissory Note, that initial principal payment of $232 was due on June 3, 2005. Additionally, the accrued interest under the Fifth Amended and Restated Secured Promissory Note has

F-17

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

been calculated beginning on December 15, 2004 up to January 3, 2005 and added to the original principal amount of $1,861, resulting in a face amount for the Sixth Amended and Restated Secured Promissory Note of $1,863.

On April 27, 2005, the Company delivered an executed Seventh Amended and Restated Secured Promissory Note in favor of Deutsche Bank AG—London, acting through DB Alternative Trading, Inc. (“DB”). The amendment changes a scheduled initial principal payment under the Sixth Amended and Restated Secured Promissory Note, dated January 3, 2005, in the amount of $232 that was due on June 3, 2005. Under the amended promissory note, that initial principal payment of $232 was due on April 16, 2006. Additionally, the accrued interest under the Sixth Amended and Restated Promissory Note was calculated beginning on January 3, 2005 up to April 20, 2005 and added to the original principal amount of $1,863, resulting in a face amount for the Seventh Amended and Restated Promissory Note of $1,885.

On December 28, 2005, the Company closed a debt conversion transaction with World Focus, an affiliate of the Essar who purchased the debt and share interest from Essar Global Limited, in which World Focus converted the aggregate outstanding principal and accrued and unpaid interest it held under three promissory notes, totaling $18,501 into 487,164,064 shares of Aegis Communications Group, Inc. common stock at a conversion price of $0.038 per share. The terms of the debt conversion transaction are as set forth in a Debt Conversion Agreement, dated as of November 30, 2005, between the Company and World Focus, and which was described on the Company’s Current Report on Form 8-K filed with the SEC on December 2, 2005 and incorporated by reference herein. In the Debt Conversion Agreement, World Focus represented that it was a non-U.S. person. The shares were issued by the Company to World Focus in an offshore transaction pursuant to the exemption from registration available under Rule 903 of Regulation S. No directed selling efforts were conducted in connection with the offer and sale of the securities.

On February 15, 2006, the World Focus had purchased the remaining debt outstanding related to the Fifth Amended and Restated Secured Promissory note of $1,861 due for maturity on April 26, 2007 and 113,303,304 common shares of the Company that was owned by Deutsche Bank.

The November 5, 2003 Essar and Deutsche Bank transaction expenses of $0.4 million were treated as debt issuance costs in accordance with APB No. 21, “Interest on Receivables and Payables” and are being amortized over the life of the notes. All other expenses associated with the deal were expensed and recorded in selling, general and administrative expenses.

The Company accounted for the warrants and notes payable in accordance with APB No. 14, “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants” (“APB 14”). Deutsche Bank and Essar had been issued initial and subsequent warrants to purchase 527,661,932 shares of common stock. APB 14 requires a portion of the proceeds from the issuance of debt securities with detachable stock warrants to be allocated to the warrants and treated as paid-in capital. Any resulting discount or premium on the notes payable should be recorded and amortized over the life of the notes. The Company used the Black-Scholes model to determine the value of the warrants issued to Deutsche Bank and Essar. Under the Black-Scholes model, the value of the warrants are determined by taking the difference between acquiring the stock outright and the present value of paying the exercise price on the expiration day. As a result, the Company valued the initial warrants at $4,400. This amount was recorded as paid-in capital and the resulting discount on the notes payable was recorded and is being amortized using the interest method over the life of the notes. As a result of making $10,000 in principal payments on the Notes during the first quarter of 2004, the Company recognized $1,500 in accelerated amortization of the discount on notes payable during the period. On July 13, 2004, Essar exercised all

F-18

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

264,358,628 of their warrants in exchange for one share of common stock per warrant. The total amount of consideration given was $2,600. These funds were used to reduce outstanding debt under the new line of credit and make capital investments. On August 20, 2004, Deutsche Bank exercised all 263,303,304 of their warrants in exchange for one share of common stock per warrant. The total amount of consideration given was $2,600. These funds were used to reduce outstanding debt and make capital investments.

The November 5, 2003 deal expenses of $400 were treated as debt issuance costs in accordance with APB No. 21, “Interest on Receivables and Payables” and are being amortized using the interest method over the life of the notes. All other expenses associated with the deal were expensed and recorded in selling, general and administrative expenses.

6. LONG-TERM DEBT

Long-term debt is summarized below:

	December 31,
	2005		2004
Capital lease obligations	$	3,707	$	831
Notes Payable		3,226		17,816
		6,933		18,647
Less current maturities		2,848		324
	$	4,085	$	18,323

Future maturities of long-term debt at December 31, 2005 are as follows:

Years ending December 31,	Capital Leases		Notes Payable
2006	$	1,548	$	1,609
2007		1,548		1,617
2008		1,161		—
2009		—		—
Total minimum future lease payments	$	4,257	$	3,226
Less amounts representing interest		550
Present value of future lease payments	$	3,707

The notes payable balance at December 31, 2005 and 2004 is net of discounts totaling $83 and $1,835, respectively.

7. REVOLVING LINE OF CREDIT

On January 26, 2004, the Company entered into the Loan Agreement with Foothill that allows the Company to borrow up to $25,000 with a maturity date of January 26, 2007. Interest rates under the agreement are variable and are tied to the London Interbank Borrowing Offered Rate and the Wells Fargo prime rate. The Loan Agreement contains restrictions and covenants limiting among other things, the amount of indebtedness incurred by the Company and its subsidiaries, certain financial targets and capital expenditures. As a result of the agreement, Foothill has been granted a continuing security interest in substantially all of the Company’s assets.

F-19

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

During the first quarter 2004, the Company failed to meet covenants regarding earnings before interest, taxes, depreciation and amortization that are common to the Loan Agreement and the Notes, dated January 28, 2004, held by Deutsche Bank and Essar in the principal amounts of $10,100 and $10,100 respectively. As such, it represented a default under these agreements and additionally, a cross default under the Loan Agreement. Additionally, while the Company made payments of $10,000 of the required $12,300 due in 2004, a portion of the amounts coming due were not paid as prescribed thus resulting in a default under the Notes and the Loan Agreement.

On March 30, 2004, the Company executed amended agreements with revised covenants and received waivers from the lenders for all defaults in the Loan Agreement and Notes. In addition, the amended Notes included an extension of the due date for the balance of initial installment payments of $2,300 to January 3, 2005. The principal amounts of the amended Notes were increased to include capitalized interest of $166 thousand through March 30, 2004. At March 31, 2004, the Company was in compliance of the revised covenants for the Loan Agreement and the Amended and Restated Secured Promissory Notes.

The Company was not in compliance with the amended EBITDA covenants common to the Loan Agreement and amended Notes for the periods ending April 30, May 31, and June 30, 2004. As such, it represented a default under these agreements and additionally, a cross default under the Loan Agreement. On August 23, 2004, the Company executed amended agreements with revised EBITDA and capital expenditure covenants and received waivers from Foothill, Deutsche Bank and Essar for all defaults in the Loan Agreement and amended Notes. Without the waivers and amended agreements dated August 23, 2004, the Company would not have been in compliance with the revised EBITDA and capital expenditure covenants for the Loan Agreement and the Notes at July 31, 2004.

The Company was not in compliance with the August 23, 2004 EBITDA covenants common to the Loan Agreement and amended Notes for the periods ending September 30, 2004. As such, it represented a default under these agreements and additionally, a cross default under the Loan Agreement. On November 22, 2004, the Company executed amended agreements with revised EBITDA covenants and received waivers from Foothill, Deutsche Bank and Essar for all defaults in the Loan Agreement and amended Notes. Without the waivers and amended agreements dated November 22, 2004, the Company would not have been in compliance with the EBITDA covenants for the Loan Agreement and the Notes at September 30, 2004. At December 31, 2004 the Company had used all its outstanding and available credit facility available for drawdown from the Foothill Loan Agreement. At, and subsequent to December 31, 2004, the Company was in full compliance with all loan covenants related to these agreements.

On April 4, 2005, the Company entered into an agreement for credit financing up to $7,500 with Rockland Credit Finance, LLC (Rockland). By its terms, that credit financing agreement allows the Company to select, sell and assign some of its accounts receivable to Rockland from time to time, subject in each case to Rockland’s prior review and acceptance of those selected accounts. The agreement prohibits the Company from entering into alternative credit financing arrangements without Rockland’s prior written consent, unless Rockland reject the Company’s selection of any particular account for sale and assignment, in which case that rejected account may be sold and assigned or pledge without restriction.

On August 22, 2005, the Company entered into an addendum to its agreement for credit financing with Rockland, which it entered into on April 4, 2005. The credit financing agreement addendum has an initial term of 120-days, and the Company may request one or more 90-day extensions from Rockland. As a precondition to the credit financing agreement addendum, the Company must induce Essar Global Limited to extend the term of the promissory note in the amount of $1,388 to a date that is 90 days after the expiration of the credit financing

F-20

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

agreement addendum, including all applicable extensions. By its terms, and construed together with the initial credit financing agreement, the credit financing agreement addendum allows the Company to assign, on a once per month basis, all of its unbilled accounts receivable to Rockland, subject in each case to Rockland’s prior review, selection and acceptance of some of those unbilled accounts. The credit financing agreement and addendum prohibit the Company from entering into alternative credit financing arrangements without Rockland’s prior written consent, unless Rockland rejects the Company’s selection of any particular unbilled account for sale and assignment, in which case that rejected account may be sold and assigned or pledged without restriction. During its term, the credit financing agreement addendum also prohibits the Company from using cash from its operations to repay any of its outstanding debts owed to third parties other than Rockland.

In February 2006, the Company gave notice to Rockland Credit Finance LLC its intention to exercise its 1-year termination option to be effective April 30, 2006 (See Note 21 Subsequent Events)

8. SUBORDINATED INDEBTEDNESS

Note I Payable to an Affiliate

On March 30, 1999, Thayer Equity Investors III, L.P. (“Thayer Equity”) provided us with $5,667 in subordinated indebtedness. Approximately one-half of the proceeds from this financing were used to pay down bank debt and the remainder for working capital purposes. The note payable was convertible into the Company’s Common Stock at a conversion price of $1.15 per share. The note payable matured on April 17, 2004 with interest payable at a 12% annual rate. Payments under the note payable were subordinated to the Credit Agreement; therefore, quarterly accrued interest was rolled into the principal balance of the note payable. The Company recognized $0, $-0- and $949 in interest expense during 2005, 2004 and 2003, respectively, pursuant to the note payable. In accordance with the terms of our agreement with Deutsche Bank and Essar, we were required to repay or otherwise retire our obligations to various lenders from the proceeds of this transaction (and, to the extent the subordinated debt was not paid off, the holders of the subordinated debt discharged the debt and released us from any further liability under their promissory notes). As a result of the November 5, 2003 Deutsche Bank/Essar transaction, all subordinated indebtedness was repaid or forgiven by the subordinated debt holders with the exception of $1,137 reserved for the sub debt holders, pending outcome of the litigation with Allserve. Any part of the break-up fee that is not paid to AllServe will be distributed to the subordinated debt holders, net of certain expenses of up to $1,137.

Note II Payable to an Affiliate

In connection with a March 1998 amendment to the Credit Agreement, IQI issued a subordinated note payable to Thayer of $2,000 due April 17, 2004 with interest payable quarterly at an annual rate of 15%. Proceeds from the note payable were used for working capital purposes and to pay down a $1,000 portion of the Credit Agreement. Payments under the note payable were subordinate to the Credit Agreement. Therefore, quarterly accrued interest was rolled into the principal balance of the note payable. The Company recognized $0, $0 and $544 in interest expense during 2005, 2004 and 2003, respectively pursuant to this note payable. In accordance with the terms of our agreement with Deutsche Bank and Essar, we were required to repay or otherwise retire our obligations to various lenders from the proceeds of this transaction (and, to the extent the subordinated debt was not paid off, the holders of the subordinated debt discharged the debt and released us from any further liability under their promissory notes). As a result of the November 5, 2003 Deutsche Bank/Essar transaction, all subordinated indebtedness was repaid or forgiven by the subordinated debt holders with the exception of $1,137 reserved for the sub debt holders, pending outcome of the litigation with Allserve. Any part of the break-up fee that is not paid to AllServe will be distributed to the subordinated debt holders, net of certain expenses of up to $1,137.

F-21

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

Note Payable to a Shareholder

In 1996, IQI issued a subordinated note payable to a shareholder aggregating $3,000. In December 1997, IQI and the shareholder consummated an agreement (the “IQI Agreement”) to settle outstanding issues between the shareholder, IQI and Thayer (IQI’s principal shareholder). As part of such settlement, the aggregate principal balance of the note was reduced to $1,000 and the interest rate increased from 8% to 12% on the remaining note. The $2,000 reduction to the shareholder note was treated as a contribution of capital by the shareholder. The Company recognized $0, $0 and $103 in interest expense during 2005, 2004 and 2003, respectively pursuant to this note payable. On April 14, 2003, the Company reached agreement with the note holder to extend the maturity date of the note from November 18, 2003 to April 17, 2004. In accordance with the terms of our agreement with Deutsche Bank and Essar, we were required to repay or otherwise retire our obligations to various lenders from the proceeds of this transaction (and, to the extent the subordinated debt was not paid off, the holders of the subordinated debt discharged the debt and released us from any further liability under their promissory notes). As a result of the November 5, 2003 Deutsche Bank/Essar transaction, all subordinated indebtedness was repaid or forgiven by the subordinated debt holders with the exception of $1,137 reserved for the sub debt holders, pending outcome of the litigation with Allserve. Any part of the break-up fee that is not paid to AllServe will be distributed to the subordinated debt holders, net of certain expenses of up to $1,137.

9. LEASES

The Company has capital leases covering certain equipment. The Company also leases property and certain other equipment under operating leases. Capital leases are included in the accompanying consolidated balance sheets under the following captions:

	December 31,
	2005		2004
Telecommunications Equipment	$	4,000	$	484
Less accumulated depreciation		333		258
	$	3,667	$	226

Future minimum lease payments for all non-cancelable leases with initial or remaining terms of one year or more at December 31, 2005 are as follows:

Years ending December 31,	Capital Leases		Operating Leases
2006	$	1,548	$	2,857
2007		1,548		2,780
2008		1,161		2,084
2009		—		1,177
2010		—		1,128
and thereafter		—		—
Total minimum future lease payments	$	4,257	$	10,026
Less: amounts representing interest		505
Present value of future lease payments	$	3,707

Rent expense on operating leases for the years ended December 31, 2005, 2004 and 2003 was $3,013, $4,651 and $5,457 respectively.

F-22

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

10. PREFERRED STOCK

The Company is authorized to issue 2,000,000 shares of preferred stock and has 29,778 shares of Series B Preferred Stock outstanding at December 31, 2005 and 2004. Following the closing of the Deutsche Bank/Essar transaction on November 5, 2003, all of the outstanding shares of Series D Preferred Stock were cancelled, all of the outstanding shares of Series E Preferred Stock were converted into Common Stock or cancelled, and all of the outstanding shares of Series F Preferred Stock have been converted into Common Stock. The Company continues to be authorized to issue up to 2,000,000 shares of preferred stock in various series, of which there are 29,778 shares of Series B Preferred currently outstanding. No shares of Series D, Series E, or Series F Preferred Stock remain outstanding.

Series B Preferred Stock

At December 31, 2005 and 2004, 29,778 shares of $0.01 par value Series B Preferred Stock were issued and outstanding. Such shares were issued by ATC, are convertible into shares of Common Stock at a conversion ratio of one share of Series B Preferred Stock for two shares of Common Stock, and pay a cumulative cash dividend at the annual rate of $0.36 per share. The Series B Preferred Stock has a liquidation preference of $3.60 per share. Accrued dividends payable were $209 and $198 at December 31, 2005 and 2004, respectively. The Deutsche Bank/Essar transaction completed on November 5, 2003 had no effect on the outstanding shares of Series B Preferred Stock.

Series D & E Preferred Stock

In an effort to reduce debt and improve the Company’s balance sheet, on June 30, 1999, a group led by the Company’s then largest shareholder, Thayer Equity (together the “Thayer-led group”), agreed to convert $12,132 of its subordinated debt into two new series of convertible preferred stock. At December 31, 2002, 129,423 of Series D Preferred Stock ($.01 par value per share, liquidation preference equal to the $100 per share investment value of such shares, but subordinate to the liquidation preferences of the Series B and Series F Preferred Stock) were issued and outstanding. Such shares were convertible into Company common stock at $2.00 per share, earned cumulative dividends (payable in kind in additional shares of Series D Preferred Stock) at the annual rate of 15%, and were non-voting except on specified matters. For the year ended December 31, 2003, accrued dividends totaling $1,507 on the Series D Preferred Stock were paid in kind, while in the comparable prior year period, accrued dividends totaling $1,772 on the Series D Preferred Stock were paid in kind. The Company had the ability, at its option, to redeem the Series D Preferred Stock in cash or by the issuance of a convertible promissory note bearing interest at a rate of 12%. In connection with the Deutsche Bank/Essar transaction on November 5, 2003, all of the outstanding shares of Series D Preferred Stock were cancelled, and there are no longer any shares of Series D Preferred Stock outstanding.

At December 31, 2002, 73,699 shares of Series E Preferred Stock ($.01 par value per share, liquidation preference equal to the $100 per share investment value of such shares, but subordinate to the liquidation preferences of the Series B and Series F Preferred Stock) were issued and outstanding. Such shares were convertible into Company common stock at $2.375 per share, earned cumulative dividends (payable in kind in additional shares of Series E Preferred Stock) at the annual rate of 15%, and were non-voting except on specified matters. For the year ended December 31, 2003, accrued dividends totaling $858 on the Series E Preferred Stock were paid in kind, while in the comparable prior year period, accrued dividends totaling $1,009 on the Series E Preferred Stock were paid in kind. The Company had the ability, at its option, to redeem the Series E Preferred Stock in cash or by the issuance of a convertible promissory note bearing interest at a rate of 12%. In connection

F-23

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

with the Deutsche Bank/Essar transaction on November 5, 2003, all of the outstanding shares of Series E Preferred Stock were either converted into Common Stock or cancelled, and there are no longer any shares of Series E Preferred Stock outstanding.

Series F Preferred Stock

On December 10, 1999, the Company completed the sale of 46,750 shares of newly issued Redeemable Preferred F senior voting convertible preferred stock to Questor Partners Fund II, L.P., Questor Side-by-Side Partners II, L.P., and Questor Side-by-Side Partners II 3(c)(1), L.P. (collectively the “Questor Investors”) for an aggregate purchase price of $46,750. The Questor Investors obtained the funds used to acquire the Series F Preferred Stock through capital contributions by their partners. The Company used the net proceeds from the sale of the Series F Preferred Stock to repay outstanding bank debt and pay transaction expenses. Holders of Series F Preferred Stock were entitled to receive dividends in preference to all other capital stock of the Company, except for the Company’s Series B Preferred Stock, at the rate of 9.626% per annum, which would accrue and be cumulative from their original issue date. The dividends on the Series F Preferred Stock, to the extent that dividends had not been paid, were added to the investment value of such shares. The Series F Preferred Stock is convertible into shares of Common Stock on the basis of one share of Common Stock per $1.00 of investment value, as adjusted, of the Series F Preferred Stock. The shares of Series F Preferred Stock had a liquidation preference equal to the investment value of such shares, which liquidation preference was subordinate to the liquidation preference of the Series B Preferred Stock. For the year ended December 31, 2003, accrued dividends totaling $5,232 on the Series F Preferred Stock were added to the investment value of such shares, while in the comparable prior year period, accrued dividends totaling $5,676 on the Series F Preferred Stock were added to the investment value of such shares. In connection with the Deutsche Bank/Essar transaction on November 5, 2003, half of the then-outstanding shares of Series F Preferred Stock were converted into Common Stock, as of December 31, 2003 and the balance was converted during 2004.

At December 31, 2005 and 2004, no shares of Series F Preferred Stock were issued and outstanding. Holders of Series F Preferred Stock waived their rights to dividends in the November 5, 2003 Deutsche Bank/Essar transaction. The Series F Preferred Stock was convertible into shares of Common Stock based on one share of Common Stock per $1.00 of investment value, as adjusted, of the Series F Preferred Stock. In connection with the transaction, on November 5, 2003, holders of a majority of the outstanding shares of the Company’s voting stock approved, by written consent, (1) an amendment to the Company’s certificate of incorporation to increase the number of shares of Common Stock the Company is authorized to issue from 200,000,000 to 800,000,000, and (2) an amendment to the Series F Preferred Stock Certificate of Designation to, among other things, increase the number of shares of Common Stock into which the outstanding shares of Series F Preferred may be converted, from 34,527,594 to 46,910,503. These amendments took effect after the circulation by the Company of an information statement to its stockholders, in accordance with Section 14(c) of the Securities Exchange Act of 1934, as amended, and Rule 14c-2 promulgated there under. This mailing took place on April 1, 2004, and the amendments became effective immediately upon expiration of the twenty-day waiting period. On April 21, 2004, the remaining 23,375 shares of Series F Preferred Stock were converted into 46,910,503 shares of Common Stock. The transaction was recorded on the accompanying consolidated balance sheet as an increase to common stock and paid-in-capital and a decrease in redeemable convertible preferred stock. These actions were approved by the required majority holders of the outstanding shares entitled to cast votes requiring no other stockholder approval of these actions. Amendments to the Company’s Articles of Incorporation were affected by the Secretary of State of the State of Delaware on April 21, 2004.

F-24

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

11. EARNINGS (LOSS) PER SHARE

Common stock equivalents consist of common stock issuable under the assumed exercise of stock options and warrants, computed based on the treasury stock method, and the assumed conversion of the Company’s issued and outstanding preferred stock and convertible subordinated indebtedness. Common stock equivalents are not included in diluted EPS calculations to the extent their inclusion would have an anti-dilutive effect.

Basic and diluted weighted average shares outstanding were computed as follows:

	Year ended December 31,
	2005		2004		2003
Basic and Diluted (in thousands)
Weighted average common shares outstanding	716,844		313,530		57,775
Weighted average treasury shares	(476	)	(476	)	(476	)
Shares used in EPS calculation	716,368		313,054		57,299
Antidilutive securities excluded from the computation of diluted EPS for the periods indicated are as follows:
Shares issuable under option agreements	—		—		—
Shares issuable under warrant agreements	—		—		68,085
Shares issuable upon conversion of preferred stock	—		—		46,970
Shares issuable upon conversion of convertible debt	—		—		—

12. INCOME TAXES

The components of the income tax expense applicable to continuing operations are as follows:

	Year ended December 31,
	2005			2004			2003
Current
Federal	$	—		$	—		$	—
State		—			145			300
Deferred
Federal		937			(9,870	)		(2,477	)
Valuation allowance		(937	)		9,870			2,477
Total income tax expense	$	—		$	145		$	300

For 2005, 2004 and 2003, the actual expense differs from the expected expense as the Company provided a full valuation allowance against the deferred tax asset and the tax benefits related to losses incurred in 2005, 2004 and 2003.

F-25

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

The components of deferred taxes included in the accompanying consolidated balance sheets are as follows:

	December 31,
	2005			2004
Deferred tax assets:
Bad debt reserve	$	33		$	33
Accrued expenses		396			245
Net operating loss carry forwards		32,207			33,122
Tax credits		807			807
Gross deferred tax assets		33,443			34,207
Deferred tax liabilities
Depreciation		3,595			3,422
Gross deferred tax liabilities		3,595			3,422
Valuation allowance		(29,848	)		(30,785	)
Net deferred tax asset	$	—		$	—

At December 31, 2005, the Company had net operating loss carry forwards of approximately $84,200 and unutilized tax credits of approximately $807. Due to an ownership change and the provisions of Section 382, the utilization of net operating losses and tax credits may be limited in future years. The net operating loss carry forwards and tax credits begin to expire from 2013 through 2022. Management has established a valuation allowance for deferred taxes where management believes it is more likely than not that the deferred tax asset will not be realized.

A reconciliation of the expected statutory income tax expense to the actual expense based on pre-tax loss is as follows for 2005, 2004, and 2003:

	Year ended December 31,
	2005			2004			2003
Expected tax benefit at statutory rate	$	(4,595	)	$	(8,451	)	$	(4,053	)
State tax adjustment		—			145			300
Increase (decrease) in valuation allowance		(937	)		9,870			2,477
Net operating loss and temporary differences adjustments		5,640			—			—
Other		(108	)		(1,419	)		1,576
Total income tax expense	$	—		$	145		$	300

13. COMMITMENTS AND CONTINGENCIES

The Company has agreements with some telephone long distance carriers which currently range to July 2010, and which provide for annual minimum usage requirements. During the fourth quarter of 2004, the Company reached agreement with its largest carrier to cancel the remaining minimum usage commitment under the then existing agreement in exchange for entering into a reduced usage commitment effective October 1, 2000, under which it is committed to usage of $7,400 annually for seven years.

At December 31, 2004, the Company accrued $290 related to unused and under accrual usage for the current year’s commitment of $7,400. The contract provides for a “Business Downturn / Network Optimization” clause which in the event of a business downturn beyond our control that significantly reduces the volume of services required by us, with the result that we will be unable to meet our revenue and or volume commitments, we and

F-26

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

the vendor service provider will cooperate to develop a mutually agreeable alternative agreement, and amend or replace the affected metrics of the contract currently in place. In January 2005, we initiated the downturn clause and will be working with the vendor provider to redraft the contract. Effective July 1, 2005, the Company amended the current 7-year agreement to a revised 10-year agreement reducing our annual commitment usage from $7,400 annually to $3,400 annually and established a contract that allowed for review of rates for purchase of circuits and usage that is benchmarked competitively to reflect the use of the most productive technology configuration. For example, the Company was able to reduce the usage rate from 2.4 cent per minute to 1.84 cents per minute. As partial consideration for the extended term, AT&T provided a credit of all underutilized charges in the original contract form prior periods. Therefore, in the third quarter 2005, the Company had reversed the $290 accrual set on the books at December 31, 2004 related to prior underutilization.

On July 22, 2004, the Company signed an agreement with the New York State Urban Development Corporation giving to us a financial grant of $0.9 million initial disbursement after execution of a lease for 80 Broad Street to expire no earlier than April 1, 2011. We must employ at least 260 full-time permanent employees at the project location by December 31, 2005 or repay the Grant. Accordingly in 2005, the Company had met the required 260 full time employees employed at the New York Facility, therefore in the fourth quarter 2005, the Company had reduced the $884 accrual set on the books at December 31, 2004 to $566 at December 31, 2005 related to that contingency.

The Company has an employment agreement with Kannan Ramasamy. The employment agreement provides for, upon the Company’s adoption of an employee stock option plan, a grant of options to purchase 3,450,000 shares of the Company’s common stock. The price of those options is the closing market price of the Company’s common stock on the date of grant. The options vest in three equal annual installments and terminate ten years from date of grant.

The Company has a transition agreement with Richard Ferry, the Company’s immediate past Chief Executive Officer. The transition agreement provides for grants of options to purchase 2,277,000 shares of the Company’s common stock upon the earlier of (i) the adoption of an employee stock option plan; or (ii) October 31, 2005. The price of those options is the closing market price of the Company’s common stock on the date of grant. The options are exercisable commencing on November 1, 2005, and will expire on November 1, 2010, if not exercised on or before that date.

Additionally, on November 12, 2003, AllServe and its wholly-owned subsidiary AllServe Systems, Inc. filed suit against us in the Court of Chancery of the State of Delaware. Based on the complaint, the plaintiffs are apparently seeking an injunction to prevent us from closing the transaction with Deutsche Bank and Essar, which in our view has already been closed. The complaint also seeks to specifically enforce our merger agreement with AllServe. Alternatively, the complaint seeks payment of the $1,137 break-up fee as well as other monetary damages that, according to AllServe, exceed $50. We deny that AllServe is entitled to any injunctive relief, payment of the break-up fee or any other damages or payments. The $1,137 was accrued at December 31, 2004 to the subordinated debt-holders. Payment to the sub-debt holders is contingent upon the outcome of the Allserve litigation and may be net of expenses. If certain fees are paid to Allserve, which will reduce the amount paid to the subordinated debt-holders, up to $1,137. At this time it is not possible to accurately predict the outcome of this lawsuit. We intend to contest this lawsuit vigorously.

We are party to certain legal proceedings incidental to our business. Certain claims arising in the ordinary course of business have been filed or are pending against us. Management believes that the ultimate resolution of such contingencies will not have a material adverse effect on the consolidated financial position or consolidated results of operations of Aegis.

F-27

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

14. MAJOR CLIENTS

The Company had earned revenue from major clients (those clients representing 10% or more of consolidated revenues during their reported years) of the following amounts for the periods indicated.

	Year ended December 31,
Revenues	2005		2004		2003
Qwest	$	10,584	$	14,405	$	20,024
Western Union	$	9,141	$	9,311	$	14,798
American Express	$	7,042	$	10,226	$	14,872
AT&T	$	5,915	$	24,610	$	36,426
Trilegiant	$	5,026	$	9,791	$	21,091

The Company held receivables from major clients (those clients with accounts receivable balances in excess of 10% of the Company’s total accounts receivable balance) of the following amounts at December 31.

Receivables	2005		2004
American Express	$	1,247	$	1,965
AT&T	$	911	$	1,239
Bell South	$	1,225	$	1,015
Comcast	$	1,939	$	1,008
Qwest	$	2,594	$	1,265

15. STOCK OPTIONS AND WARRANTS

Plan category	Number of securities remaining available for future issuance under compensation plans
	(a)
Equity compensation plans approved by security holders	43,929,774
Equity compensation plans not approved by security holders	—
Total	43,929,774

IQI Plan

In November 1996, IQI established the 1996 Incentive Stock Option Plan (the “IQI Plan”). The IQI Plan provides for the award of incentive stock options to directors, officers, key employees and members of Thayer’s Advisory Board. The IQI Plan was administered by a Compensation Committee, as established by IQI’s Board of Directors. These options are intended to qualify as incentive stock options (“ISOs”) under the Internal Revenue Code or non-statutory stock options (“NSOs”), which are not intended to qualify. IQI reserved 3,929,774 shares of common stock for issuance under the IQI Plan. Options granted pursuant to the IQI Plan are exercisable for ten years from the date of the grant subject to vesting schedules.

ATC Plan

Prior to the Merger, ATC shareholders approved two stock option plans, which provided for the granting of options to purchase up to 5,000,000 shares of Common Stock to key employees, officers and directors of ATC

F-28

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

and its operating subsidiary (the “ATC Plans”). At the date of the Merger, options to purchase 4,447,000 shares of Common Stock granted pursuant to the ATC Plans were outstanding. Options granted pursuant to the ATC Plan are exercisable for ten years from the date of the grant subject to vesting schedules.

1998 Plan

In September 1998, the Company initiated the Aegis Communications Group, Inc. 1998 Stock Option and Restricted Stock Plan (the “1998 Plan”) which provides for the granting of options to purchase up to a maximum of 35,000,000 shares of Common Stock to key employees, officers and directors of the Company and its operating subsidiaries. Options granted pursuant to the 1998 Plan are exercisable for ten years from the date of the grant subject to vesting schedules. The Company may grant additional options at any time prior to September 2008. As a result of the adoption of the 1998 Plan, the Company will not grant any future option to purchase shares of Common Stock pursuant to the IQI Plan or ATC plans.

The Company has the ability but currently has not provided through the issuance of stock options and other stock-based awards to certain employees and directors. Historically the Company accounts for these awards using the intrinsic method pursuant to Accounting Principles Board (“APB”) Opinion 25 “Accounting for Stock Issued to Employees” (“APB 25”) and related interpretations. In December 2004, the Financial Accounting Standards Board issued a revised SFAS No. 123 (revised 2004), Share-Based Payment (“SFAS 123R”), which replaces SFAS 123 and supersedes APB Opinion No. 25. SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The pro forma disclosures previously permitted under SFAS 123 will no longer be an alternative to financial statement recognition. SFAS 123R is effective for periods beginning after June 15, 2005, and the Company has adopted the method for accounting for stock based awards and payments. The guidance also provides for classifying awards as either liabilities or equity, which impacts when and if the awards must be remeasured to fair value subsequent to the grant date. At the time of adoption, companies can select from three transition methods, two of which would allow for restatement of certain prior periods. The Company has adopted the method for accounting for stock based awards and payments. Furthermore, Management anticipates selecting the transition method in which prior period financial statements would not be restated. The adoption of SFAS No. 123R is not expected to have a significant effect on our financial statements.

The following table summarizes certain information related to options for common stock. There was no option activity in Fiscal 2003.

	IQI Plan/ATC Plans		1998 Plan
	Shares	Weighted Average Price	Shares	Weighted Average Price
Outstanding at December 31, 2003	—	—	—	—
Granted	—	—	—	—
Cancelled	—	—	—	—
Forfeited	—	—	—	—
Exercised	—	—	—	—
Outstanding at December 31, 2004	—	—	—	—
Granted	—	—	—	—
Forfeited	—	—	—	—
Exercised	—	—	—	—
Outstanding at December 31, 2005	—	—	—	—

F-29

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

Warrants Outstanding

In April 1993, Advanced Telemarketing Corporation (“Advanced”) initiated the Advanced Telemarketing Corporation 1993 Stock Option Plan, which provides for the granting of options to Advanced’s key employees, officers, and directors to purchase shares of Advanced’s common stock (“Advanced Common”). In December 1996, ATC initiated the ATC Communications Group, Inc. 1996 Stock Exchange Rights Plan (the “Rights Plan”), which provides for holders of options to purchase shares of Advanced Common to exchange shares of Advanced Common received upon exercise of such options for shares of Common Stock. The shares exchanged pursuant to the Rights Plan are exchanged on the ratio of two shares of Common Stock for one share of Advanced Common. At December 31, 2002, fully vested options to purchase 11,668 shares of ATC Common were outstanding. The options to purchase ATC Common outstanding at December 31, 2002 were subject to the Rights Plan as discussed above. As a result of the transaction with Deutsche Bank and Essar on November 5, 2003, all prior outstanding warrants were cancelled.

In connection with the IQI Agreement (see Note 5—“Restructuring and Other Non-Recurring Charges”), IQI issued warrants to a shareholder to purchase an aggregate of 919,060 common shares for $3,000. The right to exercise the warrants expires at the earlier of i) repayment of the note payable to a shareholder, ii) the date the Company consummates an underwritten public offering of common stock, iii) the consummation date of a sale of the Company, as defined, or iv) November 2003. In December 1997, IQI and the shareholder settled a dispute whereby the shareholder would purchase two-thirds of the common shares subject to warrants (612,714 shares) by paying the exercise price of $2,000. As a result of the transaction with Deutsche Bank and Essar on November 5, 2003, all prior outstanding warrants were cancelled.

Thayer Warrants

In connection with the Merger, Thayer provided a guarantee for $2,000 in bridge financing to assist in funding ATC’s working capital needs. In connection with the guarantee and for additional consideration of $110, the Company issued to Thayer warrants to purchase 1,100,000 shares of the Company’s Common Stock at an exercise price of $1.96 per share. The warrants were valued at $188. These warrants expired August 31, 2003.

Also in connection with the Merger, the Company received an additional financing commitment from a Thayer-led group to advance to the Company up to an additional $4,000 in subordinated indebtedness (see Note 9.—“Subordinated Indebtedness”). In connection with this commitment, the Company issued the Thayer-led group warrants to purchase up to 350,000 shares of the Company’s Common Stock at an exercise price of $2.375 per share. The warrants were valued at $95. These warrants expired August 31, 2003.

In consideration of certain guarantees, the Company issued Thayer Equity a warrant to purchase up to 800,000 shares of the Company’s Common Stock, exercisable only if the guarantee is drawn upon and at an exercise price based on the then market price of such stock. As part of its settlement of an indemnification claim made by the company related to the Merger, Thayer Equity waived its right to this contingent warrant. As a result of the transaction with Deutsche Bank and Essar on November 5, 2003, all prior outstanding warrants were cancelled.

In consideration of the conversion of the subordinated debt into preferred stock (see Note 11.—“Preferred Stock”) on June 30, 1999, the Company issued the Thayer-led group warrants to purchase an additional 1,000,000 shares of Company Common Stock at $0.90625 per share, the closing price of such stock on the date the debt was converted into equity. These warrants were exercisable and set to expire June 30, 2004. As a result of the transaction with Deutsche Bank and Essar on November 5, 2003, all prior outstanding warrants were cancelled.

F-30

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

Deutsche Bank/Essar Warrants

On November 5, 2003, the Company signed definitive documents to effect an investment in the Company by Deutsche Bank and Essar. In the transaction, Deutsche Bank and Essar provided approximately equal portions of a $28,231 investment in the Company in return for three-year secured promissory notes and warrants to purchase up to 80 percent of the Company’s common stock. The Company accounted for the warrants and notes payable issued under the Deutsche Bank and Essar transaction in accordance with APB No. 14, “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants” (“APB 14”). Deutsche Bank and Essar had been issued initial and subsequent warrants to purchase 527,661,932 shares of common stock. APB 14 requires a portion of the proceeds from the issuance of debt securities with detachable stock warrants to be allocated to the warrants and treated as paid-in capital. Any resulting discount or premium on the notes payable should be recorded and amortized over the life of the notes. The Company used the Black-Scholes model to determine the value of the warrants issued to Deutsche Bank and Essar. Under the Black-Scholes model, the value of the warrants are determined by taking the difference between acquiring the stock outright and the present value of paying the exercise price on the expiration day. As a result, the Company valued the initial warrants at $4,400. This amount was recorded as paid-in capital and the resulting discount on the notes payable was recorded and is being amortized using the interest method over the life of the notes. As a result of making $10,000 in principal payments on the Notes during the first quarter of 2004, the Company recognized $1,400 in accelerated amortization of the discount on notes payable during the period. On July 13, 2004, Essar exercised all 264,358,628 of their warrants in exchange for one share of common stock per warrant. The total amount of consideration given was $2,600. These funds were used to reduce outstanding debt under the new line of credit and make capital investments. On August 20, 2004, Deutsche Bank exercised all 263,303,304 of their warrants in exchange for one share of common stock per warrant. The total amount of consideration given was $2,600. These funds were used to reduce outstanding debt and make capital investments.

16. EMPLOYEE BENEFIT PLANS

The Company sponsors a defined contribution 401(k) plan (the “Plan”) covering all eligible employees of Aegis. The Company, on a discretionary basis, contributes up to 3% of eligible employee salaries at the rate of 50% of employee contributions payable to the Plan. Employer matching contributions to the Plan for the year ended December 31, 2005, 2004 and 2003, were approximately $-0-, $-0- and $29, respectively.

17. RELATED PARTY TRANSACTIONS

On March 21, 2005, the Company executed a Promissory Note in favor of Essar. The Promissory Note was repaid to Essar during April 2005. The Promissory Note was in the amount of $1,250, was unsecured and bore interest at a simple rate of 0.50% over LIBOR per annum, with interest payable in arrears in fifteen-day periods beginning from the date of execution. Periodic interest payments are payable in cash, unless Essar agreed that such interest should be capitalized and added to the principle amount of the Promissory Note. The Promissory Note was paid in two installments of $250 on April 11, 2005 and $1,000 including interest on April 28, 2005.

On July 25, 2005, the Company executed a Promissory Note in the amount of $1,500 in favor of Essar. The Promissory Note is unsecured and bears interest at a simple rate of 0.50% over LIBOR per annum, with interest payable in arrears in fifteen-day periods beginning from the date of execution. During the three months ended September 31, 2005, the Company made an installment payment of $112 with a balance outstanding of $1,388 at September 30, 2005.

On December 28, 2005, the Company executed an agreement to exchange its debt of approximately $18,501 for 487,164,064 shares of Company stock.

F-31

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

Essar has invested greatly in the Company and has continued its support by providing key Essar personnel to assist the Company in strategic sales, marketing, operating finance and information technology functions. Those individuals are paid by Essar and provide services in their particular discipline for the Company.

On May 6, 2005, the Company announced that Richard N. Ferry resigned from his positions as President and Chief Executive Officer of the Company and from all other officer positions held with the Company’s subsidiaries effective as of April 30, 2005. Mr. Ferry will continue to serve as a director of the Company’s Board of Directors. On May 6, 2005, the Company announced that Kannan Ramasamy has been elected President and Chief Executive Officer and as a director on the Board of Directors of the Company effective as of May 1, 2005.

The Company has continued to pursue cost reduction initiatives moving some contracting services in India from WNS Services to Aegis BPO Services Limited (ABSL). ABSL is a wholly owned subsidiary of Essar Global Ltd., which is also a significant shareholder of the Company. The Company is in further discussions with ABSL to outsource various accounting and financial, information technology, sales and marketing services to reduce overhead and to marshal resources through this partnership for a long-term competitive advantage. The Company remains in the planning stages of executing on its strategy of growing beyond the call center business to a full line of business process operating initiatives, some of which may be associated through partnerships with related parties. The sensitivity and timing of these discussions are not complete, hence it is not possible for us to provide appropriate disclosure in this report. We look forward to providing additional communications and disclosure on these developments when relationships are firmed up.

During the year, the Company moved from WNS, its then current vendor provider, providing call center work in India at an average price of $180 per month. We moved the work to ABSL providing comparable services at the rate of approximately $150 per month. ABSL was also able to provide IT programming and Quality Assurance work that has reduced our operating costs in the United States for those services. At December 31, 2005 the Company owed ABSL approximately $145.

Effective July 1, 2005, the Company entered into an agreement with Business Transformation Consulting Inc., (“BTC”) under which BTC provides a sales function for the Company on an outsourced basis. BTC is a wholly-owned subsidiary of Essar which is an affiliate of the Company. Through this relationship, the Company outsources all of its sales and marketing functions, including its client prospecting, market research, leads generation, customer acquisitions, up-selling, cross-selling, “building loyalty” programs and relationship management services to support its inbound and outbound telephone offerings. Under this program, all of the Company’s sales and marketing personnel have been hired by BTC for the exclusive right to market and sell for the Company. BTC is responsible for all costs including but not limited to salaries, commissions, travel, and presentation, and the Company is obligated to pay commissions to BTC on any new business that they bring to the Company going forward.

During the six months ended December 31, 2005, the Company recorded a savings of $750 in sales and marketing expenses that the BTC Company incurred along with a reimbursement of $250 related to the education and training of their related personnel. During the six months ended December 31, 2005, the Company incurred a commission expense of $252. At December 31, 2005, the Company owes BTC a commission due balance of $152.

Effective August 8, 2005, the Company entered into a tri-party Networking Equipment Lease Agreement between ABSL, a wholly owned subsidiary of Essar Global Limited, and SREI Infrastructure Finance Limited. Under that agreement, SREI loaned $4,000 to ABSL to purchase VoIP equipment, which ABSL subsequently

F-32

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

leased to the Company over a 36 month period at a monthly lease cost of approximately $129. Consistent with FAS 13, that lease is accounted for as a capital lease depreciated over the life of the lease and lease payments are charged against capital lease liability and interest expense.

The Company has Master Service Agreements and related Statement of Works in process with ABSL for the off-shore production of back office work related to call service operations, information technology support, payroll support and other back office functions that support the operations of the Company. Although ABSL is an affiliate, all contracts have been negotiated and entered into through arms length transactions at prices comparable to market rates.

18. OTHER CURRENT LIABILITIES

	December 31,
	2005		2004
Accrued taxes	$	1,235	$	759
Employee benefit related accruals		345		1,256
Unclaimed property		1,176		1,178
Accrued telecommunications expense		212		480
Deferred Grant		566		884
Accrued self-insured workers compensation		701		1,755
Accrued Allserve/sub-debt holders pay-off		1,137		1,137
Accrued expenses, other		4,033		3,028
Total other current liabilities	$	9,405	$	10,477

19. REVENUES

Revenues were as follows:

	Year ended December 31,
	2005		2004		2003
Inbound CRM	$	54,893	$	61,629	$	88,050
Outbound CRM		7,392		23,063		36,275
Non-Voice & Other		6,356		9,635		15,536
Total revenues	$	68,641	$	94,327	$	139,861

F-33

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

20. UNAUDITED QUARTERLY FINANCIAL DATA

	Three months ended
	March 31, 2005			June 30, 2005			September 30, 2005			December 31, 2005
Revenues	$	15,639		$	15,807		$	14,777		$	22,418
Operating loss		(3,958	)		(3,767	)		(1,639	)		(667	)
Loss before income taxes		(4,444	)		(4,393	)		(2,350	)		(1,974	)
Net loss from continuing operations		(4,444	)		(4,393	)		(2,350	)		(1,974	)
Net loss		(4,444	)		(4,393	)		(2,350	)		(1,974	)
Preferred stock dividends		—			—			—			11
Net loss after preferred stock dividends	$	(4,444	)	$	(4,393	)	$	(2,350	)		(1,985	)
Basic and diluted (loss) per common share:
Loss from continuing operations	$	(0.1	)	$	(0.1	)	$	0.0		$	0.0
Net loss applicable to common shareholders	$	(0.1	)	$	(0.1	)	$	0.0		$	0.0
Weighted average common shares:
Basic		659,577			659,577			659,577			716,368
Diluted		659,577			659,577			659,577			716,368

	Three months ended
	March 31, 2004			June 30, 2004			September 30, 2004			December 31, 2004
Revenues	$	29,571		$	26,294		$	20,426		$	18,036
Operating loss		(3,855	)		(7,980	)		(3,786	)		(3,098	)
Loss before income taxes		(5,857	)		(8,436	)		(4,163	)		(3,639	)
Net loss from continuing operations		(5,857	)		(8,436	)		(4,163	)		(3,784	)
Net loss		(5,857	)		(8,436	)		(4,163	)		(3,784	)
Preferred stock dividends		—			—			—			11
Net loss after preferred stock dividends	$	(5,857	)	$	(8,436	)	$	(4,163	)	$	(3,795	)
Basic and diluted (loss) per common share:
Loss from continuing operations	$	(0.07	)	$	(0.07	)	$	(0.01	)	$	(0.01	)
Net loss applicable to common shareholders	$	(0.07	)	$	(0.07	)	$	(0.01	)	$	(0.01	)
Weighted average common shares:
Basic		85,005			121,605			381,471			660,053
Diluted		85,005			121,605			381,471			660,053

F-34

AEGIS COMMUNICATION GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except share and per share amounts and where noted)

21. SUBSEQUENT EVENTS

In January 2006, the Company gave notice to Rockland Credit Finance LLC its intention to exercise its 1 year termination option to be effective April 30, 2006.

The Company has received a commitment letter for a $20 million credit arrangement with CITGroup/Business Credit, Inc. The line of credit is for $20 million with a borrowing base computed on 85% of eligible billed accounts receivable, plus 80% of eligible unbilled accounts receivable, subject to a sub-limit of an amount to be determined, minus such availability reserves as Lender may reasonably establish from time to time. The Company expects a clear reduction in cost of capital related to this facility as compared to its prior factoring facility. Effectively, Management feels this additional funding capacity along with projected operational growth and resulting positive EBITDA, will be sufficient to provide liquidity for the Company’s ongoing operations.

On March 16, 2006, the Company received an e-mail communication from NationsHealth, Inc. expressing NationsHealth’s interest in ceasing operations at Aegis’s Port St. Lucie, Florida call center effective March 17, 2006. Those operations were being provided pursuant to a Master Lease Agreement, dated November 1, 2005, between the Company and NationsHealth. The material terms and conditions of the Master Lease Agreement were previously disclosed in Item 1.01 of the Company’s Form 8-K, filed on November 7, 2005. When combined with an earlier termination of services to NationsHealth at Aegis’s New York City call center on February 10, 2006, the cessation of operations resulted in a termination of the Master Lease Agreement. Under the Master Lease Agreement, the Company was entitled to 70 days written notice prior to any termination for convenience.

F-35

EX-3.1

Exhibit 3.1

CERTIFICATE OF AMENDMENT TO THE

CERTIFICATE OF INCORPORATION OF

AEGIS COMMUNICATIONS GROUP, INC.

Aegis Communications Group, Inc., a corporation organized and existing under the Delaware General Corporation Law (the “Corporation”),

DOES HEREBY CERTIFY:

FIRST: that the Board of Directors of the Corporation, at a special meeting of the Board of Directors called for such purpose, duly adopted resolutions by unanimous vote authorizing proposed amendments to the Certificate of Incorporation of the Corporation, declaring said amendments to be advisable, and directing that said amendments be submitted to the stockholders of said corporation for their consideration. In applicable part, the resolutions authorizing the amendments are as follows:

“RESOLVED, that the amendment of the Company’s Certificate of Incorporation to increase the Company’s authorized capital stock to 2,002,000,000 shares, comprised of 2,000,000 shares of preferred stock and 2,000,000,000 shares of common stock shall, through a Certificate of Amendment to the Amended and Restated Certificate of Incorporation, be and it hereby is approved and adopted;

RESOLVED, that the amendment to the Certificate of Incorporation described above be submitted for approval to the holders of outstanding stock of the Company having not less than the minimum number of votes that would be necessary to authorize or take such action and that the officers of the Company, or any one of them, are hereby authorized and directed, in the name and on behalf of the Company, to do or cause to be done all such acts as they may deem necessary or advisable in connection with the preparation, execution and filing with the Securities and Exchange Commission of the Information Statement, and thereafter the dissemination of the Information Statement to the stockholders who have not consented in writing; and that all such acts of such officers that are in accordance with the purposes and intent of this resolution, are hereby adopted, ratified and confirmed as the valid acts of the Company;

RESOLVED, that each of the officers of the Company is hereby authorized, empowered and directed to execute, verify, acknowledge, certify, deliver and file such other agreements, instruments, documents, and certificates, to attach to these resolutions such additional resolutions, and to take or cause to be taken such other actions as may be necessary, desirable, or appropriate to effect the purposes and intentions of the foregoing resolutions.”

SECOND: that the amendment of the Certificate of Incorporation, which would strike in its entirety the first paragraph of Article Fourth of the Certificate of Incorporation of the Corporation and insert in its place a new first paragraph of Article Fourth, is as follows:

“FOURTH: The total number of shares of all classes of stock which the Corporation shall have authority to issue shall be 2,002,000,000 shares, consisting of (a) 2,000,000,000 shares of common stock, $.01 par value per share (“Common Stock”), and (b) 2,000,000 shares of preferred stock, $.01 par value per share (“Preferred Stock”).”

THIRD: that thereafter, stockholders of said Corporation holding the necessary number of shares as required by statute, duly adopted and approved said amendments in a written consent executed in accordance with Section 228 of the Delaware General Corporation Law.

FOURTH: that said amendment was duly adopted in accordance with the provisions of Section 242 of the Delaware General Corporation Law.

IN WITNESS WHEREOF, the Board of Directors of the Company has caused this Certificate of Amendment to be executed on this 28th day of December, 2005.

AEGIS COMMUNICATIONS GROUP, INC., a Delaware corporation
By:	/s/ Kannan Ramasamy
	Kannan Ramasamy President and Chief Executive Officer

2

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

AEGIS COMMUNICATIONS GROUP, INC.

AEGIS COMMUNICATIONS GROUP, INC. a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:

1. The date of filing of the Corporation’s original Certificate of Incorporation with the Secretary of State was August 2, 1985, under the original name of Kenneth Resources, Inc.

2. On August 5, 1999, this Amended and Restated Certificate of Incorporation was duly adopted by the directors and stockholders of the Corporation pursuant to Section 228, 242 and 245 of the General Corporation Law of Delaware and restates, integrates and amends the Restated Certificate of Incorporation filed on July 9, 1998 (“Prior Restated Certificate of Incorporation”) and the text of the Prior Restated Certificate of Incorporation is hereby amended and restated in its entirety as follows:

FIRST: The name of this Corporation is AEGIS COMMUNICATIONS GROUP, INC. (the “Corporation”).

SECOND: The Corporation’ s registered office in the State of Delaware is to be located at 1209 Orange Street, in the City of Wilmington, County of New Castle, Zip Code 19801, and its registered agent is The Corporation Trust Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

FOURTH: The total number of shares of all classes of stock which the Corporation shall have authority to issue shall be 101,000,000 shares, consisting of (a) 100,000,000 shares of Common

3

Stock, $.01 par value per share (“Common Stock”), and (b) 1,000,000 shares of preferred stock, $.01 par value per share (“Preferred Stock”).

A. Shares of Preferred Stock may be issued from time to time in one or more series, each such series to have such designation as may be fixed by the Board of Directors prior to the issuance of any shares thereof. Each such series shall have such preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as shall be stated and expressed in the Certificate of Incorporation or of any amendment thereto, or in the resolution or resolutions providing for the issue of such stock adopted by the Board of Directors providing for the issue of such series. The Preferred Stock of any series shall or may be (a) subject to redemption at such time or times and at such price or prices; (b) entitled to receive dividends at such rates, on such conditions and at such times; (c) entitled to such rights upon the dissolution of, or upon the distribution of the assets of the Corporation; and (d) made convertible into, or exchangeable for, shares of any other class or classes, or any other series of the same or any other class or classes of stock of the Corporation at such price or prices or at such rates of exchange and with such adjustments as shall or may be provided, stated or expressed in the resolution or resolutions adopted by the Board of Directors of the Corporation providing for the issue of such series.

B. The Common Stock of the Corporation shall be subject to the prior rights of the Preferred Stock as may be set forth in the resolution or resolutions by the Board of Directors providing for the issuance of the Preferred Stock. Except for such voting rights as may be provided for in the resolution or resolutions creating one or more series of Preferred Stock, sole voting rights shall be in the Common Stock. Cumulative voting in any election of directors, regardless of class or series, is hereby expressly denied.

4

C. By resolutions duly adopted by the Corporation’s Board of Directors, the Corporation has designated the following: (a) 29,778 shares of Preferred Stock as Series B Preferred Stock and has issued and outstanding 29,778 shares of Series B Preferred Stock; (b) 100,000 shares of Preferred Stock as Series D Junior Preferred Stock and has issued and outstanding no shares of Series D Junior Preferred Stock; (c) 231,902 shares of Preferred Stock as Series D Preferred Stock and has issued and outstanding 73,300 shares of Series D Preferred Stock; and (d) 132,053 shares of Preferred Stock as Series E Preferred Stock and has issued and outstanding 44,018 shares of Series E Preferred Stock.

FIFTH: No stockholder of this Corporation shall by reason of his holding shares of any class of capital stock have any preemptive or preferential right to purchase or subscribe to any shares of any class of this Corporation, now or hereafter to be authorized, or any notes, debentures, bonds or other securities convertible into or carrying warrants or options to purchase shares of any class, now or hereafter to be authorized, whether or not the issuance of any such shares of such notes, debentures, bonds or other securities would adversely affect the dividend or voting rights of such stockholder other than such rights, if any, as the Board of Directors, in its discretion, may fix; and the Board of Directors may issue shares of any class of this Corporation, or any note, debentures, bonds or other securities of any class of this Corporation, or any notes, debentures, bonds, or other securities convertible into or carrying options or warrants to purchase shares of any class, without offering any such shares of any class, whether in whole or in part, to the existing stockholders of any class.

SIXTH: NUMBER, ELECTION AND TERMS OF DIRECTORS. Subject to the rights, if any, of the holders of any series of Preferred Stock to elect additional directors under circumstances specified in a Preferred Stock designation, the number of directors of the Corporation will not be

5

less than two nor more than twelve and will be fixed from time to time in the manner described in the bylaws of the Corporation. The directors will be divided into three classes designated as Class I, Class II, and Class III. Each Class of directors will stand for election at the 1999 annual stockholders’ meeting for the following terms: Class I directors will be elected for a three-year term; Class II directors will be elected for a two-year term; and Class III directors will be elected for a one-year term. At each following annual stockholders’ meeting, commencing with the 2000 annual stockholders’ meeting, each of the successors to the directors of the Class whose term will expire at such annual meeting will be elected for a term running until the third annual meeting succeeding his or her election and until his or her successor has been duly elected and qualified.

SEVENTH: A. The Corporation shall indemnify any director, officer or employee, or former director, officer or employee of the Corporation, or any person who may have served at its request, as a director, officer or employee of another corporation in which it owns shares of stock, or of which it is a creditor, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement to the full extent permitted by Section 145 of the General Delaware Corporation Law, including the power to purchase and maintain insurance, as provided in paragraph (g) of Section 145.

B. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, (iii) under Section 174 of the General Corporation Law of the State of Delaware, or (iv) for any transaction from which the director derives any improper personal benefit. If the General

6

Corporation Law of the State of Delaware is amended to authorize the further elimination or limitation of the liability of the directors, then the liability of a director to the Corporation shall be eliminated or limited to the fullest extent authorized by the General Corporation Law of the State of Delaware, as so amended. Any repeal or modification of this paragraph shall not adversely affect any right or protection of a director of the Corporation existing hereunder with respect to any act or omission occurring prior to or at the time of such repeal or modification. The provisions of this paragraph shall not be deemed to limit or preclude indemnification of a director by the Corporation for any liability of a director which has not been eliminated by the provision of this paragraph .

EIGHTH: In furtherance and not in limitation of the powers conferred by statute, the power to adopt, amend or repeal bylaws of the Corporation is conferred upon the directors.

NINTH: No contract or transaction between this Corporation and any person, firm, association, or corporation and no act of this Corporation shall, in the absence of fraud, be invalidated or in any way affected by the fact that any of the directors of this Corporation are pecuniarily or otherwise interested, directly or indirectly, in such contract, transaction or act, or are related to or interested in, as a director, stockholder, officer, employee, member or otherwise, such person, firm, association or corporation. Any director so interested or related who is present at any meeting of the Board of Directors or committee of directors at which action on any such contract, transaction or act is taken may be counted in determining the presence of a quorum at such meeting and may vote thereat with respect to such contract, transaction or act with like force and effect as if he were not so interested or related. No director so interested or related shall, because of such interest or relationship, be disqualified from holding his office or be liable to the Corporation or to any stockholder or creditor thereof for any loss incurred by this

7

Corporation under or by reason of such contract, transaction or act, or be accountable for any gains or profits he may have realized therein.

IN WITNESS WHEREOF, the Board of Directors has caused this Amended and Restated Certificate of Incorporation to be executed and filed on this 16th day of August, 1999.

AEGIS COMMUNICATIONS GROUP, INC.
By:	/s/ Mathew S. Waller
Name:	Matthew S. Waller
Title:	Chief Financial Officer

8

EX-10.3

Exhibit 10.3

AEGIS COMMUNICATIONS GROUP, INC.

SECOND AMENDED AND RESTATED

1998 STOCK OPTION PLAN

(As Amended Through December 28, 2005)

1. Purpose of the Plan. This Plan shall be known as the Aegis Communications Group, Inc. Amended and Restated 1998 Stock Option Plan. The purposes of the Plan are (i) to attract and retain the best available personnel for positions of substantial responsibility, (ii) to attract and retain directors and advisory directors with a high degree of training, experience and ability and (iii) to provide incentives to such personnel, directors and advisory directors to promote the success of the business of Aegis Communications Group, Inc. and its subsidiaries.

Certain options granted under this Plan are intended to qualify as “incentive stock options” pursuant to Section 422 of the Internal Revenue Code of 1986, as amended from time to time, while certain other options granted under the Plan will constitute nonqualified options.

2. Definitions. As used herein, the following definitions shall apply:

(a) “Board” means the Board of Directors of the Corporation.

(b) “Common Stock” means the Common Stock, $.01 par value per share, of the Corporation. Except as otherwise provided herein, all Common Stock issued pursuant to the Plan shall have the same rights as all other issued and outstanding shares of Common Stock, including but not limited to voting rights, the right to dividends, if declared and paid, and the right to pro rata distributions of the Corporation’s assets in the event of liquidation.

(c) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

(d) “Committee” means the committee described in Section 18(a) that administers the Plan.

(e) “Corporation” means Aegis Communications Group, Inc., a Delaware corporation.

(f) “Date of Grant” means the date on which an Option is granted pursuant to this Plan or, if the Committee so determines, the date specified by the Committee as the date the award is to be effective.

(g) “Director” means any director, advisory director or consultant of the Corporation or one of its Subsidiaries, but excluding any director, advisory director or consultant who is also an officer or employee of the Corporation or one of its Subsidiaries.

(h) “Employee” means any officer or other key employee of the Corporation or one of its Subsidiaries, including any director who is also an officer or key employee of the Corporation or one of its Subsidiaries.

(i) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(j) “Executive” means an Employee who is, or in the judgment of the Committee may become, the Chief Executive Officer of the Corporation or one of the other four most highly compensated executive officers of the Corporation.

(k) “Fair Market Value” means the closing sale price (or average of the quoted closing bid and asked prices if there is no closing sale price reported) of the Common Stock on the trading day immediately prior to the date specified as reported by The Nasdaq Stock Market or by the principal national stock exchange on which the Common Stock is then listed. If there is no reported price information for the Common Stock, the Fair Market Value will be determined by the Committee, in its sole discretion. In making such determination, the Committee may, but shall not be obligated to, commission and rely upon an independent appraisal of the Common Stock.

(l) “Non-Employee Director” means an individual who is a “non-employee director” as defined in Rule 16b-3 under the Exchange Act and also an “outside director” within the meaning of Treasury Regulation § 1.162-27(e)(3).

(m) “Nonqualified Option” means any Option that is not a Qualified Option.

(n) “Option” means a stock option granted pursuant to Section 6 of this Plan.

(o) “Optionee” means any Employee or Director who receives an Option.

(p) “Participant” means any Employee or Director who receives an Option pursuant to this Plan.

(q) “Plan” means the Aegis Communications Group, Inc. 1998 Stock Option Plan, as amended from time to time.

(r) “Qualified Option” means any Option that is intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code.

(s) “Rule 16b-3” means Rule 16b-3 of the rules and regulations under the Exchange Act, as Rule 16b-3 may be amended from time to time, and any successor provisions to Rule 16b-3 under the Exchange Act.

(t) “Subsidiary” means any now existing or hereinafter organized or acquired company of which more than fifty percent (50%) of the issued and outstanding voting stock is owned or controlled directly or indirectly by the Corporation or through one or more Subsidiaries of the Corporation.

3. Term of Plan. The Plan was initially adopted by the Board effective as of April 7, 1998. To permit the granting of Qualified Options under the Code, and to qualify awards of Options hereunder as “performance based” under Section 162(m) of the Code, the Plan was approved by the shareholders of the Corporation on July 9, 1998. On March 29, 2000, the Board approved the following amendments to the Plan:

(a) increase in the number of shares issuable upon the exercise of Options pursuant to this Plan from 7,500,000 to 9,000,000; and

2

(b) increase in the annual limit on the number of option shares issuable to an individual executive officer from 1,500,000 to 3,000,000.

On May 4, 2000, these amendments to the Plan were approved by the shareholders of the Corporation.

On July 27, 2001, the Board approved an increase in the number of shares issuable upon the exercise of Options pursuant to this Plan from 9,000,000 to 12,000,000. On August 8, 2001, this amendment to the Plan was approved by the shareholders of the Corporation.

On June 29, 2005, the Board approved an increase in the number of shares issuable upon the exercise of Options pursuant to this Plan from 12,000,000 to 35,000,000. On December 28, 2005, this amendment to the Plan was approved by the stockholders of the Corporation.

The Plan, as amended, shall continue in effect until terminated pursuant to Section 18(a).

4. Shares Subject to the Plan. Except as otherwise provided in Section 17 hereof, the aggregate number of shares of Common Stock issuable upon the exercise of Options pursuant to this Plan shall be 35,000,000 shares. Shares issuable upon the exercise of Options may either be authorized but unissued shares or treasury shares. The Corporation shall, during the term of this Plan, reserve and keep available a number of shares of Common Stock sufficient to satisfy the requirements of the Plan. If an Option should expire or become unexercisable for any reason without having been exercised in full, then the shares that were subject thereto shall, unless the Plan shall have terminated, become immediately available for the grant of additional Options under this Plan, subject to the limitations and adjustments set forth above. In addition, for purposes of calculating the aggregate number of shares that may be issued under this Plan, only the net shares issued (including the shares, if any, withheld for tax withholding requirements) shall be counted when shares of Common Stock are used as full or partial payment for shares issued upon exercise of a Qualified Option or a Nonqualified Stock Option. Shares tendered by a Participant as payment for shares issued upon such exercise shall be available for reissuance under the Plan.

5. Eligibility. Qualified Options may be granted under Section 6 of the Plan to such Employees of the Corporation or its Subsidiaries as may be determined by the Committee. Nonqualified Options may be granted under Section 6 of the Plan to such Employees or Directors of the Corporation or its Subsidiaries as may be determined by the Committee. Subject to the limitations and qualifications set forth in this Plan, the Committee shall also determine the number of Options to be granted, the number of shares subject to each Option grant, the exercise price or prices of each Option, the vesting and exercise period of each Option, whether an Option may be exercised as to less than all of the Common Stock subject thereto, and such other terms and conditions of each Option as are consistent with the provisions of this Plan. In connection with the granting of Qualified Options, the aggregate Fair Market Value (determined at the Date of Grant of a Qualified Option) of the shares with respect to which Qualified Options are exercisable for the first time by an Optionee during any calendar year (under all such plans of the

3

Optionee’s employer corporation and its parent and subsidiary corporations as defined in Section 424(e) and (f) of the Code, or a corporation or a parent or subsidiary corporation of such corporation issuing or assuming an Option in a transaction to which Section 424(a) of the Code applies (collectively, such corporations described in this sentence are hereinafter referred to as “Related Corporations”)) shall not exceed $100,000 or such other amount as from time to time provided in Section 422(d) of the Code or any successor provision. In the event that the Participant’s total Qualified Options exceed the $100,000 limit in any calendar year (whether due to acceleration of exercisability, miscalculation, error or otherwise) the amount of Qualified Options that exceed such limit shall be treated as Nonqualified Options. The Qualified Options granted earliest (whether under this Plan or any other agreement or plan) shall be applied first to the $100,000 limit. In the event that only a portion of the Qualified Options granted at the same time can be applied to the $100,000 limit, the Corporation shall issue separate share certificates for such number of shares as does not exceed the $100,000 limit, and shall designate such shares as Qualified Option stock in its share transfer records.

6. Grant of Options. Except as provided in Section 18(c), the Committee shall determine the number of shares of Common Stock to be offered from time to time pursuant to Options granted hereunder and shall grant Options under the Plan. Notwithstanding the foregoing, each member of the Committee shall be eligible to receive Options only if the Board unanimously (except for such Committee member) grants such Option to such member. The grant of Options shall be evidenced by Option agreements containing such terms and provisions as are approved by the Committee and executed on behalf of the Corporation by an appropriate officer. In connection with the granting of any Options under the Plan, the aggregate number of shares of Common Stock with respect to which Options may be granted to any single Executive in any one calendar year shall not exceed 3,000,000. Solely for this purpose, Options that lapse or are canceled continue to count against such limit.

7. Time of Grant of Options. The date of grant of an Option under the Plan shall be the date on which the Committee awards the Option or, if the Committee so determines, the date specified by the Committee as the date the award is to be effective. Notice of the grant shall be given to each Participant to whom an Option is granted promptly after the date of such grant.

8. Price. The exercise price for each share of Common Stock subject to an Option (the “Exercise Price”) granted pursuant to Section 6 of the Plan shall be determined by the Committee at the Date of Grant; provided, however, that (a) the Exercise Price for any Option shall not be less than 100% of the Fair Market Value of the Common Stock at the Date of Grant, and (b) if the Optionee owns on the Date of Grant more than 10 percent of the total combined voting power of all classes of stock of the Corporation or its parent or any of its subsidiaries, as more fully described in Section 422(b)(6) of the Code or any successor provision (such shareholder is referred to herein as a “10-Percent Shareholder”), the Exercise Price for any Qualified Option granted to such Optionee shall not be less than 110% of the Fair Market Value of the Common Stock at the Date of Grant.

9. Vesting. Subject to Section 11 of this Plan, each Option award under the Plan shall vest or be subject to forfeiture in accordance with the provisions set forth in the applicable Option agreement. The Committee may, but shall not be required to, permit acceleration of vesting or termination of forfeiture provisions upon any sale of the Corporation or similar

4

transaction. In the event that the acceleration of any Option hereunder upon a change of control of the Corporation or similar transaction would result in an “excess parachute payment” (as defined in Section 280G of the Code), the Participant’s Option agreement shall specify whether the exercisability of the full number of shares shall be accelerated. In the event that the Option agreement does not specify whether the exercisability of the full number of shares shall be accelerated and the Committee determines that an excess parachute payment would result if acceleration occurred (when added to any other payments or benefits contingent on a change of control under any other agreements, arrangements or plans), then the number of shares as to which excercisability is accelerated shall be reduced so that total parachute payments do not exceed 299% of the Optionee’s “base amount,” as defined in Section 280G(b)(3) of the Code. A Participant’s Option agreement may contain such additional provisions with respect to vesting as the Committee may specify.

10. Exercise. A Participant may pay the Exercise Price of the shares of Common Stock as to which an Option is being exercised by the delivery of (a) cash, (b) check, (c) at the Corporation’s option, by the delivery of shares of Common Stock having a Fair Market Value on the date immediately preceding the exercise date equal to the Exercise Price and have been held by the Optionee at least six (6) months prior to the date of exercise, or (d) at the Corporation’s option, any other consideration that the Corporation determines is consistent with the Plan’s purpose and applicable law. If the shares to be purchased are covered by an effective registration statement under the Securities Act of 1933, as amended, any Option granted under the Plan may be exercised by a broker-dealer acting on behalf of an Optionee if (i) the broker-dealer has received from the Optionee or the Corporation a fully- and duly-endorsed agreement evidencing such Option, together with instructions signed by the Optionee requesting the Corporation to deliver the shares of Common Stock subject to such Option to the broker-dealer on behalf of the Optionee and specifying the account into which such shares should be deposited, (ii) adequate provision has been made with respect to the payment of any withholding taxes due upon such exercise, and (iii) the broker-dealer and the Optionee have otherwise complied with Section 220.3(e)(4) of Regulation T, 12 CFR Part 220, or any successor provision.

11. When Qualified Options May be Exercised. No Qualified Option shall be exercisable at any time after the expiration of ten (10) years from the Date of Grant; provided, however, that if the Optionee with respect to a Qualified Option is a 10-Percent Shareholder on the Date of Grant of such Qualified Option, then such Option shall not be exercisable after the expiration of five (5) years from its Date of Grant. In addition, if an Optionee of a Qualified Option ceases to be an employee of the Corporation or any Related Corporation for any reason, such Optionee’s vested Qualified Options shall not be exercisable after (a) three (3) months following the date such Optionee ceases to be an employee of the Corporation or any Related Corporation, if such cessation of service is not due to the death or permanent and total disability (within the meaning of Section 22(e)(3) of the Code) of the Optionee, or (b) twelve (12) months following the date such Optionee ceases to be an employee of the Corporation or any Related Corporation, if such cessation of service is due to the death or permanent and total disability (as defined above) of the Optionee. Upon the death of an Optionee, any vested Qualified Option exercisable on the date of death may be exercised by the Optionee’s estate or by a person who acquires the right to exercise such Qualified Option by bequest or inheritance or by reason of the death of the Optionee, provided that such exercise occurs within both the remaining option term of the Qualified Option and twelve (12) months after the date of the Optionee’s death. This

5

Section 11 only provides the outer limits of allowable exercise dates with respect to Qualified Options; the Committee may determine that the exercise period for a Qualified Option shall have a shorter duration than as specified above.

12. Option Financing. Upon the exercise of any Option granted under the Plan, the Corporation may, but shall not be required to, make financing available to the Participant for the purchase of shares of Common Stock pursuant to such Option on such terms as the Board or the Committee may specify.

13. Withholding of Taxes. The Committee shall make such provisions and take such steps as it may deem necessary or appropriate for the withholding of any taxes that the Corporation is required by any law or regulation of any governmental authority to withhold in connection with any Option including, but not limited to, (a) withholding the issuance of all or any portion of the shares of Common Stock subject to such Option until the Participant reimburses the Corporation for the amount it is required to withhold with respect to such taxes, (b) withholding any portion of such issuance in an amount sufficient to reimburse the Corporation for the amount of taxes it is required to withhold, (c) allowing the Participant to deliver Common Stock as payment for the amount the Corporation is required to withhold for taxes or (d) taking any other action reasonably required to satisfy the Corporation’s withholding obligation.

14. Conditions Upon Issuance of Shares.

(a) The Corporation shall not be obligated to sell or issue any shares upon the exercise of any Option granted under the Plan unless the issuance and delivery of shares comply with all provisions of applicable federal and state securities laws and the requirements of The Nasdaq Stock Market or any stock exchange upon which shares of the Common Stock may then be listed.

(b) As a condition to the exercise of an Option, the Corporation may require the person exercising the Option to make such representations and warranties as may be necessary to assure the availability of an exemption from the registration requirements of applicable federal and state securities laws.

(c) The Corporation shall not be liable for refusing to sell or issue any shares covered by any Option if the Corporation cannot obtain authority from the appropriate regulatory bodies deemed by the Corporation to be necessary to sell or issue such shares in compliance with all applicable federal and state securities laws and the requirements of The Nasdaq Stock Market or any stock exchange upon which shares of the Common Stock may then be listed. In addition, the Corporation shall have no obligation to any Participant, express or implied, to list, register or otherwise qualify the shares of Common Stock covered by any Option.

(d) No Participant will be, or will be deemed to be, a holder of any Common Stock subject to an Option unless and until such Participant has exercised his or her Option and paid the purchase price for the subject shares of Common Stock.

6

15. Restrictions on Transfer.

(a) Options issued pursuant to the Plan shall be nontransferable except by will or the laws of descent and distribution, and may only be exercisable during the Participant’s lifetime only by the Participant.

(b) Shares of Common Stock issued pursuant to the Plan may be subject to restrictions on transfer under applicable federal and state securities laws. The Committee may impose such additional restrictions on the ownership and transfer of shares of Common Stock issued pursuant to the Plan as it deems desirable; any such restrictions shall be set forth in any Option agreement entered into hereunder.

16. Modification of Plan and Options.

(a) The Committee may from time to time and at any time alter, amend, suspend, discontinue or terminate this Plan; provided, however, that no such action of the Committee may, without the approval of the shareholders of the Corporation, alter the provisions of the Plan so as to (i) increase the maximum number of shares of Common Stock that may be subject to Qualified Options under this Plan (except as provided in Section 17 of this Plan), (ii) change the class of employees eligible to receive Qualified Options pursuant to this Plan, or (iii) change the annual limit on the number of Options granted to an Executive in Section 6 above.

(b) At any time and from time to time, the Committee may execute an instrument providing for modification, extension or renewal of any outstanding Option, provided that no such modification, extension or renewal shall impair the Option without the consent of the holder of the Option. Notwithstanding the foregoing, (i) in the event of such a modification, substitution, extension or renewal of a Qualified Option, the Committee may increase the exercise price of such Option if necessary to retain the qualified status of such Option, and (ii) the Committee may, in its discretion and without the holder’s consent, convert, any Qualified Option into a Nonqualified Option.

17. Effect of Change in Stock Subject to the Plan. In the event that each of the outstanding shares of Common Stock (other than shares held by dissenting shareholders) shall be changed into or exchanged for a different number or kind of shares of stock of the Corporation or of another corporation (whether by reason of merger, consolidation, recapitalization, reclassification, split-up, combination of shares or otherwise), or in the event a stock split or stock dividend occurs, then the Corporation may either (a) substitute for each share of Common Stock then subject to Options or available for Options the number and kind of shares of stock into which each outstanding share of Common Stock (other than shares held by dissenting shareholders) shall be so changed or exchanged, or the number of shares of Common Stock as is equitably required in the event of a stock split or stock dividend, together with an appropriate adjustment of the Exercise Price, or (b) cancel all such Options as of the effective date of any merger, consolidation, recapitalization, reclassification, split-up or combination of shares by giving written notice to each holder thereof or his personal representatives of its intention to do so and by permitting the exercise of all such Options, without regard to determinations of periods or installments of exercisability during the thirty (30) day period immediately preceding such effective date. The Committee may, but shall not be required to, provide additional anti-dilution protection to a Participant under the terms of the Participant’s Option agreement.

7

18. Administration.

(a) Notwithstanding anything to the contrary herein, to the extent necessary to comply with the requirements of Rule 16b-3, the Plan shall be administered by the Board, if each member is a Non-Employee Director, or by a committee comprised solely of two or more Non-Employee Directors appointed by the Board (the group responsible for administering the Plan is referred to as the “Committee”). Options may be granted under Section 6 only by majority agreement of the members of the Committee. Option agreements, in the form as approved by the Committee, and containing such terms and conditions consistent with the provisions of this Plan as are determined by the Committee, may be executed on behalf of the Corporation by the Chairman of the Board, the President or any Vice President of the Corporation. The Committee shall have complete authority to construe, interpret and administer the provisions of this Plan and the provisions of the Option agreements granted hereunder; to prescribe, amend and rescind rules and regulations pertaining to this Plan; to suspend, discontinue or terminate this Plan; and to make all other determinations necessary or deemed advisable in the administration of the Plan. The determinations, interpretations and constructions made by the Committee shall be final and conclusive. No member of the Committee shall be liable for any action taken, or failed to be taken, made in good faith relating to the Plan or any award thereunder, and the members of the Committee shall be entitled to indemnification and reimbursement by the Corporation in respect of any claim, loss, damage or expense (including attorneys’ fees) arising therefrom to the fullest extent permitted by law.

(b) Members of the Committee shall be specified by the Board, and shall consist solely of Non-Employee Directors. Non-Employee Directors may not possess an interest in any transaction for which disclosure is required under Section 404(a) of Regulation S-K under the Exchange Act or be engaged in a business relationship that must be disclosed under Section 404(a) and must qualify as ‘outside directors’ as defined in Section 162(m) of the Code and regulations thereunder.

(c) Although the Committee may suspend, discontinue or terminate the Plan at any time, all Qualified Options must be granted within ten (10) years from the effective date of the Plan or the date the Plan is approved by the shareholders of the Corporation, whichever is earlier.

19. Continued Employment Not Presumed. Nothing in this Plan or any document describing it nor the grant of any Option shall give any Participant the right to continue in the employment of the Corporation or affect the right of the Corporation to terminate the employment of any such person with or without cause.

20. Liability of the Corporation. Neither the Corporation, its directors, officers or employees or the Committee, nor any Subsidiary which is in existence or hereafter comes into existence, shall be liable to any Participant or other person if it is determined for any reason by the Internal Revenue Service or any court having jurisdiction that any Qualified Option granted hereunder does not qualify for tax treatment as an incentive stock option under Section 422 of the Code.

8

21. Governing Law. The Plan shall be governed by and construed in accordance with the laws of State of Delaware and the United States, as applicable, without reference to the conflict of laws provisions thereof.

22. Severability of Provisions. If any provision of this Plan is determined to be invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not affect the remaining provisions of the Plan, but such invalid, illegal or unenforceable provision shall be fully severable, and the Plan shall be construed and enforced as if such provision had never been inserted herein.

9

EX-10.27

Exhibit 10.27

MASTER LEASE AGREEMENT

This Master Lease Agreement (this “Agreement”), dated as of November 1, 2005 (the “Effective Date”), is between Aegis Communications Group, Inc, having its principal place of business at 8001 Bent Branch Drive, Irving, Texas 75063, together with its majority-owned subsidiaries (“Aegis”), and NationsHealth, Inc., having its principal place of business at 13650 N.W. 8^th Street, Sunrise, Florida 33325 (“NationsHealth”).

WHEREAS, Aegis has the capability to provide health information management services, and NationsHealth has a need for such health information management services;

WHEREAS, NationsHealth is a party to a Strategic Agreement among Connecticut General Life Insurance Company (“CIGNA”), NationsHealth and United States Pharmaceutical Group, LLC (“USPG”), dated as of May 4, 2005 (the “Strategic Agreement”), pursuant to which NationsHealth provides certain marketing, enrollee communication, enrollee billing, enrollee premium collection, enrollment, and enrollee eligibility services to CIGNA in connection with the CMS-approved and CIGNA-sponsored Prescription Drug Plan under the Medicare Part D program (the “CIGNA Medicare Part D Prescription Drug Plan”), which services will be referred to hereinafter as the “NationsHealth Medicare Part D Services”; and

WHEREAS, Aegis and NationsHealth desire to enter into this Agreement setting forth the terms and conditions pursuant to which NationsHealth will lease or otherwise obtain from Aegis, and Aegis will provide to NationsHealth, certain personnel, Capacity (as defined in Section 2(j) below) and other assets relating to health information management services in connection with NationsHealth providing the NationsHealth Medicare Part D Services.

NOW, THEREFORE, NationsHealth and Aegis hereby agree as follows:

1. Scope of Agreement. This Agreement sets forth the terms and conditions that will apply to the combination of certain of Aegis’s employees, assets and premises that together constitute Aegis’s operational capabilities to assist NationsHealth with NationsHealth’s Medicare Part D Services, which operational capabilities will be leased or otherwise provided by Aegis to NationsHealth.

2. Definitions. Except as otherwise specified, the following terms will have the respective meanings set forth below whenever used in this Agreement and will include the singular as well as the plural:

(a) “Advance” has the meaning set forth in Section (8).

(b) “Aegis” has the meaning set forth in the preamble.

(c) “Aegis Indemnified Parties” has the meaning set forth in Section 13(a).

(d) “Aegis Non-Compete Covenants” has the meaning set forth in Section 11.

(e) “Aegis Non-Renewal Notice” has the meaning set forth in Section 3 below.

- 1 -

(f) “Agreement” has the meaning set forth in the preamble.

(g) “Assets” has the meaning set forth in Section 4.

(h) “Book Value” means the values assigned to the assets identified on Schedules 2, 3 and 4 attached hereto as of the Effective Date, subject to decrease as a result of depreciation expensed in accordance with generally accepted accounting principles to reflect the appropriate value of a given asset as of the date of the applicable determination.

(i) “Call” means a single telephonic contact to, from or on behalf of an enrollee or potential enrollee of the CIGNA Medicare Part D Prescription Drug Plan with respect to that prescription drug plan, measured from the time it originates from or enters Aegis’s equipment to closure.

(j) “Capacity” means the total number of physical, operational call center workstations for use by CSRs to perform the Services at an Aegis call center facility, supported by all hardware, software, licenses and other rights necessary for the continued operation of such workstations.

(k) “Capacity Fixed Assets” has the meaning set forth in Section 4(b).

(l) “Capacity Forecast” has the meaning set forth in Exhibit A, Section (a)(2).

(m) “Capacity Intangible Assets” has the meaning set forth in Section 4(b).

(n) “CIGNA” has the meaning set forth in the preamble.

(o) “CIGNA Data” means, collectively, all data and information (a) relating to providers, enrollees, and Customers of CIGNA, or (b) CIGNA’s Confidential Information, or (c) CIGNA’s Intellectual Property.

(p) “CIGNA Intellectual Property” or “CIGNA’s Intellectual Property” means all of CIGNA’s and its affiliates’ copyrights, patents, service marks, trademarks, designs, logos, brand names, Internet “URL” addresses, World Wide Web sites and all right, title and interest in and to any trade names, fictitious business names and all other intellectual property rights including all right, title and interest, including any license rights it has, in and to the names “CIGNA,” “CIGNA HealthCare,” “CIGNA Companies,” “Connecticut General Life Insurance Company,” and any derivation thereof and including CIGNA New Intellectual Property.

(q) “CIGNA Medicare Part D Prescription Drug Plan” has the meaning set forth in the preamble.

(r) “CIGNA New Intellectual Property” means all developed materials and other intellectual property that (a) are conceived, created or developed in connection

- 2 -

with or in the course of Aegis’s provision of Services, and are modifications, enhancements, adaptations or derivative works or derived from or based on the CIGNA Data or CIGNA Confidential Information or any CIGNA Intellectual Property in all cases, regardless of who makes such modifications, enhancements, adaptations and derivative works of or derived from or based on the CIGNA Data or any CIGNA Intellectual Property, or (b) are conceived, created or developed to address, execute or embody a CIGNA-specific product, service, business process, including any modifications, enhancements, adaptations and/or derivative works of or based on any of the foregoing, in all cases, regardless of who conceives, creates, develops or makes any of the foregoing.

(s) “Confidential Information” has the meaning set forth in Section 10.

(t) “Connectivity Expenses” means all fixed and variable telecommunications charges and associated taxes and tariffs directly related to the performance of Services, including, but not limited to, charges from telecommunications carriers for leased and local voice telephone lines, DIDs, data connectivity and Internet access.

(u) “Contractors” has the meaning set forth in Section 11(e).

(v) “Customer” means a customer of CIGNA, in its capacity as a prescription drug plan sponsor, calling or receiving outbound calls via telephone for information.

(w) “CMS” has the meaning set forth in Section 5(e).

(x) “CSR” means an Aegis hourly production employee who performs Services for Customers.

(y) “Deficiency” has the meaning set forth in Section 14(c).

(z) “DID” means Direct-Inward-Dial, a service that enables callers to dial directly into an extension on a PBX (private branch exchange) and bypass the PBX’s built-in auto attendant.

(aa) “Effective Date” has the meaning set forth in the preamble.

(bb) “Expected Number of Calls” means the expected number of Routed Calls for which NationsHealth will be using the Services during any period.

(cc) “Expiration Date” has the meaning set forth in Section 3.

(dd) “Facility Expenses” means non-payroll expenses related to the lease and operation of an Aegis facility performing the Services incurred in the ordinary course of business. Facility Expenses include, but are not limited to, rent, wear and tear facility maintenance that are the responsibility of the tenant, repairs required in the ordinary course of business that are the responsibility of the tenant, customary

- 3 -

facility insurance expenses, utilities, janitorial services, security services, property tax, training materials, supplies and other non-payroll expenses incurred in the ordinary course of owning and operating a facility.

(ee) “Handle Time” means the total time spent on a Call including consultation, CSR hold time, after-call work as may be required, and wrap-up of a Call, but excluding any queue time.

(ff) “HIPAA” has the meaning set forth in Section 5(e).

(gg) “Leased Capacity” has the meaning set forth in Section 4(b).

(hh) “Lease Payments” has the meaning set forth in Section 9.

(ii) “Licensed Agent” means a CSR or Staff member that has obtained all licenses necessary for that CSR or Staff member to perform the Services.

(jj) “Licensing Expenses” means expenses associated with (i) a CSR becoming and remaining a Licensed Agent for the purposes of performing Services; and (ii) expenses associated with Aegis acquiring and retaining such rights and licenses as may be required for Aegis to employ Licensed Agents

(kk) “Managers” has the meaning set forth in Section 6.

(ll) “Management Fees” has the meaning set forth in Section 9(c).

(mm) “Month” means a calendar month.

(nn) “NationsHealth” has the meaning set forth in the preamble.

(oo) “NationsHealth Medicare Part D Services” has the meaning set forth in the preamble.

(pp) “NationsHealth Indemnified Parties” has the meaning set forth in Section 13(b).

(qq) “NationsHealth Termination for Cause” has the meaning set forth in Section 14(c).

(rr) “NationsHealth Termination for Convenience” has the meaning set forth in Section 14(a).

(ss) “New York Facility” means the Aegis call center located in New York, New York, as more fully described on Schedule 4, which has a maximum Capacity of 200 workstations and which is included in the Assets.

(tt) “New York Expenses” has the meaning set forth in Section 9(d).

(uu) “New York Purchase Option” has the meaning set forth in Section 15(a).

- 4 -

(vv) “New York Purchase Price” has the meaning set forth in Section 15(a).

(ww) “Operations Expenses” means non-payroll expenses incurred by Staff directly related to the effective discharge of the job responsibilities in support of the Services. Examples of Operations Expenses include, but are not limited to, reasonable travel and lodging expenses and sales taxes relating to the Services.

(xx) “Outbound Calls” means all Calls originating from either the New York Facility or the Port St. Lucie Facility, including, but not limited to, calls to Customers, prospective customers or other calls related to the Services.

(yy) “Payroll Expenses” means wage, salary, benefit, payroll tax, worker’s compensation and other direct expenses incurred by Aegis in employing personnel to provide the Services.

(zz) “Personnel” has the meaning set forth in Section 4(a).

(aaa) “Port St. Lucie Expenses” has the meaning set forth in Section 9(e).

(bbb) “Port St. Lucie Facility” means the Aegis call center located in Port St. Lucie, Florida, as more fully described on Schedule 4, which has a maximum Capacity of 325 workstations and which is included in the Assets. The parties acknowledge that Aegis currently uses not more than forty (40) workstations for purposes other than the Services, however, such workstations will be available for use by NationsHealth in connection with the Services, and not used by any other party, within ninety (90) days of the Effective Date.

(ccc) “Port St. Lucie Purchase Option” has the meaning set forth in Section 15(b).

(ddd) “Port St. Lucie Purchase Price” has the meaning set forth in Section 15(b).

(eee) “Prime Date” means the date that is six Months prior to the Expiration Date.

(fff) “Prime Notice” has the meaning set forth in Section 15.

(ggg) “Rolling Forecast” has the meaning set forth in Exhibit A, Section (I)(a)(2).

(hhh) “Routed Calls” means the number of Customer Calls NationsHealth routes to Aegis during any period.

(iii) “Services” means the services described in subsection (I)(a) of Exhibit A attached hereto provided by the Staff and CSRs using the Capacity, the Capacity Fixed Assets and the Capacity Intangible Assets according to the procedures, protocols and methods directed by NationsHealth in support of the NationsHealth Medicare Part D Services.

(jjj) “Service Standards” has the meaning set forth in Section 5(h).

- 5 -

(kkk) “Staff” means an Aegis employee having his or her primary workplace in an Aegis facility performing Services and assigned in a supervisory, support, or management role in furtherance of the Services. Staff employees include, but are not limited to, supervisors, team leads, recruiters, trainers, program and account managers, technical support, human resources, and quality and validation personnel.

(lll) “Strategic Agreement” has the meaning set forth in the preamble.

(mmm) “Training” means the period or periods in which a CSR is engaged in formal or informal activities prior to providing Services, or period of periods in which a CSR is temporarily assigned to activities other than providing Services. Training includes, but is not limited to, orientation training, licensing training and study, refresher training, HIPAA training, or other training activities necessary to enable CSR to become a Licensed Agent and effectively provide Services.

(nnn) “USPG” has the meaning set forth in the preamble.

3. Term. Subject to Section 14 (Termination) below, the term of this Agreement will commence on the Effective Date and will continue for thirty-six (36) Months, after which it will expire (the “Expiration Date”). This Agreement will automatically renew upon the same terms and conditions contained herein unless Aegis provides notice to NationsHealth that this Agreement will not renew within 10 days following the Prime Date; (such notice, an “Aegis Non-Renewal Notice”).

4. Assets to be Leased or Provided. Aegis will lease or otherwise provide to NationsHealth under this Agreement the following items or assets (collectively the “Assets”):

(a) All Staff and CSRs of Aegis that are engaged exclusively in providing the Services (the “Personnel”). The Personnel will include employees that are employed either as of the Effective Date or thereafter. The Personnel that are employed as of the Effective Date are identified on Schedule 1 together with their corresponding salary information. The parties acknowledge that Schedule 1 does not need to be completed as of the Effective Date, but will be completed within fifteen (15) days of the Effective Date and as required by Section 5(e).

(b) All Capacity of the New York Facility and the Port St. Lucie Facility used by Aegis in providing the Services (the “Leased Capacity”). Subject to Section 29 (Ownership), the Leased Capacity is supported by (i) all of the fixed assets owned or leased by Aegis that are used exclusively in connection with the Services and located at the New York Facility and the Port St. Lucie Facility (including the lease agreements relating to the New York Facility and the Port St. Lucie Facility), including G3 telephone system and the computer systems; and (ii) the Avaya switch owned by Aegis in support of the Services, which is in use at NationsHealth’s Plantation, Florida, facility (collectively, the “Capacity Fixed Assets”). The Capacity Fixed Assets are identified on Schedule 2, with

- 6 -

corresponding Book Values. The parties acknowledge that Schedule 2 does not need to be completed as of the Effective Date, but will be completed within fifteen (15) days of the Effective Date and as required by Section 5(e). Subject to Section 29 (Ownership), the Leased Capacity is also supported by all of Aegis’s intangible assets owned, leased or licensed that are used in connection with the Services, including software relating to the telephone and computer systems (the “Capacity Intangible Assets”). The Capacity Intangible Assets are identified on Schedule 3, with corresponding Book Values. The parties acknowledge that Schedule 3 does not need to be completed as of the Effective Date, but will be completed within fifteen (15) days of the Effective Date and as required by Section 5(e)

(c) Workspace for three (3) NationsHealth staff members at the New York Facility and the Port St. Lucie Facility, and reasonable accommodation for workspace requirements associated with periodic visits to those facilities from NationsHealth staff members.

5. Representations, Warranties and Covenants of Aegis. Aegis represents, warrants and covenants the following:

(a) Aegis represents and warrants that the Assets have, as of the Effective Date, a total Capacity of 468 workstations. Aegis further covenants that the Assets will have a total Capacity of 525 workstations within 90 days of the Effective Date and thereafter throughout the term of this Agreement, and that Aegis will bear the costs associated with raising the total Capacity of the Assets (whether by building and outfitting new workstations or making available workstations currently committed on other non-NationsHealth projects) from 468 workstations to 525 workstations.

(b) Aegis represents and warrants that the Capacity is, as of the Effective Date, in good, operational condition with all hardware, software and infrastructure necessary for Aegis to provide the Services.

(c) Aegis covenants that it will, through the term of this Agreement, maintain the Capacity in good, operational condition with all hardware, software and infrastructure necessary for Aegis to provide the Services. Aegis will be responsible for all costs relating to repairs and maintenance of the Capacity, and will make all necessary repairs to comply with this covenant promptly upon discovery. For avoidance of doubt, Aegis’s obligations under this Section 5(c) do not include Facility Expenses, which will be the sole responsibility of NationsHealth under Section 9(d). For further avoidance of doubt, subject to Section 5(a), NationsHealth will be solely responsible under Section 9(g) for the costs associated with any upgrades, changes, or improvements to the Capacity or the infrastructure relating to the Capacity subsequent to the Effective Date; however, in the event that Aegis wishes to make any such upgrades, changes or improvements to the Capacity or the infrastructure relating to the Capacity, Aegis

- 7 -

will be reimbursed by NationsHealth for such upgrades, changes or improvements only if Aegis and NationsHealth agree on the upgrades, changes or improvements prior to their execution.

(d) Aegis covenants that it will screen and perform background checks, including any criminal records, as part of hiring all of the Personnel, and that it will terminate or remove from the Services any of the Personnel that are unable to become a Licensed Agent. Aegis covenants that it will obtain such license(s) as may be necessary for it to employ Licensed Agents to perform the Services.

(e) Aegis covenants that it will comply with the same restrictions and conditions that apply to NationsHealth pursuant to its Strategic Agreement with CIGNA with respect to “Protected Health Information” as that term is defined under the Federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), and that it will implement reasonable and appropriate safeguards to protect “Electronic Protected Health Information” as that term is defined under HIPAA. Moreover, Aegis covenants that it will comply with all instructions and guidelines of the Centers for Medicare and Medicaid Services (“CMS”), and all applicable legal requirements including, but not limited to, requirements related to the record-keeping, any employee screening and/or health insurance agent or other necessary licensing requirements and requirements associated with HIPAA. Aegis covenants that it will comply with all applicable Federal laws, regulations and CMS instructions that relate to this Agreement and its performance hereunder.

(f) Aegis represents and warrants that, as of the Effective Date, it either owns, or has all necessary rights, licenses, leases and consents required to use the Capacity Fixed Assets, the Capacity Intangible Assets, the New York Facility and the Port St. Lucie Facility, identified in Schedules 2, 3 and 4, respectively, in the manner currently used and proposed to be used under this Agreement, without interference, subject to matters of record and the terms and conditions of applicable licenses, leases or other agreements affecting same; provided, that such matters of record and terms and conditions will not materially affect the Services contemplated under this Agreement. Aegis covenants that it will maintain the right to use the Assets during the term of this Agreement, without interference, including making all payroll, licensing and lease payments. Subject to the terms and conditions of Aegis’s lease agreements for the New York Facility and the Port St. Lucie Facility, respectively, Aegis covenants that NationsHealth will be permitted to exclusively brand the New York Facility and the Port St. Lucie Facility, including the use of the CIGNA brand, as permitted by CIGNA.

(g) Aegis covenants that it will immediately notify NationsHealth of any material changes to the Assets, and will provide NationsHealth with an updated version of Schedules 1, 2, 3 and 4 on a quarterly basis. The reports will be in a format agreed upon by the parties.

- 8 -

(h) Aegis covenants that it will meet the standards relating to the Services set forth on Exhibit A (the “Service Standards”).

(i) Aegis covenants that it will dutifully and rapidly execute actions and changes outlined and requested by NationsHealth consistent with this Agreement.

(j) Aegis covenants that it will share with NationsHealth and implement Aegis’s best practices in its performance of the Services.

(k) Aegis acknowledges that it may come into possession of NationsHealth’s data and electronic information and that such data and electronic information is the property of NationsHealth. Aegis further acknowledges that it may come into possession of CIGNA Data, and that CIGNA Data is the property of CIGNA. Aegis covenants that its use and management of CIGNA Data will be as described in Exhibit B.

(l) Aegis represents and warrants that it has the requisite corporate power and authority to enter into and perform this Agreement in accordance with the terms hereof.

(m) Aegis represents and warrants that, as of the Effective Date, the execution and delivery of this Agreement has been duly authorized by all necessary corporate action and that no further consent or authorization is required by Aegis, its board of directors or its stockholders.

(n) Aegis represents and warrants that, as of the Effective Date, this Agreement has been duly executed and delivered by Aegis, and that upon execution and delivery this Agreement constitutes the valid and binding obligations of Aegis enforceable against Aegis in accordance with its terms.

(o) Aegis covenants that it will develop, with the assistance and approval of NationsHealth, a disaster recovery plan as further described in Exhibit C; provided, that NationsHealth will bear the reasonable costs of any capital expenditures required to implement such disaster recovery plan.

(p) Aegis covenants that it will maintain adequate physical security to ensure that Aegis complies with the covenants set forth in Sections (c), (d), (e) and (k) above, to be agreed to by Aegis and NationsHealth. Aegis makes no other warranties concerning the Assets.

(q) Subject to Sections 9(d) and 9(e), Aegis covenants that it will maintain through the term of this Agreement the level of insurance on the Assets, to the extent applicable, that is in place on the Effective Date.

6. Retention of Authority for the Personnel. The Personnel will at all times remain employees of Aegis and not employees of NationsHealth. At such times as the Personnel are providing Services hereunder, Aegis will designate managers of Aegis responsible

- 9 -

for oversight of the Services, which managers will provide periodic reports, as requested, to NationsHealth (the “Managers”). Subject to Section 13(a) (Indemnities) and Section 13(c) (Termination), and except for management decisions that Aegis, in its sole discretion, deems necessary to achieve the Service Standards, the Managers will direct and supervise the work of the Personnel pursuant to the protocols, procedures, measurements and directives of NationsHealth. Without limiting the foregoing, and except as otherwise provided in this Section 6, during the term of this Agreement, NationsHealth will have the authority and right to direct all lawful managerial decisions, including, but not limited to, the following relating to the Personnel and the Assets: (a) to determine the hiring, staffing and scheduling requirements for the Personnel; (b) to determine the means and methods to be utilized by the Personnel in the provision of Services; (c) to change the directives regarding the means and methods to be utilized by the Personnel with respect to the Services at any time; (d) to determine the compensation for the Personnel; (e) to determine the training for the Personnel; (f) to determine the business processes employed at the New York Facility and the Port St. Lucie Facility; (g) to determine the employee performance guidelines which will apply to the Personnel; (h) to determine the content and method of Personnel communications during Calls; (i) the appearance and work environment of the New York Facility and the Port St. Lucie Facility, including the right to make improvements, modifications and cosmetic changes thereto; and (j) determine the assignment of the Personnel to the Services, including, but not limited to, having the right to insist that any member of the Personnel be removed from providing the Services at any time. Any exercise of authorities and rights by NationsHealth under this Section 6 will be taken in consultation with Aegis, provided however, such consultation will not limit NationsHealth’s rights hereunder, and will be communicated jointly by NationsHealth and Aegis to the extent reasonably practical.

7. Consents. The obligations of the parties relating to Section 15 hereunder are expressly conditioned upon Aegis obtaining all consents from third-parties to the extent necessary for Aegis to (i) lease, assign, license, or otherwise transfer the Assets to NationsHealth; or (ii) to use the Assets in any manner not expressly permitted under any lease, license or agreement between Aegis and any relevant third party. Aegis will use its commercially reasonable efforts to obtain such consents as required.

8. Project Development Payment. On the Effective Date, NationsHealth will pay Aegis an advance of $750,000 to be applied the Lease Payments (as defined in Section 9 below) relating to the Services (the “Advance”). Aegis will credit the Advance against amounts owed by NationsHealth to Aegis for Lease Payments as such Lease Payments accrue. If this Agreement is terminated for any reason, any amounts of the Advance that have not been used to pay for Lease Payments that have accrued prior to the termination date will be returned to NationsHealth on the termination date. Within two days of the Effective Date, Aegis agrees to provide NationsHealth written documentation of Aegis’s expenses incurred in connection with the Services, and for which Advance proceeds were spent.

9. Payment for Services. NationsHealth will pay to Aegis for the Assets a lease payment equal to the sum of the following (collectively the “Lease Payments”):

(a) All CSR-related Payroll Expenses incurred by Aegis in providing the Services, including expenses incurred during Training. Such expenses include those expenses incurred prior to the Effective Date and that specifically relate to the Services.

- 10 -

(b) All Staff Payroll Expenses incurred by Aegis in providing the Services. Such expenses include those expenses incurred prior to the Effective Date and that specifically relate to the Services.

(c) [Redacted]

(d) All of the Facility Expenses, Operations Expenses and Connectivity Expenses of the New York Facility included in the Assets, including those expenses incurred prior to the Effective Date and that relate specifically to the Services (“New York Expenses”), provided however, if NationsHealth uses less than 50% of the Capacity of the New York Facility, NationsHealth will have the option upon sixty (60) days written notice to reduce its obligation to pay the New York Expenses 50% (or some other percentage agreed to by Aegis and NationsHealth). If NationsHealth exercises this option, Aegis will be permitted to lease the Capacity not used by NationsHealth to any person that does not violate Aegis Non-Compete Covenants contained in Section 11.

(e) All of the Facility Expenses, Operations Expenses and Connectivity Expenses of the Port St. Lucie Facility that are included in the Assets, including those expenses incurred prior to the Effective Date and that relate specifically to the Services (“Port St. Lucie Expenses”), provided however, if NationsHealth uses less than 50% of the Capacity of the Port St. Lucie Facility, NationsHealth will have the option upon sixty (60) days written notice to reduce its obligation to pay the Port St. Lucie Expenses by 50% (or some other percentage agreed to by Aegis and NationsHealth). If NationsHealth exercises this option, Aegis will be permitted to lease the Capacity not used by NationsHealth to any person that does not violate Aegis Non-Compete Covenants contained in Section 11.

(f) The maintenance costs associated with the Avaya switch owned by Aegis and in use at NationsHealth’s Plantation, Florida facility.

(g) All improvements implemented at the New York Facility and the Port St. Lucie Facility, which are specifically requested to be made by NationsHealth in writing, provided however, NationsHealth will not be responsible for the payment for capital expenditures necessary for Aegis to establish as set forth in this Agreement, the viability of the New York Facility and the Port St. Lucie Facility as operating and functioning call centers with a total Capacity of 525 workstations capable of providing the Leased Capacity to NationsHealth. To the extent not a fixture, any improvements paid for by NationsHealth will become the property of NationsHealth, and, at no additional cost to NationsHealth, will be returned to

- 11 -

NationsHealth upon the termination of this Agreement or upon NationsHealth’s exercise of one or both of its Purchase Options, as the case may be, as set forth in Section 15 (Purchase Options). NationsHealth will be responsible for the cost of repair of any damages to the facilities resulting from the removal of NationsHealth’s property upon the termination of this Agreement and, if required under any facility lease, for the cost of restoring a given facility to its condition as it existed before any NationsHealth–approved improvements were made.

(h) All Licensing Expenses.

Statements for the Lease Payments will be invoiced, including back-up documentation relating to expenses, as follows:

i. Invoices will be issued bi-weekly for Payroll Expenses and Management Fees as described in Section 9(a), 9(b) and 9(c) above. A final invoice for the bi-weekly activity will be submitted to NationsHealth within fifteen (15) days following the end of each bi-weekly period.

ii. Invoices will be issued monthly for expenses detailed in Sections 9(d), 9(e) and 9(f) above. A final invoice for the previous monthly period will be submitted to NationsHealth no later than the 15^th day following the month of the accrual of any expense incurred. Any expenses not reported within ninety (90) days will be deemed waived by Aegis.

iii. Terms for billing for all invoices will be net thirty (30) days.

Other than Payroll Expenses, Connectivity Expenses and any rent-related Facilities Expenses, Aegis will obtain NationsHealth’s prior written approval for any expenses for which Aegis seeks reimbursement from NationsHealth that exceeds $25,000. Except for fees or expenses disputed in good faith by either party, which Aegis and NationsHealth agree to promptly discuss and attempt in good faith to resolve informally, any fees or expenses not paid within thirty (30) days of when due will thereafter bear interest until paid at a rate equal to the lesser of (i) one percent (1%) per month, or (ii) the highest rate allowed by applicable law. If Aegis and NationsHealth cannot informally resolve fees or expenses disputed in good faith within thirty (30) business days, Aegis and NationsHealth agree to appoint a mediator reasonably acceptable to both parties and attempt to resolve the dispute through mediation within ten (10) additional business days. The decision of the mediator will not be binding on the parties. Aegis and NationsHealth agree to evenly divide the costs of any mediator selected by them. Unless otherwise agreed by the Aegis and NationsHealth, upon resolution, fees and expenses that had been disputed in good faith will be immediately due and payable and will thereafter bear interest until paid according to this Section 9.

- 12 -

10. Confidentiality. In connection with the activities contemplated by this Agreement, each party may have access to confidential or proprietary technical, financial or business information of the other party (“Confidential Information”). Each party will protect the confidentiality of the other party’s Confidential Information. Aegis recognizes the extreme confidential nature of some or all of the information it may receive, including confidentiality requirements established by HIPAA. Except as required by law or as necessary to perform under this Agreement, neither party will disclose the Confidential Information of the other party or use such Confidential Information for the benefit of itself or any third party, and such Confidential Information will be used solely as required to perform this Agreement. Confidential Information will not include information that (i) was in the public domain at or subsequent to the time it was communicated to the receiving party by the disclosing party through no fault of the recipient; (ii) was rightfully in receiving party’s possession free of any obligation of confidence at or subsequent to the time it was communicated to the receiving party by the disclosing party; (iii) was developed by employees or agents of the receiving party independently of and without reference to any information communicated to the receiving party by the disclosing party; or (iv) was communicated by the disclosing party to an unaffiliated third party free of any obligation of confidence. Other than as prevented by applicable law, the receiving party may disclose the Confidential Information of the other party as necessary to establish its rights under this Agreement, in response to a valid court order, law, rule, regulation (including any securities exchange regulation) or other governmental action provided that (a) the disclosing party is notified in writing prior to disclosure of the information and (b) the receiving party assists the disclosing party, at the disclosing party’s expense, in any attempt by the other to limit or prevent the disclosure of the Confidential Information.

11. Aegis Non-Compete Covenants. Aegis will adhere and comply with the following non-competition covenants (the “Aegis Non Compete Covenants”):

(a) As of the Effective Date, during the term of this Agreement, and for a period of three (3) years following the termination of the Strategic Agreement or any successor agreement thereto between NationsHealth and CIGNA, Aegis will not have any contracts, agreements, relationship, joint ventures or other business dealings with CIGNA, or any affiliate (as defined by federal securities laws) of CIGNA, unless specifically agreed to in writing in advance by NationsHealth. Notwithstanding the foregoing, if either (i) the Strategic Agreement is terminated by CIGNA “For Cause” pursuant to Sections 6.05(a), (d), (e), (f) or (g) only of the Strategic Agreement, as finally determined pursuant to Article IX of the Strategic Agreement (assuming that the provisions of Article IX have been invoked in an attempt to resolve a dispute with regard to the For Cause termination) or (ii) NationsHealth or its affiliate USPG change their business operations such that they cease to offer the services that they are obligated to provide under the Strategic Agreement, then, if the conduct or action of Aegis (in and of itself and not caused by NationsHealth) does not cause or contribute in any way to such termination by CIGNA, Aegis will be relieved of its obligations under the Aegis Non-Compete Covenant set forth in this Section 11(a) if, and solely to the extent, the performance of those obligations would cause any interference with or

- 13 -

restriction of CIGNA’s ability to exercise of any of its rights or NationsHealth’s ability to fulfill of any of its obligations under Section 6.07(c) of the Strategic Agreement. Section 6.07(c) of the Strategic Agreement, and subsections (a), (d), (e), (f) and (g) of Section 6.05 of the Strategic Agreement to which Section 6.07(c) refers are attached hereto as Exhibit G to this Agreement and incorporated herein.

(b) As of the Effective Date, during the term of this Agreement, and for a period of eighteen (18) months following the termination of this Agreement, Aegis must not assist, provide, advise or otherwise engage in any business relationship with any person or entity engaged in a healthcare related business, including, but not limited to, providing any infrastructure solution, agent training processes, licensure training, sales methods, business solution architecture, right-to-purchase (co-managed) structuring, call flow or service treatment or expanded usage of agents for defined complimentary product sales, if the information or expertise developed by Aegis in connection with the performance of the Services under this Agreement are used in connection with the provision of services or advice to such other person or entity. Notwithstanding the foregoing, and solely as it relates to CIGNA, if (i) either the Strategic Agreement is terminated by CIGNA “For Cause” pursuant to Sections 6.05(a), (d), (e), (f) or (g) only of the Strategic Agreement, as finally determined pursuant to Article IX of the Strategic Agreement (assuming that the provisions of Article IX have been invoked in an attempt to resolve a dispute with regard to the For Cause termination) or (ii) NationsHealth or its affiliate USPG change their business operations such that they cease to offer the services that they are obligated to provide under the Strategic Agreement, then, if the conduct or action of Aegis (in and of itself and not caused by NationsHealth) does not cause or contribute in any way to such termination, Aegis shall be relieved of its obligations under the Aegis Non-Compete Covenant set forth in this Section 11(b) if, and solely to the extent, the performance of such obligations would cause any interference with or restriction of CIGNA’s ability to exercise of any of its rights or NationsHealth’s ability to fulfill of any of its obligations under Section 6.07(c) of the Strategic Agreement. Section 6.07(c) of the Strategic Agreement, and subsections (a), (d), (e), (f) and (g) of Section 6.05 of the Strategic Agreement to which Section 6.07(c) refers are attached hereto as Exhibit G to this Agreement and incorporated herein.

(c) As of the Effective Date, during the term of this Agreement, and for a period of eighteen (18) months following the termination of this Agreement, Aegis must not, directly or indirectly, own or invest in (other than investments in publicly-traded companies that do not exceed three percent (3%) of any class of securities of any enterprise if such securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of the Securities Exchange Act of 1934, as amended) engage in, manage, operate, finance, control or participate in the ownership, management, operation, financing or control of, become a partner of, or joint venture participant in, lend its name or assets to, or provide consultant or advisory services of any other services to any business that is competitive with the NationsHealth Medicare Part D Services in the United States.

- 14 -

(d) In support of its obligations under Sections 11(b) and 11(c) above, Aegis covenants that it will use its commercially reasonable efforts to cause its officers and affiliates (as defined under the federal securities laws) to enter into side agreements with NationsHealth, in a form reasonably satisfactory to NationsHealth, containing non-competition covenants substantially similar to the Aegis Non-Compete Covenants.

(e) In support of its obligations under Sections 11(b) and 11(c) above, Aegis covenants that it will use its commercially reasonable efforts to cause its (i) Managers; and (ii) unless otherwise approved by NationsHealth contractors directly engaged by Aegis on NationsHealth matters (“Contractors”) to enter into side agreements with NationsHealth, in a form reasonably satisfactory to NationsHealth, containing non-competition covenants substantially similar to the Non-Compete Covenant. If Aegis is unable to obtain the side agreements described in this Section 11(e) from its Managers and Contractors, NationsHealth may in writing request that Aegis remove such Managers or Contractors from providing Services, and Aegis will promptly comply with such request.

12. NationsHealth Non-Compete Covenants. As of the Effective Date, during the term of this Agreement, and for a period of eighteen (18) months following the termination of this Agreement, NationsHealth must not, directly or indirectly, unless approved in writing in advance by Aegis (i) provide stand-alone call center services to any person or entity that is a customer of Aegis during the term of this Agreement; and (ii) implement or use any trade secrets or proprietary processes unique to Aegis and disclosed by Aegis to NationsHealth during the Term of this Agreement.

13. Indemnities.

(a) Aegis will be entitled to rely on and act in accordance with any instructions or directions provided to Aegis by NationsHealth. NationsHealth will defend, indemnify and hold harmless Aegis and its subsidiaries, successors and assigns, and each of their officers, directors, agents, contractors, subcontractors and employees (collectively, the “Aegis Indemnified Parties”), from and against any and all claims, liabilities, damages, fines, penalties, costs and expenses, including reasonable attorneys’ fees, arising out of or resulting from (i) Aegis acting in accordance with written instructions or directions from NationsHealth; or (ii) any infringement of a United States patent, a trade secret, or any copyright, trademark, service mark, trade name or similar proprietary rights conferred by statute, by common law, or by contract alleged to have occurred as a result of rights conveyed or materials provided by or on behalf of NationsHealth; provided, however, that such indemnification obligation will not be triggered in the event that claims are asserted or liability assessed against Aegis as a result of (x) the gross negligence or willful misconduct of any of the Aegis Indemnified Parties;

- 15 -

(y) conduct by any of the Aegis Indemnified Parties that violates any federal, state or local statues, regulations or ordinances; and (z) any conduct by and of the Aegis Indemnified Parties that fails to conform with the terms of this Agreement.

(b) Aegis will defend, indemnify and hold harmless NationsHealth and each of its officers, subsidiaries, successors and assigns and each of their directors, agents, contractors, subcontractors and employees (collectively, the “NationsHealth Indemnified Parties”), from and against any and all claims, liabilities, damages, fines, penalties, costs and expenses, including reasonable attorneys’ fees, arising out of or resulting from the negligent acts or intentional misconduct of Aegis, arising out of or in any way connected with the Services, including, but not limited to, any claims of wrongful termination, discrimination, harassment, workplace tort, breach of contract or for compensation or benefits or both, unless such liability results from specific instructions or directions by NationsHealth to Aegis that are in conformity with the terms of this Agreement.

(c) The party to be indemnified pursuant to this Section 13 will notify the indemnifying party within ten (10) days after receiving notice of a claim. Provided that the indemnifying party defends any such claim, the indemnifying party will have control over the defense and settlement thereof, provided however, settlement of any claim will require the consent of the indemnified party unless the settlement includes an unconditional general release of the indemnified party. The party to be indemnified will furnish, at the indemnifying party’s reasonable request and expense, information and assistance necessary for such defense.

14. Termination.

(a) NationsHealth will have the right to terminate this Agreement for convenience (a “NationsHealth Termination for Convenience”), without cause or reasons, upon seventy (70) days written notice to Aegis at any time (i) only with respect to that portion of the Services provided in the New York Facility; or (ii) only with respect to that portion of the Services provided in the Port St. Lucie Facility; or (iii) with respect to this Agreement in its entirety. For purposes of the preceding sentence, if NationsHealth exercises a NationsHealth Termination for Convenience only with respect to the New York Facility or the Port St. Lucie Facility, then this Agreement will continue in full force and effect with respect to the Services that Aegis continues to provide. Under any NationsHealth Termination for Convenience, NationsHealth will be responsible for all costs associated with the termination of any Personnel relating to the WARN Act and similar state employment laws that are required as a result of a NationsHealth Termination for Convenience, provided, that Aegis complies with all legal requirements applicable to such termination, including notices required under the WARN Act, and such terminated Personnel, if any, are not subsequently employed by Aegis or its affiliates (as defined under the federal securities laws) for a period of at least 90 days after such termination.

- 16 -

(b) If NationsHealth materially breaches this Agreement (including a default in payments to Aegis) and fails to cure such default within thirty (30) days after receiving written notice specifying the default from Aegis, then Aegis may terminate this Agreement as of the date set forth in such notice. For purposes of the foregoing sentence, amounts disputed in good faith only become due upon resolution of, and to the extent that, the dispute is resolved in favor of payment. Notwithstanding any such termination by Aegis for nonpayment, NationsHealth agrees that it will be liable to, and promptly pay, Aegis for any and all unpaid fees and charges, including amounts disputed in good faith when and to the extent the resolution of the dispute is in favor of payment.

(c) If Aegis materially breaches this Agreement (other than for a failure to meet and maintain the Service Standards) and fails to cure such default within thirty (30) days after receiving written notice specifying the default from NationsHealth, then NationsHealth may terminate this Agreement as of the date specified in such notice; provided, that no breach will result from Aegis following the instructions of NationsHealth under this Agreement (a “NationsHealth Termination for Cause”). If Aegis fails to meet the Service Standards, and provided such failure does not result from Aegis following the instructions of NationsHealth under this Agreement a (“Deficiency”) NationsHealth will provide Aegis with written notice setting forth the Deficiency relating to the Service Standards. If the Deficiency is not cured within five (5) days of such notice, NationsHealth will be permitted to reduce the Management Fees by twenty-five percent (25%) for the period starting after the fifth (5^th) day from such notice until the Deficiency is cured or the Agreement is terminated. If the Deficiency is not cured within thirty (30) days after the date of the initial notice, NationsHealth will be permitted to declare a NationsHealth Termination for Cause.

(d) The rights acquired or obligations incurred by Aegis and NationsHealth prior to any termination will not be affected. In the event of any termination under this Section 14, Aegis will be entitled to receive Lease Payments accrued and payable to it as of the date of termination. Aegis and NationsHealth will not have any liability to each other for any costs, expenses or liabilities that are incurred or accrue after the termination date. Aegis will comply with all legal requirements applicable to any termination, including notices required under the WARN Act. Upon expiration or any termination of this Agreement, NationsHealth and Aegis will, within thirty (30) days, return to the other, or destroy all copies of Confidential Information and will certify, in writing, delivery or destruction of all such Confidential Information and copies thereof, unless such party is required by law to maintain copies of any Confidential Information for a longer period.

15. Purchase Options. On or before the Prime Date, NationsHealth will have the purchase options described in this Section 15. If Aegis has not received notice from NationsHealth within 33 days before the Prime Date of NationsHealth’s intention to exercise one or both of its purchase options on a particular date before the Expiration Date, Aegis will send to NationsHealth, with copy to counsel, a certified letter (the “Prime Notice”) informing

- 17 -

NationsHealth that it has within 30 days following transmittal of the Prime Notice to (i) notify Aegis of its intention to exercise one or both of its purchase options; and (ii) the date of intended exercise, if any. Provided that NationsHealth has not already exercised one or both of its purchase options under this Section 15 and that a Prime Notice has been sent to NationsHealth by Aegis, NationsHealth’s purchase options under this Section 15 will only vest with respect to the purchase options that NationsHealth indicates it will exercise in a written, timely and adequate response to the Prime Notice.

(a) Subject to Section 7 (Consents) and this Section 15, NationsHealth has the option, but not the obligation, at any time upon thirty (30) days written notice to Aegis, to purchase or assume Aegis’s contractual rights and obligations in all, but not less than all, of the non-employee Assets specific to the Services at the New York Facility provided to NationsHealth, including the Capacity Fixed Assets and the Capacity Intangible Assets associated with the New York Facility, excluding, however, any contingent liability associated with any related real property lease agreement or any contingent liability not relating to the Services (such option, the “New York Purchase Option”) at the following price (the “New York Purchase Price”):

i. If the New York Purchase Option is exercised prior to the Expiration Date, the New York Purchase Price will equal the sum of (i) the Book Value of the Assets being purchased, plus (ii) the difference between $4,000,000 and one-half of the Management Fees received by Aegis as of the date the New York Purchase Option is exercised by NationsHealth.

ii. If the New York Purchase Option is exercised upon or after the Expiration Date, or after a breach of this Agreement by Aegis that remains uncured for thirty (30) days, the New York Purchase Price will equal the Book Value of the Assets being purchased.

(b) Subject to Section 7 (Consents) and this Section 15, NationsHealth has the option, but not the obligation, at any time upon thirty (30) days written notice to Aegis, to purchase or assume Aegis’s contractual rights and obligations in all, but not less than all, of the non-employee Assets specific to the Services at the Port St. Lucie Facility provided to NationsHealth, including the Capacity Fixed Assets and the Capacity Intangible Assets associated with the Port St. Lucie Facility, excluding, however, any contingent liability associated with any related real property lease agreement or any contingent liability not relating to the Services (such option, the “Port St. Lucie Purchase Option”) at the following price (the “Port St. Lucie Purchase Price”):

i. If the Port St. Lucie Purchase Option is exercised prior to the Expiration Date, the Port St. Lucie Purchase Price will equal the sum of (i) the Book Value of the Assets being purchased, plus (ii) the difference between $4,000,000 and one-half of the Management Fees received by Aegis as of the date the Port St. Lucie Purchase Option is exercised by NationsHealth.

- 18 -

ii. If the Port St. Lucie Purchase Option is exercised upon or after the Expiration Date, or after a breach of this Agreement by Aegis that remains uncured for thirty (30) days, the Port St. Lucie Purchase Price will equal the Book Value of the Assets being purchased.

Upon NationsHealth exercising either or both of the Purchase Options, and subject to Section 7 (Consents), Aegis will execute and deliver to NationsHealth one or more of a Bill of Sale or Assignment and Assumption Agreement or both, the forms of which are attached hereto as Exhibits D and E, respectively. Further, notwithstanding Section 30 (Non-Solicitation) below, NationsHealth must offer employment to all of the Personnel associated with the New York Facility or the Port St. Lucie Facility, as the case may be, upon the exercise of a corresponding Purchase Option. The NationsHealth Purchase Options will not be affected by a Termination for Convenience or a Termination for Cause elected by Aegis so long as NationsHealth gives notice of the exercise of one or both of the Purchase Options prior to the effective date of such termination.

16. Reporting and Financial Covenants. Subject to Section 10 (Confidentiality) and consistent with applicable securities laws, including but not limited to Regulation FD, during the term of this Agreement, Aegis will provide to NationsHealth, and NationsHealth will receive, a monthly balance sheet, a monthly statement of operations and a monthly statement of cash flows within thirty (30) days after the conclusion of the month being reported. All annual financial statements furnished to NationsHealth under the terms of this Section 16 will be audited statements. All other documents furnished to NationsHealth under the terms of this Section 16, such as quarterly and monthly financial statements, may be unaudited, provided however, if they exist as audited financial documents, then they will be provided to NationsHealth in their audited form.

17. Notice of Bankruptcy. Each party will provide the other party at least ten (10) days written notice prior to filing a petition for bankruptcy protection or similar proceeding, including, but not limited to, a receivership, assignment for the benefit of creditors or other reorganization proceeding (a “Bankruptcy Proceeding”). Each party will also provide immediate notice to the other party of any Bankruptcy Proceeding being commenced against the notifying party on an involuntary basis. Aegis will take all reasonable actions required to permit NationsHealth to exercise one or both of its Purchase Options in the event that Aegis is contemplating or becomes a party to a Bankruptcy Proceeding.

18. Aegis Retention of Liabilities. Notwithstanding NationsHealth’s obligations to make the Lease Payments, and excluding NationsHealth’s rights upon exercise of one or both of its Purchase Options, Aegis will retain all liabilities relating to the Assets, including, but not limited to, claims and causes of actions asserted by any of the Personnel. However, nothing in this Section 18 will extinguish the parties’ respective indemnification obligations set forth in Section 13 (Indemnities).

19. Cooperation. NationsHealth will cooperate with Aegis by furnishing any information or performing any action reasonably requested by Aegis, which information or action is

- 19 -

necessary to the timely, and successful consummation of the transactions contemplated by this Agreement, including, without limitation, providing Aegis with NationsHealth’s Subscription Account Number, if any, with the National Do-Not-Call registry and all other information reasonably requested by Aegis to ensure compliance with applicable law.

20. Binding Nature and Assignment. This Agreement will be binding on the parties hereto and their respective successors and assigns, but neither party may assign or subcontract this Agreement, in whole or in part, without the other party’s prior written consent following the provision of written notice as set forth in Section 22.

21. Force Majeure. Except for NationsHealth’s payment obligation, each party will be excused from performance hereunder for any period and to the extent that it is prevented from performing any services pursuant hereto, in whole or in part, as a result of an act of God, natural disaster, war, civil disturbance or state of emergency and that it could not have prevented by reasonable precautions.

22. Notices. Notices provided for in this Agreement will be in writing and will be delivered by hand, by overnight mail or by certified mail, return receipt requested, to the parties at the following addresses, or such other addresses either party may provide to the other party in writing, and will be deemed delivered and received three (3) days after being sent:

If to Aegis Communications Group:

Aegis Communications Group, Inc.

8001 Bent Branch Drive

Irving, Texas 75063

Fax No.: (972) 868-0218

Attn: Chief Executive Officer

If to NationsHealth:

NationsHealth, Inc.

13650 N.W. 8^th Street

Sunrise, Florida 33325

Attn: Chief Operating Officer

With a copy to:

McDermott, Will & Emery, LLP

201 S. Biscayne Blvd., 22nd Floor

Miami, Florida 33131

Attn: Ira J. Coleman, Esq.

- 20 -

AND

CIGNA HealthCare, S-201

900 Cottage Grove Road

Hartford, CT 06152-2201

Attn: Rhonda M. Karlin, Esq.

23. Severability. If any provision of this Agreement is invalid or unenforceable, the Agreement will be construed as if such invalid or unenforceable provision was not included and the remainder of the Agreement will be enforced as written in a manner as close to the original intent of the parties.

24. Waiver. No provision of this Agreement will be deemed waived, amended or modified by either party unless such waiver, amendment or modification is in writing and signed by the party against whom enforcement of the waiver, amendment or modification is sought. Any such amendment or modification will be binding with or without tender of consideration. A waiver by either of Aegis or NationsHealth of any of the covenants, conditions or agreements to be performed by the other or any breach thereof will not be construed to be a waiver of any other or succeeding breach or of any other covenant, condition or agreement contained in this Agreement.

25. Relationship of Parties. Aegis is performing pursuant to this Agreement only as an independent contractor. Nothing set forth in this Agreement will be construed to create the relationship of principal and agent, joint venture or partnership between NationsHealth and Aegis.

26. Survival. Expiration or termination of this Agreement for any reason will not release either party from any liabilities or obligations set forth in this Agreement that (a) Aegis and NationsHealth have expressly agreed will survive any such expiration or termination, or (b) remain to be performed or by their nature would be intended to be applicable following any such expiration or termination.

27. Entire Agreement. This Agreement, together with each schedule and exhibit attached hereto or thereto, constitute the entire agreement between Aegis and NationsHealth and supersedes any and all prior or contemporaneous oral and written communications, understandings or agreements relating to the subject matter hereof.

28. Governing Law. This Agreement will be governed by and construed in accordance with the laws, other than choice of law rules, of the State of Florida.

29. Ownership. Aegis’s ownership of, or contractual rights in, all systems, software, documentation, utilities, tools, methodologies, specifications, techniques and other materials, know-how, and hardware owned by Aegis or in the possession of Aegis prior to the Effective Date of this Agreement and used and developed by Aegis in connection with providing the Services, together with the intellectual property rights therein, will remain with Aegis, unless expressly sold or assigned by Aegis to NationsHealth as a result of NationsHealth’s exercise of one or both of the Purchase Options.

- 21 -

30. Non-Solicitation. During the term of this Agreement and for one (1) year after its conclusion, neither party will directly or indirectly, solicit the hiring or retention of, recruit, employ or otherwise engage as an employee, independent contractor or advisor, or attempt to solicit, recruit, employ or otherwise engage as an employee, independent contractor or advisor any person who is or was an employee or independent contractor of the other party at any time during the preceding twelve (12) months, provided however if Aegis provides an Aegis Non-Renewal Notice, NationsHealth will be permitted to employ any CSR trained to provide the Services without restriction after the termination date, regardless of whether NationsHealth exercises either of its Purchase Options.

31. Injunction Relief. Aegis and NationsHealth agree that in the event of any actual or threatened breach of the provisions of this Agreement, the non-breaching party will be entitled (in addition to any and all other rights and remedies at law or in equity for damages or otherwise, which rights and remedies are and will be cumulative) to specific performance, a temporary restraining order, or an injunction to prevent such breach or contemplated breach, without the necessity of the posting of a bond.

32. Right to Inspect and Audit. NationsHealth, CIGNA, and CMS will have the right, directly or through their designated auditors, at all reasonable times to inspect, audit, or otherwise evaluate the work performed or being performed by Aegis, its supporting policies and procedures, including those related to data security, disaster recovery and back-up, as well as all data supplied, in the performance of this Agreement, including the calculation of the Lease Payments. If any inspection or evaluation is made by NationsHealth, CIGNA or CMS on the premises of Aegis, Aegis will provide at no additional charge all reasonable facilities and assistance for the safety and convenience of the personnel conducting the inspection or evaluation. The Secretary of Health and Human Services, the Comptroller General of the U.S. Government Accountability Office, or their designees will have the right during the term of this Agreement and for a period of four (4) years after termination of this Agreement or the date of the audit completion, whichever is later, to audit, evaluate, or inspect any books, contracts, medical records, documents, papers, enrollee documentation, and other records of Aegis, Aegis’s related entities, subcontractors, or transferees that pertain to any aspect of the Services provided under this Agreement, or as the Secretary may deem necessary to enforce the applicable Medicare contract between CMS and CIGNA, and each party to this Agreement will be responsible for its own labor and out of pocket expenses relating to that audit. Aegis further represents, warrants, and covenants to NationsHealth and CIGNA that, in connection with the performance of the Services hereunder, Aegis will not hold enrollees liable for fees that are the responsibility of CIGNA.

33. Authorization. This Agreement is effective only when signed by the Chief Executive Officer of Aegis.

34. CIGNA as Third Party Beneficiary. Notwithstanding any provision to the contrary in this Agreement, CIGNA is a third party beneficiary to this Agreement, and CIGNA will be entitled to enforce all provisions that are intended for its benefit.

- 22 -

IN WITNESS WHEREOF, each party has caused its authorized representative to execute this Agreement as of the Effective Date.

AEGIS COMMUNICATIONS GROUP, INC.
By:	/s/ Kannan Ramasamy
Name:	Kannan Ramasamy
Title:	Chief Executive Officer
NATIONSHEALTH, INC.
By:	/s/ Glenn Parker
Name:	Glenn Parker
Title:	CEO

Schedule 1

Leased Employees

Schedule 2

Leased Fixed Assets

Port St. Lucie

Floor 1

144 CSR Workstations

15 Admin Workstations

Agent Workstation: Dell Optiplex G1

Agent Monitor: Dell D1028L

Agent Operating system: Windows NT

Agent Ram in MB: 128

Agent phones: Avaya 8410B

Admin Workstation: Dell GX100

Admin Monitor: Dell D1028L

Admin Ram in MB: 128

Admin phones: Avaya Callmaster IV

IE Version: 6.0

Floor 2

164 CSR Workstations

13 Admin Workstations

Agent Workstation: Dell Optiplex G1

Agent Monitor: Dell D1028L

Agent Operating system: Windows NT

Agent Ram in MB: 128

Agent phones: Avaya Callmaster IV

Admin Workstation: Dell GX100

Admin Monitor: Dell M781p

Admin Ram in MB: 128

Admin phones: Avaya Callmaster IV

IE Version: 6.0

1 Avaya G3r PBX

20 Servers

New York City

10th floor

128 CSR Workstations

3 Admin Pods

Agent Workstations: Dell GX100

Agent Monitor: Dell M990/M991

Agent Operation System: NT 4

Agent Phones: Avaya Callmaster V

S2 - 1

Admin Workstations: Dell GX100

Admin Monitors: Dell M990

Admin Operation System: Windows 2000

Admin Phones: Avaya 64080+

IE Version: IE6

11th floor

72 CSR Workstations

2 Admin Pods

Agent Workstations: Dell GX100

Agent Monitor: Dell M990M991

Agent Operation System: NT 4

Agent Phones: Avaya Callmaster V

Admin Workstations: Dell GX100

Admin Monitors: Dell M990

Admin Operation System: Windows 2000

Admin Phones: Avaya 64080+

IE Version: IE6

10^th Floor

1 AVAYA G3R

5 DELL 350 SERVERS

1 DELL 2300 SERVER

2 CISCO 3640

1 HP PROCURVE 2524

2 HP PROCURVE 4108

2 SUN MICROSYSTEMS ENTERPRISE SERVER 3500 WITH MONITOR

1 STARTECH 16 PORT KEYBOARD/MOUSE BOX

11^th Floor

1 AVAYA G3R

1 DELL 350 SERVERS

0 DELL 2300 SERVER

1 CISCO 3640

0 HP PROCURVE 2524

2 HP PROCURVE 4108

0 SUN MICROSYSTEMS ENTERPRISE SERVER 3500 WITH MONITOR

1 STARTECH 16 PORT KEYBOARD/MOUSE BOX

S2 - 2

Schedule 3

Leased Intangible Assets

Port St. Lucie

Witness 5.20.3.54

Agent Workstations: NT workstation

Admin Workstations: Windows 2000

New York City

Schedule 4

Leased Premises

Port St. Lucie Facility

10011 South U.S. Highway 1

Port St. Lucie, FL 34952

Approx. 42,000 sq. ft.

13 Admin offices

1 Conference Room

3 Training rooms

New York City Facility

80 Broad Street

New York, NY 10004

Approx. 20,000 sq. ft.

10^th Floor

2 executive Offices

25 Seat Training room

Break Room

11th floor

25 Seat Training room

Break Room

Conference Room

Computer Room

IT/UPS Room

EXHIBIT A

SERVICE STANDARDS

Aegis will establish and maintain throughout the term of this Agreement the following systems and infrastructure and service standards in the performance of its obligations under this Agreement:

I. SYSTEMS AND INFRASTRUCTURE.

(a) General Description of Telephone Services:

(1) To provide telephone inbound and outbound inquiry and enrollment support services (the “Services”) to Customers (to include a Customer’s representative) via Routed Calls and Outbound Calls. Initially the Services will be provided Monday through Friday from 8:00 AM – 11:00 PM local time for those time zones where the CIGNA Medicare Part D Prescription Drug Plan is offered, including the continental United States, Hawaii, and Alaska, unless Aegis and NationsHealth agree otherwise. Services may need to be provided on Saturdays, but will not be provided on Sunday. NationsHealth reserves the right to modify the foregoing hours of operation, provided however, prior to any material change to the hours of operation, NationsHealth will provide Aegis with two (2) weeks prior written notice. Notwithstanding such notice requirement, Aegis will take all reasonable steps to implement any requested change to the hours of operations.

(2) Call Volumes.

• Demand Forecasting. Promptly following the Effective Date, NationsHealth will provide Aegis a written, rolling forecast of the Expected Number of Calls NationsHealth will send to Aegis in a subsequent three-Month period, with adjustments made every subsequent Month (a “Rolling Forecast”). The initial Rolling Forecast will be made as of the Agreement date. Aegis and NationsHealth agree to keep Rolling Forecasts confidential.

• Capacity Forecasting. Simultaneously upon receipt of the first Rolling Forecast, Aegis will provide NationsHealth with a written, rolling forecast of the maximum capacity for each of its facilities performing Services for NationsHealth in a subsequent three-Month period, with adjustments made every subsequent Month (a “Capacity Forecast”). NationsHealth will use the Capacity Forecast to help plan volume allocations. Aegis and NationsHealth agree to keep Capacity Forecasts confidential.

• Routed Calls. NationsHealth will distribute Calls to Aegis using an agreed-upon technology platform. Aegis will accept all calls offered it by NationsHealth during the hours of operation.

(b) Systems Services; Support Requirements:

(1) with the support and resources provided by or otherwise arranged through NationsHealth, to track and monitor inbound and outbound member calls and to collect and report statistics on response times and accuracy and call abandonment rates.

(2) to monitor and audit each area of service to determine compliance with quality, service levels, and accuracy standards agreed-upon by Aegis and NationsHealth.

(3) NationsHealth will provide or cause to have provided data connectivity and access to all necessary applications in order to provide the Services.

(3) Aegis will provide NationsHealth with the appropriate allocation of DID numbers in order to receive Routed Calls provided to the Aegis facilities in New York, New York and Port St. Lucie, Florida.

(4) Equipment and Software. Aegis will provide a sufficient number of computers with associated application software (and maintenance parts for those computers) as required to provide the Services. In the event that NationsHealth’s system requirements require Aegis to expand its platform beyond a standard workstation, Aegis and NationsHealth agrees to develop a plan for such expansion including associated costs to NationsHealth, setting forth assets similar to those set forth on Schedules 2 and 3, as well as any and all other assets necessary to facilitate such expansion.

(c) Data Management and Reporting Processes:

(1) to enable NationsHealth to fulfill its reporting obligations to CIGNA under the Strategic Agreement with respect to call center measures and statistics.

(2) to provide information to NationsHealth to enable NationsHealth to manage and monitor the services and systems described in this Exhibit A. Aegis will furnish NationsHealth the information necessary for NationsHealth to create management reports consistent with the format, content and timing of management reports that NationsHealth is obligated to furnish under the Strategic Agreement or as otherwise agreed upon between NationsHealth and CIGNA.

(d) Compliance with Service Level Standards:

to meet the service level standards (also referred to herein as “service level agreement,” or “SLA”)agreed upon or to be agreed upon by CIGNA and NationsHealth pursuant to the Strategic Agreement, which standards will set forth timeliness, accuracy and quality standards in addition to, or in excess of, the standards that are set forth in CMS instructions and guidelines.

(e) Compliance with a Disaster Recovery and Business Continuation Plan:

to ensure business continuity through adherence to the disaster recover and business continuation plan established or to be established by CIGNA and NationsHealth pursuant to the Strategic Agreement.

II. CUSTOMER COMMUNICATIONS

(a) In accordance with applicable CMS requirements set forth at 42 C.F.R. § 423.50, the CMS Marketing Guidelines applicable to the Medicare Part D Prescription Drug Plan, and the CMS Marketing Guidelines applicable to the Medicare Part D Prescription Drug Plan, Aegis will, annually and at the time of enrollment, provide Customers (which term, when used in this Exhibit A will include Customers’ representatives, as the context warrants) information on the following features of the CIGNA Medicare Part D Prescription Drug Plan:

• Enrollment procedures;

• Customer Procedural Rights;

• Potential for contract termination;

• Prescription Drug Plan benefits for standard Part D benefits;

• Types of pharmacies in the pharmacy Network;

• Out-of-network pharmacy access;

• Premiums;

• Service Area;

• Current CIGNA Medicare Part D Prescription Drug Plan formularies;

• 60-days notice to potential and current Customers of the removal or change in the placement of any drug on the formulary;

• Information about quality and performance indicators;

• Information about utilization management procedures;

• Information about the frequency of Customer grievances and appeals; and

• Information on CIGNA’s financial condition.

(b) Aegis will maintain a toll-free customer service call center that is open during usual business hours and provides customer telephone service for potential and current Customers in compliance with standard business practices. NationsHealth will pay the expenses of the toll free telephone numbers. Aegis agrees to operate the call center in accordance with the following:

(1) The call center will operate Monday through Friday from no less than 8:00 AM – 11:00 PM local time for those time zones where the CIGNA Medicare Part D Prescription Drug Plan is offered, including the continental United States, Hawaii, and Alaska, unless Aegis and NationsHealth agree otherwise;

(2) Eighty percent of all incoming Customer calls will be answered within 30 seconds;

(3) The abandonment rate of all incoming Customer calls will not exceed 5 percent;

(4) The call blockage (i.e. busy signals) rate will be set forth in the SLA;

(5) The call center will provide thorough information about the CIGNA Medicare Part D Prescription Drug Plan’s benefit plans, including co-payments, deductibles, and network pharmacies;

(6) The call center will incorporate procedures for handling Customer complaints;

(7) Unless NationsHealth otherwise provides or arranges for non-English speaking services, the call center will provide service to non-English speaking and hearing impaired Customers to be agreed upon by Aegis and NationsHealth;

(8) The call center will provide the information described in paragraph II(a) above. NationsHealth will provide the information within its, or its designee’s, possession to Aegis or provide the requisite tools to enable Aegis’s access to such information.

(9) The call center will refer appeals and coverage determination issues, provider inquiries, and potential fraud and abuse matters to CIGNA.

(c) Additional Obligations of Aegis related to Customer Communications.

(1) Aegis will require its employees, agents, and representatives engaged in marketing the CIGNA Medicare Part D Prescription Drug Plan to receive training in CMS’s Medicare marketing and enrollment instructions and guidelines before they are permitted to talk with prospective Customers. Each such employee, agent, and representative will sign a form acknowledging that he or she has received such training. CIGNA, acting directly or through NationsHealth, will have a reasonable period of time within which to review, and comment on, any training materials. Aegis will comply with all the requirements and instructions provided by NationsHealth, which will be acting on behalf of CIGNA in providing such requirements and instructions, with regard to the content of Aegis’s communications with Customers. Aegis will comply with all applicable laws and regulations in the performance of the Services, including instructions and guidelines of CMS and

Medicare Services. Aegis will train its CSRs using NationsHealth’s training curriculum, which will have been approved by CIGNA, and will include, but not be limited to, HIPAA training.

(2) Aegis, through the support and resources provided by or otherwise arranged through NationsHealth, will assist in reporting to CIGNA the number of calls answered in 30 seconds or less, average call handle time, minimum and maximum handle times, and related statistics. The form, content and frequency of such reports will be agreed to by Aegis and NationsHealth. It is currently anticipated that NationsHealth will use an outside vendor to monitor and provide this information to CIGNA on Aegis’s behalf.

(3) Aegis, through the support and resources provided by or otherwise arranged through NationsHealth, will monitor and/or record for later review no less than three calls per month for each Aegis call center representative. It is currently anticipated that NationsHealth will use an outside vendor to monitor and provide this information on Aegis’s behalf. Aegis and NationsHealth will agree upon standards against which the quality and accuracy of such monitored or review/call will be assessed. Aegis, in connection with NationsHealth, will report the results of its call center monitoring and review on a quarterly basis, together with any corrective actions taken with respect to call center personnel who fail to meet the acceptable quality levels agreed upon by Aegis and NationsHealth.

(4) Aegis, through the support and resources provided by or otherwise arranged through NationsHealth, will report to CIGNA the average hold times for calls, call abandonment rates, and related statistics. It is currently anticipated that NationsHealth will use an outside vendor to monitor and provide this information on Aegis’s behalf. The form, content and frequency of such reports will be agreed to by Aegis and NationsHealth.

(5) Aegis, through the support and resources provided by or otherwise arranged through NationsHealth, will provide call center statistics as specified in CMS’s Final Medicare Part D Reporting Requirements in sufficient time for CIGNA to provide them to CMS at the times set forth in Section VIII thereof. It is currently anticipated that NationsHealth will use an outside vendor to monitor and provide this information on Aegis’s behalf.

(6) Aegis will maintain records and provide support for any CMS or HHS OIG audits of marketing and call center operations.

(7) If Aegis and NationsHealth agree that Aegis will respond to questions by Customers or their representatives about premium billing and collection, Aegis will respond to such questions in accordance with protocols, policies and procedures agreed upon by CIGNA and NationsHealth pursuant to the Strategic Agreement.

(d) Enrollment Communications

(1) Aegis will administer the enrollment process agreed upon by CIGNA and NationsHealth pursuant to the Strategic Agreement that satisfies CMS guidelines and that includes:

• communicating with beneficiaries who are applying for enrollment in the CIGNA Medicare Part D Prescription Drug Plan within timeframes specified by CMS or otherwise agreed upon by NationsHealth and Aegis;

• initiating appropriate follow up with beneficiaries who have incomplete enrollment applications within 7 calendar days of receipt of such applications or such period specified in the SLA; and

• making enrollments effective according to the effective date policy associated with the enrollment period in which the enrollment is received.

(2) Aegis will notify each Customer prior to or at the time of enrollment, of expected uses and disclosures of the Customer’s protected health information, and the Customer’s rights and CIGNA’s duties with respect to such information.

(3) If the Aegis and NationsHealth agree that Aegis will make “welcome calls,” Aegis will make a “welcome” call within such time and using such script as agreed upon by CIGNA and NationsHealth pursuant to the Strategic Agreement.

(4) Aegis will perform the foregoing functions in accordance with the timeliness and accuracy standards set forth in the SLA.

(e) Inquiry and Grievance Communications. Aegis will be responsible for communications from Customers as set forth in this Section II(e) of Exhibit A. Aegis will administer the CIGNA Medicare Part D Prescription Drug Plan Customer inquiries and grievance procedures in accordance with CMS requirements set forth at 42 C.F.R. § 423.564 and any other guidelines established by CMS. For purposes of this Section II(e) of Exhibit A, a “grievance” is any complaint or dispute, other than one that involves a coverage determination, expressing dissatisfaction with any aspect of CIGNA’s or any of its subcontractors’ and providers’ operations, activities, or behavior, regardless of whether remedial action is requested. The grievance procedure is separate and distinct from the appeal procedure. The appeal procedure will be the sole responsibility of CIGNA. An “inquiry” is any communication from a Customer that is not a grievance or an appeal. A “Customer” includes a Customer’s representative. All communications from providers will be directed to CIGNA. Aegis will be responsible for communications from Customers as follows:

(1) General Requirements

• Aegis will enable its CSRs to accurately distinguish and classify Customer inquiries, grievances (including types of grievances), and appeals in accordance with the protocols and definitions established or to be established by CIGNA and NationsHealth pursuant to the Strategic Agreement.

• Aegis will maintain an accuracy rate as determined in the SLA in its identification and classification of inquiries, grievances, and appeals.

• Aegis will refer all communications from providers to CIGNA and all Customer communications about mail order prescriptions covered under Part D to CIGNA.

(2) Customer Telephonic Inquiries

• Aegis will handle all telephonic inquiries by Customers or Customer representatives in a timely, courteous, professional, and culturally competent manner.

• The service levels for timeliness and accuracy in responding to such inquiries will be the same as set forth in Section I (d)(1) of this Exhibit A.

• Aegis will maintain and report data on telephonic inquiries in the formats and at the times set forth in Section VIII of CMS’s Final Medicare Part D Reporting Requirements. Aegis will maintain sufficient records to support the accuracy of such reported data in the event of an audit by CMS or the HHS OIG.

(3) Grievances

• Aegis will track and address Customers’ grievances in accordance with the process agreed upon or to be agreed upon by CIGNA and NationsHealth pursuant to the Strategic Agreement, which, in turn, will be consistent with the timelines, policies and procedures as well as definitions and protocols for identifying the different types of grievances identified in 42 CFR § 423.564 and Section V of the Final Medicare Part D Reporting Requirements.

• Aegis will train its staff and any permitted subcontractors involved in the grievance procedure on such policies and procedures in accordance with 42 C.F.R. § 423.564.

• Aegis will accept grievances from Customers by telephone and in writing (including facsimile and in whatever other form CMS requires CIGNA to accept grievances), and reject any that are untimely under 42 CFR § 423.524(d)(2).

• Fraud and Abuse grievances, as defined in Section V of the Final Medicare Part D Reporting Requirements, will be referred to CIGNA for disposition.

• Aegis will notify the Customer of the grievance decision as expeditiously as the case requires, based on the Customer’s health status, but no later than 30 days after the date Aegis receives the oral grievance; provided, that Aegis may extend the 30-day timeframe by up to 14 days if the Customer requests the extension or if Aegis justifies a need for additional information and documents how the delay is in the interest of the Customer. When Aegis extends the deadline, it will immediately notify the Customer in writing of the reason(s) for the delay.

• Aegis will inform the Customer of the disposition of the grievance in accordance with the following procedure: Grievances submitted orally may be responded to either orally or in writing, unless the Customer requests a written response.

• Aegis will respond to a Customer’s grievance within 24 hours if the complaint involves a refusal by CIGNA to grant a Customer’s request for an expedited coverage determination under 42 C.F.R. § 423.570 or an expedited redetermination under 42 C.F.R. § 423.584, and the Customer has not yet purchased or received the drug that is in dispute.

• Aegis will maintain, and provide upon request by CIGNA or CMS, access to records on all grievances received both orally and in writing, that includes:

• Date of receipt of the grievance;

• Mode of receipt of grievance (i.e. fax, telephone, letter, etc.);

• Person or entity that filed the grievance;

• Subject of the grievance;

• Final disposition of the grievance;

• Date the Customer was notified of the disposition.

• Aegis will maintain and report data or grievances required in Section V of the Final Medicare Part D Reporting Requirements in the formats and at the times specified therein. Aegis will maintain sufficient records to support the accuracy of such data in the event of an audit by CMS or the HHS Office of Inspector General.

(4) Appeals

• Aegis will transmit to CIGNA, as expeditiously as possible, any appeals received by Aegis.

EXHIBIT B

DATA

(1) Ownership of CIGNA Data. All CIGNA Data is, or will be, and will remain the property of CIGNA and will be deemed CIGNA Confidential Information. Other than as necessary for Aegis’s performance under this Agreement, without CIGNA’s approval (in its sole discretion), the CIGNA Data will not be (a) used by Aegis, (b) disclosed, sold, assigned, leased or otherwise provided to third parties by Aegis or to other third parties or (c) commercially exploited by or on behalf of Aegis. Aegis will not possess or assert liens or other rights in or to CIGNA Data. To the extent applicable, Aegis hereby irrevocably and perpetually assigns, transfers and conveys to CIGNA without further consideration all of its right, title and interest in and to the CIGNA Data. Upon request by CIGNA, and at CIGNA’s expense, Aegis will execute and deliver any financing statements or other documents that may be necessary or desirable under any Law to preserve, or enable CIGNA to enforce, its rights hereunder with respect to the CIGNA Data.

(a) Return of Data. Upon request by CIGNA (or by NationsHealth acting on behalf and at the direction of CIGNA) at any time during the term of this Agreement and upon expiration or termination of this Agreement, Aegis will (a) promptly return to CIGNA, in the format and on the media requested by CIGNA, all or any part of the CIGNA Data and (b) erase or destroy all or any part of the CIGNA Data in Aegis’s possession, in each case to the extent so requested by CIGNA. Any archival tapes containing CIGNA Data will be used by Aegis solely for back-up purposes.

(b) Data Safeguards. Aegis will establish and maintain safeguards against the destruction, loss, or alteration of CIGNA Data in the possession of Aegis.

(2) Intellectual Property. During the term of this Agreement, Aegis will assist CIGNA or its designee, at CIGNA’s expense, in every reasonable way to secure all of CIGNA’s worldwide rights, title and interest in CIGNA Intellectual Property in any and all countries, including the disclosure to CIGNA of all pertinent information and data with respect thereto, the execution of all applications, registrations, filings, specifications, oaths, assignments, confirmation of assignments and all other instruments which CIGNA may deem reasonably necessary or appropriate in order to apply for and obtain such rights, title and interest and in order to assign and convey to CIGNA, its successors, assigns and nominees the sole and exclusive rights, title and interests in and to CIGNA Intellectual Property. Aegis further agrees that its obligation to execute or cause to be executed any such instrument or papers will continue after the expiration or termination of this Agreement. If testimony or information relative to any of said matters or related to any interference or litigation is requested by CIGNA (or by NationsHealth acting on behalf and at the direction of CIGNA) either during the term of this Agreement or following its expiration or termination, Aegis agrees to give all information and testimony and do all things reasonably requested by CIGNA (or by NationsHealth acting on behalf and at the direction of CIGNA) and at CIGNA’s expense. If CIGNA is unable because of Aegis’s refusal or dissolution to secure a signature by or on behalf of Aegis to apply for or to pursue any application, registration, filing or other instrument for any United States or foreign intellectual

property rights covering the CIGNA Intellectual Property, then Aegis hereby irrevocably designates and appoints CIGNA and its duly authorized officers and agents as Aegis’s agent and attorney in fact, to act for and on Aegis’s behalf and stead to execute and file any such application, registration, filing or other instrument, and to do all other lawfully permitted acts to further the prosecution and issuance of such intellectual property rights, with the same legal force and effect as if executed by Aegis.

EXHIBIT C

DISASTER RECOVERY

(1) Continued Provision of Services.

(a) Business Continuation. Aegis and NationsHealth will (i) within 30 days after the Effective Date, develop a detailed disaster recovery and business continuation plan, including resource and infrastructure requirements that will enable Aegis to provide the Services in accordance with this Agreement, (ii) during the term of this Agreement, implement and comply with the disaster recovery and business continuation services described in this Exhibit C and the plans developed pursuant to sub-section (a)(i) above, and (iii) test and successfully verify to NationsHealth that the disaster recovery and business continuation plan is fully operational and capable of restoring operations so that Aegis is providing the Services as contemplated in this Agreement. Upon the discovery by Aegis of a disaster or business interruption, Aegis will promptly provide NationsHealth with a notice of a disaster or business interruption or otherwise affecting the provision or receipt of the Services.

(b) Implementation of Plan and Restoration of Services. In the event of a disaster or business interruption (including a Force Majeure event, as defined in this Agreement), Aegis will implement or cause to be implemented the disaster recovery and business continuation plan. In the event Aegis does not implement, or cause to be implemented, the disaster recovery and business continuation plan and restore the Services in accordance with such plan as set forth in this Exhibit, NationsHealth may terminate this Agreement in whole or in part, for cause upon notice to Aegis without regard to any cure period and may pursue any and all available rights and remedies. In the event of a disaster, Aegis will not increase its charges under this Agreement or charge NationsHealth usage fees in addition to the fees to be paid under this Agreement. The occurrence of a Force Majeure event does not excuse, limit or otherwise affect Aegis’s obligation to provide either normal recovery procedures or any other disaster recovery services, except to the extent that such procedures or services are directly affected by such Force Majeure event.

(c) Alternate Source. If and for so long as any Force Majeure event prevents, or substantially hinders or delays, the performance of any critical Service for longer than the recovery period specified in the applicable disaster recovery and business continuation plan, NationsHealth may procure part or all of the Services from an alternate source (after consultation with Aegis) in which case NationsHealth will have no obligation to compensate Aegis for the Services for time period that the Services, or part of them, are procured from an alternate source.

EXHIBIT D

BILL OF SALE

THIS BILL OF SALE, dated as of                      (the “Effective Date”), is being executed and delivered by Aegis Communications Group, Inc, having its principal place of business at 8001 Bent Branch Drive, Irving, Texas 75063 (“Seller”), to NationsHealth, Inc., having its principal place of business at 13650 N.W. 8^th Street, Sunrise, Florida 33325 (“Purchaser”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller hereby agrees as follows:

1. Seller hereby transfers, conveys, assigns and delivers to Purchaser, all of its right, title and interest in and to all of the assets set forth on the attached Schedules (the “Assets”).

2. Seller, for itself and its successors and assigns, hereby covenants with Purchaser, its successors and assigns, that Seller has good right and lawful authority to sell and transfer the Assets to Purchaser.

3. The Assets are being transferred to Purchaser without reservation, qualification, limitation or encumbrance, and Seller agrees to defend the sale of the Assets made hereby to Purchaser against all persons lawfully claiming the whole or part thereof.

4. Seller hereby covenants and agrees to execute and deliver to Purchaser such instruments of sale, transfer, conveyance, assignment and delivery, and such consents, assurances, and other instruments as may be requested by Purchaser or its counsel in order to vest in Purchaser all right, title and interest of Seller in and to the Assets and otherwise in order to carry out the purpose and intent of this Bill of Sale.

IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be executed and delivered as of this      day of                     .

SELLER:	PURCHASER:
AEGIS COMMUNICATIONS GROUP, INC.	NATIONSHEALTH, INC.
By:	By:
Name:	Name:
Title:	Title:

EXHIBIT E

ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (“Assignment”), is made as of the      day of September, 2005 by and among Aegis Communications Group, Inc, having its principal place of business at 8001 Bent Branch Drive, Irving, Texas 75063 (“Assignor”), and NationsHealth, Inc., having its principal place of business at 13650 N.W. 8^th Street, Sunrise, Florida 33325 (“Assignee”).

NOW THEREFORE, for good and valuable in consideration of the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

1. Assignment of Agreements. Assignor hereby assigns and transfers to Assignee all of Assignor’s right, title and interest in and to the agreements set forth on the Schedule attached hereto (the “Agreements”).

2. Representations and Warranties of Assignors. Assignor represents and warrants that as of the date hereof: (i) the Agreements are in full force and effect; (ii) all amounts required to be paid as of the date hereof under the Agreements have been paid; and (iii) Assignor is not in default under the Agreements.

3. Assumption of Agreements. Assignee hereby assumes all duties, obligations, and responsibilities of the Assignor under the Agreements which accrue commencing as of the date hereof; provided, however, Assignee expressly does not assume any duties, obligations and/or responsibilities of the Assignor under the Agreements which accrued prior to the date hereof. Furthermore, Assignee agrees to perform, observe, and discharge all of the Assignor’s covenants and conditions under the Agreements which accrue commencing as of the date hereof.

4. Miscellaneous. Except as modified by this Assignment, the terms, covenants, conditions and provisions of the Agreements will remain unmodified and in full force and effect. Captions and paragraph headings contained in this Assignment are for convenience and reference only and in no way define, describe, extend or limit the scope or intent of this Assignment or any provision hereof. This Assignment and all transactions contemplated by this Assignment will be governed by and construed and enforced in accordance with the laws of the State of Florida. This Assignment may be executed in any number of counterparts, any one and all of which will constitute the contract of the parties and each of which will be deemed an original.

[SIGNATURES APPEAR ON NEXT PAGE]

C-1

IN WITNESS WHEREOF, the undersigned parties have executed this Assignment as of the day and year first above written.

ASSIGNOR:	ASSIGNEE:
AEGIS COMMUNICATIONS GROUP, INC.	NATIONSHEALTH, INC.
By:	By:
Name:	Name:
Title:	Title:

C-2

EXHIBIT F

CONSENT TO ASSIGNMENT OF LEASE AGREEMENT (OR OTHER AGREEMENT)

The undersigned, as Licensor (or Lessor), does hereby consent to the Assignment of the agreement attached hereto as Exhibit “A” (the “Agreement”). The aforesaid Agreement is in full force and effect. All amounts required to be paid under said Agreement have been duly and timely paid as of the date hereof. In consideration of the assumption by Assignee of the covenants, agreements and obligations by the “licensee/lessee” to be paid, performed and kept under the Agreement, Licensor hereby releases and discharge Assignor from any and all obligation and liability under the Agreement, and agrees to look solely to Assignee for the payment of the rentals and other sums, and for the performance and keeping of all the covenants, agreements and conditions, to be paid, performed or kept by the “licensor/lessee” under the Agreement, but only from and after the date hereof.

IN WITNESS WHEREOF, Licensor has caused this Consent to be executed as of             .

	LICENSOR:
	, a
Witnesses:
Print Name:	By:
	Print Name:
	Title:
Print Name:

EXHIBIT G

Pursuant to Section 11 of this Agreement, this Exhibit G sets forth Section 6.07(c) of the Strategic Agreement and subsections (a), (d), (e), (f) and (g) of Section 6.05 to which 6.07(c) of the Strategic Agreement refers:

“SECTION 6.07(c):

Option to Acquire Servicing Assets. In the event of a termination of this Agreement by CIGNA For Cause pursuant to subsections (a), (d), (e), (f) and (g) of Section 6.05, above, or in the event that USPG and NationsHealth change their business operations such that they no longer offer the Services, then CIGNA shall have the option to acquire, which option must be exercised within thirty (30) days of the final date on which USPG renders Services pursuant to this Agreement, the assets required to deliver all or part of the Services described in Exhibits 1.02, 1.03, 1.04, 1.05, and 1.06 . CIGNA shall have the option to acquire such physical assets from USPG and/or NationsHealth at their fair market value. NationsHealth may decline to sell such physical assets to CIGNA, in which instance CIGNA may acquire similar assets from third party vendors. NationsHealth and/or USPG will provide know how, expertise, and personnel resources to assist CIGNA, without cost to CIGNA, in replicating the functionality of such assets. Prior to the effective date of such termination, CIGNA may notify USPG or NationsHealth of CIGNA’s intent to exercise such option so that the transfer of such assets will occur simultaneously with the termination. Further, in the event of such termination, CIGNA shall have the option to acquire from USPG and/or NationsHealth, without cost to CIGNA, the intangible assets required to deliver all or part of the Services, including system specifications and configurations, software code, training and policy manuals, marketing plans and other information used by USPG or NationsHealth in the performance of the Services described in the foregoing exhibits through a grant by USPG and/or NationsHealth to CIGNA of a royalty-free perpetual license for such intangible assets to the extent of the authority of USPG and/or NationsHealth to grant such a license.”

“SECTION 6.05 For Cause. “For Cause” termination shall mean the following:

(a) As to a nonbreaching Party, the other Party’s breach of any of the terms and conditions of this Agreement that causes a Material Adverse Effect on the non-breaching Party, and remains uncured following written notice and a reasonable opportunity to cure, which shall not be less than ninety (90) days from the date of written notice of such breach.

(d) As to a nonbreaching Party, if a default occurs on a payment required to be made by the breaching Party relating to the PDP.

(e) As to a nonbreaching Party, if a Party is adjudicated to have committed fraud in a civil proceeding or otherwise settles a civil fraud action involving the United States for a material amount, or a criminal action is filed by a governmental agency against a Party arising out of, or relating to, the PDP, or a Party is excluded or debarred from participation in any federal or state health care program pursuant to 42 U.S.C. § 1320a-7.

4

(f) As to a nonbreaching Party, if a Party: (i) is unable to pay its debts generally as they become due; (ii) makes a voluntary assignment for the benefit of creditors; (iii) is declared insolvent in any proceeding; (iv) commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself, any of its property, assets or debts under any bankruptcy, insolvency or other similar laws now or hereafter in effect or petitions or applies to any tribunal for the appointment of a receiver, liquidator, custodian or trustee for such Party under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, liquidation, or dissolution law of any jurisdiction now or hereafter in effect; or (v) is named as a debtor party in such petition, application, case or proceeding and it indicates its approval thereof, consents thereto, acquiesces therein or acts in furtherance thereof, or if such petition, application, case or proceeding is not dismissed or stayed for a period of sixty (60) days after it is commenced, or is the subject of any order appointing any such receiver, liquidator, custodian or trustee or approving the petition in any such case or proceeding.

(g) If a Party undergoes a change in control which shall be defined as a transfer of all, or substantially all, of the Party’s assets, or a transfer of more than (i) fifty percent (50%) as to CIGNA, or (ii) twenty-five (25%) as to NationsHealth or USPG, of the voting control of their respective securities, in a single transaction or a series of transactions intended to effect a change in control of such Party then the Party not undergoing such change in control may deem a For Cause termination to have occurred, provided, however that a reorganization by a Party and one or more of its Affiliates for administrative or similar purposes shall not be deemed a change in control and provided further that as to USPG and/or NationsHealth this provision shall be limited to a change in control such that USPG and/or NationsHealth would be substantially controlled by a health plan or pharmacy benefit provider or another entity that substantially competes with, or operates a business that substantially conflicts with, CIGNA.”

5

EX-10.28

Exhibit 10.28

DEBT CONVERSION AGREEMENT

BY AND BETWEEN

AEGIS COMMUNICATIONS GROUP, INC.

AND

WORLD FOCUS INCORPORATED

Dated as of November 30, 2005

TABLE OF CONTENTS

		Page
ARTICLE 1 TERMS OF DEBT CONVERSION		2
1.1	Conversion and Release.	2
1.2	Time and Place of Closing.	2
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF COMPANY		2
2.1	Organization, Standing, and Power.	2
2.2	Authority of the Company; No Breach By Agreement.	3
2.3	Capital Stock and Conversion Shares	3
2.4	Litigation.	3
2.5	Brokers and Finders.	4
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF WORLD FOCUS		4
3.1	Organization, Standing, and Power.	4
3.2	Title to Promissory Notes.	4
3.3	Authority; No Breach By Agreement.	4
3.4	Litigation.	5
3.5	Brokers’ Fees.	5
3.6	Investment Representations.	5
ARTICLE 4 CONDUCT OF BUSINESS PENDING CONSUMMATION		6
4.1	Affirmative Covenants of the Company.	6
4.2	Material Developments.	6
ARTICLE 5 ADDITIONAL AGREEMENTS		7
5.1	Agreement as to Efforts to Consummate.	7
5.2	Filings with State Office.	7
5.3	Confidentiality.	7
5.4	Press Releases; Disclosure.	7
5.5	Meeting of Stockholders.	8
5.6	Preparation of Proxy Statement.	8
ARTICLE 6 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE		9
6.1	Conditions to Obligations of Each Party.	9
6.2	Conditions to Obligations of World Focus.	9
6.3	Conditions to Obligations of the Company.	10
ARTICLE 7 TERMINATION		10
7.1	Termination.	10
7.2	Effect of Termination.	11

ARTICLE 8 MISCELLANEOUS		11
8.1	Survival of Representations.	11
8.2	Definitions.	11
8.3	Expenses.	14
8.4	Entire Agreement.	14
8.5	Amendments.	14
8.6	Waivers.	14
8.7	Assignment.	15
8.8	Notices.	15
8.9	Governing Law; Jurisdiction and Venue; WAIVER OF TRIAL BY JURY.	16
8.10	Counterparts.	16
8.11	Interpretations.	16
8.12	Severability.	16

DEBT CONVERSION AGREEMENT

THIS DEBT CONVERSION AGREEMENT (this “Agreement”) is made and entered into as of November 30, 2005, by and between Aegis Communications Group, Inc. (“Company”), a Delaware corporation, and World Focus, an affiliate of Essar Global Limited (“World Focus”). Certain capitalized terms used in this Agreement are defined in Section 8.1 of this Agreement.

Preamble

WHEREAS, World Focus is the holder of a series of promissory notes issued by the Company, copies of which are attached hereto (the “Promissory Notes”);

WHEREAS, the outstanding principal and interest due and payable under the Promissory Notes as of November 14, 2005 is $18,283,690, and such Promissory Notes will continue to accrue interest until the closing of the Debt Conversion (as defined below);

WHEREAS, World Focus, and its affiliates, own a majority of the issued and outstanding Common Stock of the Company, par value $.01 per share (the “Common Stock”), which is the only outstanding class of capital stock of the Company;

WHEREAS, World Focus and its affiliates have proposed that World Focus acquire shares of Common Stock in exchange for cancellation of all outstanding principal and accrued interest amounts due or which may become due under the Promissory Notes (the “Debt Conversion”);

WHEREAS, the Board of Directors of the Company (the “Board”) has determined it to be in the best interests of the Company to consummate the Debt Conversion on fair and reasonable terms and has appointed a special committee of independent and disinterested directors to undertake consideration of the Debt Conversion (the “Special Committee”);

WHEREAS, the Board has delegated to the Special Committee full and complete authority to negotiate and determine whether to approve the terms of the Debt Conversion, with full power and authority to retain such independent legal counsel and financial advisors as the Special Committee may, in its sole discretion, deem appropriate and necessary to discharge the duties delegated to it by the Board;

WHEREAS, in connection with its consideration of the Debt Conversion, the Special Committee retained Legg Mason Wood Walker, Incorporated (“Legg Mason”) to provide the Special Committee with assistance in evaluating the terms of the Debt Conversion and, to the extent appropriate, provide it with an opinion as to the fairness, from a financial point of view, of the Conversion Price to the Company;

WHEREAS, the Special Committee has received the opinion of Legg Mason to the effect that, as of November 22, 2005, the Conversion Price is fair, from a financial point of view, to the Company (the “Fairness Opinion”);

WHEREAS, the Special Committee has reviewed the Fairness Opinion;

WHEREAS, the Special Committee, based on, among other things, its review of the Fairness Opinion and of the other terms and conditions of the Debt Conversion, has determined that it would be in the best interests of the stockholders of the Company to convert the outstanding principal amount of the Promissory Notes and all interest accrued and unpaid as of the Closing Date into shares of Common Stock at the Conversion Price.

NOW, THEREFORE, in consideration of the above, and the mutual warranties, representations, covenants, and agreements set forth herein, the Parties agree as follows:

ARTICLE 1

TERMS OF DEBT CONVERSION

1.1 Conversion and Release.

(a) Subject to the terms and conditions of this Agreement, at the Closing, World Focus shall deliver the Promissory Notes free and clear of all Liens, other than those transfer restrictions imposed by applicable securities Laws, in exchange for such number of shares of the Common Stock determined as set forth in the next succeeding sentence. On the Closing Date, the Promissory Notes shall be converted into that number of shares of Common Stock (the “Conversion Shares”) determined by dividing (x) the sum of the outstanding principal amount of the Promissory Notes plus all interest accrued and unpaid as of the Closing Date by (y) the Conversion Price. No fractional Conversion Shares shall be issued in connection with the Debt Conversion, but in lieu of such fractional shares the Company shall make a cash payment therefor rounded up to the next one cent.

(b) At Closing, the Company shall deliver to World Focus, against receipt of the Promissory Notes free and clear of all Liens, other than those transfer restrictions imposed by applicable securities Laws, a stock certificate representing the Conversion Shares. Upon receipt by World Focus of a stock certificate representing the Conversion Shares in accordance with Section 1.1(a), World Focus hereby (i) agrees that such stock certificates shall constitute full and final satisfaction of the amounts outstanding under the Promissory Notes and (b) irrevocably releases and discharges the Company and its Subsidiaries from any and all claims and demands it may have against the Company and its Subsidiaries pursuant to the terms of the Promissory Notes or otherwise in connection with the Promissory Notes.

1.2 Time and Place of Closing.

The transactions contemplated by this Agreement shall take place at a closing (the “Closing”) at the offices of Pepper Hamilton LLP, 3000 Two Logan Square, Eighteenth & Arch Streets, Philadelphia, PA 19103, commencing at 9:00 A.M. on the third (3^rd) Business Day following the satisfaction or waiver of the conditions set forth in Article 6 (other than those conditions which are to be satisfied by delivery or performance at the Closing) or at such other time and place as the Company and World Focus may mutually agree (the “Closing Date”).

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF COMPANY

The Company hereby represents and warrants on the date of this Agreement to World Focus as follows:

2.1 Organization, Standing, and Power.

The Company is a corporation duly organized, validly existing, and in good standing under the Laws of the State of Delaware, and has the requisite corporate power and authority to carry on its business as now conducted and to own, lease and operate its assets. The Company is duly qualified or licensed to transact business as a foreign corporation in good standing in the States of the United States and foreign jurisdictions where the character of its assets or the nature or conduct of its business requires it to be so qualified or licensed, except for such jurisdictions in which the failure to be so qualified or licensed is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect.

2

2.2 Authority of the Company; No Breach By Agreement.

(a) The Company has the requisite corporate power and authority necessary to execute and deliver this Agreement, to perform its obligations under this Agreement and to consummate the transactions contemplated hereby, all in accordance with this Agreement. The execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated herein have been duly and validly authorized by all necessary corporate action in respect thereof on the part of the Company, with the exception of the approval and adoption by the Company’s stockholders of an amendment to the Certificate of Incorporation (the “Stockholder Approval”) to increase the number of shares of Common Stock that the Company is authorized to issue thereunder from 800,000,000 to 2,000,000,000 (the “Certificate of Amendment”).

(b) Assuming the due authorization and execution of this Agreement by World Focus, this Agreement represents a legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other Laws affecting creditors’ rights generally and except insofar as the availability of equitable remedies may be limited by applicable Law.

(c) Neither the execution and delivery of this Agreement by the Company, nor the consummation by the Company of the transactions contemplated hereby, nor compliance by the Company with any of the provisions hereof, (i) conflicts with or results in a breach of any provision of the Company’s Certificate of Incorporation or bylaws, or (ii) constitutes or results in a default under, or require any Consent pursuant to, any Law or Order applicable to the Company.

(d) Except for (i) the filing of the Proxy Statement with the SEC, and (ii) the filing and recordation of the Certificate of Amendment as required by the DGCL, no notice to, filing with, or Consent of, any Regulatory Authority is necessary to be provided, made or obtained by the Company for the consummation by the Company of the transactions contemplated in this Agreement, except where the failure to provide, make or obtain such notifications, filings or Consents is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect.

2.3 Capital Stock and Conversion Shares

(a) The capital stock of the Company consists of: (i) 800,000,000 shares of authorized Common Stock, of which (A) 660,053.022 shares are issued and outstanding, and (B) 475,600 are issued and held in the Company’s treasury; and (ii) 2,000,000 shares of authorized preferred stock, $0.01 par value per share, of which (A) 29,778 shares of Series B Preferred Stock are issued and outstanding, and (B) none of which are otherwise reserved for issuance upon exercise or conversion of outstanding options, warrants, convertible securities or other rights to purchase or otherwise obtain shares of preferred stock.

(b) Assuming Stockholder Approval has been obtained and the Certificate of Amendment has been filed and recorded with the Secretary of State of the State of Delaware, the Conversion Shares, when issued and delivered in accordance with the terms of this Agreement (including against cancellation of the Promissory Notes), will be duly and validly issued and outstanding and fully paid and nonassessable under the DGCL.

2.4 Litigation.

Except for the pending matter captioned as AllServe Systems, PLC, et al. v. Aegis Communications Group, Inc., case number 061-N, filed in Delaware Chancery Court, New Castle County, Delaware, there is no litigation, arbitration or other similar proceeding pending or, to the Company’s knowledge, threatened in writing, against the Company which seeks to enjoin, restrict or prohibit the transactions contemplated by this Agreement.

3

2.5 Brokers and Finders.

Except for Legg Mason, neither the Company nor any of its officers, directors, employees, or Affiliates has employed any broker or finder or incurred any liability for any financial advisory fees, investment bankers’ fees, brokerage fees, commissions, or finders’ fees in connection with this Agreement or the transactions contemplated hereby.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF WORLD FOCUS

World Focus hereby represents and warrants on the date of this Agreement to the Company as follows:

3.1 Organization, Standing, and Power.

World Focus is an entity duly organized, validly existing, and in good standing under the Laws of its jurisdiction of organization. World Focus has the requisite power and authority to carry on its business as now conducted and to own, lease and operate its assets. World Focus is duly qualified or licensed to transact business as a foreign entity in good standing in the states of the United States and foreign jurisdictions where the character of its assets or the nature or conduct of its business requires it to be so qualified or licensed, except for such jurisdictions in which the failure to be so qualified or licensed is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect.

3.2 Title to Promissory Notes.

World Focus owns the Promissory Notes, free and clear of all Liens, other than those transfer restrictions imposed by applicable securities Laws. Except for this Agreement, there are no outstanding agreements, arrangements, warrants, options, puts, calls, rights, options, subscriptions or other commitments to which World Focus is a party relating to the Promissory Notes, or the sale, issuance or voting of the Conversion Shares. Upon delivery by World Focus to the Company of the Promissory Notes, the Company shall acquire the Promissory Notes, free and clear of all Liens, other than those transfer restrictions imposed by applicable securities Laws.

3.3 Authority; No Breach By Agreement.

(a) World Focus has the requisite power and authority necessary to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein, have been duly and validly authorized by all necessary action in respect thereof on the part of World Focus.

(b) Assuming the due authorization and execution of this Agreement by the Company, this Agreement represents a legal, valid, and binding obligation of World Focus, enforceable against it in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other Laws affecting creditors’ rights generally and except insofar as the availability of equitable remedies may be limited by applicable Law.

(c) Neither the execution and delivery of this Agreement by World Focus, nor the consummation by World Focus of the transactions contemplated hereby, nor compliance by World Focus with any of the provisions hereof, conflicts with or results in a breach of any provision of the certificate of incorporation or bylaws (or other governing documents) of World Focus.

4

(d) No notice to, filing with, or Consent of, any Regulatory Authority is necessary to be provided, made or obtained by World Focus for the consummation by World Focus of the transactions contemplated in this Agreement, except where the failure to provide, make or obtain such notifications, Consents, filings is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect.

3.4 Litigation.

There is no litigation, arbitration or other similar proceeding pending or, to World Focus’s knowledge, threatened in writing, against World Focus which seeks to enjoin, restrict or prohibit the transactions contemplated by this Agreement.

3.5 Brokers’ Fees.

Neither World Focus nor any of its officers, directors, employees, or Affiliates has employed any broker or finder or incurred any Liability for any financial advisory fees, investment bankers’ fees, brokerage fees, commissions, or finders’ fees in connection with this Agreement or the transactions contemplated hereby.

3.6 Investment Representations.

(a) World Focus understands and acknowledges that the Conversion Shares it receives, are not registered under the Securities Act of 1933, as amended (the “Securities Act”) or applicable state securities Laws, nor qualified under the securities Law of any other jurisdiction, and that the Conversion Shares are being offered and sold in reliance upon exemptions provided by the Securities Act and certain state securities Laws for transactions not involving any public offering.

(b) World Focus is acquiring the Conversion Shares for investment purposes only for its own account, and not on behalf of any other Person (regardless of whether such Person is a U.S. resident) nor with a view to, or for resale in connection with any distribution thereof).

(c) World Focus is able to bear the lack of liquidity inherent in holding the Conversion Shares. World Focus has been given the opportunity to ask questions of, and to receive answers from, Persons acting on behalf of the Company concerning the business, properties, prospects and financial condition of the Company, and to obtain additional information necessary to verify the accuracy of any information furnished to World Focus or to which World Focus has had access.

(d) World Focus is not a “U.S. person” (as defined in Regulation S, promulgated under the Securities Act). The offer and issuance of Conversion Shares to World Focus constitute an “Offshore Transaction” as defined in Rule 902 of the Securities Act. World Focus is an “accredited investor” as defined in Section 501(a) of the rules and regulations adopted pursuant to the Securities Act and, accordingly, has such knowledge and experience in financial and business matters that World Focus is capable of evaluating the merits and risks of the Debt Conversion and issuance of Conversion Shares.

(e) World Focus hereby agrees to resell such Conversion Shares only pursuant to registration under the Securities Act, or pursuant to an available exemption from registration, and agrees not to engage in hedging transactions with regard to such Conversion Shares unless in compliance with the Securities Act.

5

(f) World Focus consents to the placement of the following legend on any certificate representing the Conversion Shares:

THE SALE AND ISSUANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE DISTRIBUTION THEREOF, AND MAY NOT BE OFFERED, SOLD, PLEDGED, OR TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH SECURITIES AND SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, OR (2) AN OPINION OF COUNSEL (INCLUDING INTERNAL LEGAL COUNSEL) ACCEPTABLE TO THE CORPORATION THAT AN EXEMPTION FROM SUCH REGISTRATION STATEMENT IS AVAILABLE AND SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.

ARTICLE 4

CONDUCT OF BUSINESS PENDING CONSUMMATION

4.1 Affirmative Covenants of the Company.

From the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement, unless the prior written consent of World Focus shall have been obtained, which consent shall not be unreasonably withheld, delayed or conditioned, and except as otherwise provided or permitted herein, the Company shall, and shall cause each of its Subsidiaries to, (i) operate its business only in the usual, regular and ordinary course of the business, consistent with past custom and practice of the Company, and (ii) take no action which would (A) intentionally and adversely affect the ability of any Party to obtain any Consents required to consummate the transactions contemplated hereby, or (B) adversely affect the ability of any Party to perform its covenants and agreements under this Agreement.

4.2 Material Developments.

(a) After it obtains knowledge thereof, the Company agrees to give written notice promptly to World Focus upon: (i) the occurrence or impending occurrence of any event or circumstance relating to the Company or any of its Subsidiaries which would constitute a material breach of any of its representations, warranties, or covenants contained herein, and to use commercially reasonable efforts to prevent or promptly to remedy the same, (ii) any notice or other communication from any Person alleging that the Consent of such Person is or may be required in connection with the transactions contemplated by this Agreement, or (iii) any Litigation instituted or pending, or, to the Company’s knowledge, threatened against the Company that seeks to enjoin, restrict, or prohibit the transactions contemplated by this Agreement.

6

(b) From the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement, the Company shall keep World Focus advised of all material developments relevant to its ability to consummate the transactions contemplated herein.

(c) From the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement, (i) World Focus shall keep the Company advised of all material developments related to its ability to consummate the transactions contemplated herein and (ii) except for (A) the transfer of the Promissory Notes to the Company at the Closing as contemplated by this Agreement, or (B) World Focus shall neither transfer, sell, assign, convey or grant any interest in, nor otherwise permit any transfer, sale, assignment, conveyance or granting of an interest in, the Promissory Notes.

ARTICLE 5

ADDITIONAL AGREEMENTS

5.1 Agreement as to Efforts to Consummate.

Subject to the terms and conditions of this Agreement, each of the Parties hereto agrees to use, and to cause its Subsidiaries to use, all commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper, or advisable under applicable Laws to consummate and make effective, as soon as reasonably practicable after the date of this Agreement, the transactions contemplated by this Agreement, including using commercially reasonable efforts to lift or rescind any Order adversely affecting its ability to consummate the transactions contemplated herein and to cause to be satisfied the conditions referred to in Article 6; provided, that nothing herein shall preclude either Party from exercising its rights under this Agreement and nothing herein shall require any Party to institute Litigation in order to obtain a Consent.

5.2 Filings with State Office.

Upon the terms and subject to the conditions of this Agreement, the Company shall execute and file the Certificate of Amendment with the Secretary of State of the State of Delaware in connection with the Closing.

5.3 Confidentiality.

Except with the prior written consent of the other Party or as required by this Agreement or applicable Law or Court Order, each Party shall, and shall cause its advisers and agents to, maintain the confidentiality of (i) the existence, nature or terms and conditions of this Agreement and the transactions contemplated by this Agreement and (ii) all confidential information furnished to it by the other Party concerning its and its Subsidiaries’ businesses, operations, and financial positions and shall not use such information for any purpose except in furtherance of the transactions contemplated by this Agreement. If this Agreement is terminated prior to the Closing Date, each Party shall promptly return or certify the destruction of all documents and copies thereof, and all work papers containing confidential information received from the other Party.

5.4 Press Releases; Disclosure.

No Party to this Agreement shall make, or cause to be made, any press release or public announcement with respect to this Agreement or the transactions contemplated hereby or otherwise communicate with any news media with respect thereto without the prior written consent of the other Party (which consent shall not be unreasonably withheld, delayed or conditioned), and the Parties shall cooperate as to the timing and contents of any such press release or public announcement; provided, however, that such prior written consent shall not be required for releases, announcements or

7

communications by a particular Party to the extent obtaining such prior written consent would prevent the timely and accurate dissemination of information which such Party deems necessary or advisable to comply with any applicable Law.

5.5 Meeting of Stockholders.

Subject to compliance with their fiduciary duties under applicable Law: (a) the Company will duly take all lawful action to call, give notice of, convene and hold a meeting of its stockholders as soon as reasonably practicable (the “Stockholders Meeting”) for the purpose of obtaining Stockholder Approval and will its use commercially reasonable efforts to solicit the approval and adoption by the Company’s stockholders of the Certificate of Amendment; and (b) the Board will recommend approval and adoption of the Certificate of Amendment by the Company’s stockholders and will not (i) withdraw, modify or qualify (or propose to withdraw, modify or qualify) in any manner adverse to World Focus such recommendation, or (ii) take any action or make any statement in connection with the Stockholders Meeting that is inconsistent with such recommendation.

5.6 Preparation of Proxy Statement.

(a) Preparation. As promptly as reasonably practicable following the date hereof, the Parties will cooperate with each other in preparing, and the Company will cause to be filed with the SEC, proxy materials that constitute the proxy statement relating to the stockholders’ consideration of the approval and adoption by the Company’s stockholders at the Stockholders Meeting of the Certificate of Amendment (such proxy statement and any amendments or supplements thereto, the “Proxy Statement”). The Company will use commercially reasonable efforts to have the Proxy Statement cleared by the SEC. The Company will, as promptly as practicable after receipt thereof, provide World Focus with copies of any written comments and advise World Focus of any oral comments received from the SEC with respect to the Proxy Statement. The Parties will cooperate with each other and the Company will provide World Focus with a reasonable opportunity to review and comment on any amendment or supplement to the Proxy Statement prior to filing such with the SEC, and the Company will provide World Focus with a copy of all such filings made with the SEC. The Company will use commercially reasonable efforts to cause the Proxy Statement to be mailed to the Company’s stockholders as promptly as practicable after the Proxy Statement is cleared by the SEC. If at any time prior to Closing Date any information in the Proxy Statement relating to World Focus or the Company, or any of their respective Affiliates, officers or directors, should be discovered by World Focus or the Company, as applicable, to be false or misleading in any material respect, or that any information should be set forth in an amendment or supplement to the Proxy Statement so that the Proxy Statement would not include any misstatement 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, the Party that discovers such information will promptly notify the other Party and, to the extent required by applicable Law, an appropriate amendment or supplement describing such information will be promptly filed with the SEC and disseminated to the Company’s stockholders.

(b) Information Supplied.

(1) None of the information supplied or to be supplied by World Focus or the Company for inclusion or incorporation by reference in the Proxy Statement will, on the date it is first mailed to the Company’s stockholders or at the time of the meeting of the Company’s stockholders, contain any untrue statement of a material fact or omit 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. With regard to the information supplied or to be supplied by World Focus or the Company for inclusion or incorporation by reference in the Proxy Statement, such

8

information will comply as to form in all material respects with the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder.

(2) Notwithstanding the foregoing provisions of this Section 5.6, no representation or warranty is made by either Party hereto with respect to statements made or incorporated by reference in the Proxy Statement based on information supplied by the other Party hereto for inclusion or incorporation by reference therein.

ARTICLE 6

CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE

6.1 Conditions to Obligations of Each Party.

The respective obligations of each Party to perform this Agreement and consummate the transactions contemplated hereby are subject to the satisfaction of the following conditions, unless waived by both Parties pursuant to Section 8.6:

(a) Regulatory Approvals. All Consents of all Regulatory Authorities required for consummation of the transactions contemplated hereby shall have been obtained or made and shall be in full force and effect and all waiting periods required by applicable Law shall have expired.

(b) Regulatory Proceedings. No Regulatory Authority shall have enacted, issued, promulgated, enforced or entered any Law or Order (whether temporary, preliminary or permanent) or taken any other action which seeks to enjoin, restrict or prohibit the consummation of the transactions contemplated by this Agreement.

(c) Stockholder Approval. Stockholder Approval shall have been obtained.

6.2 Conditions to Obligations of World Focus.

The obligations of World Focus to perform this Agreement and consummate the transactions contemplated hereby are subject to the satisfaction of the following conditions, unless waived by World Focus pursuant to Section 8.6:

(a) Representations and Warranties. The representations and warranties made by the Company in Article 2 of this Agreement shall be true and correct in all material respects.

(b) Performance of Agreements and Covenants. Each and all of the agreements and covenants of the Company to be performed and complied with pursuant to this Agreement and the other agreements contemplated hereby prior to the Closing Date shall have been duly performed and complied with in all material respects.

(c) Officer Certificates. The Company shall have delivered to World Focus (i) a certificate, dated as of the Closing Date and signed on its behalf by its chief executive officer and its chief financial officer, to the effect that the conditions set forth in Section 6.1 (as they relate to the Company) and in Sections 6.2(a) and 6.2(b) have been satisfied, (ii) certified copies of resolutions duly adopted by the Board and Special Committee evidencing the taking of all corporate action necessary to authorize the execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, and (iii) certified copies of resolutions duly adopted by the Company’s stockholders approving the Certificate of Amendment.

9

(d) Certificate of Amendment. The Company shall have delivered to World Focus a copy of the Certificate of Amendment as filed with and certified by, the Secretary of State of the State of Delaware.

(e) Stock Certificates. The Company shall have delivered to World Focus a stock certificate representing the Conversion Shares registered in the name of “World Focus”.

6.3 Conditions to Obligations of the Company.

The obligations of the Company to perform this Agreement and consummate the transactions contemplated hereby are subject to the satisfaction of the following conditions, unless waived by the Company pursuant to Section 8.6.

(a) Representations and Warranties. The representations and warranties made by World Focus in Article 3 of this Agreement shall be true and correct in all material respects.

(b) Performance of Agreements and Covenants. Each and all of the agreements and covenants of World Focus to be performed and complied with pursuant to this Agreement and the other agreements contemplated hereby prior to the Closing Date shall have been duly performed and complied with in all material respects.

(c) Officer Certificates. World Focus shall have delivered to the Company (i) a certificate, dated as of the Closing Date and signed on its behalf by its chief executive officer and its chief financial officer, to the effect that the conditions set forth in Section 6.1 (as they relate to World Focus) and in Sections 6.3(a) and 6.3(b) have been satisfied, and (ii) certified copies of resolutions duly adopted by World Focus’s governing body evidencing the taking of all action necessary to authorize the execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby.

(d) Promissory Notes. World Focus shall have delivered to the Company the Promissory Notes for cancellation.

ARTICLE 7

TERMINATION

7.1 Termination.

Notwithstanding any other provision of this Agreement, and notwithstanding the receipt of Stockholder Approval, this Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing Date:

(a) By mutual written agreement of the Company and World Focus; or

(b) By World Focus (provided, that World Focus is not then in material breach of any of its representations, warranties, covenants or other agreements hereunder) in the event of a breach by the Company of any representation, warranty, covenant or agreement contained in this Agreement, which breach or inaccuracy would, individually or in the aggregate together with all such other then breaches and inaccuracies by the Company, constitute grounds for the conditions set forth in Section 6.2(a) or 6.2(b) not to be satisfied at the Closing Date, and which breach has not been cured within thirty (30) days after the giving of written notice to the Company of such breach;

10

(c) By the Company (provided, that the Company is not then in material breach of any of its representations, warranties, covenants or other agreements hereunder) in the event of a breach by World Focus of any representation, warranty, covenant or agreement contained in this Agreement, which breach or inaccuracy would, individually or in the aggregate together with all such other then breaches and inaccuracies by World Focus, constitute grounds for the conditions set forth in Section 6.3(a) or 6.3(b) not to be satisfied at the Closing Date, and which breach has not been cured within thirty (30) days after the giving of written notice to World Focus of such breach;

(d) By either World Focus or the Company in the event (i) any Consent of any Regulatory Authority required for consummation of the transactions contemplated hereby shall have been denied by final nonappealable action of such authority or if any action taken by such authority is not appealed within the time limit for appeal, or (ii) if there shall be any Law or Order enacted, promulgated, issued or entered following the date of this Agreement that makes consummation of the transactions contemplated hereby illegal or otherwise prohibited; or

(e) By either World Focus or the Company in the event that the transactions contemplated by this Agreement shall not have been consummated by March 31, 2006, so long as the failure to consummate the transactions contemplated by this Agreement on or before such date shall not have been principally caused by any material breach of this Agreement by the Party providing notice of termination.

7.2 Effect of Termination.

In the event of the termination and abandonment of this Agreement pursuant to Section 7.1, this Agreement shall become void and have no effect, except that (i) the provisions of this Section 7.2, Section 5.3, Section 5.4 and Article 8, shall survive any such termination and abandonment, and (ii) no such termination shall relieve the breaching Party from liability resulting from any willful or intentional breach by that Party of this Agreement.

ARTICLE 8

MISCELLANEOUS

8.1 Survival of Representations.

None of the representations and warranties contained in this Agreement or in any certificate delivered pursuant to this Agreement shall survive the Closing Date.

8.2 Definitions.

(a) Except as otherwise provided herein, the capitalized terms set forth below shall have the following meanings:

“Affiliate” of a Person means: (i) any other Person directly, or indirectly through one or more intermediaries, controlling, controlled by or under common control with such Person; (ii) any officer, director, partner, employer, or direct or indirect beneficial owner of any 10% or greater equity or voting interest of such Person; or (iii) any other Person for which a Person described in clause (ii) acts in any such capacity.

“Agreement” has the meaning set forth in the recitals.

“Board” has the meaning set forth in the recitals.

11

“Business Day” shall mean any day other than (i) a Saturday or Sunday or (ii) a day on which banks in New York, New York are required or authorized by Law, executive order or governmental decree to be closed.

“Certificate of Amendment” has the meaning set forth in Section 2.2(a).

“Certificate of Incorporation” means the Amended and Restated Certificate of Incorporation of the Company, as amended.

“Closing” has the meaning set forth in Section 1.2.

“Closing Date” means the date on which the Closing occurs.

“Common Stock” has the meaning set forth in the recitals.

“Consent” means any consent, approval, authorization, clearance, exemption, waiver, or similar affirmation by any Person pursuant to any agreement, Law, Order, or Permit.

“Conversion Price” means $0.038 per share, subject to adjustment to reflect any dividend, subdivision, reclassification, recapitalization, split, combination or exchange of Common Stock that may occur between the date of this Agreement and the Closing Date.

“Conversion Shares” has the meaning set forth in Section 1.1(a).

“Debt Conversion” has the meaning set forth in the recitals.

“DGCL” means the General Corporation Law of the State of Delaware.

“Exchange Act” has the meaning set forth in Section 5.6(b)(1).

“Fairness Opinion” has the meaning set forth in the recitals.

“Law” means any code, law (including common law), ordinance, regulation, reporting or licensing requirement, rule, or statute applicable to a Person or its assets, Liabilities, or business, including those promulgated, interpreted or enforced by any Regulatory Authority.

“Legg Mason” has the meaning set forth in the recitals.

“Lien” means any conditional sale agreement, default of title, easement, encroachment, encumbrance, hypothecation, infringement, lien, mortgage, pledge, reservation, restriction, security interest, title retention or other security arrangement, or any adverse right or interest, charge, or claim of any nature whatsoever of, on, or with respect to any asset.

“Material” or “material” for purposes of this Agreement shall be determined in light of the facts and circumstances of the matter in question.

“Material Adverse Effect” means, with respect to a Party, an event, change or occurrence which, individually or together with any other event, change or occurrence, has or reasonably could have a material adverse impact on the ability of a Party to perform its obligations under this Agreement or to consummate the Debt Conversion or the other transactions contemplated by this Agreement.

12

“Nasdaq National Market” means the National Market System of Nasdaq Stock Market, Inc.

“Order” means any administrative decision or award, decree, injunction, judgment, order, quasi-judicial decision or award, ruling, or writ of any federal, state, local or foreign Regulatory Authority.

“Party” means either the Company or World Focus.

“Person” means a natural person or any legal, commercial or governmental entity, such as, but not limited to, a corporation, general partnership, joint venture, limited partnership, limited liability company, limited liability partnership, trust, business association, group acting in concert, or any person acting in a representative capacity.

“Promissory Notes” has the meaning set forth in the recitals.

“Proxy Statement” has the meaning set forth in Section 5.6(a).

“Regulatory Authorities” means, collectively, the SEC, the Nasdaq National Market, the Federal Trade Commission, the Department of Justice and all other federal, state, county, local or other governmental or regulatory courts, agencies, authorities (including taxing and self-regulatory authorities), instrumentalities, commissions, boards or bodies having jurisdiction over the Parties and their respective Subsidiaries.

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

“Securities Act” has the meaning set forth in Section 3.6(a).

“Securities Laws” means the Securities Act, the Exchange Act, the Investment Company Act of 1940, as amended, the Investment Advisors Act of 1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules and regulations of any Regulatory Authority promulgated thereunder.

“Special Committee” has the meaning set forth in the recitals.

“Stockholder Approval” has the meaning set forth in Section 2.2(a).

“Stockholder Meeting” has the meaning set forth in Section 5.5.

“Subsidiaries” means all those corporations, associations, or other business entities of which the entity in question either (i) owns or controls 50% or more of the outstanding equity securities either directly or through an unbroken chain of entities as to each of which 50% or more of the outstanding equity securities is owned directly or indirectly by its parent (provided, there shall not be included any such entity the equity securities of which are owned or controlled in a fiduciary capacity), (ii) in the case of partnerships, serves as a general partner, (iii) in the case of a limited liability company, serves as a managing member, or (iv) otherwise has the ability to elect a majority of the directors, trustees or managing members thereof.

“World Focus” has the meaning set forth in the recitals.

13

(b) In this Agreement, unless otherwise specified or where the context otherwise requires:

(1) the headings of particular provisions of this Agreement are inserted for convenience only and will not be construed as a part of this Agreement or serve as a limitation or expansion of the scope of any term or provision of this Agreement;

(2) words importing the singular only shall include the plural and vice versa;

(3) words importing any gender shall include other genders;

(4) the words “include,” “includes” or “including” shall be deemed followed by the words “without limitation;”

(5) the words “hereof,” “herein” and “herewith” and words of similar import, shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement;

(6) references to “Articles” and “Sections” shall be to Articles and Sections of this Agreement; and

(7) references to any Person include the successors and permitted assigns of such Persons.

8.3 Expenses.

Each of the Parties shall bear and pay all direct costs and expenses incurred by it or on its behalf in connection with the transactions contemplated hereunder, including filing, registration and application fees, printing fees, and fees and expenses of its own financial or other consultants, investment bankers, accountants, and counsel.

8.4 Entire Agreement.

Except as otherwise expressly provided herein, this Agreement (including the documents and instruments referred to herein) constitutes the entire agreement between the Parties with respect to the transactions contemplated hereunder and supersedes all prior arrangements or understandings with respect thereto, written or oral. Nothing in this Agreement expressed or implied, is intended to confer upon any Person, other than the Parties or their respective successors, any rights, remedies, obligations, or liabilities under or by reason of this Agreement.

8.5 Amendments.

This Agreement may be amended by a subsequent writing signed by each of the Parties upon the approval of each of the Parties, whether before or after Stockholder Approval has been obtained.

8.6 Waivers.

At any time prior to the Closing Date, any Party hereto may (a) extend the time for the performance of any of the obligations or other acts of any other party hereto, (b) waive any inaccuracies in the representations and warranties of any other party contained herein or in any document delivered pursuant hereto and (c) waive compliance by any other party with any of the agreements or conditions contained herein. Any such extension or waiver will be valid only if set forth in an instrument in writing signed by the Party or Parties to be bound thereby. No failure or delay on the part of any Party hereto in the exercise of any right hereunder will impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor will any single or partial exercise of any such right preclude other or further exercise thereof or of any other right.

14

8.7 Assignment.

Except as expressly contemplated hereby, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any Party hereto (whether by operation of Law or otherwise) without the prior written consent of the other Parties. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and assigns.

8.8 Notices.

All notices or other communications which are required or permitted hereunder shall be in writing and sufficient if delivered by hand, by facsimile transmission, by registered or certified mail, postage pre-paid, or by courier or overnight carrier, to the Persons at the addresses set forth below (or at such other address as may be provided hereunder), and shall be deemed to have been delivered (a) on the date of delivery if delivered personally, or by telecopy or facsimile, upon confirmation of receipt, (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service, or (c) on the fifth Business Day following the date of mailing if delivered by registered or certified mail return receipt requested, postage prepaid:

Company:	Aegis Communications Group, Inc.
	8001 Bent Branch Drive
	Irving, Texas 75063
	Facsimile Number: (972) 868-0267
	Attention: Chief Executive Officer
	Hughes & Luce LLP
	1717 Main Street
	Suite 2800
	Dallas, Texas 75201
	Facsimile Number: (214) 939-5849
	Attention: David Luther, Esq.
Copies to:	Special Committee of Board of Directors
	c/o Aegis Communications Group, Inc.
	8001 Bent Branch Drive
	Irving, Texas 75063
	Facsimile Number: (972) 868-0267
	Attention:	Mr. John-Michael Lind and
		Mr. Rashesh Shah
	Pepper Hamilton LLP
	3000 Two Logan Square
	18th and Arch Streets
	Philadelphia, Pennsylvania 19103
	Facsimile Number: (215) 981-4750
	Attention:	Barry M. Abelson, Esq. and
		James D. Epstein, Esq.

15

World Focus:	World Focus
	Essar House, 14th Floor,
	KK Marg, Mahalakshmi,
	Mumbai 400 034, India.
	Tel No.:     91 22 5660 1100
	Fax No.:     91 22 2495 4490
	Attention: Mr. Surendra Agarwal

8.9 Governing Law; Jurisdiction and Venue; WAIVER OF TRIAL BY JURY.

(a) Governing Law; Jurisdiction and Venue. Regardless of any conflict of law or choice of law principles that might otherwise apply, the Parties agree that this Agreement shall be governed by and construed in all respects in accordance with the Laws of the State of Delaware. The Parties all expressly agree and acknowledge that the State of Delaware has a reasonable relationship to the Parties and/or this Agreement. As to any dispute, claim, or litigation arising out of or relating in any way to this Agreement or the transaction at issue in this Agreement, the Parties hereto hereby agree and consent to be subject to the exclusive jurisdiction of the state and federal courts located in Delaware. Each Party hereto hereby irrevocably waives, to the fullest extent permitted by Law, (a) any objection that it may now or hereafter have to laying venue of any suit, action or proceeding brought in such court, (b) any claim that any suit, action or proceeding brought in such court has been brought in an inconvenient forum, and (c) any defense that it may now or hereafter have based on lack of personal jurisdiction in such forum.

(b) WAIVER OF TRIAL BY JURY. AFTER CONSULTATION WITH COUNSEL, EACH OF THE PARTIES HEREBY AGREES THAT IT WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.

8.10 Counterparts.

This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

8.11 Interpretations.

Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against any Party, whether under any rule of construction or otherwise. No Party to this Agreement shall be considered the draftsman. The Parties acknowledge and agree that this Agreement has been reviewed, negotiated, and accepted by all Parties and their attorneys and shall be construed and interpreted according to the ordinary meaning of the words used so as fairly to accomplish the purposes and intentions of all Parties hereto.

8.12 Severability.

Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

16

[Signature Page Follows]

IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed on its behalf by its duly authorized officers as of the day and year first above written.

COMPANY:
AEGIS COMMUNICATIONS GROUP, INC.
By:	/s/ Kannan Ramasamy
Name:	Kannan Ramasamy
Title:	President and CEO
WORLD FOCUS
By:	/s/ Rajiv Agarwal
Name:	Rajiv Agarwal
Title:	Authorized Signatory

[Signature Page to Debt Conversion Agreement]

EX-10.29

Exhibit 10.29

SUPPLEMENT TO EMPLOYMENT AGREEMENT

This Supplement to Employment Agreement (this “Agreement”) is made and entered into as of September 14, 2005 (the “Execution Date”), by and among Aegis Communications Group, Inc., a Delaware Corporation (the “Parent”), Advanced Telemarketing Corporation, a Nevada corporation (“ATC”), IQI, Inc., a New York corporation (“IQI”) (together, Parent, ATC, and IQI are referred to as the “Company”), and Kannan Ramasamy (“Ramasamy” or “Employee”).

RECITALS

Whereas, Employee is presently employed by the Company and serves as director, President and Chief Executive Officer of the Parent and Chief Executive Officer of IQI and ATC and has entered into an Employment Agreement with the Company dated as of September 14, 2004, a copy of which is attached hereto as Exhibit A (the “Employment Agreement”).

Whereas, the Company and Employee mutually desire to supplement and modify the contractual employment relationship as of September 14, 2005.

Now, therefore, in consideration of the mutual acts, payments, and promises described and agreed to be performed herein, Employee and the Company agree as follows:

1. Modification of Employment Agreement.

(a) Section 2(a) of the Employment Agreement is hereby amended in its entirety as follows:

“Employee will initially serve in the capacity as Chief Executive Officer of each of the Company and the Parent, subject in each case to the reasonable supervision of the respective Boards of Directors of the Company and the Parent. In such capacity, Employee will have all necessary powers to discharge his responsibilities, subject in each case to the reasonable supervision of the respective Boards of Directors. The respective Boards of Directors of the Company and the Parent may from time to time define the title and duties of the Employee hereunder in furtherance of the respective business of the Company and the Parent.”

(b) Section 2(c) of the Employment Agreement is hereby amended in its entirety as follows:

“Employee will comply with the written rules and regulations of the Company and the Parent respecting their businesses and perform the reasonable directives and policies of the Company and the Parent as they may from time to time be stated to Employee verbally or in writing by the Board of Directors of each corporation.”

(c) Section 8(c)(iv) of the Employment Agreement is hereby amended in its entirety as follows:

“Willful refusal by Employee to carry out reasonable instructions of the Company’s Board of Directors not inconsistent with the provisions of this Agreement;”

(d) The second sentence of Section 9 of the Employment Agreement is hereby amended in its entirety as follows:

“Employee agrees that he will not, except in the normal and proper course of his duties hereunder, disclose or use, or authorize any third party to disclose or use, any such Confidential Information without the prior written approval of the respective Boards of Directors of the Company and the Parent.”

(e) Annex A of the Employment Agreement is hereby amended in its entirety as set forth on Annex A hereto.

2. Ratification of Employment Agreement. Employee acknowledges, confirms, and ratifies his Employment Agreement dated September 14, 2004, which is attached hereto as Exhibit A. Employee specifically confirms that, during the course of his employment, he received special training, unique and confidential information, and actual contacts and relationships with customers and potential customers, as contemplated in Section 10 of the Employment Agreement. Accordingly, except as modified by this Agreement, Employee and the Company ratify the obligations stated in the Employment Agreement, including specifically Sections 9, 10, 11 and 13 (including arbitration).

3. Director Service. Employee and the Company agree that Employee will continue to serve as a director on the Board of Directors of the Company (the “Board”) until such time that Employee resigns from the Board or Employee is replaced and his successor is duly elected.

4. Nature of the Agreement. This Agreement and all its provisions are contractual, not mere recitals, and will continue in permanent force and effect, unless revoked as provided herein. In the event that any portion of this Agreement is found to be unenforceable for any reason whatsoever, the unenforceable provision will be severed and the remainder of the Agreement will continue in full force and effect.

5. Miscellaneous. (a) Any notice, demand, or request required or permitted to be given or made under this Agreement will be in writing and will be deemed given or made when delivered in person, when sent by United States registered or certified mail, or postage prepaid, or when telecopied to a party at its address or telecopy number specified below:

If to the Company:

Aegis Communications Group, Inc.

8001 Bent Branch Drive

Irving, Texas 75063

Attn: President or Chief Executive Officer

Telecopy number: (972) 868-0267

With a copy to:

Hughes & Luce, L.L.P.

1717 Main Street

Suite 2800

Dallas, Texas 75201

Attn: David G. Luther

Telecopy number: (214) 939-5849

If to Employee:

Kannan Ramasamy

#1 Dove Lane

Andover, Massachusetts 01810

The parties to this Agreement may change their addresses for notice in the manner provided above.

(b) All section titles and captions in this Agreement are for convenience only, will not be deemed part of this Agreement, and in no way will define, limit, extend, or describe the scope or intent of any provisions hereof.

(c) Whenever the context may require, any pronoun used in this Agreement will include the corresponding masculine or neuter forms, and the singular form of nouns, pronouns, and verbs will include the plural and vice versa.

(d) The parties will execute all documents, provide all information, and take or refrain from taking all actions as may be reasonably necessary or appropriate to achieve the purposes of this Agreement.

(e) This Agreement will be binding upon and inure to the benefit of the parties hereto, their representatives and permitted successors and assigns. Except for the provisions of Section 2 of this Agreement, which are intended to benefit the Company’s affiliates as third party beneficiaries, or as otherwise expressly provided in this Agreement, nothing in this Agreement, express or implied, is intended to confer upon any person other than the parties to this Agreement, their respective representatives and permitted successors and assigns, any rights, remedies or obligations under or by reason of this Agreement.

(f) This Agreement, and the Employment Agreement which is partially modified and ratified herein, constitute the entire agreement among the parties hereto pertaining to the specific subject matter hereof.

(g) None of the provisions of this Agreement will be for the benefit of or enforceable by any creditors of the parties, except as otherwise expressly provided herein.

(h) No failure by any party to insist upon the strict performance of any covenant, duty, agreement, or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof will constitute waiver of any such breach or any other covenant, duty, agreement, or condition.

(i) This Agreement may be executed in telecopy format and/or in counterparts, all of which together will constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart.

(j) THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO TEXAS PRINCIPLES OF CONFLICTS OF LAW.

(k) All claims, disputes, and controversies arising out of or relating to this Agreement

or the performance, breach, validity, interpretation, application, or enforcement hereof, including any claims for equitable relief or claims based on contract, tort, statute, or any alleged breach, default, or misrepresentation in connection with any of the provisions hereof, will be resolved by binding arbitration. Provided, however, an aggrieved party may petition a federal or state court of competent jurisdiction in Dallas County, Texas for interim injunctive or other equitable relief to preserve the status quo until arbitration can be completed in the event of an alleged breach of Section 2 of this Agreement. A party may initiate arbitration by sending written notice of its intention to arbitrate to the other party and to the American Arbitration Association (“AAA”) office located in Dallas, Texas (the “Arbitration Notice”). The Arbitration Notice will contain a description of the dispute and the remedy sought. The arbitration will be conducted at the offices of the AAA in Dallas, Texas before an independent and impartial arbitrator who is selected by mutual agreement, or, in the absence of such agreement, before three independent and impartial arbitrators, of whom each party will appoint one, with the third being chosen by the two appointed by the parties. In no event may the demand for arbitration be made after the date when the institution of a legal or equitable proceeding based on such claim, dispute, or other matter in question would be barred by the applicable statute of limitations. The arbitration and any discovery conducted in connection therewith will be conducted in accordance with the Commercial Rules of arbitration and procedures established by AAA in effect at the time of the arbitration (the “AAA Rules”); provided, however, that the parties will have the right to exchange at least one set of written discovery requests in accordance with the Federal Rules of Civil Procedure, and each party will have the right to take at least two depositions. The decision of the arbitrator(s) will be final and binding on all parties and their successors and permitted assignees. The judgment upon the award rendered by the arbitrator(s) may be entered by any court having jurisdiction thereof. The arbitrator(s) will be selected no later than 30 days after the date of the Arbitration Notice. The arbitrator(s) will render a decision no later than 30 days after the close of the hearing, in accordance with AAA Rules, and the arbitrator’s decision will include an award of costs (including attorneys’ fees to the prevailing party).

(l) If any provision of this Agreement is declared or found to be illegal, unenforceable, or void, in whole or in part, then the parties will be relieved of all obligations arising under such provision, but only to the extent that it is illegal, unenforceable, or void, it being the intent and agreement of the parties that this Agreement will be deemed amended by modifying such provision to the extent necessary to make it legal and enforceable while preserving its intent or, if that is not possible, by substituting therefore another provision that is legal and enforceable and achieves the same objectives.

(m) No supplement, modification, or amendment of this agreement or waiver of any provision of this Agreement will be binding unless executed in writing by all parties to this Agreement. No waiver of any of the provisions of this Agreement will be deemed or will constitute a waiver of any other provision of this Agreement (regardless of whether similar), nor will any such waiver constitute a continuing waiver unless otherwise expressly provided.

(n) Employee acknowledges and agrees that the Company and the Parent would be irreparably harmed by any violation of Employee’s obligations under Section 2 hereof and that, in addition to all other rights or remedies available at law or in equity, the Company and the Parent will be entitled to injunctive and other equitable relief to prevent or enjoin any such violation. The provisions of Section 2 hereof will survive any termination of this Agreement, in accordance with their terms.

(o) No party may assign this Agreement or any rights or benefits thereunder without the written consent of the other parties to this Agreement.

THE FOLLOWING PAGE IS THE SIGNATURE PAGE

EXECUTED as of the date first above written.

AEGIS COMMUNICATIONS GROUP, INC.
By:	/s/ Pramod Saxena
Name:
Title:
ADVANCED TELEMARKETING CORPORATION
By:	/s/ Pramod Saxena
Name:
Title:
IQI, INC.
By:	/s/ Pramod Saxena
Name:
Title:
/s/ Kannan Ramasamy
Kannan Ramasamy

EXHIBIT A

EMPLOYMENT AGREEMENT

See attached.

ANNEX A

TO SUPPLEMENT TO EMPLOYMENT AGREEMENT

Initial Compensation and Bonus

A. INITIAL BASE SALARY: $250,000 per year.

B. INITIAL STOCK OPTIONS: Upon the Parent’s adoption of an employee stock option plan, Employee will be granted options to purchase 3,450,000 shares of the Common Stock of the Parent at a price equal to the closing market price of the Common Stock on the date employee commences employment. The options will vest in three equal annual installments beginning as of September 14, 2004, and terminate ten years from the date of grant.

C. SECONDARY OPTION GRANT: Effective September 30, 2005, Employee will be granted options to purchase 3,450,000 shares of the Common Stock of the parent at a price equal to the closing market price of the Common Stock on September 30, 2005. The options will vest in three equal annual installments beginning as of May 1, 2005, and terminate on May 1, 2015.

D. FIRST YEAR BONUS: On September 14, 2005, the Employee will receive a bonus in an amount equal to his initial base salary (the “First Year Bonus”). The First Year Bonus will be paid 50% in cash and 50% in the Parent’s Common Stock (with the portion paid in Common Stock calculated from the closing market price of the Common Stock of the Parent on September 14, 2005), subject to withholding from the cash portion for applicable federal and state income and employment taxes. The full portion of the First Year Bonus payable in cash will be paid in eight consecutive installments corresponding to the Parent’s regular payroll payment dates, beginning with the first payroll date following September 14, 2005. The full portion of the First Year Bonus payable in Common Stock of the Parent will be payable on October 15, 2005; provided, that in the event the Common Stock portion of the First Year Bonus is not paid by October 15, 2005, the Employee will have the option to receive the amount due and payable in cash subject to withholding tax, and such amount will be paid in eight consecutive installments corresponding to the Parent’s regular payroll payment dates, beginning with the first payroll date following October 15, 2005.

E. SECOND YEAR BONUS: On September 14, 2006, the Employee will receive a bonus (a “Second Year Bonus”) (i) in the amount of $75,000; plus (ii) based upon performance targets established by the Parent’s Board of Directors, within 15 days following the second anniversary of the Agreement, a bonus in an amount equal to (a) 50% of base salary if at least 100% of the performance targets are achieved, (b) 75% of base salary if at least 120% of the performance targets are achieved, and (c) 100% of base salary if at least 135% of the performance targets are achieved. Any Second Year Bonus will be paid 50% in cash and 50% in shares of the Common Stock of the Parent (based on the closing market price of the Common Stock on the second anniversary of this Agreement), subject to withholding from the cash portion for applicable federal and state income and employment taxes. The full portion of the Second Year Bonus payable in cash will be paid in eight consecutive installments corresponding to the Parent’s regular payroll payment dates, beginning with the

first payroll date following September 14, 2006. The full portion of the Second Year Bonus payable in Common Stock of the Parent will be payable on October 15, 2006; provided, that in the event the Common Stock portion of the Second Year Bonus is not paid by October 15, 2006, the Employee will have the option to receive the amount due and payable in cash subject to withholding tax, and such amount will be paid in eight consecutive installments corresponding to the Parent’s regular payroll payment dates, beginning with the first payroll date following October 15, 2006.

F. BONUS(ES) FOR SUBSEQUENT YEAR(S): For subsequent years, Parent may, in its sole and absolute discretion, pay annual performance based cash bonuses as, when, and in the amount determined in the sole and absolute discretion of the Parent’s Board of Directors or Compensation Committee.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Aegis Communications Group, Inc.

Irving, Texas

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-15827) and on Form S-8 (Nos. 333-01131, 333-26451, and 333-66339) of Aegis Communications Group, Inc. of our report dated April 14, 2005, relating to the 2004 and 2003 consolidated financial statements and financial statement schedule, which appears in this Form 10-K.

/s/ BDO Seidman, LLP

Dallas, Texas

March 30, 2006

EX-23.2

Exhibit 23.2

CERTIFICATION

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Aegis Communications Group, Inc.

Irving, Texas

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-15827) and on Form S-8 (Nos. 333-01131, 333-26451, and 333-66339) of Aegis Communications Group, Inc. of our report dated March 17, 2006, relating to the consolidated 2005 financial statements and financial statement schedule, which appears in this Form 10-K.

/s/ RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP

Russell Bedford Stefanou Mirchandani LLP

McLean, Virginia

March 31, 2006

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Kannan Ramasamy, certify that:

1. I have reviewed this annual report on Form 10-K of Aegis Communications Group, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and

c) Disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.

Date: March 30, 2006	/s/    KANNAN RAMASAMY
	Kannan Ramasamy President and Chief Executive Officer, Director

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Kannan Ramasamy, certify that:

1. I have reviewed this annual report on Form 10-K of Aegis Communications Group, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and

c) Disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.

Date: March 30, 2006	/s/    KANNAN RAMASAMY
	Kannan Ramasamy The Person Performing the Function of Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Aegis Communications Group, Inc. (the “Company”) on Form 10-K for the year ending December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kannan Ramasamy, President and Chief Executive Officer of the Company, certify, to the best of my knowledge and in my capacity as an officer of the Company, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

/s/    KANNAN RAMASAMY        

Kannan Ramasamy

President and Chief Executive Officer

March 30, 2006

Note: This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Aegis Communications Group, Inc. (the “Company”) on Form 10-K for the year ending December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kannan Ramasamy, President and Chief Executive Officer of the Company, certify, to the best of my knowledge and in my capacity as an officer of the Company, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

/s/    KANNAN RAMASAMY        

Kannan Ramasamy

President and Chief Executive Officer

The Person Performing the Function of Chief Financial Officer

March 30, 2006

Note: This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended.