RESTRICTED ACCOUNT AGREEMENT
This
Restricted Account
Agreement (this "Agreement") is entered into this
16th day of August
2004, by and among NORTH FORK BANK, a New York banking
corporation with offices at 275 Broadhollow Road, Melville, New York 11747
(together with its successors and assigns,
the "Bank"),
CONVERSION
SERVICES
INTERNATIONAL, INC., a Delaware corporation with offices at 100 Eagle
Rock
Avenue, East Hanover, NJ 07936 (together with its
successors and assigns, the
"Company"), and LAURUS MASTER FUND,
LTD., a Cayman
Islands corporation with
offices at 825 Third Avenue,
14th Floor, New York, New York 10022 (together with
its successors and assigns, "Laurus"). Unless otherwise defined herein,
capitalized terms used herein shall have the
meaning provided such terms in the
Purchase Agreement referred
to below.
WHEREAS,
Laurus has provided
financing to the Company, which financing is
evidenced by a Securities Purchase Agreement (as amended, modified or
supplemented from time to time, the "Purchase Agreement") and the Related
Agreements referred to
therein;
WHEREAS,
the Company and Laurus
have retained the Bank to provide certain
services with respect to the
Restricted Account (as defined below); and
WHERERAS,
the Company and Laurus
have agreed that an amount of cash equal
to $4,251,000 shall be deposited by Laurus on behalf of the
Company by
wire
transfer of immediately
available funds into the Restricted Account, which cash
shall be held by the Bank for the benefit of Laurus, as security for the
Company's and its
Subsidiaries' obligations under the Purchase Agreement and
the
Related Agreements. For the
purposes of this Agreement, the "Restricted Account"
shall mean that certain deposit account (as defined in Section 9-102 of the
Uniform Commercial Code as in effect in the State of New York on the date
hereof) described on Exhibit B hereto, which Restricted Account shall be
maintained at the Bank and
shall be in the sole dominion and control of Laurus;
NOW
THEREFORE, in
consideration of the
mutual promises
contained herein
and for other good and
valuable consideration the sufficiency of which is
hereby
acknowledged, the parties
hereto agree as follows:
1. The
Bank is hereby authorized to accept for deposit into the
Restricted
Account the sum of $4,251,000. The Bank hereby agrees to hold any and all
monies, and other amounts from time to time on deposit and/or held in the
Restricted Account for the benefit of the Laurus and shall not release any
monies held in the Restricted Account until such time as the Bank shall
have
received a notice
from Laurus substantially in the form attached hereto as
Exhibit A (a "Release
Notice"). Following the receipt of a Release
Notice from
Laurus, the Bank agrees to promptly
disburse the amount of
cash referred to in
such Release Notice to such account as Laurus shall determine in its sole
discretion. The Bank hereby agrees that it will only comply with written
instructions originated by Laurus directing disposition of funds in the
Restricted Account. The
Company hereby irrevocably authorizes the Bank to comply
with any and all instructions given to the Bank by Laurus with
respect to
the
Restricted Account without
further consent by the Company. The Bank, the Company
and Laurus agree that the
Restricted
Account is in Laurus'
sole dominion and
control.
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2.
Each of the
Company, Laurus and the Bank hereby agrees that the
Restricted Account shall not be closed, and
the account name and account number
in respect thereof shall not
be changed, in any case, without the consent of the
Laurus, except as
specifically provided for in Section 9 below.
3. The
Bank hereby
subordinates any claims and security interests it may
have against, or with respect to, the Restricted
Account (including any amounts
from time to time on deposit therein) to the security interests of Laurus
therein, and agrees that no amounts shall be charged by it to, or
withheld or
set-off or otherwise
recouped by it from,
the Restricted Account or any amounts
from time to time on deposit
therein; provided that, in connection with all
service charges and any other charges which the Bank is entitled
to receive in
connection with the servicing and
maintaining of the
Restricted Account
(such
charges, collectively, the "Charges"), each
of the Company, Laurus and the Bank
hereby agrees that the Bank
will collect such Charges in the following manner:
(i) first, the Bank will
charge other deposit accounts maintained by the Company
with the Bank, (ii) second,
in the event that
there are insufficient
collected
funds in such other deposit
accounts to pay such Charges, the Bank will promptly
notify the Company and Laurus with respect to same and, within seven (7)
business days of the
Company's receipt of such notice, the Company shall pay
to
the Bank the full
amount of such
Charges then due, and (iii) third, if the
Company fails to pay to the Bank such
Charges then due within the time
period
set forth in the preceding
clause (ii), the Bank will promptly provide a written
notice to Laurus of such occurrence and, in such case, the Bank is hereby
authorized, following a period of
