Exhibit 10.5
REAFFIRMATION AND RATIFICATION AGREEMENT
July 28, 2005
Laurus Master Fund, Ltd.
c/o Laurus Capital Management, LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Reference is made to the (a) Subsidiary Guaranty dated as of August 16,
2004 made by each of CSI Sub Corp., Inc., a Delaware corporation (the "CSI
Sub"), XxXxxxx Associates, LLC, a Delaware limited liability company ("XxXxxxx")
and Evoke Software Corporation, a Delaware corporation ("Evoke") in favor of
Laurus Master Fund, Ltd., a Cayman Islands company ("Laurus") (as amended,
modified or supplemented from time to time, the "Subsidiary Guaranty"), (b)
Master Security Agreement dated as of August 16, 2004 Conversion Services
International, Inc. a Delaware corporation ("CSII"), CSI Sub, XxXxxxx and Evoke
in favor of Laurus (as amended, modified or supplemented from time to time, the
"Master Security Agreement") and (c) Stock Pledge Agreement dated as of August
16, 2004 made by CSII, in favor of Laurus (as amended, modified or supplemented
from time to time, the "Stock Pledge Agreement"). (the Subsidiary Guaranty, the
Master Security Agreement and the Stock Pledge Agreement, collectively, the
"Existing Security and Guaranty Agreements").
1. To induce Laurus to provide additional financial accommodations to CSII
pursuant to that certain Secured Revolving Note, dated August 16, 2004 made by
CSII in favor of Laurus (as amended, modified or supplemented from time to time,
the "2004 Laurus Revolving Note"), (ii) the Securty Agreement referred to in the
2004 Laurus Revolving Note (as amended, modified or supplemented from time to
time, the "2004 Laurus Security Agreement"), (iii) the Ancillary Agreements
referred to in, and defined in, the 2004 Laurus Security Agreement (the
agreements set forth in the preceding clauses (i) through (iii), inclusive,
collectively, the "2004 Laurus Agreements"), each of CSII, CSI Sub, and XxXxxxx
hereby:
(a) represents and warrants to Laurus that it has reviewed and
approved the terms and provisions of each of the 2004 Laurus Agreements to which
it is a party and the documents, instruments and agreements entered into in
connection therewith;
(b) acknowledges, ratifies and confirms that all indebtedness
incurred by, and all other obligations and liabilities of, each of CSII, CSI
Sub, and XxXxxxx under each of the 2004 Laurus Agreements to which it is a party
are (i) "Obligations" under, and as defined in the Subsidiary Guaranty, (ii)
"Obligations" under, and as defined in, the Master Security Agreement and (iii)
"Indebtedness" under, and as defined in, the Stock Pledge Agreement;
(c) acknowledges, ratifies and confirms that each of the 2004 Laurus
Agreements to which it is a party are "Documents" under, and as defined in, each
of the Subsidiary Guaranty, the Master Security Agreement and the Stock Pledge
Agreement;
(d) acknowledges, ratifies and confirms that all of the terms,
conditions, representations and covenants contained in the Existing Security and
Guaranty Agreements are in full force and effect and shall remain in full force
and effect after giving effect to the execution and effectiveness of each of the
2004 Laurus Agreements to which it is a party, provided, however, that the
transactions contemplated by the 2004 Laurus Agreements shall not be deemed to
violate any of the terms, conditions, representations and covenants contained in
the Existing Security and Guaranty Agreements;
(e) represents and warrants that no offsets, counterclaims or
defenses exist as of the date hereof with respect to any of the undersigned's
obligations under any Existing Security and Guaranty Agreement; and
(f) acknowledges, ratifies and confirms the grant by each of CSII,
CSI Sub, and XxXxxxx to Laurus of a security interest in the assets of
(including the equity interests owned by) each of CSII, CSI Sub, and XxXxxxx,
respectively, as more specifically set forth in the Existing Security and
Guaranty Agreements to which such entity is a party.
2. Laurus hereby acknowledges the sale of the Evoke Software Corporation
to Similarity Systems ("Similarity") on July 18, 2005 (the "Evoke Sale") and
hereby agrees the consummation of the Evoke Sale shall not be deemed to violate
any of the terms, conditions, representations and covenants contained in the
Existing Security and Guaranty Agreements. The Company further agrees to deliver
to Laurus on the date hereof as security for the satisfaction of the
Indebtedness (as defined in the Stock Pledge Agreement) the Collateral (as
defined in the Stock Pledge Agreement) relating to all of its equity ownership
in Similarity, and to amend Schedule A to the Stock Pledge Agreement to reflect
the same.
3. CSII hereby undertakes (i) to cause XxXxxxxx Associates, Inc., a wholly
owned subsidiary of CSII acquired on July 22, 2005 pursuant to an Agreement and
Plan of Merger ("XxXxxxxx"), on the date hereof to execute and deliver to
Purchaser the form of Joinder Agreement attached hereto as Exhibit A and
otherwise become party to the Existing Security and Guaranty Agreements, as
required by the terms set forth therein and (ii) to deliver to Laurus on the
date hereof as security for the satisfaction of the Indebtedness (as defined in
the Stock Pledge Agreement) the Collateral (as defined in the Stock Pledge
Agreement) relating to XxXxxxxx and to amend Schedule A to the Stock Pledge
Agreement to reflect the same.
4. CSII hereby undertakes (i) to cause ISI Merger Corp. ("ISI"), within
five (5) days of the date of its acquisition by CSII to execute and deliver to
Purchaser the form of Joinder Agreement, substantially in the form attached
hereto as Exhibit A and otherwise become party to the Existing Security and
Guaranty Agreements, as required by the terms set forth therein and (ii) to
deliver to Laurus, on such date as security for the satisfaction of the
Indebtedness (as defined in the Stock Pledge Agreement), the Collateral (as
defined in the Stock Pledge Agreement) relating to ISI and to amend Schedule A
to the Stock Pledge Agreement to reflect the same.
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This letter agreement shall be governed by and construed in accordance with the
laws of the State of New York.
Very truly yours,
CONVERSION SERVICES
INTERNATIONAL, INC.
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: President
Address:
CSI SUB CORP., INC.
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: President
Address:
XXXXXXX ASSOCIATES, LLC
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: CEO
Address:
XXXXXXXX ASSOCIATES, INC.
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: President
Address:
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Acknowledged and Agreed to by:
LAURUS MASTER FUND, LTD.
By: /s/ Xxxxx Grin
Name: Xxxxx Grin
Title: Director
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