Exhibit 10.4
JOINDER AGREEMENT
THIS JOINDER IN SUBSIDIARY GUARANTY, MASTER SECURITY AGREEMENT,
STOCK PLEDGE AGREEMENT AND SECURITY AGREEMENT (this "Joinder") is executed as of
July 28, 2005 by ▇▇▇▇▇▇▇▇ Associates, Inc., a Delaware corporation ("Joining
Party"), and delivered to Laurus Master Fund, Ltd., a Cayman Islands company
(the "Purchaser"). Except as otherwise defined herein, terms used herein and
defined in the Purchase Agreement and Security Agreement (each as defined below)
respectively, shall be used herein as therein defined.
W I T N E S S E T H:
WHEREAS, Conversion Services International, Inc., a Delaware
corporation (the "Company"), certain Subsidiaries of the Company and the
Purchaser, have entered into (x) a Securities Purchase Agreement, dated as of
August 16, 2004 (as amended, modified or supplemented from time to time, the
"Purchase Agreement") and (y) a Security Agreement, dated as of August 16, 2004
(as amended, modified or supplemented from time to time, the "Security
Agreement"), providing for the issuance of the Note and the Warrant and the
execution of the Related Agreements referred to in the Purchase Agreement and
the Ancillary Agreements referred to in the Security Agreement; and
WHEREAS, the Joining Party is a direct wholly owned Subsidiary of
the Company and desires, or is required pursuant to the provisions of the
Purchase Agreement, the Related Agreements, the Security Agreement and the
Ancillary Agreements, to become a Guarantor under the Subsidiary Guaranty, an
Assignor under the Master Security Agreement and, a Pledgor under the Stock
Pledge Agreement and an Eligible Subsidiary under the Security Agreement;
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to the Joining Party, the receipt and sufficiency of which are hereby
acknowledged, the Joining Party hereby makes the following representations and
warranties to the Purchaser and hereby covenants and agrees with the Purchaser
as follows:
NOW, THEREFORE, the Joining Party agrees as follows:
1. By this Joinder, the Joining Party becomes (i) a Guarantor for
all purposes under the Subsidiary Guaranty, (ii) an Assignor for all purposes
under the Master Security Agreement , (iii) a Pledgor for all purposes under the
Stock Pledge Agreement and (iv) an Eligible Subsidiary under the Security
Agreement.
2. The Joining Party agrees that, upon its execution hereof, it will
become a Guarantor under the Subsidiary Guaranty with respect to all Obligations
(as defined in the Subsidiary Guaranty), and will be bound by all terms,
conditions and duties applicable to a Guarantor under the Subsidiary Guaranty,
the Purchase Agreement and the other Related Agreements. Without limitation of
the foregoing, and in furtherance thereof, the Joining Party unconditionally and
irrevocably, guarantees the due and punctual payment and performance of all
Obligations (on the same basis as the other Guarantors under the Subsidiary
Guaranty).
3. The Joining Party agrees that, upon its execution hereof, it
will become a Pledgor under, and as defined in, the Stock Pledge Agreement, and
will be bound by all terms, conditions and duties applicable to a Pledgor under
the Stock Pledge Agreement. Without limitation of the foregoing and in
furtherance thereof, as security for the due and punctual payment of the
Indebtedness (as defined in the Stock Pledge Agreement), the Joining Party
hereby pledges, hypothecates, assigns, transfers, sets over and delivers to the
Purchaser grants to the Purchaser a security interest in all Collateral (as
defined in the Stock Pledge Agreement), if any, now owned or, to the extent
provided in the Stock Pledge Agreement, hereafter acquired by it.
4. (x) The Joining Party agrees that, upon its execution hereof, it
will become an Assignor under, and as defined in, the Master Security Agreement,
and will be bound by all terms, conditions and duties applicable to an Assignor
under the Master Security Agreement. Without limitation of the foregoing and in
furtherance thereof, as security for the due and punctual payment of the
Obligations (as defined in the Master Security Agreement), the Joining Party
hereby pledges, hypothecates, assigns, transfers, sets over and delivers to the
Purchaser and grants to the Purchaser a security interest in all Collateral (as
defined in the Master Security Agreement), if any, now owned or, to the extent
provided in the Master Security Agreement, hereafter acquired by it.
(y) The Joining Party agrees that, upon its execution hereof, it
will become an Eligible Subsidiary under, and as defined in, the Security
Agreement, and will be bound by all terms, conditions and duties applicable to
an Eligible Subsidiary under the Security Agreement. Without limitation of the
foregoing and in furtherance thereof, as security for the due and punctual
payment of the Obligations (as in the Security Agreement), the Joining Party
hereby pledges, hypothecates, assigns, transfers, sets over and delivers to the
Purchaser and grants to the Purchaser a security interest in all Collateral (as
defined in the Security Agreement), if any, now owned or, to the extent provided
in the Security Agreement, hereafter acquired by it.
5. In connection with the grant by the Joining Party, pursuant to
paragraphs 3 and 4 above, of a security interest in all of its right, title and
interest in the Collateral (as defined in each of the Master Security Agreement
and the Stock Pledge Agreement) in favor of the Purchaser, the Joining Party (i)
agrees to deliver to the Purchaser, together with the delivery of this Joinder,
each of the items specified in Section 3 of the Stock Pledge Agreement, (ii)
agrees to execute (if necessary) and deliver to the Purchaser such financing
statements, in form acceptable to the Purchaser, as the Purchaser may request or
as are necessary or desirable in the opinion of the Purchaser to establish and
maintain a valid, enforceable, first priority perfected security interest in the
Collateral (as defined in each of the Master Security Agreement and the Stock
Pledge Agreement) owned by the Joining Party, (iii) authorizes the Purchaser to
file any such financing statements without the signature of the Joining Party
where permitted by law (such authorization includes a description of the
Collateral as "all assets and all personal property, whether now owned and/or
hereafter acquired" of the Joining Party all assets and all personal property,
2
whether now owned and/or hereafter acquired" (or any substantially similar
variation thereof)) and (iv) agrees to execute and deliver to the Purchaser
assignments of United States trademarks, patents and copyrights (and the
respective applications therefor) to the extent requested by the Purchaser.
6. Without limiting the foregoing, the Joining Party hereby makes
and undertakes, as the case may be, each covenant, representation and warranty
made by, and as (i) each Guarantor pursuant to the Subsidiary Guaranty, (ii)
each Assignor pursuant to the Master Security Agreement, (iii) each Pledgor
pursuant to the Stock Pledge Agreement and (iv) each Eligible Subsidiary
pursuant to the Security Agreement, in each case as of the date hereof (except
to the extent any such representation or warranty relates solely to an earlier
date in which case such representation and warranty shall be true and correct as
of such earlier date), and agrees to be bound by all covenants, agreements and
obligations of a Guarantor, Assignor, Pledgor and Eligible Subsidiary pursuant
to the Subsidiary Guaranty, Master Security Agreement, Stock Pledge Agreement
and the Security Agreement, respectively, and all other Related Agreements to
which it is or becomes a party.
8. Each of Schedules of the Purchase Agreement and Schedules of the
Security Agreement is hereby amended by supplementing such Schedule with the
information for the Joining Party contained on Schedules attached hereto as
Annex I. Schedule A to the Stock Pledge Agreement is hereby amended by
supplementing such Schedule with the information for the Joining Party contained
on Schedule A attached hereto as Annex II. In addition, Schedule A to the Master
Security Agreement is hereby amended by supplementing such Schedule with the
information for the Joining Party contained on Schedule A attached hereto as
Annex III.
9. This Joinder shall be binding upon the parties hereto and their
respective successors and permitted assigns and shall inure to the benefit of
and be enforceable by each of the parties hereto and its successors and
permitted assigns, provided, however, the Joining Party may not assign any of
its rights, obligations or interest hereunder or under the Purchase Agreement or
any other Related Agreement and the Security Agreement or any Ancillary
Agreement without the prior written consent of the Purchaser or as otherwise
permitted by the Purchase Agreement or any Related Agreement and the Security
Agreement or any Ancillary Agreement. THIS JOINDER SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
This Joinder may be executed in any number of counterparts, each of which shall
be an original, but all of which shall constitute one instrument. In the event
that any provision of this Joinder shall prove to be invalid or unenforceable,
such provision shall be deemed to be severable from the other provisions of this
Joinder which shall remain binding on all parties hereto.
10. From and after the execution and delivery hereof by the parties
hereto, this Joinder shall constitute a "Related Agreement" for all purposes of
3
the Purchase Agreement and the Related Agreements and an "Ancillary Agreement"
for all purposes of the Security Agreement and the Ancillary Agreements.
11. The effective date of this Joinder is July 28, 2005.
* * *
4
IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be
duly executed as of the date first above written.
▇▇▇▇▇▇▇▇ ASSOCIATES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
5
Accepted and Acknowledged by:
LAURUS MASTER FUND, LTD.
By: /s/ ▇▇▇▇▇ Grin
Name: ▇▇▇▇▇ Grin
Title: Director
6
ANNEX I
Schedules to Securities Purchase Agreement
The following amended schedules of Conversion Services International,
Inc., a Delaware corporation (the "Company") to that certain Securities Purchase
Agreement, dated August 16, 2004, by and among the Company and Laurus Master
Fund, Ltd. (the "Agreement") are delivered with the express understanding that
an exception or qualification set forth in any of the Company's schedules with
respect to a particular representation and warranty shall be deemed to be an
exception or qualification with respect to all other applicable representations
and warranties of the Company to the extent the description of the facts
regarding the event, item or matter disclosed is adequate so as to make
reasonably clear or otherwise make the other parties to the Agreement reasonably
aware that such exception or qualification (and the description of the facts
relating thereto) is applicable to such other representations and warranties,
whether or not such exception or qualification is no numbered.
All capitalized terms used but not defined herein shall have the meanings
ascribed such terms in the Agreement.
Schedule 4.2
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Subsidiary Owner Percentage
----------------------------------------------------------------------------
CSI Sub Corp. (DE) Conversion Services 100%
International, Inc.
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▇▇▇▇▇▇▇ Associates, LLC Conversion Services 100%
International, Inc.
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▇▇▇▇▇▇▇ International ▇▇▇▇▇▇▇ Associates, LLC 50%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ Associates, Inc. Conversion Services 100%
International, Inc.
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ISI Merger Corp. Conversion Services 100%
International, Inc.
----------------------------------------------------------------------------
Doorways, Inc.* Conversion Services 100%
International, Inc.
----------------------------------------------------------------------------
LEC Corporation (of NJ)* Conversion Services 100%
International, Inc.
----------------------------------------------------------------------------
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* There are no assets in these subsidiaries.
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Schedule 4.3(a)
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Subsidiary Authorized Capital
--------------------------------------------------------------------
CSI Sub Corp. (DE) 1,000 shares of common stock
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▇▇▇▇▇▇▇ Associates, LLC N/A
--------------------------------------------------------------------
▇▇▇▇▇▇▇ International N/A (foreign entity)
--------------------------------------------------------------------
▇▇▇▇▇▇▇▇ Associates, Inc. 1,000 shares of common stock
--------------------------------------------------------------------
7
--------------------------------------------------------------------
ISI Merger Corp. 1,000 shares of common stock
--------------------------------------------------------------------
Doorways, Inc.* N/A
--------------------------------------------------------------------
LEC Corporation (of NJ)* 1,000 shares of common stock
--------------------------------------------------------------------
Schedule 4.3(b)
Taurus Advisory Group, LLC:
June 2004 $2,000,000 Unsecured Convertible Line of Credit Note and warrant to
purchase 4,166,666 shares of CSI Common Stock
Sands:
September 2004 $50,000 Sands Brothers Venture Capital LLC Senior
Subordinated Secured Convertible Promissory Note and warrant to purchase
300,000 shares of CSI Common Stock
September 2004 $850,000 Sands Brothers Venture Capital II LLC Senior
Subordinated Secured Convertible Promissory Note and warrant to purchase
5,100,000 shares of CSI Common Stock
September 2004 $100,000 Sands Brothers Venture Capital IV LLC Senior
Subordinated Secured Convertible Promissory Note and warrant to purchase
600,000 shares of CSI Common Stock
Schedule 4.6
CSI owes approximately $995,000 to ▇▇▇▇▇ ▇▇▇▇▇▇▇ (COO) and $670,000 to ▇▇▇▇▇
▇▇▇▇▇▇ (CEO) loaned to CSI
See Schedule 4.3(b)
Schedule 4.7
See Schedule 4.3(b)
Schedule 4.8
The Company sold substantially all the assets of its subsidiary Evoke Software
Corporation on July 18, 2005.
The Company purchased ▇▇▇▇▇▇▇▇ Associates, Inc. on July 22, 2005.
Schedule 4.9
Sands Brothers has a subordinate lien (to Laurus) on the assets of the Company.
8
Schedule 4.12
N/A
Schedule 4.13
N/A
Schedule 4.14
Employment Agreements not in Exchange Act filings:
-------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
Schedule 4.15
Taurus Advisory Group, LLC
WHRT I Corp. (formerly known as Evoke Software Corporation)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Sands Brothers Venture Capital LLC
Sands Brothers Venture Capital III LLC
Sands Brothers Venture Capital IV LLC
CMKX-treme, Inc.
Viant Capital LLC
Schedule 4.17
N/A
Schedule 4.21
N/A
Schedule 6.12(e)
See Schedules 4.3(b) and 4.6
Schedule 11.12
N/A
9
Schedules to Security Agreement
The following amended schedules of Conversion Services International,
Inc., a Delaware corporation, CSI Sub Corp. (DE), a Delaware corporation,
▇▇▇▇▇▇▇ Associates, LLC, a Delaware limited liability company, and Evoke
Software Corporation, a Delaware corporation (collectively, the "Company") to
that certain Security Agreement, dated August 16, 2004, by and among the Company
and Laurus Master Fund, Ltd. (the "Agreement") are delivered with the express
understanding that an exception or qualification set forth in any of the
Company's schedules with respect to a particular representation and warranty
shall be deemed to be an exception or qualification with respect to all other
applicable representations and warranties of the Company to the extent the
description of the facts regarding the event, item or matter disclosed is
adequate so as to make reasonably clear or otherwise make the other parties to
the Agreement reasonably aware that such exception or qualification (and the
description of the facts relating thereto) is applicable to such other
representations and warranties, whether or not such exception or qualification
is no numbered.
All capitalized terms used but not defined herein shall have the meanings
ascribed such terms in the Agreement.
Schedule 7(p)
Conversion Services International, Inc.:
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇. ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Operating account: 4344007127
Payroll account (ZBA): 4344007135
▇▇▇▇▇▇▇ Associates, LLC:
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇. ▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Cash Management account: 821-07T14
▇▇▇▇▇▇▇▇ Associates, Inc.
North Fork Bank
Operating account: 434401559
ISI Merger Corp.
North Fork Bank
Operating account: 434401534
10
Schedule 12(b)
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Subsidiary Owner Percentage
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CSI Sub Corp. (DE) Conversion Services 100%
International, Inc.
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▇▇▇▇▇▇▇ Associates, LLC Conversion Services 100%
International, Inc.
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▇▇▇▇▇▇▇ International ▇▇▇▇▇▇▇ Associates, LLC 50%
-------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ Associates, Inc. Conversion Services 100%
International, Inc.
-------------------------------------------------------------------------------
ISI Merger Corp. Conversion Services 100%
International, Inc.
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Doorways, Inc.* Conversion Services 100%
International, Inc.
-------------------------------------------------------------------------------
LEC Corporation (of NJ)* Conversion Services 100%
International, Inc.
-------------------------------------------------------------------------------
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* There are no assets in these subsidiaries.
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Schedule 12I(i)
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Subsidiary Authorized Capital
--------------------------------------------------------------------
CSI Sub Corp. (DE) 1,000 shares of common stock
--------------------------------------------------------------------
▇▇▇▇▇▇▇ Associates, LLC N/A
--------------------------------------------------------------------
▇▇▇▇▇▇▇ International N/A (foreign entity)
--------------------------------------------------------------------
▇▇▇▇▇▇▇▇ Associates, Inc. 1,000 shares of common stock
--------------------------------------------------------------------
Doorways, Inc.* N/A
--------------------------------------------------------------------
LEC Corporation (of NJ)* 1,000 shares of common stock
--------------------------------------------------------------------
ISI Merger Corp. 1,000 shares of common stock
--------------------------------------------------------------------
Schedule 12I(ii)
Taurus Advisory Group, LLC:
---------------------------
June 2004 $2,000,000 Unsecured Convertible Line of Credit Note and warrant to
purchase 4,166,666 shares of CSI Common Stock
Sands:
------
September 2004 $50,000 Sands Brothers Venture Capital LLC Senior
Subordinated Secured Convertible Promissory Note and warrant to purchase
300,000 shares of CSI Common Stock
September 2004 $850,000 Sands Brothers Venture Capital II LLC Senior
Subordinated Secured Convertible Promissory Note and warrant to purchase
5,100,000 shares of CSI Common Stock
September 2004 $100,000 Sands Brothers Venture Capital IV LLC Senior
Subordinated Secured Convertible Promissory Note and warrant to purchase
600,000 shares of CSI Common Stock
11
Schedule 12(f)
CSI owes approximately $995,000 to ▇▇▇▇▇ ▇▇▇▇▇▇▇ (COO) and $670,000 to ▇▇▇▇▇
▇▇▇▇▇▇ (CEO) loaned to CSI
See Schedule 12I(ii)
Schedule 12(g)
See Schedule 12(f)
Schedule 12(i)
The Company sold substantially all the assets of its subsidiary Evoke Software
Corporation on July 18, 2005.
The Company purchased ▇▇▇▇▇▇▇▇ Associates, Inc. on July 22, 2005.
Schedule 12(l)
N/A
Schedule 12(m)
N/A
Schedule 12(n)
Employment Agreements not in Exchange Act filings:
-------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
Schedule 12(o)
Taurus Advisory Group, LLC
WHRT I Corp. (formerly known as Evoke Software Corporation)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Sands Brothers Venture Capital LLC
Sands Brothers Venture Capital III LLC
Sands Venture Capital IV LLC
CMKX-treme, Inc.
Viant Capital LLC
12
Schedule 12(q)
N/A
Schedule 12(u)
N/A
Schedule 12(bb)
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Name Type State of Employee Locations Other names
incorporation ID Number
/ formation
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Conversion Corporation Delaware ▇▇-▇▇▇▇▇▇▇ East CSI - The
Services Hanover, NJ Center for
International, Data
Inc. Warehousing
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CSI Sub Corporation Delaware ▇▇-▇▇▇▇▇▇▇ East
Corp. (DE) Hanover, NJ
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▇▇▇▇▇▇▇ Limited Delaware ▇▇-▇▇▇▇▇▇▇ East
Associates, liability Hanover, NJ
LLC company Charlotte, NC
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▇▇▇▇▇▇▇▇ Corporation Delaware ▇▇-▇▇▇▇▇▇▇ East
Associates, Hanover, NJ
Inc. Plano, TX
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ISI Merger Corporation Delaware ▇▇-▇▇▇▇▇▇▇ East
Corp. Hanover, NJ
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Schedule 13(l)(i)
See Schedules 12(c)(ii) and 12(f)
13
ANNEX II
Schedule A to the Stock Pledge Agreement
Pledged Stock
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Pledgor Issuer Class of Stock Par Value Number of
Stock Certificate Shares
Number
--------------------------------------------------------------------------------------------
Conversion ▇▇▇▇▇▇▇ Membership N/A N/A N/A
Services Associates, LLC Interest
International,
Inc.
--------------------------------------------------------------------------------------------
Conversion CSI Sub Corp. (DE) Common 1 $0.001 100
Services
International,
Inc.
--------------------------------------------------------------------------------------------
Conversion ▇▇▇▇▇▇▇▇ Common 1 $0.001 100
Services Associates, Inc.
International,
Inc.
--------------------------------------------------------------------------------------------
Conversion ISI Merger Corp. Common 1 $0.001 100
Services
International,
Inc.
--------------------------------------------------------------------------------------------
Conversion Similarity Systems Ordinary 833,333
Services Shares
International, (Ireland
Inc. entity)
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14
ANNEX III
Schedules to Master Security Agreement
Schedule A
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Entity Jurisdiction of Employee
Organization Identification Number
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Conversion Services Delaware ▇▇-▇▇▇▇▇▇▇
International, Inc.
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CSI Sub Corp. (DE) Delaware ▇▇-▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ Associates, LLC Delaware ▇▇-▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ Associates, Inc. Delaware ▇▇-▇▇▇▇▇▇▇
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ISI Merger Corp. Delaware ▇▇-▇▇▇▇▇▇▇
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Schedule B
N/A